subject: Financial Indepence: You Can Achieve It! [print this page] Because this economy has thrown so many family financial plans into chaos, we can focus so much of our energies on surviving this storm and forget that what we are really seeking to accomplish in wealth-building requires us to keep our head on straight, and to avoid all of the negativity which surrounds us. After all, what is it we are trying to accomplish by earning wealth? For me - and for many others, the answer is Financial Independence.
Here is what I mean by that: "having an income sufficient for your basic needs and comforts from sources other than paid employment".
Financial independence implies freedom. It implies you have an income sufficient enough to allow you to do whatever you might choose. Whether you elect to keep working doesn't matter - you have enough saved and invested to follow your dreams. But is financial independence just a pipe dream? Is it something only for the lucky and the strong? No, it is a goal that anyone can fulfill as long as they are armed with some basic knowledge. You can get there as long as you make the smart choices.
As I see it, there are four keys to accumulating wealth:
1. Start investing as early as possible. It takes significantly less money to accomplish what you want, and investments are all about time.
2. Be determined to save on a regular basis. It is an easy way to accumulate wealth.
3. Begin investing with the largest possible sum you can. That way, you will have more money working for you over a longer period of time.
4. Reach for the highest rate of return you believe you can safely receive on your money over time. Each additional percent is important. The higher the rate, the less money it takes to accomplish what you want.
Financial independence is built upon these four guidelines. Now of course, not everyone accomplishes their goal of financial independence. Let's discuss some of the reasons behind this failure.
Confronting your financial challenges.
In order to save money, you must obviously fight to keep from spending it too much! I encourage you to set goals, to actively prioritize wants--and not just make wild decisions about what you are spending.
To do this, it may be helpful to place a value on each of your wants. So here is an exercise for the week: Pull out a piece of paper and list your wants.
Depending on your income and net worth, these can range from a new house, to a hot tub, to a trip to London, and even to a new blender for the kitchen. Next to each item, write why you want it. (You might want a hot tub, for example, because it would allow you to relax with family and friends.)
When you have finished, take another piece of paper and re-order the list based on how important each want is to you. If a trip to London tops the list, are you still willing to delay it by spending $100/month for that gym membership you rarely use?
That's how you can use a list of prioritized desires.
by: Kimberly Hegwood
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