Use the Month of July to Seek Financial Independence
Here we are in the month of July – the month when we celebrate Independence Day.
How financially independent are you? I’ve seen many studies on this and some indicate only about 5 per cent of the population is financially independent. That means they can pay all bills on time, they don’t have to borrow money and they are saving enough for the years when they no longer work.
I’ve also seen studies that have found as many as 20 percent of us will likely die owing somebody money.
Let’s get on the right track:
First thing to do is list your financial goals. Get out a pencil; and paper and write them down. A Harvard study some years ago that followed people through their lives found those who had written goals (only about 3% of those in the study) turned out to be totally financially independent in retirement. Almost everyone else who had goals in mind but not written down needed financial assistance in their later years.
One goal: Make sure you have enough insurance to protect yourself, your home and your belongings. We all may be just one accident or mishap away from financial disaster unless we’re prepared. Being prepared means being covered for the unthinkable.
Track your spending: Take a pencil and paper with you for two weeks writing down everything you spend. You’d be surprised at how much you may be tossing away. I was when a financial planner had us take that step many years ago.
Prepare a budget: But be honest. Financial pros have told me people are not honest when they put a budget together and that’s why they tend to bust the budget. Two things to make sure you include are clothing and entertainment. That can add up to $5000 or more a year. Many people budget less for that in hopes of creating a budget that does not go into the red. The problem is, we spend that money anyway so budget for it and you’ll be on track.
Develop a savings plan: It’s the old ‘pay yourself first” advice. But budget for that!!!
Also budget for making regular investments.
Remember, it’s not how much you earn that determines your wealth—it’s how much you save compared to how much you spend!
Happy Independence Day!