Planning your route to financial independence

No two careers or life trajectories are the same. Everyone has different goals, different responsibilities, and a different vision for their life after retirement – and when that will be. Life throws us and our family curveballs that can derail our most well-thought-out plans, or unexpected windfalls and opportunities that can turn the whole picture around.

With all of these variables thrown into the mix, it’s tempting to simply put aside the average recommended minimum retirement saving each month, cross your fingers, and hope it all works out in the end. As many baby boomers are now coming to realize the hard way, that’s not the path to financial independence it was cracked up to be.

Most of us envision our lives becoming simpler and our costs decreasing after retirement – but that may not always be the case. Aside from anything else, when you’re in your 20s, 30s and 40s, you simply can’t foresee a world where you might need to spend one third of your income on medical expenses.

Rather than aiming just to be able to make ends meet, we should all be striving towards true financial independence – and that takes a little more planning. Here’s where to begin.

Get a clear idea of where you are right now

Whether you’ve been saving for a few years or haven’t even made a start yet, you can’t formulate a plan until you know where you stand. How much are you actually spending each month, and where is that money going? How long is it going to take to pay off any current debts? At the current rate you’re saving, how much will you actually have in savings by the time you reach the age you’d like to retire? If there’s a shortfall, how much more do you need to start putting away?

With these facts at your disposal, you’ll be able to better allocate your resources, designing your budget around your goals rather than relying on guesswork. When you know where you’re wasting money, you can take steps to correct your behavior. And the better you get at doing that, and the healthier your financial outlook starts to get, the more motivated you are to keep up the good work.

Educate yourself and get expert advice

Get interested in investing. Read up on the different options available to you, comparing different products and learning how their fee structures work. Sign up for newsletters or subscribe to podcasts which can help you educate yourself and better understand the market – whatever works for you.

As your wealth starts to grow, get expert advice from a firm like CoinIT on how to take things to the next level – diversifying your assets and bringing your goals closer to reality faster.

Aggressively tackle your debt

If there’s one thing that makes achieving financial independence harder, it’s losing money towards debt every month. The faster you can get out from under it, the sooner you’ll be able to get your money actually working for you. It may mean gritting your teeth and making some sacrifices in the short term but will mean big rewards in the long term. Using the snowballing or stacking method to tackle your debt, as well as exploring your options for refinancing, may be a few avenues to consider.

Find an investment vehicle you’re passionate about

Whether it’s looking into buying rental properties, starting your own business, or learning about the stock market, if you can find an investment opportunity that you find stimulating and rewarding in its own right, the journey can be a lot more fun.

Grow your income

Aside from cutting back on unnecessary expenses, growing the amount of money you’re bringing in can make putting aside a more substantial amount into savings each month a lot easier. Hunting for a new job which comes with a significant pay rise is one option which can get fast results, but there are plenty of others. You could offer your services in a consulting or freelance capacity, start a small weekend business or side hustle, or devote more time to studying or developing your professional skills to move up the career ladder.

Be mindful of lifestyle creep

If you’re lucky enough to be in a job you enjoy where you get a raise every year, human nature usually means that little bit of extra cash is more likely to go towards keeping up with the Joneses than growing your investments! If you can keep your expenses to a minimum even when your income is growing, however, you can really ramp up the rate of growth of your portfolio – and that ultimately means bringing your goal of financial independence closer. And who doesn’t want that?