As we take the time to celebrate America’s Independence Day, it’s also a good time to reflect on when you can celebrate your own independence – financial independence that is! Financial independence is being independent from having to work for a living. Working becomes an option, not a necessity. See below for 4 steps to help you reach your financial independence.
- Take Advantage of the Free Tools that are out there
- Whether you are just starting to save, or are already on your way to a secure financial future there are tools out there to help you. If you are thinking about retirement (or are even trying to grasp what that might mean from a financial standpoint) there are free tools such as the Social Security Administration’s Life Expectancy Calculator which can assist in figuring out how many years of retirement you will need to plan and save for. In addition, FINRA has a Retirement Calculator which can help estimate how much money you will need to save to meet your projected expenses.
- Review your Credit Score and Credit Report
- This is an easy step and can be done in a few minutes. You are entitled to one free copy of your credit reportevery 12 months from each of the three nationwide credit reporting companies. You can order your report online at annualcreditreport.com. You will need to provide your name, address, social security number, and date of birth to verify your identity.
Please see website below for further information:
https://www.ftc.gov/faq/consumer-protection/get-my-free-credit-report
- Track your Spending
- The first step to cutting back on spending is an awareness of where you are at. For the month of July keep a notebook or an Excel spreadsheet of every item that you buy and the cost of that item. At the end of the month take a look at where you could cut back and if all those items were really necessary?
- If you use a credit card, many online websites for credit cards will track your spending by category (i.e. travel, food, etc.). I prefer to analyze each individual transaction to really understand where my money is going and it also makes me think twice about if I really needed the purchase.
- Prepare for the Future/Create an Emergency Fund
- An emergency fund, it a bank account set aside to cover major unexpected expenses, such as auto repairs, job loss or medical expenses. Having cash or savings set aside will help you avoid racking up these expenses on a credit card with a large interest rate.
- The rule of thumb is to have enough set aside to cover 3-6 months of your average living expenses.
- You can start small, but just start. Even having $500 set aside can get you through some unexpected financial bumps. Put away what you can now and build it over time.