We go to work primarily to receive a salary. We utilize that salary to settle our bills, provide for our loved ones, and ideally, save a little for future needs. Often, we become trapped in this routine of working and bill-paying without pausing to reflect on the purpose behind our daily actions.
What drives us to earn income? There are numerous motivations, but many of us seek freedom. Once your essential needs are met, you can focus on the path to financial autonomy, which brings true freedom—the capacity to choose how to spend your time at your discretion.
Identify your purpose.
Traditional financial guidance advises us to increase our earnings and grow our wealth, and there is no shortage of online strategies to help you secure promotions or launch side ventures. These are crucial actions, but it’s equally important to contemplate your destination and the reasoning behind your aspirations. Once you identify your motive, determining the necessary steps to achieve your objectives becomes more manageable.
Everyone has unique motivations, yet fundamentally, we all desire the liberty to explore and prioritize what matters most to us. For some, financial freedom may signify the ability to avoid office environments altogether. For others, it could represent the capability to manage life’s challenges—ensuring that, even amid job loss or diminished income, you still can provide for your family.
Envision your future.
Grab a journal or a blank sheet of paper and illustrate what a typical day looks like once you achieve your dreams. Do you rise early to prepare a leisurely breakfast each morning instead of hurrying out? Perhaps you dedicate your mornings to exercise and spend afternoons with loved ones.
Let this be free-flowing writing, devoid of judgment. Simply transcribe all you visualize in your mind onto paper for future reference. Subsequently, formulate specific actions that will facilitate the attainment of your aspirations.
Determine your financial target.
After identifying your work’s purpose, think about articulating the specific dollar amount necessary to fulfill your overarching why. Many financial professionals suggest calculating your current monthly expenses, adding an extra 4% for inflation, and then multiplying that sum by 25 or 30 to find your independence target.
While this can be an enlightening exercise, it often yields an abstract figure that may not translate to your personal life. Employing visualization allows you to internalize what you’re striving for, rather than relying on statistics from others’ experiences or your own vague perceptions of what financial independence entails.
Establish clear objectives and utilize the figures.
Once your destination is set, it’s time to figure out the specific measures required to reach that point. Reflect on your envisioned daily life, considering the location you wish to be in, the type of residence you aspire to have, and what it would feel like to achieve enough. Then, conduct research on living costs and housing to assign concrete numbers to those concepts.
Once a target dollar amount is established (be sure to include provisions for unforeseen expenses and an inflation estimate of 4-6%), you can refine your vision and budget accordingly. Examine areas such as healthcare, groceries, utilities, and insurance. Your current budget serves as an excellent foundation to build upon.
Incorporate large, medium, and small objectives.
With your financial independence figure established, start contemplating the significant milestones necessary to achieve your aim. Consider benchmarks like:
- Your preferred retirement timeline
- Sourcing and acquiring a home, and/or diminishing your mortgage as swiftly as possible
- Clearing your student debt
- Boosting your overall net worth
Once you define these significant objectives, deconstruct them into manageable intermediate goals that will lead you toward these larger aspirations.
These intermediate goals may include:
- Maximizing contributions to retirement accounts annually
- Calculating the additional amount you can apply to your mortgage each month
- Exploring new investment opportunities to enhance your wealth
Then, break down your intermediate goals into actionable daily steps that contribute to your success.
These small steps may involve:
- Adhering to your weekly spending plan and resisting excessive treats
- Utilizing your lunch breaks to research investment strategies to optimize retirement contributions
- Scheduling a weekly review to assess your budget and ensure you’re making progress
Understanding your vision for the future and devising a strategy to achieve it can significantly simplify your pursuit of financial independence. Aligning your objectives with someone else’s definition of freedom may hinder your advancement and dilute your focus. While these exercises do not guarantee success, defining your goals and mapping out a plan makes it far easier to achieve them. Utilize these methods to shape the life you desire, filled with success and liberation.
