How to Become Financially Independent

How to Become Financially Independent

6 Second Take: While we celebrate our country’s independence, it may be time to plan your own financial independence — here’s how.

Happy Independence Day! Following the July Fourth holiday weekend, I thought it might be useful this week to discuss financial independence, which is the ability to live off savings and investments without having to work.

What factors help some people achieve financial independence while others who earn the same amount of money (or more) live “paycheck to paycheck”? Below are seven strategies to help you improve your financial fitness and achieve your dreams:

Set Specific Goals.

Put a date and a price on each financial goal such as “save $6,000 for home improvements in 2022.” Next, break down those goals into smaller pieces, such as “save $2,000 a year for three years” and “save $167 per month.

Focus on Succeeding.

Remember the old saying “when there’s a will, there’s a way”? Well, this adage is as applicable to personal finance as it is to other areas of life. It takes discipline and focus to postpone spending today for a goal that may be years away.

Live Below Your Means.

Consider the three sustainable ways to “find” money to save for your future goals: increase income, reduce expenses, or do a little of each.

Living below your means is an intentional process of spending less than you earn.

It also means saving the amount that is left over.

Automate Savings and Investments.

Save automatically through an employer 401(k) or 403(b) plan, credit union, or mutual fund automatic investment plan (AIP) that deducts periodic deposits from a bank savings or checking account.

Maximize Tax Breaks.

Take advantage of tax deductions for contributions to tax-deferred employer retirement plans, tax-free municipal bonds, tax credits, and the long-term capital gains tax rate on investments held more than a year.

Develop Financial Resilience.

Increase your resiliency resources including adequate savings and insurance, low household debt, in-demand employment skills, a social support system, and personal traits such as optimism, organization, and good health.

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* Applications submitted on this website may be funded by one of several lenders, including: FinWise Bank, a Utah-chartered bank, Member FDIC; Coastal Community Bank, Member FDIC; Midland States Bank, Member FDIC; and LendingPoint, a licensed lender in certain states. Loan approval is not guaranteed. Actual loan offers and loan amounts, terms and annual percentage rates ("APR") may vary based upon LendingPoint's proprietary scoring and underwriting system's review of your credit, financial condition, other factors, and supporting documents or information you provide. Origination or other fees from 0% to 8% may apply depending upon your state of residence. Upon final underwriting approval to fund a loan, said funds are often sent via ACH the next non-holiday business day. Loans are offered from $2,000 to $36,500, at rates ranging from 7.99% to 35.99% APR, with terms from 24 to 72 months. Minimum loan amounts apply in Georgia, $3,500; Colorado, $3,001; and Hawaii, $2,000. For a well-qualified customer, a $10,000 loan for a period of 48 months with an APR of 24.90% and origination fee of 8% will have a payment of $331.01 per month. (Actual terms and rate depend on credit history, income, and other factors.) Customers may have the option to deduct the origination fee from the disbursed loan amount if desired. If the origination fee is added to the financed amount, interest is charged on the full principal amount. The total amount due is the total amount of the loan you will have paid after you have made all payments as scheduled.

* Applications submitted may be funded by one of several lenders including First Electronics Bank, a Utah-chartered bank, Member FDIC; Coastal Community Bank, Member FDIC; and LendingPoint, a licensed lender in certain states. Loan approval is not guaranteed. Minimum loan amounts apply in Georgia, $3,500; Colorado, $3,001; and Hawaii, $1,500. Upon final underwriting approval to fund a loan, said funds are often available the next non-holiday business day. Actual loan offers and loan amounts, terms and annual percentage rates (“APR”) may vary. Loans are offered from $500 to $10,000 (loan amount maximum based on MCC codes), at rates ranging from 7.99% to 35.99% APR, with terms from 24 to 48 months. For example, for a well-qualified customer, a $5,000 purchase will have a 90-day promotional period with no interest, a 3% fee, and $100 monthly payments. After the promotional period, a remaining balance will be a 24-month term loan, and $263.72 monthly payments with an overall APR of 26.54%.

**Minimum initial transaction of $1,000 in Alabama, Idaho and Iowa.

1. Alimony, child support, or separate maintenance income need not to be revealed if you do not wish to have it considered as a basis for repaying this obligation.

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