August 11, 2015
Achieving Financial Independence
Financial independence can mean different things to different people. For you, financial independence may mean living debt-free, paying your bills today while still saving enough to retire comfortably, making ends meet on your own without help, or some combination of those things.
Whatever it means to you, here are a few tips to make financial independence easier to attain:
Break the Paycheck-to-Paycheck Cycle
It's easy to feel secure in your spending when there's a regular paycheck to rely on, but most people have unnecessary expenses they can trim. Cutting down on expenses can free up money to pay off debt, save or invest.
If you don't have one already, set up a budget with these tips on getting started to understand your monthly cash flow. If you already have a budget, look at what you're spending money on every month and see where you could cut back – dining out, movies, or your daily latte.
If reducing expenses isn't enough to break the paycheck-to-paycheck cycle, consider finding a way to augment your income, even for a little while. A part-time or freelance job, for example, may help you get away from living paycheck to paycheck.
Don't Touch Your Nest Egg Before It Hatches
Leave your long term savings alone, even if you're tempted to borrow from it. While you should always pay yourself first and enjoy some of your hard-earned money now, the funds you've set aside for your long term goals should stay there until it's time to retire or buy a home – or whatever your long-term goals are.
Diversify Your Financial Plan
If you've been able to build a nest egg and break the paycheck-to-paycheck cycle, consider adding investments to your financial strategy. Our advisors are always willing to help.
Investments include the purchase of something you believe will increase in value, or produce a positive return, over time. Examples include stocks, bonds, time deposits, and mutual funds.
Investments may help your money grow more than basic savings accounts, but there is no guarantee to their performance. Diversification – spreading your money over many types of investments – may help increase the likelihood of positive returns and minimize the impact of both poor performance and inflation.
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