Top Ways to Become Financially Independent
Updated on Jun 27 2019
“We hold these truths to be self-evident, that all men are created equal, that they are endowed, by their Creator, with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness.” - The Declaration of Independence
The values outlined in the Declaration of Independence in 1776 still hold true for Americans today. This Fourth of July, as we continue to understand what it means to live as equals with equality of opportunity to reach our highest aspirations and goals, we must realize that our individual independence is relies heavily on our financial independence.
5 Steps to Greater Financial Freedom
Achieving financial independence looks different for each person and can also change in different stages of life. Maybe it’s about taking fun vacations, or starting your own business, or the ability to retire comfortably. No matter what financial independence can buy you, true financial independence is the ability to live off income, savings, and investments, with no debt. It’s not easy, but it is possible.
This Independence Day, take these steps toward becoming more financially independent.
1. Conduct a thorough financial assessment.
Like most things, you have to know where you are to get where you want to go. Start by considering what your vision of financial freedom looks like and then take an honest financial assessmentof where you are in comparison to that goal. You may find that you need to adjust your goal - or your lifestyle - to achieve greater financial freedom.
2. Live within your means.
This means spending less than you earn and adhering to a budget. Create a budget by starting with your known income and subtracting monthly expenses and then decide how the difference between income and expenses can be used to meet your financial goals. This is the first task for increasing financial independence. You should have enough to save and the general rule is to put 10 percent to 15 percent of your income in savings or investments each week.
3. Establish a safety net.
Having an emergency fund is a crucial part of financial independence. This should be a separate cash account that can be used instead of credit in an emergency. The more capable you are at dealing with financial emergencies, the faster you can grow financial independence.
4. Eliminate all debt.
Getting rid of revolving, non-housing debt is one of the single most effective things you can do to free up finances. This means paying off all credit card debt, and all debt other than mortgages. Once you are debt free, consider saving the amount that you were paying towards debt each month and investing it to have greater financial independence.
5. Contact a financial advisor.
Living in financial freedom means living a life you love without worrying about money. It’s a rewarding way to live but it takes hard work and planning. Connect with a fiduciary financial advisor to help you outline the steps you need to take now to have financial independence later. They have expert knowledge on common financial mistakes and can help you navigate your investments for greater financial freedom.
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