10 Tips for Early Financial Independence

As we continue our February FIRE (Financial Independence, Retire Early) movement, it’s important to understand what it takes to achieve early financial independence. Many people mistakenly think that earning a high salary is all it takes, while others may be looking for “get rich quick” schemes to accumulate wealth. It’s rarely that simple.

In this article, we want to explore some tips that will help you gets started down the road toward financial independence and, ideally, an early retirement.

1. Think Long-Term

Wealth does not happen overnight. It takes a lot of planning and discipline to achieve your financial goals. Some investments may be short-term to get quick returns. Others may grow slowly over time. You have to consider the money you spend now versus the money you put away for your future. The point is you have to think long-term and have patience.

2. Manage Your Expenses

So many people we partner with at Illumination Wealth have no clue as to how much money they really spend each month when we start our planning process. You should understand your living expenses, track them carefully and look for ways to eliminate expenses that are not in alignment with your values. The more conscious you are about your spending, the quicker you can ultimately achieve financial independence.

3. Increase Your Income

If your income never goes up, you will have a very hard time achieving any sense of early financial independence. Your cost of living is always going up with inflation (think about health insurance, property taxes, food prices, etc.), so you want to have a career path (or business) that allows for continued growth. This enables you to increase your income over time and putting more money into savings for wealth building purposes.

4. Manage Your Investments

First, you must be willing and able to invest money. Then, you must manage your investments wisely. This includes maximum contributions to your 401k or Roth IRA accounts, strategic investments in the financial markets (stocks, bonds, etc.), real estate investments and other investment opportunities that will help you grow your wealth. Simply putting money aside in a basic savings account won’t cut it.

5. Be Independent

One of the best ways to achieve financial independence is to start your own business. Working for yourself and not for others can give you the freedom and growth potential you need to retire early. You just have to be smart about running your business, and that’s easier said than done.

6. Educate Yourself

Investing in your own financial education is vital. The more you understand about investing, financial strategy, stock markets and retirement savings, the more successful you will be at managing your wealth. Also stay on top of your own finances to understand what strategies will work best for your income situation.

7. Hire a Financial Advisor

Don’t try to go it alone. Working with an experienced wealth management advisor will really make a difference in how you manage your money. Professional advisement will enable you to build your wealth more effectively.

8. Don’t Procrastinate

Never put off planning for your future. Get started now on planning for your early retirement or implementing a strategy to build your wealth.

9. Make Your Money Inconvenient

When it comes to your investments and retirement savings, you want to keep the money as far out of reach as possible. That doesn’t mean forgetting about it. It just means you shouldn’t have easy access to it. Otherwise, you’ll be too tempted to either spend it now or make emotional investment decisions like selling low and buying high. Make sure it’s just inconvenient enough to stick to your plan while maintaining liquidity for your short-term commitments.

10. Find Balance

Even though financial independence and early retirement are your goals, don’t forget to enjoy the life you have now. It’s all about finding the right balance between what you need in the present with what you want to have in the future.

We hope you find these tips helpful. For more guidance on the road to financial independence and early retirement, contact Illumination Wealth today at (858) 246-6855 or schedule a consultation online.