Are there shortcuts to becoming financially independent?

What if we said that the path to financial independence really exists? And that it doesn't have to take as long as you might think? We'll show you the options you have available to take that first small, but important step.

What is financial independence, exactly?

The goal is rather simple: the faster you can get on your own two feet financially, the better. You may have just got your first job, or you've been working for a few years and built up some savings, but you're still looking for that extra boost to take the next big step.

The way to get there is fairly straightforward to explain – the more you can set aside each month, the faster you'll reach your goal.

In other words, you should find a way to stop relying solely on your monthly salary, supplemented with a bonus or the thirteenth month's pay every now and then. The fastest way to success is to generate as much passive income as possible. Examples include:

• Dividends
• Interest
• Rental income
• And many more...

Financially independent does not mean wealthy

Financial independence means that you've built up enough assets over time to be able to finance your lifestyle (almost in full) without an active income. At the same time, you want to build up as much as you can in savings in the shortest possible time.

If you think that sounds unrealistic, you'd be wrong. Becoming financially independent is not the same as trying to become wealthy. Your goal is to be as comfortable as possible from a financial perspective. This means:

• No more worrying about monthly bills
• Preferring not to borrow too much
• Maintaining the freedom to travel when and where you want
• Creating the luxury of choosing a career based purely on enjoyment, not necessity
• And much more...

This means you want to buy yourself freedom both in the near and distant future. But what's the best way to go about it?

Step 1: Know your expenses

Every big adventure starts with a small step. Financial freedom starts with learning how to save and budget. And that starts by understanding your income and expenses. If we're being honest now, do you know what you currently spend each month?

• Map out your annual income and expenses as accurately as possible. Also include unplanned expenses such as repair costs, fines and so on.
• Analyse your monthly expenses. Which costs can you eliminate or reduce?

Step 2: Choose your approach

Work towards your own 'freedom fund' – a fixed amount (or more) that you try to set aside each month. Before you can add anything extra on top, you need to decide which financial horses you're going to bet on.

• Will you decide to put part of your salary into a savings account on a regular basis?
• Do you want to invest your current savings (in real estate, companies and so on)?
• Are you considering investing in the hope of seeing your passive income grow exponentially? If so, do you opt for shares, trackers, funds, government bonds and so on?

In each scenario, you're choosing to get a better return on your money. Yet there's a huge different in the potential return and the speed at which you may generate passive income.

As an example, renting out an energy-efficient home in a popular neighbourhood or investing in a promising start-up can give you a huge boost on the way to financial independence. On the other hand, the financial risks are greater and it requires greater follow-up on your end. Either way, there's no such thing as easy money. Unless you win the lottery, of course.

Step 3: Learn and adapt

Look at what works and what doesn't, and make regular adjustments. Seek advice from people with expert knowledge of the subject. Sometimes, it's also worth showing a little more patience, which can certainly be the case with investing.

Discover the three investment options at Keytrade Bank

Already thinking about more than just saving? At Keytrade Bank, we offer a range of investment options both for those who prefer to play it safe to start with and for those who like to take a calculated risk (you can read more about these investment risks here). Our three investment plans are as follows:

• Keyplan: Invest automatically through a diversified plan with limited risk (from €25 per month)
• Keyprivate: Let our experts manage your assets (from €15,000)
• Trading: You take control and invest in a range of shares, ETFs and funds, guided by our investment tools.

A few other helpful tips

The path to financial freedom is one of relaxation and peace of mind. Be sure to bear the following tips in mind:

• Keep it light: Save where you can, but maintain a sense of fun. In other words, make sure you can still enjoy life to the full.
• Keep it healthy: Don't push yourself too far; rather, move slowly in the right direction. Every additional euro in your pocket is one euro earned.
• Maintain a buffer: A separate savings account is always welcome in the event of unexpected costs such as medical costs, repairs or renovations.

Becoming financially independent isn't a pipe dream

With the right combination of saving, budgeting and investing, you can plot your own path to financial freedom. You're always welcome to contact Keytrade Bank to find out more about our range of saving and investment options, too. Start your journey with us today.

Take the next step towards investing now