HomeImmigrationBecome Financially Independent in Canada in 8 Steps

Become Financially Independent in Canada in 8 Steps

Here some useful tips on how to become financially free in Canada.

There are many approaches to how you can become financially independent in Canada. One thing stands out – it is a process and you must not jump the hurdles. This is because each step takes you to the next, and the next until you get to the top.

But then, everyone’s reality is not the same. As such, how people attain their financial goals are never going to be the same since their experiences and approach to the same issue cannot be the same.

What’s more, if you can save enough to comfortably retire at a good time, while still having more than enough money to sustain you, you are financially independent. If also, you can make both ends meet without anyone assisting you, even if you are still gainfully employed, you are still on the same track. That is why we said people’s realities are not the same.

Thus, we believe you would like to know more about how to become financially independent in Canada. And that is exactly what this article aims to achieve. You will equally learn the meaning and benefits of financial independence.

What does financial independence mean?
There are ways different individuals can define financial independence and it all depends on their understanding of the concept. However, to define financial independence in a simple term, it means when one has sufficient wealth to enjoy a comfortable life without having to work.

What are the steps to becoming financially independent in Canada?
Like we pointed out that there is no one-size-fits-all approach to become financially independent in Canada. That is, there is no particular strategy to attain this freedom. But then, all strategies used aim to achieve the same purpose. And to achieve this purpose, you must have a defined financial objective, persevere and decide on the best investment strategy to set up your goal. Here are they:

  1. Have financial Objectives

Unarguably, how you structure your financial objectives is usually dissimilar with other people’s own. To set your objectives, you need to consider your long-term goals. Ask yourself if you want to be totally financially free. That is, freedom from working and do what you like with your time. Or, do you feel like still working, yet being in control of what enters your account?

While considering that, you should as well consider your age. Your age will determine how long you can work and the kind of risks you can take. For instance, if you are still in your 20s or 30s, you have so much energy and vigour to carry out certain tasks and take more risks.

You may think of retiring early, thus, becoming FIRE (Financial Independence, Retire Early). This method has to do with having extreme savings and investment strategies designed to enable you to retire earlier than necessary. You may also focus on your ability to pay your bills and avoid debt. It is equally financial independence.

In some cases, you may decide what gives you financial independence and work towards it. What’s more, do not forget to write your financial objectives and work towards them.

  1. Earn money while working

Although it might be difficult to find employment in Canada if you are still new to the system, you need to find something adequate to keep you moving. Firstly, you must balance the need to earn money to pay your bills and the desire to secure a better paying job. So, you must dedicate yourself to advancing in a higher skilled occupation.

  1. Build your career

Another step to become financially independent in Canada is to build a profitable career. You must have a clear understanding of the local market and job. You may use sites like Indeed.com, PayScale.com or Glassdoor.com to learn about your earning potential in Canada. It is not bad to secure an entry-level position in your field if you are still new in the job market. What is more important is to keep upgrading your skills to increase your earning power.

  1. Build your Canadian credit history

To become financially independent in Canada, you need to start early to build your credit history. Whatever you want to do in the country, you need a good credit score. If you need to access loan at any point, for instance, your credit history will be handy to speak for you and you can get it at a good rate too. Therefore, you will need to pay your bills on time and also keep your account balance below 35% of your available credit.

  1. Have financial Assets

Having your financial assets implies having the right tools to achieve the objectives you have set before you. In this case, having many sources of income is a great asset. These could be in form of having a savings account, dividend-paying stocks, investment in real estate, bonds, etc.

You can equally invest in a home if you think towards real estate. To some people, it’s an asset that can be turned into a source of equity or used as a reverse mortgage. This can be invaluable for retirement plans.

Another way to enjoy real estate investment is by investing in rental property. This can create a considerable income flow, although it comes with its own risk, just like other income flows. The most interesting thing is that you can become financially independent in Canada by investing in real estate and other assets.

In addition, if you have the strength to bear the risk, running a successful business is one way you can smartly build wealth. Here, you may choose to be directly or indirectly involved in the business management. But make sure that whichever way you choose, will keep the business running smoothly.

Not to forget, you must keep to constant knowledge upgrade. Learning is an asset. So, learning ways to better your financial life can actually take you there in no distant time.

  1. Make good plans

Planning precedes action. You need so much action to become financially independent in Canada. On your journey, you must be fully involved to enable you to get to your destination on time. But to take actions, you need plans. You need to start making a budget and factor your income, living expenses and savings and investment.

