We’re getting close to the Fourth of July, our national Independence Day. This celebration may get you thinking of the many freedoms you enjoy. But have you thought of what you might need to do to attain financial freedom?
Your first step is to define what financial independence signifies to you. For many people, it means being able to retire when they want to, and to enjoy a comfortable retirement lifestyle. So, if this is your vision as well, consider taking these steps: Pay yourself first. If you wait until you have some extra money “lying around” before you invest for retirement, you may never get around to doing it. Instead, pay yourself first. This actually is not that hard to do, especially if you have a 401(k) or other employer-sponsored retirement plan, because your contributions are taken directly from your paycheck, before you even have the chance to spend the money. You can set up a similar arrangement with an IRA by having automatic contributions taken directly from your checking or savings account.
Invest appropriately. Your investment decisions should be guided by your retirement goals, along with how long you have before you need the money and how comfortable you are with different levels of investment risk. If you deviate from these guideposts — for instance, by taking on either too much or too little risk — you may end up making decisions that aren’t right for you and that may set you back as you pursue your financial independence.
