My quest for financial independence

If you've never heard of 'financial independence' , you're probably thinking, "Huh, what's that?". It's quite simple really. If your passive income exceeds your living expenses, you're considered financially independent.

What's passive income? Passive income is any income that is not derived from a salary. If you work for someone and receive a salary each month, that's not passive income. Passive income is income you receive from your business and/or other investments.

For example, you may have a 9 to 5 job that pays $3000 a month. In addition to your salary you may receive $500 a month from an apartment that you rent to another person. That $500 is considered passive income. You may have invested in your brother's company and that generates an additional income of $1000 a month - that's also passive income. So your total passive income a month is $1500.

What is your monthly expenses? If your monthly expenses is $2500, you're not financially independent yet because your passive income is only $1500. But the moment your investments generate at least $2501 a month, you're considered financially independent.

There are various ways to generate passive income - start a business, invest in someone else's business, invest in real estate, invest in shares etc. The idea is to generate multiple streams of income - that is how you build wealth.

That's the basic idea of financial independence.