Many people dream about financial independence or financial freedom, yet very few realise just what it takes to reach financial independence, let alone financial freedom. The general belief is that you need to earn extremely well in order to accumulate wealth. This is, however, far from necessary and also by no means any guarantee of success. The good news is that accumulating wealth has a lot less to do with how much you earn than most people assume. The truth is that reaching financial independence has more to do with your spending than your earning. In reality, though, very few people are prepared to honestly scrutinise and adjust their spending in order to reach financial independence.
What is the difference between financial independence and financial freedom?
The way we see it, there are three steps along the path towards reaching financial freedom:
This is when you have sufficient passive income which can cover your basic living expenses (e.g. accommodation, food and other basic necessities) indefinitely.
At this point, your passive income can cover your current lifestyle indefinitely. This may include some discretionary spending on luxury items, but will most likely still be a budget-conscious approach towards spending.
For many, this is the ultimate goal, when your passive income not only covers your current lifestyle but is sufficient to cover your ideal lifestyle.
People often ask us how we are able to travel full time. Neither of us has won the lottery nor inherited wealth. The truth is that it took us years of planning, lots of hard work, many sacrifices and an ongoing commitment towards a shared passion and goal. Although we are able to sustain our current lifestyle through passive income, we remain incredibly aware and frugal in our spending. We enjoy the FREEDOM th