One of the largest factors that is holding young people back is having no idea how to achieve financial independence. While easy to look at 2020 as a big reason for the financial stagnation looming over millions of Americans, the issue goes back much further than the last nine months. Educational expenses continue to skyrocket beyond any ability to accurately project where they are headed, and young people are largely devoid of any knowledge about how to make the most of the little money they do have. Financial independence feels more like a pipedream than it does a distinct possibility, and it’s hard to blame anyone for having that mentality. While barriers exist to achieving financial independence and security that are real and difficult to get over, there are ways to help realize that goal and take the next steps towards making it a reality. Today, we will take a look into the ways anyone can move themselves a step or two closer to achieving real financial independence.
Tip #1- Limit Expenditures
Maybe the most obvious of all the tips on this list but one of the hardest for people to achieve, Americans regularly spend well beyond their actual abilities every single day in the United States. An easy way to move yourself towards a healthier financial outlook is by adopting a more disciplined attitude and creating a budget that will work for you, so that you stick with it. It’s okay to “treat yourself” every so often, but the problem that most have is they cannot limit their treats and instead treat themselves into a large financial hole that they have no ability to get out of. Living above your income level is maybe the largest reason that people end up in debt and further away from financial independence, but even those who receive regular raises face similarly poor situations. A wise move is to consider any raise or “found” income as a tool to pay off any debt and/or to add to your savings. By taking this approach instead of looking at this additional income as more to spend, you’re going to be a step closer to achieving that independence you crave.
Tip #2- Invest More
In 2021, there’s simply too many different ways to grab a piece of the stock market. Whether you access it through apps on your smart phone or with a financial advisor/stockbroker, the barriers to entry are few and far between. If you haven’t spoken with a licensed financial advisor or other professional, it’d be wise to do so! If you’ve ever wondered how most of the people we’d consider “rich” make their money, it boils down to this: The wealthy make their money work for them and everyone else works for their money. When you invest your money, there is always risk involved that could result in you losing money. A safe bet for new investors is to find a great index fund (Vanguard is a great place to look for more information on these). An index fund basically mirrors the overall stock market. And guess what? The stock market has only grown over the years! Have there been periods of downswings and recessions? Absolutely. But if you can be in it for the long haul, it is almost a certifiable truth that that you will multiply your money over the years if you set it up in an index fund and just forget about it. Always confer with a financial strategist about the approach that works best for your situation, but it’s almost always recommended to be investing a good part of your income to help secure your financial future and take a big step towards your financial independence.
Tip #3- Pay Your Debts
There are countless ways to accrue debts. Credit cards are easy for anyone-literally anyone- to qualify for and we’ve been conditioned to believe that debt is simply a part of reality. Stop that way of thinking right now! Luckily, there are a thousand ways to approach tackling your debt and the one I encourage most of all is called the snowball method. List out your debts from lowest to highest and begin attacking them like the cancerous plague that they are. Pour every extra dollar you can into the lowest debt while paying the minimum on the others and watch your debts dwindle by the month. It will be difficult, and it will take financial discipline that you may have never used before, but it will be worth it! A large part of achieving financial independence is eliminating all that pesky debt, including any mortgage you may have. In a society that encourages balance transfers and gives out 0% interest offers like candy, be different! Tackle that debt and achieve your financial independence!
No matter what you decide to do first, a look in the mirror is probably where you need to start. What your beliefs about money are probably need an adjustment, as well as the belief you have in yourself for achieving a financial future that enables you to be unchained from your creditors and enjoy independence. We all start at different points on our journey to financial independence, but the important part of each one of our journeys is that starting point. Stop thinking you can’t do it, because if that’s your mentality, then you’re going to prove yourself correct. Financial independence is not reserved for the wealthy or those who live a life different than yours. It is for every single one of us who wish to act a bit different and behave responsibly with our money. There’s no “right” day to begin, there’s only “today.” So, what are you waiting for? Take that first step, you’ll only be happy that you did.