On July 4, 1776, a small band of colonial leaders declared independence from the Kingdom of Great Britain. The American Revolution changed the course of world history forever and launched a nation that no other has since rivaled.
In the spirit of the heroes of the American Revolution, would you consider declaring your own revolution…your Declaration of Financial Independence?
Here are four steps you can take today to set you on the road to your financial independence:
- Automate your investment program- 10% of gross income is the minimum needed to put you on the path to financial independence, so do it! Start with your company’s 401(k) program, particularly if they match contributions.
- Attack bad debt- Bad debt is money you borrow to buy something that is expected to go down in value. To attack bad debt, you must first commit to avoiding any new bad debt. Then implement a plan to pay off your existing debt as fast as possible. Start with paying an additional $100 monthly (minimum) against your highest interest rate debt.
- Prioritize your lifestyle spending- Review the past three months of credit card statements and written checks. Make a list of your spending, starting with the ‘must-dos’ (rent, mortgage, health insurance, etc.). What’s left is discretionary spending, and it should be prioritized based on those things that add the most to your life. Commit to stop spending at least 20% of discretionary expenses. The 20% you save will be used for steps one and two above.
- Hire a coach- Accelerate your success by hiring someone with experience to take you further, faster. If you want to transform your fitness and physical appearance, hiring a nutritionist and personal trainer would be an excellent place to start. In the financial world, consider hiring a Certified Financial Planner™ practitioner.
At the time, the idea of a small group of colonialists taking on the world’s mightiest country would have seemed impossible. They proved anything is possible to those with vision and an unwavering commitment to never give up until they achieve success.
If you decide what you want, set in motion a plan to achieve it, and never give up, you, too, can create the life of your dreams. Happy Fourth of July!
Stewart H. Welch, III, CFP®, AEP, is the founder of THE WELCH GROUP, LLC, which specializes in providing fee-only investment management and financial advice to families throughout the United States. He is the author or co-author of six books, including 50 Rules of Success; J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning- 6th Edition (John Wiley & Sons, Inc.); THINK Like a Self-Made Millionaire; and 100 Tips for Creating a Champagne Retirement on a Shoestring Budget. For more information, visit The Welch Group. Consult your financial advisor before acting on comments in this article.
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