Wealth Management is a carefully designed strategy to help you meet your financial needs and goals, one of them being financial independence. The ability to live your life as you choose with a secure financial backing for you and your family is considered, by many, the ultimate success.
1. Financial Literacy
Research has shown that people who are financially literate end up with more wealth than those who are not. There is a strong monetary incentive for becoming financially sophisticated. Taking the time and effort to become knowledgeable in the areas of personal finance and investing will pay off throughout your life. Make use of the knowledge your financial advisor provides. Financial learning and financial independence are lifelong endeavors.
2. Think Long Term
The level of your wealth should be measured by the length of time you could maintain your standard of living without an additional pay check. In other words, if you had to stop working right now, how long could you maintain your current lifestyle needs? The principles of gaining financial independence seem simple, although we all know it is in the application that we occasionally stumble. Spend less than you earn. Keep investing. It is important to take a long-view focus as you work towards your financial goals. It takes more than a few weeks to achieve financial independence.
3. Good Debt vs. Bad Debt
Consumer debt is the bane of financial independence. Borrowed money should only be used for investing, not to finance lifestyle needs. ‘Bad debt’ is used to finance consumables and other lifestyle preferences. ‘Good debt’ could be termed as strategic loans used to invest, or money used to make more money. Your gains need to be greater than your borrowing costs; borrowing to meet short-term desires is counterproductive.