Becoming independently wealthy takes time. It actually takes so much time and hard work that you might not even realize it. Here is a guide to the true meaning of independent wealth.
What Does Independently Wealthy Truly Mean? (Including How & Signs You Are)
Building wealth is a long, drawn-out journey that can feel draining at times. It can also feel like there is no end in sight to achieve true wealth.
Growing your net worth is a rollercoaster. You will have big wins and (hopefully) small losses. Your net worth won’t always go straight up over time.
Looking back on the last 5 years where I build my net worth by $400,000 was an absolute journey. I used to check my Personal Capital account daily and would get worried about day-to-day movements.
You simply can’t do that. You will drive yourself crazy.
Also, it’s unnecessary. If you want to become independently wealthy, you need to be out there executing. Not checking your net worth every day.
In order to build wealth over time, you need to have discipline and focused execution.
What does independently wealth mean?
Independent wealth means that you have a vast amount of resources, either possessions or monetary resources, without relying on a single external resource along the way.
To break it down in a bit more detail, let’s take a look at each of the components of independent wealth in a discreet fashion.
- free from outside control; not depending on another’s authority
- an abundance of valuable possessions or money.
So, what is independent wealth? The independent component of it all is pretty straightforward. You do it on your own, in some form.
The wealth component of the equation is much more subjective. What does wealth mean?
It can’t just be having a boatload of money. That’s B.S.
Is independent wealth the same amongst every person? Or is it a matter of each person’s situation and where they started from?
How to Become Independently Wealthy
Building wealth is a journey that isn’t about quick fixes. It’s about making lifestyle changes. Otherwise, you will have some serious issues building wealth and face challenges along the way.
Here are a few considerations on how to be independently wealthy.
1. Focus on Saving Not Spending
The first thing you should do to build wealth independently is to build habitual routines of saving not spending. It’s not going to happen right away. You don’t need to get carried away with saving either.
There is a fine line between living stingy and enjoying life.
You should, however, focus on making saving a repetitive process that can be continued no matter if you make more or less money.
Every person that has independent wealth. Here is where using a tool like Personal Capital can be a gamechanger. You can focus on the more important decisions while the software automates your cash flow and expense tracking.
2. Invest for Retirement Early
With retirement, the sooner you start the better. Why? Because you can’t touch that money until you are 59.5 years old. That’s why you need to start now!
If you take some risks later on (I’ll get to that later), you might not need to contribute to it later on. That’s if you max out your retirement accounts early.
Think of this money as a slush fund, solely for your retirement years. It really is a slush fund because it’s prohibitive to turn it into cash.
Invest early and often for retirement and let compound interest work its magic. Get a FREE check-up on your 401k with Blooom.
3. Have a Desire to Learn, Be Hungry
Learning is the single most important intangible characteristic of building wealth on your own. There is no debate about it.
By learning, you can monetize your knowledge in a variety of ways. Or, you can reinforce your current skills to perform more efficiently. This goes a long way for your career.
Want to try freelancing to make money online? Use our freelance rate calculator to see how much you need to charge hourly. You can even try listing a Fiverr gig to perform small tasks to earn extra money online.
4. Take a Risk and Start a Business
One of the single most straightforward to independent wealth is building a business. If you are a 100% owner of a business, you inherently can use growth and operating expenses to grow your wealth.
People will always pay multiples of cash flow for an operating business and will never pay that for your personal finances (maybe insurance companies…).
Businesses are a lot of work, but they are totally worth it. Businesses are one of the few ways that you can grow something and take market share from others in any economic situation.
Some of the best businesses are service businesses because they offer low startup costs and high free cash flow.
As your company grows over time, so does your wealth. With a service business, you can use the proceeds from any client engagement to focus on growth by finding additional resources and talent.
Finally, once your business reaches an operating scale. You, as the owner, make your own hours and call the shots. You can build a lifestyle business to make the decisions on how you want to experience life.
See Related: Best Freelance Business Ideas
5. Think About the Thousand Dollar Decisions… Not a Hundred Dollar Decisions
If you want to become independently wealthy, you need to know the value of a dollar. At the same time, as your net worth builds, you will eventually make higher-level decisions about your money.
An example would be making decisions if you want to invest in real estate to build wealth or if you want to invest in index funds.
With owning and operating a business, you are making thousand dollar decisions every single day. Again, here is where Personal Capital can do wonders. You can take a step back and get a bird’s eye view of your personal financial situation.
See Related: 17 Life Insurance Questions to Ask
6. Stay Humble
Finally, if you want to become independently wealthy, you need to be never satisfied. At the same time, you don’t think about money as an object or something that defines who you are.
Money is a resource that can unlock freedom and autonomy. Money will never make you more important than others.
Most people that are indepedently wealth continue to push the envelope for success but in moderation. There’s more to life than working forever.
5 Signs That You Are Independently Wealthy
What if you are already independently wealthy? You might already be… Here are some telltale signs that suggest you’ve already achieved independent wealth.
You Know the Value of a Dollar… Because at One Point You Had $0 (or limited)
If you feel like you have the comfortability of your wealth, you might be independently wealthy if you still question/read your dinner bill.
You might be independently wealthy if you question every order or every financial decision you make.
See Related: Personal Capital Review
You’ve Saved Your Money with a Purpose
Generally speaking, if you have achieved wealthy you likely have moved onto the highest form of giving, which includes either impactful donations, time and investment.
These are some ways to save your money with a purpose. Saving your money for purposes doesn’t just stop there. You likely have given back to others in some form.
You Like Control… You Bet on Yourself
People that have independent wealth took the step of breaking off the reliance and resource of others. They went after their life and financial decisions on their own.
You might be independently wealthy if you would rather make decisions on your own than relying on another person.
You Think About The Value of Time and Life
People that are independently wealthy have made a lot of tough decisions today that will help better their future tomorrow.
Once you’ve hit a level of comfortability, you think about things from a different perspective. There’s more to life than just having a lot of money.
You can do other things in life that will make you wiser, more experienced and smarter. These financial resources are some that I use daily, so I can focus on the more important things in life.
You Love to Learn… But Also Apply Your Learnings
Independently wealthy individuals love to learn and grow over time. That’s not it.
You learn for a reason because you want to apply it. By applying it, you are learning even more from your findings as a case study.
It’s a vicious cycle of wealth.
- You learn to figure out what works and is successful.
- Then, you take calculated risks to scale out your learning.
- Finally, you profit off your learning.
These are some of the most common signs that you are independently wealthy.
They aren’t the only ones.
If you want to become independently wealthy, you need to work your A$$ off. And don’t look back. Take matters into your own hands to improve your life.
Conclusion on Building Independent Wealth
Becoming independently wealthy is a challenge, but it’s completely doable for anyone. You must have a plan for success. You must execute and at the same time, be patient.
Stay patient and stay hungry. Your wealth likely won’t change overnight, but you can make daily decisions that will position you for wealth. Be humble and always have an open mind.
With independent wealth, you might have some relative resources to start out. But, at the end of the day, you are hardworking and forward-thinking.
Wealth doesn’t come too easy and the true definition of independently wealthy means you’ve done the dirty work to build a foundation for yourself and family. Use Personal Capital to start your journey towards a better lifestyle of saving and earning.
What do you think it means to be independently wealthy?