Work Towards Financial Independence This 4th of July
There’s a kind of magic associated with the Fourth of July. Regardless of politics, it’s a day that simply celebrates the diversity of thought that is literally woven into the fabric of our nation. Who hasn’t watched a spectacular fireworks show and felt some emotions stir up? It’s a shared expression of joy, and the day as a whole inspires a reflective state about our history and our future, both collectively and independently.
Financial independence isn’t explicitly tied to national independence, but it’s something that should be on your radar in terms of personal future. Everyone wants to be financially independent, but relatively few actually achieve it. Why is that?
Think of it in the same vein as personal fitness. It takes time, planning, and dedication. You go to the gym regularly. You eat the right things. You resist unhealthy foods and watching Netflix on the couch all day. The same goes for financial independence--you won’t get a six pack after one workout; you won’t be debt-free after sticking to a budget for a week.
So how does it happen? It takes time and consistency. Start working toward your financial independence today with these tips from Forbes.
4 Ways to Achieve Financial Independence:
1. Ask Yourself Why
When we have firm goals in place and a desired outcome, it makes the steps from here to there much more clear and apparent. It’s also helpful to remind ourselves of these end goals when we get frustrated within the process. Why do you want to achieve financial independence? To get out of debt? To increase credit score? To buy a house or rental properties? Start your own business? Take a few moments and write down your why.
2. Analyze Your Financial State
This sounds like a relatively easy thing to do, but it can be difficult to own up to bad habits. Start to lay out your finances: what you owe, what you make (and any other income sources), and how you spend your money. Many banks have programs to show what percentage you spend on coffee, eating out, entertainment, etc (if yours does not, sign up for MInt or a similar service). This part takes a little more internal searching as well. For example, if you eat out for every meal, consider how this fits in with your finances, and consider your mental state. Why do you prefer to eat out instead of at home? Working through this is one way you can start re-configuring your budget.
3. Start Small and Grow
If you’re new to financial planning, don’t shoot for drastic changes overnight. This will likely set you up for discouragement and disillusionment. Instead, start small. Set aside $20 a week into savings, and increase little by little. The smaller the amount, the less you’ll miss it. Make a vow to always save something--no matter if it seems inconsequential--to stay in that frame of mind. The frame of mind that says “I am living beneath my means...and I’m ok with it.”
4. Invest and Diversify
Once you’ve started saving (and have a comfortable safety net and lower debt), start looking for investment opportunities. The best way to make your money work for you is to find new opportunities, like different funds, peer to peer lending, real estate, or whatever else is out there for you. Creating a diverse profile is a great way to insulate yourself through lean times, in case the market moves south, and also to increases assets.
This also applies to your income sources as well. If you have the time, consider a part-time job or starting a side business. The money earned can go straight toward these investments or be devoted to specific big debt, like student loans.
Whatever your motives are for working toward financial independence, keep those front and center. It’s like when people on a weight loss journey write their goal weight on their bathroom mirrors. It keeps the goal present, and it’s a reminder for when you want to reach for Doritos instead of celery sticks. Work toward your personal financial independence in order to make the most of your future. When you achieve it...feel free to break out the fireworks and celebrate.
What are some ways that have helped you achieve financial success? Share with us in the comment box below!