First read about financial independence

I recommenced to read this before starting your path to financial independence. “Why should I read Letter on happiness of Epicurus? are you crazy?”. The reason is very simple, because the financial independence is a path towards a better life style. So the first and most important question is “what make me happy?” “What happiness really means?”. Read and think what is real important in your life. Financial independence is only finance and math.

Financial indipendence explained in 3 step

Financial independence is real simple to explain. If you have a job and you are a wise man problably you are in a situation like this

You have a job and income from it, you have expenses (bill, mortage ecc..) and if income > expenses you have saving. Simple

After that you can generate passive income from your saving (es if you buy stock they can generate dividends)  so the picture  can became like that

 

If your passive income = expenses you are financial indipendent so you can live

only from income from your saving without changing life style

 

If this is easy to understand the real question is “how can I achieve financial independence?” This is the main question but this trivial picture has more subtle question

Our life as a path to independence

I found an nice post about financial independence, you can read here According to the author our life is a path to independence.  we are born dependent on the parents and achieve independence working.  Nowadays, most developed countries have systems to provide pensions on retirement so we achieve financial independence: we can live without working.  Unfortunately we are too old to enjoy life

About Financial Independence:

According to Wikipedia Financial independence means you have enough wealth to live on without working. Financially independent people have assets that generate income (cash flow) that is at least equal to their expenses. Income you earn without having to work a job is commonly referred to as “passive income”.  For example, if someone receives $5000 in dividends from stocks they own, but their expenses total $4000, they can live on their dividend income because it pays for all their expenses to live (with some left over).