What We Can Learn From The Financial Independence Movement

-




Financial independence is a term that has many a different meaning. Is it complete freedom from debt, or when you are simply self-sufficient?  Some see it as the ability to make decisions based on what makes you happy and not what makes you money.  Yet others see is as that moment when you do not have to work  another day in your life.  All different and  all correct. Never one-size fits all.  Nothing ever really is.

For most retirement, by default becomes financial independence; when social security and the pension plan kick in, but do you want to work 40 plus years so you can one day finally say “I am done”?  Why wait until then to do all the things you always wanted to, but never could do? This should not be your life’s goal.  Imagine learning to skydive at 67.  Pretty neat, but would you rather take that leap on your 40th birthday instead? For a growing number, financial independence has become the ultimate goal.

Do you want to spend more time with your loved ones, travel more?  Just aiming for early retirement to enjoy life  The goal is achievable. Truth be told no one should have to live paycheck to paycheck.

Keep an open mind and be flexible!  

Some changes need to take place and at times it may not seem easy, but seeing the financial improvements over time will make it all worthwhile. Here are a few you can start with today...


pexels-photo-210615.jpeg


  • Save regardless of your income level

No matter how small what you can save may seem, it is not. So get started now because compounding interest starts working for you as soon as you start working towards your goals. Do not wait until you get that raise because you will find an excuse to delay or spend it and never get started.  Make saving automatic if you have to because you must pay yourself first.  Start now and watch your money grow over time.  Many may be thinking that with retirement 30 or even 40 years away, why start now?
  • The magic of compounding
Historically the S&P has earned approximately 8% a year.  I will use that for this example.  Say you start saving $1,000 a year and do so for only five years ($5,000) at age 21; in 30 years you will have more than $40,000. Starting ten years later, at 31, would leave you with only $18,000.

  • Learn the difference between wants and needs
A need is something you can't live without. We all need to eat, but it does not have to be steak and lobster every day.  A want is something you would like to have, but It is not a necessity.  You do not need 43 pairs of shoes along with the matching purses, belts or other accessories.  Shop in moderation.
  • Live bellow your means
Spend less than you earn by living bellow your means, not within your means. There is a difference and while this should be obvious, for many, it isn’t.  That shiny new luxury car may impress the neighbors, but it will definitely depress your savings.  You cannot buy a new car every three or four years, it is fiscally irresponsible and downright absurd.
  • Reign-in your spending
Step away from consumerism. That behavior destroys your financial health. What you bought yesterday is now garbage. Today you borrow from tomorrow to buy something new; you'll have to repay with interest. And the cycle continues. How it is good that you spend money, sometimes money you don't have, on things that you don't need?  Instant gratification is your enemy.
  • Increase your income
Find a side hustle. Get a raise, or a new job. I am not advocating that you just quit, but since you are working you can afford to be selective when looking for better options.  In a 2014 article Forbes reported that employees who stay in companies longer than two years make up to 50 percent less over their lifetime.

What steps did you take, are there any you plan to take on your path to freedom?


I am not a financial advisor. I hold no fancy degree and as such this is not financial advice.  Seek out a professional.  

Comments

Post a Comment

Popular posts from this blog

The Toxicity Caused by Today's Politics

-
Image
I stay away from these issues on my blog, but the climate has become toxic and something needs to be change. I recently visited relatives in another state. This was days after the midterm elections were over and done with, but many campaign signs still remained visible.   The first one to catch my eye was for county sheriff.  The incumbent won; Many people I spoke to voted for him. Their decision was solely based on his position on gun control; Not whether crime went down, or he cleaned-up the streets. His effect on crime rate apparently had no bearing on the opinion of many voters. Another one that piqued my interest was one for a congressional hopeful.  It seemed that the only thing many knew said candidate was their opinion on abortion. Not much more about their platform; not that they could tell me. These topics have been hot-button issues for quite some time and were usually deciding factors, discriminators so to speak, but as of now it see...
Read more

We Should All Have A Credit Card

-
Image
Whenever we turn the TV on, open up a magazine or visit the internet we get bombarded, or so it seems, by credit card offers. They are everywhere and they are relentless in the pursuit of new clients.   My mother took out a small loan early last year, and she started to receive one or two credit card offers every week. Same with my son soon after he applied to college. Credit card usage is today seen as a negative by many. Some belive in only having one in case of emergencies and others do not believe in having any at all. To recommend using one has become almost irresponsible almost evil advice. Using a credit card to buy things you can't afford or even need is certainly not smart and somewhat irresponsible. The interest charges can pile up over time. Why do you think minimum payments exist? Finance charges and the compounding interest add up. There are also pluses to using credit cards and zero, yes no drawbacks when used correctly.  I belie...
Read more

The $25 A Week Master Plan To Retirement

-
Image
My kids overheard a conversation I was having regarding saving for early retirement and were intrigued, not about retiring, but about having their money grow into  what for them seemed like an insane amount. Since their earning potential was limited to washing the neighbor’s car, or mowing a lawn, I tried to show them how easy it would be to start small. A small amount is all that is needed, say $25 a week. I used the morning coffee their uncle buys every day as an example.  Coffee should be brewed at home; Easy math, $5 a day is $25 a week. I also mentioned the lunch they buy at school every day.  They could brown bag it and save all that cash. They said that they saw my point but that my math was flawed as the ingredients had to be purchased. At least they saw my logic. $25 a week is roughly $100 a month, $1,200 a year.  That may not seem like much, but I found an IRA calculator and plugged in the numbers. That money contributed ...
Read more