Financial independence and its levels

Financial independence and its levels

Financial independence and its levels are among the topics which are not aware to many people. Financial independence is nothing but having income after retirement to face the expenses for the rest of life without depending on others. Income earned by not working in a job is referred to as passive income. Not everyone finds this a perfect one for their life as people’s standard of living differs. Usually, people working under government sectors will get passive income once they retire from their job. And even a few private sectors provide passive income. There are many strategies to get freedom independence. The moment called (FIRE) The Financial Independence, Retire Early has emphasized the power of financial freedom. Those who get passive income can be happy and independent in their old age without worrying about anything and don’t need to depend on others for money.

There are many ways to yield financial independence. It is said that there are three levels that help to unlock financial independence. They are Budget Financial Independence, Baseline Financial Independence, and Blockbuster Financial Independence. All these levels should follow the basic criteria that it’s not necessary to work for a living. Passive income will cover all the expenses to eternity. Or the net worth value should be equal to or greater than the number of living years. The person is said to be financially independent if they are able to meet their necessities from the sources, regardless of their age, wealth and the salary they are earning. There is also a defect in this, that is due to the inflation there is a chance of losing their financial independence. Dividend income helps in this as the sum of money will regularly be given to the shareholder. Both the assets and expenses play a major role in one’s life, both have to be managed by increasing the assets or by reducing the expenses.

 Financial independence levels, Budget Financial Independence is nothing but getting the passive income. This won’t work all the time in all the companies. If you are not ready to work all the time and can also cover up all your expenses, then you will be the perfect fit for Budget Financial Independence. Then comes the Baseline Financial Independence, one should have more investment than the regular expense that met by the family. Inflation will be the biggest drawback in this and also no one knows how long they are going to live, so that will also be the biggest drawback in this. So, it’s always better to have more than the need. And if one, once reached financial independence then there is no need for them to save. In this case, many people find it difficult as they have the fear of not working. Thus, the Budget Financial Independence.

Blockbuster Financial Independence, this level helps to lead a comfortable life with huge income. This level is also known as Fat FIRE or Obese FIRE. And this level was the most popular one today. This level was completely for the luxurious and happiest life. But this won’t be the successful one all the time because of a few drawbacks in it. All three financial independence levels are good and helpful. And it differs according to the level, members in the family, and their needs. Some need to be more comfortable and luxurious, while some are happy with what they have. So, it depends on the individuals. It’s really an important one to be financially independent. You can be independent without depending on others for your survival. And you can be like how you want yourself to be. And nowadays it becomes a difficult task for anyone to become financially independent because of inflation and so on. But being financially independence is a treasure that everyone should have in their life.