Financial independence or freedom does not just happen by accident. Many people are waiting to win the lottery. Sorry to disappoint you, but that will not happen. Financial independence requires that you take deliberate steps.
An important step along the path to financial independence is increasing the amount of money available to you. This money can help you reduce debt and also help you to build a nest egg. There are two ways to achieve this goal. One way is to manage your expenses, and the second way is to increase your available income.
How to manage expenses
Make every attempt possible to spend less than you earn. This may seem obvious, but it is very difficult for many people. If you keep spending more than you earn, you will always struggle financially. If you develop a habit of spending less than you earn, you would have taken the first step towards financial independence.
Create a budget by looking at your monthly expenses. Differentiate between your wants and your needs.
Take a good look at all your insurance policies, like auto, home owners, and medical. Try and increase the deductibles on your insurance policies to an appropriate level. This will reduce your premiums, and hence increase your cash flow.
When doing your grocery shopping, look out for store brands. They are less expensive.
Earn tax deductions by starting your own business. Some of the tax deductions you may be able to make are:
• Self-Employment Tax Deduction
• Home Office
• Health Insurance Premiums
• Meals and Entertainment
• Internet and Phone
• Interest on Business Loans and Business Credit Card Interest
• Car
• Travel
• Education
Please do not consider the above as tax advice. Always seek tax advice from your tax consultant.
If you are considered to be on low income, talk to the utilities companies. They may consider giving you a discount on your utility bills.
How to increase your available income
One of the ways you can increase your available income is to take on a second career, or part-time job for additional income.
Look through the house and find things in the house you can sell either on eBay or in a garage sale. You will be amazed at the amount of money you can make from this. You can sell things like dvds, furniture, electronics, books etc. You will make extra money from the sales, and also create additional space in your home!
You can offer a service that other people would pay for. For example you can offer services like teaching, translating etc to make some extra money weekly.
You can also be a part of focus groups online by taking surveys and sharing your thoughts about certain products and services. Be careful about the online surveys though, many of them ask you to pay money upfront and offer you little or nothing in return.
Consult your tax consultant about adjusting your W-2 allowances if you are expecting a tax refund.
Thoroughly go through your last three years' tax returns to make sure that you did not miss out on any deductions that were available to you. If you missed out on deductions, file an amendment to your taxes.
Of course you can always ask your employers for a raise at work, or offer to work additional hours for overtime pay.
Once you are able to create additional income, you can now begin to invest in order to achieve financial independence.
An important step along the path to financial independence is increasing the amount of money available to you. This money can help you reduce debt and also help you to build a nest egg. There are two ways to achieve this goal. One way is to manage your expenses, and the second way is to increase your available income.
How to manage expenses
Make every attempt possible to spend less than you earn. This may seem obvious, but it is very difficult for many people. If you keep spending more than you earn, you will always struggle financially. If you develop a habit of spending less than you earn, you would have taken the first step towards financial independence.
Create a budget by looking at your monthly expenses. Differentiate between your wants and your needs.
Take a good look at all your insurance policies, like auto, home owners, and medical. Try and increase the deductibles on your insurance policies to an appropriate level. This will reduce your premiums, and hence increase your cash flow.
When doing your grocery shopping, look out for store brands. They are less expensive.
Earn tax deductions by starting your own business. Some of the tax deductions you may be able to make are:
• Self-Employment Tax Deduction
• Home Office
• Health Insurance Premiums
• Meals and Entertainment
• Internet and Phone
• Interest on Business Loans and Business Credit Card Interest
• Car
• Travel
• Education
Please do not consider the above as tax advice. Always seek tax advice from your tax consultant.
If you are considered to be on low income, talk to the utilities companies. They may consider giving you a discount on your utility bills.
How to increase your available income
One of the ways you can increase your available income is to take on a second career, or part-time job for additional income.
Look through the house and find things in the house you can sell either on eBay or in a garage sale. You will be amazed at the amount of money you can make from this. You can sell things like dvds, furniture, electronics, books etc. You will make extra money from the sales, and also create additional space in your home!
You can offer a service that other people would pay for. For example you can offer services like teaching, translating etc to make some extra money weekly.
You can also be a part of focus groups online by taking surveys and sharing your thoughts about certain products and services. Be careful about the online surveys though, many of them ask you to pay money upfront and offer you little or nothing in return.
Consult your tax consultant about adjusting your W-2 allowances if you are expecting a tax refund.
Thoroughly go through your last three years' tax returns to make sure that you did not miss out on any deductions that were available to you. If you missed out on deductions, file an amendment to your taxes.
Of course you can always ask your employers for a raise at work, or offer to work additional hours for overtime pay.
Once you are able to create additional income, you can now begin to invest in order to achieve financial independence.
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