How to Pursue Your Financial Freedom
Where are you financially? Are you on a path to achieving your life goals? July 1 is National Financial Freedom Day, which is a great opportunity to assess your progress. You could even establish July 1 as your annual financial check-in day.
What is financial freedom?
While it looks different for each person, the basic idea of financial freedom is when you have enough resources to avoid working, while still living the lifestyle you envision for yourself.
If you’re younger and in the throes of your career, this idea may seem far-fetched, but many people eventually achieve financial freedom—think of those who have successfully retired.
In some cases, that’s the dream: retirement. What you want to achieve and the likelihood of achieving it depends on your circumstances and goals. How can you get started? Most successful financial outcomes start with planning.
Outline Your Goals
The first step to pursuing financial freedom is deciding what exactly that means for you.
Are you happy working until a typical retirement age? Or would you rather retire early from the workforce? When you aren’t working, where do you imagine living? What kind of lifestyle do you desire—and what would it cost? These questions should be clarified as you start to think about achieving your financial freedom.
Once you determine your goal, then you can start to see how much it costs—and what it may take to get there.
Catalog Your Current Spending
Planning comes first—and you can’t plan if you don’t know your current budget or spending habits. If you haven’t already done so, you should document how much money you bring in every month (income) and how much of it you spend.
Once you have a deep understanding of your spending habits, it becomes a matter of determining if you’re on the path you want. If not, you’ll know what resources or habits you must adjust. There are several basic keys to consider: your debt, your savings plan, and doing more with the money you’ve saved.
Assess Your Debt
How much debt do you have? Addressing this question is often the next step in pursuing financial freedom. If you have high-interest debt, it’s almost certainly holding you back. You may want to consider debt consolidation or using your resources to pay it off entirely.
On the other hand, debt such as a fixed-rate mortgage or relatively low-interest student loans may not be as problematic. It may make sense to talk with your wealth advisor about the situation and how you can arrange the debt so that you can also pursue your long-term financial goals.
Build Your Savings
You may dream of having enough savings to stop working. Another step in achieving financial freedom is building your emergency savings. Do you have enough saved to cover the expenses of a car accident or an unexpected medical problem? Having an emergency fund readily available will give you peace of mind and the ability to think ahead.
After you’ve built an emergency fund, you should put money away for retirement and medium-term expenses, such as a home, a new car, or college tuition if you have children. Consider using high-yield savings accounts to maximize your money. Building these reserves will also help you build your financial confidence.
Put Your Money to Work
As your savings grow, you may be able to do more with your money. Some may want to generate passive income from real estate investments. Others may invest in the stock market or buy treasury bonds. Each situation is unique, but there are seldom scenarios where having all your money in a savings account makes sense long-term.
At this stage in your pursuit of financial freedom, you should consult with a professional to be sure that you’re making prudent choices with your savings. A wealth advisor can guide you and suggest strategies that you may not have even realized were possible.
Remember: Habits Can Go a Long Way
As you pursue financial freedom, taking the first steps may feel daunting. You may only need to make a few minor tweaks to your current habits—or maybe you should make substantial changes.
Remember that habits are built over time, and they can become powerful. It may feel strange to start brewing coffee at home or to automate savings from your paycheck into a dedicated money market account. These actions may seem insignificant at first, but as you do things repeatedly, it can become second nature.
Over time, the money saved or invested from your new habits will become something in which you take pride. You’ll be grateful that you made the effort to build and align your habits with your long-term goals.
Conclusion: Talk with an Expert
At Old National, we believe planning comes first. There’s power in having a clear outline of what you want and how you’ll get there. You’ll gain confidence by working with an expert.
Our wealth advisors will sit down with you and listen first. We’ll help you figure out how to pursue your goals. Nothing is ever set in stone—we are responsive to you. As your financial circumstances or goals change, just check in with us. We can work together to adjust your plan to ensure your confidence in the path you’ve chosen.
Are you ready to talk with a financial professional? Connect with us today!
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss. This communication is intended for informational purposes only and is not intended to be a substitute for specific individualized investment planning advice, as individual situations will vary. The information presented here should only be relied upon when coordinated with individual professional advice.
