What does financial independence really mean, and how’s it different from financial freedom? Understand Financial Freedom Vs. Financial Independence, the differences, and the path to get there.
Financial Security vs. Financial Freedom vs. Financial Independence
To achieve financial independence or financial freedom, you’ll likely need to build multiple streams of passive income. This is something that won’t happen overnight but can grow your wealth with a slow and steady approach. Ongoing passive income is created while you sleep – think of it as a financial journey. You can create passive
income in a variety of ways.
Milestone #1 – Financial Security
The first milestone many people achieve is financial security. To achieve this, you need income coming in from other sources (beyond your W2) to cover basic living expenses.
Becoming financially secure is the first step toward financial freedom and early retirement.
Milestone #2 – Financial Independence
Being financially secure means you can cover all the basics to survive. Financial independence means you can retire early and maintain your current lifestyle without working ever again. This is the sweet spot and where many people desire to end up.
Multiple streams of passive income fund your lifestyle while you choose what you want to do on a day-to-day basis.
Milestone #3 – Financial Freedom
True financial freedom is one step beyond financial independence. It’s where you can enjoy the true “do-what-I-want” lifestyle without much, if any, financial constraints.
Financial freedom means you can make choices without worrying about where the money is coming from. It also means you have complete time freedom to do what you want, when you want without worrying about finances.
You can build this through both passive and residual income. Passive income can come through things like real estate investing and investing in businesses. Residual income can come from things like a subscription product or residual commissions on something you sold years back.
Becoming Financially Free
To be financially free, you have to start with the end in mind, ,which means, like anything in life, you have to set goals. Specific, measurable, time-bound goals. This will help you set your investing criteria and map out your goals as well as measure your progress and success throughout your journey. To start, you need to figure out what your bottom line numbers are for financial security, independence and freedom.
Achieving Financial Freedom Through Investing in Real Estate
There are a million ways to generate passive income streams, but more people have become millionaires through investing in real estate and owning businesses. Why? Because it can be simple! Remember the game Monopoly? Well, real estate is pretty similar if you are a passive investor. The same can be true when investing in businesses.
Investing and Building Slowly
Investing is definitely NOT a get-rich-quick play. But, if you take the time to build your portfolio slowly, you’ll get there.
Investing in Real Estate Syndications
In these types of group investments, many investors pool their money together ($50,000+ each) to cover the purchase, renovations and initial operating expenses on a much larger-scale, or commercial, property (often called an asset).
In this scenario, you would be a limited partner (passive investor), while the general partners (also called sponsors/operators) are responsible for the day-to-day operations and management of the asset. Syndications are truly passive because your money makes money while you have no active responsibilities.
Real estate syndications are available in different markets and various asset classes, which allows you to diversify and build multiple streams of income rather quickly.
You can also find syndications or funds that allow you to invest in cash flowing businesses, which can provide increased cash flow and diversification.
Enjoying Your Own Journey to Financial Freedom
Investing can be the easy, slow and steady approach to financial freedom no matter where you are in your financial journey. Creating residual income make take more effort on the front end, but it can definitely pay off in the long run.
The goal is to diversify your investments and to enjoy the journey. You are on your way to creating new, passive income streams as you form new relationships and grow your knowledge and your wealth.
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Meet the expert:
Angie Aki has successfully started multiple businesses and grown them to over 6-figures in the first year. She is a real estate investor and helps people passively invest in real estate. She also has an affiliate marketing team to help people grow their wealth easily through day-to-day conversations.
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