25th April is Financial Independence Awareness Day and the perfect opportunity to reflect on your financial situation and perhaps take some steps towards attaining financial independence.
Financial independence is at the root of everything that we do here at Infinity although a surprisingly tricky concept to accurately define. We’re going to give it our best shot though!
Financial independence is not the same as wealth
Some people confuse financial independence with wealth but they are not the same thing. Financial independence does not necessarily mean you are wealthy enough to not have to work again and huge wealth does not guarantee financial independence. We’ve all heard the riches to rags stories of film stars or pop icons who made and lost millions. In many of these sad stories, in spite of amassing huge wealth, the individuals suffered financial insecurity due to poor financial planning.
What is financial independence?
So if financial independence is not earning vast amounts of money, what is it? We think there are three elements to financial independence:
1. Living comfortably
Having enough to cover your day-to-day expenses and some treats and luxuries with enough left over to save without having to incur any debt.
2. Having choices
Being able to make the lifestyle choices that you want to whether that be having the option to choose when, how and where to work, maintaining a work/life balance that suits you, taking a sabbatical to travel or look after children etc.
3. Being protected
Protecting your assets pays a key role in financial independence and this is where insurance comes in. Life and health insurance are the two biggies but there are others you may want to consider such as critical illness and income protection. Wealth protection ensures that your family is protected financially in the face of certain unforeseen life events.
How can you gain financial independence?
The thing that sets the comfortably retired teacher with a seven figure pension pot apart from the struggling ex-millionaire sports superstar is financial planning.
The former gains financial independence by making a sound financial plan and sticking to it over the long term compared to the latter who squanders vast amounts of money seeking instant gratification. Which, as we all know, doesn’t necessarily bring happiness.
Gaining financial independence is a long game which involves saving and investing over many years but one that is well worth the effort.
If you’d like to find out how to get started, check out this helpful article from Carl Turner, one of our senior financial consultants, or get in touch to speak to one of our qualified financial advisers based throughout Asia who can help you put together a watertight financial plan to enable you to live comfortably, have choices and protect yourself and your family.
A leading provider of expat financial services and wealth management services across Asia.