Financial freedom

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Work can be nice and rewarding, and everybody needs an income to pay the bills. But wouldn’t it be nice to have an income that requires almost no effort? That passive income allows you to do more fun stuff, retire early, or to finally make that trip around the world.

When you invest your money, it gives you passive income such as interest, rent, or dividend. As soon as that passive income is high enough to pay for all your expenses, you have reached financial independence! When it is high enough to do all the fun things you want to do? Financial freedom!

Everyone can build a passive income, you do not need a lot of money to start. Even small steps eventually lead you to your destination. The most important thing is to just start and take the first step. Set a few targets, and invest in your own future each month!

In short, look at it as a new multi-annual plan. A new hobby, challenge, to watch your money grow at a higher speed. And preferably without too much effort and energy. On this blog I’ll show you my steps towards financial freedom, and hopefully you’ll be inspired to take a few steps on the road to financial freedom too!

How to start?

Starting is the easy part. You have to spend less than your income, then invest the difference into your own future. Make a list of all your current monthly expenses. Yearly or quarterly expenses? Calculate the monthly average. Be thorough and honest, for example go over your bank account statements of the past 12 months. Divide everything into categories such as insurance, rent/mortgage, transportation, entertainment, groceries, clothing, and luxury purchases. Then go over each category and determine for each item whether it is really necessary, or try to find cheaper alternatives.

Are you in debt? The most important thing is to get rid of these debts. Look at how much interest you’re paying the bank each month, and think about how much better it would feel when you invest this into your own future. You can read more about getting out of debt on this page.


One of the most secure locations to park your money is your savings account. There are exceptions, but in most cases your money is even guaranteed should your bank go bankrupt.

But.. The current interest rates (0.03 % – 0.25 %) aren’t even enough to cover inflation (1,7% in 2018). And above that, above a certain amount the money in your savings account is taxed. This means your money will shrink every year.. To compensate inflation and taxes, the interest rate has to be at least 3%, and that is just not to loose money. No savings account will offer this.

Having said that, it is still really important to set money aside in your savings account. You need a financial buffer in case of an emergency, otherwise you risk putting yourself in debt again. Money in the bank is usually immediately available, and in case of a financial emergency you cannot afford to wait several days or weeks for your money. It also prevents you from ‘plundering’ your financial future.

Invest in stocks?

Good change you’ll end up on the stock market when you are looking for higher returns. But the higher returns go hand in hand with a lot of uncertainty and fluctuations. Studies have shown that it is nearly impossible to get consistently high returns in the long run, and there is a high risk of losing money. Consider investing in index funds when you really want to go the stocks route. History shows that index funds perform consistently better in the long run, better than trying to di this yourself, better than the banks or companies that try to do it for you.

Crowdfunding and crowdlending

After a tip form a friend I started looking into crowdfunding and crowdlending. A crowdfunding or crowdlending platform connects borrowers and investors, while cutting out the traditional banks in between. Borrowers can borrow money against lower interest rates, and at the same time the investors receive an interest rate that is a lot higher than a savings account (4% – 20%), without the fluctuations of the stock market. And a lot of platforms even guarantee your invested money; they’ll buy back your investment in case the borrower is behind in payments for several days.

And then?

After you have paid of your debts and built that emergency fund, it is time to invest in your own future. Reserve a part of your monthly income for this, and invest something in your future before paying your other expenses. That should change your spending pattern, and build your capital used to reach financial independence.

A good starting point is to try to save at least 10% of your income, and invest this into your future. the higher the percentage, the sooner you’ll reach financial freedom.

Patience and perseverance

The next thing you’ll need is patience, and perseverance. Reaching financial independence or financial freedom can take years. But it is worth the effort and worth the wait! Invest as much as possible, and you’ll reach these goals in less time than you’d think!

Set targets

Reaching something without targets is a lot more difficult. Targets give you a roadmap, a means to pull yourself forward and to monitor your progression. Just make sure you set several targets, and make sure you can actually reach them. You always need to be motivated by the nearest target. Set enough targets, and promise yourself a reward for reaching each of them.

One type of target can be the percentage of your monthly income that you set apart. Can you only save 5% of your monthly income? Set your target to 10% for the next year. Then 15%, 20%, etc.

Another target an be the monthly revenue of your investments. This gives a good indication of your progress to financial independence, because it is similar to a normal paycheck. You just do not have to work so hard. You could set your first target to 25, 50, or 100 euros per month. Of course it can also be lower or higher, it al depends on the amount you’re investing.

Monitor your progress

When you stay aware of your progress it is easier to reach your targets. When you don’t keep track you’ll risk loosing focus and eventually get distracted, resulting in delays on your journey towards financial freedom.

Create a report each month and write down your investments, your passive income, targets and progression. It does not have to take a lot of time, but it will help you stay on track.

Once a year, create an overview of all your average monthly expenses. This will help you identify expenses that aren’t really needed. Try to lower your fixed expenses, and keep an eye on the other expenses.

Reward yourself

Make it easier on yourself, and couple a reward to each target you set. That keeps the targets fun and motivational. Of course, do not spend too much, as that will be counterproductive.

Set enough targets, strive to reach them, and eventually you’ll reach your goals!