How to become financially free (because you have no choice)
When I grew up my parents taught me to study hard, pass my exams and then get a good job. This was the simple recipe for success that most children learned from their parents. On the whole, it has served me and my generation pretty well over the years but times have changed. A lot.
No longer do the old rules apply. School leavers and graduates are no longer guaranteed a job for life. No longer can you expect to pursue the same career until you retire. Your profession or trade will probably get disrupted and replaced by a robot or some other form of automation before you know it. You will need to re-train and re-qualify into new trades or professions probably several times during your working life. Welcome to the technology age.
Because of changing demographics, improvements in healthcare and greater awareness, in the future an increasingly larger proportion of the population will be old. This means there will be significantly less younger, working-age people to pay taxes to support the welfare state. As a result, I foresee state pensions and public sector pensions’ benefits reducing and the age of retirement becoming later and later. This trend has already started to happen.
I have already told my Millenial age children not to expect to receive a state pension nor to be able to rely on the welfare state in the future. I fully expect the state pension to be means-tested one day, if not abolished altogether. Mathematically it will be impossible to maintain it because it would require a taxation level of more than 100% to do so. Clearly, that isn’t going to happen.
So what choices do you have? Well, it is obvious to me that you have no choice other than to build your own wealth and become financially free so that you never have to rely on the government or an employer to take care of you in retirement. The alternative is to live a long retirement in abject poverty. This is not an appealing strategy if you can even call it a strategy.
So how do you become financially free? The answer is to create multiple sources of passive income. Read these earlier blogs of mine to find out how.
So what is passive income? It is income that works for you. Earned income, on the other hand, is where you work for money. In other words, you exchange your time for money.
Some examples of passive income are rental income from property, dividends from shares, income from business investment, royalties from a book you have written, feed-in tariff income from solar panels etc.
How do you learn how to create passive income? Well by reading, self-studying, the Internet, attending courses etc. A good start would be to read my book Wealth Magic which is available from this link https://wealthmagic.co.uk/wealth-magic/ or from Amazon.
The business and personal development coach Jim Rohn once said “Formal education will make you a living: self-education will make you a fortune.” What’s more, you will not end up with student debt to repay for over 30 years!
So self-educate yourself and become financially free early. Become self-reliant. Create multiple sources of passive income. Become empowered. Work if you want to not because you have to. You know it makes sense.*
*The value of your investments can fall as well as rise and is not guaranteed. . You may not get back what you invest.
This blog is based purely on my personal opinion and experience. You should always seek advice from a professional before investing your money.
The contents of this blog are for information purposes only and do not constitute individual advice. All information contained in this article is based on our current understanding of taxation, legislation and regulations in the current tax year. Any levels and bases of relief from taxation are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future.