Why are you not financially independent? : Part 1

If you're living in the 21st century, you would have noticed a few things.

For one, people are increasingly reliant on government handouts such as social security(for you Americans) or things like CPF(the those Singaporeans among us). Or even smaller handouts such as election goodies, progress packages, things I would even call a form of welfare package.

Secondly, you see more and more financial plans to help old folks turn their assets into cash. An example would be the reverse mortgage schemes(Where you 'sell' your house to a financier, in return for a small monthly cash allowance.)

Thirdly, you see more and more people working longer than they would have liked, till 65 or 70. This is definitely way past retirement age and the golden years. In fact, since a large number of people die even before that age, it is indeed debatable if it's all worth it.

Have you seen these? I have. Lots.

It is increasingly common to be dependent on some person, some government, or some organisation to provide you a sum of money to survive. In short, you lose control of your financial status.

To me, financially independent is the ability to survive on the cashflow generated by your assets. Of course, this is fairly subjective. Some people can survive on $1000 a month, some need $20,000 a month. You just need more assets if you want $20,000.

Now, assets are yet another messy subject. Basically, that can be considered as anything that makes you a potential income. The more common examples would be cash(in the form of bank deposits), forms of investments( such as stocks), businesses(that have an ongoing revenue of course), and royalties(think Harry Potter for J.K Rowling).

And of course, you can argue that giving birth to 10 children who can each earn $5000 is an asset. But that is not what we're talking about here.

This may seem to be a huge foreign topic to most people, simply because it is definitely not taught in formal education. But one thing's for sure, everybody can be financially independent before 50. Financial freedom is another thing. But financially independence is definitely possible and attainable. What you do need is a prudent plan and the ability to stick to the plan.

I'll be posting a series of action steps you can perform, and also a list of recommended books that I feel would benefit, if you're interested.

Action: Commit to be financially independent by a pre-determined age(like 50 years old).

Recommended reading list:
Think and Grow Rich by Napolean Hill
* Free ebook version of the Think and Grow Rich classic is available here
The Strangest Secret by Earl Nightingale (special free online resource!)

In the next of the series, we'll be looking more into how the world is stacked against us becoming financially independent.

Stay tuned!