I’m sitting on my balcony enjoying the summer breeze. The birds make little noises and a car is passing by as I take a sip from my cold brew, also known as “Frappe” here in Rhodes, Greece. The economy isn’t at its best, everyone knows about it. So preaching financial independence, saving more and investing makes me sound like I’m from a different planet to most of my local friends.
My ‘tourist’ role doesn’t give me much credibility either when I suggest different ways of working and living. It certainly, though, finds some eager listeners in London, UK where I live. People there enjoy a much higher average salary despite the higher cost of living.
But what happens when people get a pay raise, a bonus or move to a higher income bracket? Their lifestyle is inflated too. They move to bigger houses, enjoy more expensive holidays, buy another car etc. They spend more in search of convenience or happiness in return. At the end of the day, “I work hard so I can enjoy my free time. I deserve it”. Not to mention that You Only Live Once.
What people do not get is that although the short-term path to happiness is tackled by throwing more money at our lives, the long-term view is usually a story which involves: A struggle to send kids to college and make ends meet, working the 9-to-5 until the age of 65, a stressful life and constant complaints about how the government and taxes make our life so hard. Pensions and housing have also become so unaffordable!
It’s time to change what we can and stop worrying about things sitting outside of our control. Let’s fix what we can fix. I have previously written about why everyone should focus on becoming financially independent. But I want to explain why now is the best time to achieve it.
Building a passive income stream
Having a passive income should be at the back of everyone’s mind. Working because you want to not because you have to. I see plenty of opportunities to save more, make more and live a better life.
I started making side money in many different ways. That’s because I started thinking out of the “My only income is my job” train of thinking. In today’s world, there are multiple sources of income one can benefit from.
Blogging is a great way to make an income, either directly or indirectly. This blog, now 6-months old, makes £150 a month from affiliate marketing, believe it or not. There are zero ads, zero sponsored posts and a “share everything” attitude which helps people try out new things to improve their finances (like peer-to-peer lending).
When people buy something I’ve recommended I usually earn a few pounds. The higher the traffic, the more valuable it becomes. So if you’re passionate about something, or want to indirectly get more credibility and trust for your profession go out there and start a blog about it. It doesn’t matter if other people have done it before, people want to hear from YOU. Trust me, it’s worth it!
Another benefit of writing is that you clearly write down your thoughts. Even if no one ever reads what you write, the process matters more than the product.
Airbnb is another great way to utilise your house when not using it. I haven’t used it much, mostly because some lovely friends stay at our flat to take care of the cat left behind (thanks, Lena!). However, if you feel comfortable subletting your house to others, then great. You can definitely get a 2-week holiday paid by your guests! Currently, I can see that I could make about £1200-1500 in zone 2 had I managed to rent it for 2-weeks to London visitors.
Same goes for parking space. If you have a spare parking spot you can rent it on JustPark for at least £100 per month in a residential neighbourhood. That’s not much compared to Airbnb, but it’s totally hands-off. You just receive bookings and send them a welcome message if you want to be a super host!
Another idea is to find something you’re passionate about and turn it into consulting. What are your hobbies? I find the Smart Passive Income or the Side Hustle Nation great if I want to get inspiration. There are real stories from people making a living doing things they love. The opportunity is there, we just need a little motivation.
I don’t want to create a new job for myself just for the money. For example, I could start selling things on Amazon but I see that as a job and therefore I won’t enjoy it. Writing about money management, on the other hand, is something I love discussing and don’t mind writing about it even if I didn’t make a penny from it!
Making money requires a change of mindset
Making more will not help you become financially independent. It will help you realise that the possibility exists but what everyone really needs is a change of mindset.
Society is structured in such a way that wants us to spend everything we’ve got. Have some spare cash? Enjoy today by buying the next X, Y, Z on interest-free finance. Spend more, buy happiness is the usual trend. But if we take a step back, and think how the world is structured then we can take smarter decisions that don’t involve marketing and social pressure to buy a fancier version of what we’ve already got.
You get a short-term pleasure which fades out quickly until the next dose of consumerism. As the book “The Subtle Art of Not Giving a F*ck” suggests: solving problems you care about is a proven way to make you happy. Spending time with people you love and building experiences are things that we think back and inadvertently smile about. It’s about the journey, not the destination.
Changing our mindset is one thing, knowing what we really spend is another. Old and forgotten direct debits combined with sneaky fees (for example when using our card abroad) make budgeting a painful experience. I’m only looking at my bank account once in a while. Other people, however, have used Monzo to find out where their money really goes. Do it the traditional way or use whatever fancy tech you want. Awareness about your outgoings plays a huge role when saving for the future.
I’m only looking at my bank account once in a while but other people have used Monzo to find out where their money really goes. Do it the traditional way or use whatever fancy tech you want. Awareness about your outgoings plays a huge role when saving for the future.
The sharing economy makes our life cheaper. Airbnb is a great example of how people share space to lower the holiday costs. You can share a cab with other people (UberPool) and travel around.
If something, technology is destroying the monopolies and dropping the prices. The most recent example is Octopus.energy that offers an online, hassle-free gas & electricity service. Read my guide: “How to shop for gas & electricity in 2017“. Bonus points, half the energy sources come from wind farms, totally green! A tremendous hit to the Big 6 energy companies that have driven prices so high while providing a terrible service in return.
Technology makes the financial independence journey easier while improving our quality of life.
Enjoying a passive income stream requires some investing too. But investing today is quite simple compared to how it was done in the past. Opening an online ISA account is a simple process which you can do in a couple of minutes from the comfort of your sofa (i.e. Halifax Sharedealing). You even get a tax-free way to grow your pot, if you invest inside an ISA! You can then choose a passively managed fund which tracks an index and invest consistently every month via direct debits.
Making more money, saving more and investing will not only make our financial independence possible. It will, in fact, make it inevitable.
The best news is that you are not alone! This movement is probably in its infancy but it’s happening. Sure, the first who carved the path like Jacob from Early Retirement Extreme and MMM had to invite everyone to the party. Now though, the group is growing.
People in the UK like the Mad Fientist have already done it. The Fire Starter and I are half way there. There are lots of people that believe it’s possible and we’re all in it together. Plus regardless of how young or old you are, it’s never too late to start.