Declare Your Financial Independence
This weekend, we’ll gather with family, friends, neighbors and perfect strangers to celebrate America’s 239 years of Independence. As you prepare to celebrate our nation’s independence, is it time for you to review your finances and declare your financial independence?
Take inventory of your finances (income, expenses, savings, debt, etc.) and follow these steps to reach financial independence.
Create a budget. It can be tedious and time-consuming, but according to research included in The Millionaire Next Door – a study of the habits of wealthy Americans – 55% of self-made millionaires diligently maintain a budget. Need help creating yours? Try one of these simple and free budgeting tools.
Reduce your expenses. Another habit of self-made millionaires is frugal living. Successful investor, Warren Buffet lives in the same house he bought for $31,500 in 1958. Simple ways to reduce your expenses: Dine out less. Consider buying bulk. Review and consolidate debt and insurance policies. For more ways to reduce expenses, check out my blog post, 10 Ways to Keep More of Your Money.
Set goals. Financial independence is easier to achieve with goals. Goals set a course for action and guide you if tough decisions have to be made. You can start small by saving an extra $30 a month or push yourself by paying off your vehicle loan 5 months early. Don’t meet your goal in time? Don’t give up! Regroup and keep going until you do.
Pay yourself. Earn extra money. Before you start giving your hard earned money to others, give yourself at least 10% and steadily build your savings. If you earn $35,000 annually, you’ll be able to save at least $3,500 a year.
You can add to your savings by earning extra income. Ask your employer for a raise. Get a second job. Turn your favorite hobby into a money maker. Sell gently-used items on eBay, Amazon.com or at garage sales.
Start an emergency fund. Financing emergencies (unexpected repairs, medical expenses, unemployment) with your credit card only increases your debt. Start putting money aside to guard against these emergencies. The goal is to save at least six months’ worth of your current take-home pay.
Create or update your will. If you have a family, their financial freedom is as important as yours, especially if something were to happen to you. A precise and up-to-date will is assurance for you and your family that your assets will be allocated the way you want. If you don’t have one, hire a reliable lawyer to write one for you or you can create one yourself online.
I’m declaring financial independence this month by paying off our credit card balances. How do you C.U. declaring your financial independence? Share with us below or tweet your ideas @AmEagleCU.