Financial independence can mean different things to everyone. A 2013 survey from Capital One 360 found that 44 per cent of American adults feel that financial independence means not having any debt, 26 per cent said it means having an emergency savings fund, and 10 per cent link financial independence with being able to retire early.
We define financial independence as the time in life when my assets produce enough income to cover a comfortable lifestyle. At that point, working a day job will be optional just like the hundreds of games at https://www.australianonlinecasino.io/.
But what about the rest of America? How would you define financial independence? If freedom from debt is what you’re seeking, here are five areas that could be holding you back.
Not having clear, financial goals
If you’re not planning for financial independence, chances are you won’t reach it. The future is full of unknowns, but having an idea of when you’d like to achieve financial freedom should be your first step.
Do you want to retire before you turn 65? Do you want to travel the world with your spouse once you reach early retirement? Both goals will require a significant amount of cash stashed away, so it’s important to start saving ASAP to make those dreams come true, not looking for casino bonus for your favourite games.
Not saving enough
It’s important to identify how much you’re currently saving, and how much you need to save to retire when you want to or reach another major financial goal. Using a calculator like Networthify can help you play with various money-saving scenarios and make realistic projections about retirement.
Another way to make saving money easier is to automate it. Setting up an automatic weekly or monthly transfer from your checking account into your savings account will take the extra task off your already full plate. Even if it’s as little as $5 a week, it’s enough to start building that nest egg.
Not paying off consumer debt
If you’re carrying a credit card balance each month, financing cars, or just paying the minimum on your student loans, compound interest is working against you. Creating an aggressive plan to pay off debt quickly should be a number one priority for anyone serious about achieving financial independence. Otherwise, your money is working for your creditors, not you.
If you prefer to tackle credit card debt first, there are several debt management methods you can try, including the Debt Snowball Method and the Debt Avalanche Method. The Debt Snowball Method has you paying off the card with the smallest balance first, working your way up to the card with the largest balance. The Debt Avalanche Method is similar, but here you would pay more than the monthly minimum on the card with the highest interest rate first, working towards paying off the card with the lowest interest rate. Both are highly effective methods, and choosing one just depends on your preference.
Giving into lifestyle creep
A high income does not automatically make you wealthy. As you move up in your career, the temptation to upgrade your lifestyle to match your income will be ever-present. After all, you work hard, so why not reward yourself with the latest gadgets and toys?
However, if you continue to spend and live modestly, you can put more money away for travel or retirement with every pay raise you earn. Financial freedom will be just around the corner if you resist the temptation to upgrade your home, car, and electronics to match your income bracket.