Trust deed real estate Approaches to financial independence[ edit ] If a person can generate enough income to meet their needs from sources other than their primary occupation, they have achieved financial independence, regardless of age, existing wealth, or current salary.
They have no need to work a regular job to pay their bills. However, the effects of inflation must be considered. Therefore, if the person in the above example obtains their passive income from a perpetuitythere will be a time when they lose their financial independence because of inflation.
Under these circumstances, a person is financially independent. A person's assets and liabilities are an important factor in determining if they have achieved financial independence.
An asset is anything of value that can be readily turned into cash vizualizare independența financiară if a person has to pay debt, whereas a liability is a responsibility to provide compensation. Homes and automobiles with no liens or mortgages are common assets.
Since there are two sides to the assets and expenses equation, there are two main directions one can focus their energy: accumulating assets or reducing their expenses. Expense reduction[ edit ] Another approach to vizualizare independența financiară independence is to reduce regular expenses while accumulating assets, to reduce the amount of assets required for financial independence.
This can be done by focusing on simple livingor other vizualizare independența financiară to reduce expenses.