The financial climate at times, may prove volatile and extreme, but the principles of money and wealth building will always remain the same. If you have a dream of becoming financially independent and remaining financially independent, you will need to follow the simple wealth building formula of: earning, saving, investing, repeating.
What do you think when you consider financial independence? What does it mean to you? Having enough wealth to cover expenses indefinitely, resonates with me. Better stated, your assets (not your personal/physical effort) generate enough income to pay for your living expenses. Don’t forget the key word, indefinitely. Your assets should have the ability to cover your expenses, forever, not just a few years or limited amount of time. Because your assets are not dependent on your effort, financial independence means, you don’t have to work for money. You may choose to work if you want but working is not required to maintain your lifestyle. Optional work puts the freedom in financial independence where you have the freedom and choice to decide what you want to do with your time.
Now that we’re clear on financial independence, how do you get there?
Step 1: Earn: It’s no secret that in order to start, you need money; and the higher the income, the better. Earn as much as you can and increase that over time, and you’re off to a good start.
Step 2: Save: You must spend less than you earn. It doesn’t matter how much money you make; it matters how much money you keep. You could earn $1,000,000 a year, but if you spend every dollar, your road to financial independence will be a long one. Controlling, minimizing, and monitoring your spending in order to maximize the spread (difference) between your income and your spending will be key.
Step 3: Invest: You won’t become financially independent by keeping your money tucked away in your bank’s savings account. It’ll take much more than the .01% return that your bank offers in order to reach that coveted level of wealth and financial independence. Identifying the ideal places for safe and competitive returns will do well for your investing dollars.
Step 4: Repeat: Repeating the three steps over time will put and keep you on the right track to financial independence.
It’s important to take a critical and honest look at your progress and your behaviors if you want to achieve financial independence. Failure in any one step will negatively affect the progress in the other 3 steps. On the flip side, the better you are at steps 1-4, the faster you’ll reach your goal.
To be successful and reach any goal, it’s no secret that you need a plan of action. Here are a few steps to position yourself for financial independence.
Set a retirement income amount. How much money do you want to have each year in retirement to live comfortably or the way you choose?
Create a retirement budget. Include specific amounts for expenses, income, and the assets you’ll need to make that budget work
Create a strategy for managing and growing your earnings, savings, and investments to cover and maintain your retirement budget
Implement your plan and stick to it
The process may seem simple, but it’s really not that complicated. Becoming wealthy and achieving financial independence is not that complex, it just requires knowing the basics (which now you do), having the discipline to follow the plan (which I can help you with), and the dedication to work on it and follow the plan over time (which we can do together).
If financial independence and building wealth is your goal, schedule your free consultation to discuss your options and create a plan to become successful at reaching financial independence.
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