Financial Independence

The truth is, unless we're lucky enough to receive a sizeable inheritance, we'll need to navigate our own route to prosperity. And anyone, at any age, can develop the traits that increase wealth and decrease debt.

Part of our culture is, 'Fake it until you make it.' People rather borrow and keep borrowing to show their wealth. They buy liabilities and they make those payments forever. Debt holds people back.

By right, we should spend less than we make, live a modest lifestyle and don't live up to every raise. Some people have spent their prosperity for the next 10 years and they've done it on credit!

In summary, 95 percent of the people never achieve financial independence. For 65 percent of retirees, pension, EPF and other 'forced-saving' funds are their largest source of retirement income.

Wealth is relative, it doesn't necessarily mean millionaire. The goal to have is financial independence.

7 SIMPLE STEPS TO WEALTH
1. Develop a written financial plan
Saying we want to be wealthy isn't good enough. We need to come up with a workable plan and put it on paper.
2. Save, save, and more save
The end result of our financial plan should be systematic investment. Get in the habit of saving money. Build an emergency fund in a money market account so we don't have to raid the rest of our savings and investments when there's an unexpected major expense. Make it a point to save at least half of every pay raise.
3. Live below means
Don't be a walking billboard for overpriced designer clothes, shoes, sunglasses or jewelry. Don't allow our house or car payments to be budget-busters.
4. Lay off the credit
Try not putting anything on our cards that we can't pay off in two or three months. We need only one or two credit cards. If we have a fistful, pay them off and cancel them. Debt holds us back. It reduces cash flow for other things, including investing.
5. Make money work
It takes money to make money, but that doesn't mean we need a lot to invest. Open an account with a mutual fund company that has no-load funds and low expense ratios. Build a diverse portfolio and we can reasonably expect to earn 8 percent to 10 percent annually on our investments over the long haul.
6. Start own business
In the 1996 book The Millionaire Next Door: The Surprising Secrets of America's Wealthy, the authors state that two-thirds of the millionaires are self-employed, with 75 percent of them entrepreneurs, and the remainder professionals such as doctors and accountants.
7. Get professional advice
If necessary, get a good financial planner. He/she can help us fill our portfolio with the right investments and dump the wrong ones. We don't need to relinquish control, but we do need to form a good working relationship with someone who has expertise in this complicated area.
(excerpt: bankrate.com)