When we think about financial independence, I believe it is achievable and can be conquered by following a few principles for your financial walk.
Set some ground rules that work for your life
Your ground rules are simple things that you can commit to daily. Not just for a season, but for a daily walk. You may say for instance:
Every week, I will make it a habit to save $25 towards my emergency goals
Every paycheck, I will commit to praying over my finances
Once a month, I will meet with my family and discuss financial education
Commit to investing
Know that it is impossible to be financially independent, but one of the keys that will help you get there is through the power of investing. Investing is great because of a small powerful tool – compounding, which is often referred to as the snowball effect, which means that you receive earnings on your original investments, plus earnings on your earnings! This will help you grow your money faster.
As such, let’s say a 25 year old starts investing $1,000 per month for a return of 6% until he is 65, he will have close to $1.9 million at 65. Whereas a 45 year old starts investing the same amount until 65, assuming the same rate of return he will have close to $500,000 saved.
Be mindful of debt
Debt is the enemy of financial freedom. Now of course, we know in life, that you may have to take on some forms of debt. But just be cautious when you do so. I can recall when I was in college and there were the many credit card companies offering credit card after credit card, I eagerly signed my name to cards I simply did not need. If you have to use debt, use it wisely and for ways to help to reach your financial independence – to help buy that house, start that business and even to get your education. But only take on what is needed or find alternatives
When seeking to invest, know that education is key. There are many great apps that can help you with investing. One great app is Robinhood, which allows you to invest in stocks with no trading fees. It also provides a platform for education, which may be a starting point to learn about investing.