The 4th of July is fast approaching and is a celebration of our country’s independence. It should also serve as a reminder to all of us the freedom we have and strive for. This would include trying to achieve financial independence. Financial independence can be hard to define since these words conjure different meanings for each of us. No matter your personal definition, there are some basic tenants that are important to achieve financial independence.
1. Spend less than you earn
It is impossible to have financial freedom if you are spending more than you earn. To be on the path to financial independence it is important to have a plan and stick to it. This seems obvious but it is surprising how many people do not practice this. For the most part no debt is good debt. Some debt is beneficial to help you move forward in life, namely school loans and mortgage debt. But the reality is the lower the debt you have, the easier it is to live the lifestyle you want.
2. Save and Invest Regularly
We know life happens and it is important to have an emergency fund for life’s unexpected turns, as this year has shown. Your emergency fund is the most important place to save and try to keep 3 to 6 months’ worth of living expenses in savings. Investing on a regular basis is the best way to achieve financial independence over time.
3. Always be learning
So many people become complacent in life. There is a strong correlation with wealth and education and reading. Individuals that continue to be students in life and continually learn and grow their skillset typically are on the path for financial independence.
4. Take care of yourself
It is important to take care of your mental and physical health. Prevention is the best medicine and taking care of yourself physically and mentally reduces stress, anxiety and increases your mood and performance.
5. Have patience Financial independence does not happen overnight unless you win the lottery. Since winning the lottery is not sound financial advice the best way to achieve financial independence is to be consistent and intentional over a longer period. Remember you run a marathon one step at a time, one mile at a time.
