In this episode of Get Real Wealthy Season 3, Quentin talks about financial independence from the perspective of a young adult.
Quentin says that financial independence means that you are given more choice in what you want to spend your time doing. While it is different for different people, a common theme is that you need to go out, get a good education, get a good job, work for 40 or 50 years, retire, and use your nest egg to be able to live off that. Now, you can do it at an earlier age if you choose. You have to decide where you want to see your life ten, twenty, thirty years from now. So, what exactly is financial independence? Everybody has three main expenses: accommodation, transportation, and food. Now, if you can create income that comes to you without having to spend time creating it, you can create financial independence because it covers your accommodation, transportation, and food.
For accommodation, transportation, and food, the only way to figure it out is to devise a plan and write it down, make a budget, and figure out how much you would spend in a month. Your needs and, consequently, the budget will differ depending on where you are now. In order to have financial independence, you need to have income coming in that exceeds your expenses. While there are different ways to achieve that, a simple way people move down this path is through house hacking, where you can rent out space in your house that you don’t need or is extra. This can help you save a significant amount of money.
He adds that as you get older, you will have different requirements. Things will change, and you have to change the funds that come in. He says that when you decide on having financial independence, it could be related to what you want to do in the future for a job. Perhaps, if you’ve created this financial independence, you can have a job because you love it. You can leave a job for another job because you have this financial independence in the background, or if you have no job and you choose to work on passion projects, instead, you’ll have that ability because you have financial independence.
In conclusion, Quentin says there are several creative ways we can go about doing this. The homework for this episode is to read about the FIRE movement and see if it appeals to you.
Important Links and Resources
Quentin D’Souza is the Chief Education Officer of the Durham Real Estate Investor Club. Author of The Action Taker's Real Estate Investing Planner, The Property Management Toolbox: A How-To Guide for Ontario Real Estate Investors and Landlords, The Filling Vacancies Toolbox: A Step-By-Step Guide for Ontario Real Estate Investors and Landlords for Renting Out Residential Real Estate, and The Ultimate Wealth Strategy: Your Complete Guide to Buying, Fixing, Refinancing, and Renting Real Estate.