June 27th, 2024 | 3:22 PM MST
Written By: Teresa Milner | Senior Wealth Management Advisor with Pearl Capital Management
Achieving financial independence and retiring early is a journey that requires dedication, planning, and smart decision-making. If you can identify what you should do today to achieve your goal of financial freedom, then you will be well on your way. Whether you are just starting your journey or looking to refine your current strategy, developing a plan will allow you to pursue your personal passions without the constraints of a traditional 9-5 job.
Read on to learn about 6 actionable steps you can take today to set yourself on the path to financial freedom.
- Assess Your Current Financial Situation
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- Track your spending. This is an essential ingredient to financial independence; it is critical to know exactly where all your money is going.
- Make a list of all assets and liabilities which will help you understand your net worth.
- Identify all debt by listing balances and associated interest rates.
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- Set Clear Financial Goals
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- Based on your current financial situation, you can set manageable short and long-term goals to better define your financial independence.
- By identifying your annual spending habits, you can roughly estimate the amount of money needed to retire.
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- For example: If you spend $100,000/year and plan to live 30 years into retirement, you will need about $3,000,000.
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- Develop a Budget that Aligns with Your Financial Goals
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- Differentiate between needs and wants. Cutting unnecessary spending can reduce your expenses.
- Set up automatic contributions to your savings and investment accounts.
- Adopt a minimalist lifestyle to increase your ability to save more.
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- Identify all Income Sources
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- To live within your means, it is crucial to know what’s coming in versus what’s going out.
- Explore ways to boost your income. For instance, you could invest in rental properties, take on freelance projects, or sell products online. Higher income allows for increased savings.
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- Maximize Your Savings
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- Ensure you have an emergency fund that consists of 3-6 months of living expenses saved.
- Contribute to retirement accounts to benefit from tax advantages.
- Aggressive saving enables you to accumulate wealth quickly and accelerates your path to financial freedom.
- Participate in company retirement plans that offer a match. View the match as ‘free money’ provided by your employer, which assists you in attaining financial independence.
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- Invest Wisely
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- Consider diversifying your portfolio with a healthy mix of investments across several asset classes to help reduce your risk, i.e. stocks, bonds, real estate, etc.
- Calculate and evaluate potential savings from investing in low-cost ETFs versus actively managed funds.
- Educate yourself and continuously learn about personal finance and investing.
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Stay committed, stay informed, and enjoy the process of building a secure financial future. By taking these steps today, you can set yourself on the path to financial freedom and a secure financial future. Keep in mind that it is not just about reaching your destination but enjoying the journey along the way.
At Pearl Capital Management, we specialize in personalized financial planning tailored to your unique goals and circumstances. Speak with one of our advisors to start your journey towards financial freedom, and enjoy the peace of mind that comes with a well-crafted financial plan.
This article was written by Teresa Milner, CDFA a Certified Divorce Financial Analyst who specializes in helping women navigate through divorce and into the next financial chapter of life. For more information, email her at CDFA@thepearlcapital.com.