That means your budget must be long-term because it is a plan to your financial freedom. Pay attention to where your money goes and what you use it for. Try to minimize spending on things you hardly need. Instead, create more opportunities to save and invest your money wisely.

You can equally take advantage of any retirement plans and start building yours. It is not wrong to indulge in some fun activities but don’t make it a habit. Make plans for unforeseen eventualities while investing your money. This will help you not to run into financial crises, even though you still have your money with you. Lastly, don’t forget to involve a good investment advisor, even before you commit your money. This is a good way to avoid making costly investment mistakes.

  1. Be determined to make it

Becoming financially independent in Canada requires you to become committed to your pursuit. So, you must keep to your budgeting and investment plans. You equally must be vigilant over situations that may lead to having excessive money lying dormant that could have been put to a better use. To persevere, you must be on the lookout for opportunities to make the most of your financial independence. You must always keep your financial objectives before you and adjust your plans to suit your current reality.

  1. Take care of your health

One of the most ignored steps to becoming financially independent in Canada is taking care of one’s health. You must invest in good health. Regularly visit your doctors and dentist, while following healthy advice. Your lifestyle must be healthy to prevent or curb certain health issues. For that reason, you must have health insurance to enable you take care of certain health issues that would have overwhelmed you financially.

What are the benefits of becoming financially independent in Canada?

When you are financially independent, you will enjoy the following perks:

  1. Live and work on your own terms and conditions

Although when you are financially independent, you may choose not to work, it is not always possible. However, you can choose to work when you want and how you want it. You will have a greater negotiation power and it will most likely fall into your terms of service. As long as salary does not matter, you can choose what to do and what to turn down.

  1. Enjoy a greater financial security

Since you are not working to take care of your basic needs, you are in a better position not to be at the mercy of another. This is one joy of becoming financially independent in Canada. You can as well choose roles that fit your financial approach and mimise activities that may cause you to fall back to salary.

  1. Choose the kind of life to live

With your investments working for you, you can continue to enjoy a lifestyle that is convenient for you. Although you did not completely stop working, but you may choose to increase your wealth, improve your comfort and save for your children.

  1. Early retirement

If you chose FIRE, you can retire as early as 45. This means you can travel round the world and as many times as you like. With your money, your average life expectancy can be sustained. So, you can choose to save radically in your 20s and 30s to enjoy a beautiful retirement plan before your 50s.

  1. Peace of mind

You will have greater flexibility when you become financially independent in Canada. Thus, you can remove the stress of having to work before you can pay your bills. You are not also worrying yourself out about your next income or promotion. With stress, your lifespan and happiness may be reduced. But financial independence offers you freedom of choice. You are simply in charge and that, in itself, is peace of mind.

Frequently Asked Questions

Why do most people find it difficult to become financially free?

Whereas most people want financial independence, not everyone can attain it. The reality is that most people in Canada will keep working even after their retirement. Some of the reasons are:

  • Shortage of time: People have little or no time to review their personal expenses, asset performance and tracking their net worth. They may prefer to spend the little time they have, hanging out with friends and family. But to become financially independent in Canada requires that you invest in your time.
  • Lack of knowledge: Unfortunately for some people, they lack the knowledge to take control and manage their time. They may not have access to resources or people that can point them towards the right direction.
  • Lack of plans: Even if you are the most knowledgeable person on earth, without plans, you will not have any direction. This could equally affect your finances.

How can you start your financial independence journey?

Firstly, you must be willing to commit to a goal. One you have your goals bared, you can start making plans to accommodate each goal.

Is it hard to become financially independent in Canada?

To amass wealth and becoming financially independent in the country is a slow but steady process that takes time. However, you have to do small things every day. They include:

  • cutting your expenses
  • generating additional income
  • putting your money into some investment and retirement accounts.

As time progresses, it will begin to make sense.

How much money do I need to be independently wealthy?

Overall, to be considered financially free, you need to have at least 25 times your yearly expenses in savings.

What is the 30-day rule?

It is simple: If you see something you want, wait for 30 days before buying it. If after 30 days and you still wish to buy it, you can press onward to do so. But if you forget about it or realise that you don’t need it, you will end up having the amount for the purchase as money earned.

Conclusion

Keep up the good work. Follow the steps and consider the strategies to become financially independent in Canada. You will encounter challenges but you can make them your stepping stone if you choose to. What’s more, ensure to be focused because without it, success may elude you.

Must Read
Related News

31 COMMENTS

LEAVE A REPLY

Please enter your comment!
Please enter your name here