You may be wondering if you’ll ever achieve financial independence. Many of us play it safe with a day job, side gig, and maybe even a side-side gig that nets some extra cash on the side. However, will those gigs really help you achieve your long-term financial goals? Financial independence is a process, not an endpoint. It’s more than just having enough money to retire in style someday. It’s about being able to do that without substantial risk of running out of funds before passing on. In this blog post we will discuss how you can set financial goals as well as how to achieve financial independence by focusing on the four pillars.
Table Of Contents
Decide on your financial independence date
When setting financial goals, the first thing you should do is decide on a financial independence date. This is the year you want to be financially independent and financially free. You may choose to retire at this time, but that’s not a requirement. The goal is to have enough passive income that you can live off it and not have to worry about getting a new job or having to work overtime. For example, if you know that your job has a high rate of injury and you’re likely to be injured and unable to work within the next five years, setting a financial independence date will allow you to live without a salary until you can return to work.
Save for retirement
The next step to achieving your financial goals is to save for retirement. While this may seem contradictory to your goal of achieving financial independence, it’s actually a smart move. By saving money now, you’ll be able to retire sooner. Let’s say you have enough money saved to retire at the age of 45. Because you have more time, you are able to increase your savings rate. At the same time, you are able to decrease your expenses. You may also be able to work fewer hours and less stressful jobs that don’t require as much energy and focus. You’ll have more time to spend with loved ones and less time stressing out over money.
Build an emergency fund
Your third financial goal is to build an emergency fund. According to a recent survey, 40% of Americans don’t have enough money saved to cover a $500 emergency. That’s not a good statistic, and it shows that people need to start setting financial goals. What are emergencies? They are unexpected expenses that you aren’t able to cover with your current level of income. They could be something as simple as your car breaking down or your roof leaking and needing to be repaired. In order to avoid taking on debt and running up credit card bills to cover these expenses, you need to save up an emergency fund. The amount you need to save depends on your expenses and lifestyle. However, it should be enough to cover any unexpected expenses that may arise.
Invest in tax-free investments
The final step in achieving your financial goals is to invest in tax-free investments. By doing so, you’ll be able to earn more money and have more money to save. You’ll also be able to reach your financial goals faster. How do you invest in tax-free investments? You can invest in real estate, stocks and bonds, and start a side hustle like selling on Amazon. When investing in real estate, you can consider investing in a tax-advantaged account like a real estate investment trust (REIT). This is a fund that holds many different types of real estate assets and invests in tax-free municipal bonds.
The path to achieving your financial goals is not an easy one. It will take time, effort, and most importantly, discipline to get there. You need to be willing to make sacrifices today in order to have a better tomorrow. You can start by setting financial goals. Once you determine what you want to achieve, you can start taking action towards those goals. This will help you make progress towards achieving financial independence.
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