Do you dream of early retirement? Or do you wish you had the ability to enjoy the greater freedom that comes with retirement in your younger years? When you achieve financial independence, that dream can become a reality.
Financial independence is different than traditional retirement. The typical idea of retirement follows a process of working until you reach retirement age and then exiting the working world.
Financial independence, on the other hand, is a lifestyle that can be achieved at any age. It means having enough financial stability to decide when, where, how or even whether you work.
Many people have the goal of achieving financial independence earlier in life so they can enjoy their younger, healthier years and live a more fulfilling lifestyle with greater flexibility. If this is a dream of yours, consider the tips below on how you can make it happen:
Become a prolific saver.
Achieving financial independence requires a significant amount of savings, so it’s important that you get in the habit early. Pay yourself first, and always make it a goal to put away as much money as possible. Keep in mind, this may mean living a lifestyle that’s well below your means.
A budget can help you become a more disciplined saver. Create a budget with specific line items for all your expenses, and then look for ways to cut back on spending as much as possible. Make savings a mandatory expense, just like housing, food and utilities. When you start treating savings as a required bill, it becomes much easier to get in the savings habit.
Think twice about a costly home purchase.
For many people, homeownership is a major source of expenses. There can be substantial costs associated with homeownership, including mortgage payments, taxes, maintenance, repairs, homeowners association fees and more. These high costs can significantly impact your ability to save.
If you want to buy a house, consider looking for a modest, inexpensive home you can pay off quickly. It’s tough to be financially independent with a mortgage payment, so it’s important to keep your long-range financial goals in mind. Also, smaller homes generally come with lower costs for utilities, taxes and more.
You may also want to consider renting, which allows you to avoid the taxes, fees, maintenance, repairs, insurance and other costs that come with owning a home. It can also give you the flexibility to move on short notice without having to sell a home.
Develop multiple streams of retirement income.
When seeking financial independence, it can be helpful to have multiple sources of income. While competent investing can be an important aspect of your overall financial picture, your investment portfolio may not generate all the income you need.
You may want to consider additional opportunities that offer flexibility and the opportunity to earn income on your terms. You could use a special skill or passion to freelance or start a part-time side gig. Another option might be to take advantage of tools like Uber or TaskRabbit that allow you to make money when it’s convenient for you.
Achieving financial independence may require some creative thinking, but if you take the right steps, it’s a goal that can be within reach. The key is to develop a plan and to stay disciplined.
Want to learn more about the best strategies for achieving financial independence? Contact Fenton Financial Services today. We can help you analyze your needs and develop a strategy. Let’s connect soon.
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