4 Steps to Financial Independence

Happy Independence Day!  In honor of the holiday, let’s talk about a related topic: financial independence. 

When meeting with new clients, we often discuss their financial history, values, and goals.  Some of my clients have very defined goals (i.e. be debt free in 5 years, retire at age 55, etc.), while others need more direction.  Ultimately, each client is searching for some type of financial independence. 

Usually this independence takes the form of “not having to work for money” or “beginning another career that I truly enjoy.”  Chris Guillebeau alludes to this concept of career satisfaction in his book “Born for This.”  He talks about ideal work as something that satisfies the following three criteria:

1.     Joy - something that makes you happy

2.     Money - something that’s financially viable

3.     Flow - something that maximizes your unique skills

I agree with Chris that finding the work you were born to do is a combination of those three factors.  With only two of the three criteria, you suffer from: unfulfilled potential, starving artist syndrome, or success without purpose.  Unfortunately, there’s no magic wand you wave to suddenly arrive at a place of professional nirvana. 

Yet, there are steps you can take towards financial independence now:

1.     Save early and often

Saving is rarely convenient.  Early in your career, you may want to spend all your earnings on entertainment and dining out.  As your family expands, kids’ expenses tend to rule the budget.  When kids are grown, travel often becomes a priority.  There will always be some reason NOT to save.  However, if you are diligent about saving in the face of external pressure, you’ll be further along the road to financial independence.

2.     Explore alternate careers in a “safe” environment

Do you feel stuck in your current role?  Pursue a passion or interest on the side.  This pursuit could lead to a full-fledged business or second act career later.

3.     Circle a date on the calendar

I’m a big proponent of goal setting.  SMART goal-setting means setting a goal that is: specific, measurable, achievable, relevant, and time-bound.  My earlier examples – be debt free in 5 years or retire at age 55 – follow these SMART goal parameters.  It’s very difficult to work towards anything if you don’t have a specific date in mind. 

4.     Don’t beat yourself up

Remember that financial independence is relative.  Some people feel they already won the career lottery.  To them, financial independence may mean scaling back to part-time work at age 62.  To others in certain government positions, retirement is offered at age 50 and required at age 57.  You need to define what financial independence means for YOU and YOUR FAMILY.

Are you ready to start working toward financial independence?  Let me know if you’d like to chat.

Happy 4th,

Deb Meyer, CPA, CFP®