Achieving Financial Freedom is Within Your Reach
The Fourth of July is cause for celebration as we recognize our independence as a country and the freedoms that we enjoy as American citizens, but it’s also a great time to think about your financial freedom and security, too. In 2019, the American Association of Retired Persons (AARP) published a report that showed at least 53% of adults in America do not have emergency savings account for their household. Whether you count yourself among that percentage or not, now is a great time to find that extra motivation you need to tackle your finances in a long-lasting way.
After a year or two of lockdown and business and social restrictions, what does financial freedom look like to you? What’s more – how can you achieve financial freedom in your everyday life? In the spirit of Independence Day and freedom in all forms, here are some steps you can take to achieve the financial independence you desire.
#1. Declare your financial independence by creating a budget.
It may seem counterintuitive to think that you can find freedom when living within a budget, but the reality is that creating a budget is all about living free. Having a budget doesn’t mean that you’re going to be deprived of fun or give up your freedom to spend your money how you wish. Rather, it can offer you a sense of peace knowing exactly how your money is coming and going, which can ultimately give you a deep sense of control in your life. When you know how much you’re spending – whether on fun or necessary expenses – you’re able to control of your finances, instead of letting them control you.
#2. Prepare for the future by creating an emergency fund.
As we experience the impact that Covid-19 has had on the rate of employment for U.S. citizens as well as on the U.S. economy at large, it’s clear how important it is to have a nest egg that we can fall back on in times of emergency. It’s often recommended that you have three to six months’ worth of your expenses saved up and readily available to you in an emergency savings fund. If you have dependents who are relying on you, it might be smart to have even more socked away to ensure that your family will be supported no matter what the future brings.
If saving money is difficult for you, consider ways to automate your savings. Many workplaces allow you to split your direct deposit between checking and savings accounts, and most banks allow for recurring transfers between accounts where you can choose a specific day to transfer money into a savings account. By automating your savings, you can help eliminate the temptation to spend instead of preparing for a future of financial freedom.
Not only does establishing an emergency fund help ensure that you and your family will be protected should something unfortunate happen, but it can also bring peace of mind and improve your mental health by minimizing the stress that comes with financial uncertainty.
#3. Find financial freedom from living burdened by debt.
While having debt seems like an inevitable part of life for some and can, at times, be a valuable financial tool, it’s imperative that you understand the implications of having debt and how it may be impacting your overall financial health. A good rule to follow is to only borrow money to pay for things that will increase in value or help you make money later down the road, such as education, real estate, or starting and building a business. Whenever possible, try to avoid making everyday purchases with high-interest credit cards, as they can easily add up and leave you buried in a mountain of debt.
Additionally, try to avoid getting bogged down by unnecessarily large mortgage payments, car payments, or the like. If you’re struggling to support your current lifestyle, you may want to think about making some lifestyle changes so you can more comfortably live within your means – another reason that budgeting is so important.
#4. Invest in your financial future.
Whether you’re contributing to a 401(k), IRA, or taxable investment portfolio, investing in your future is a great way to begin building wealth and financial security. As you’re creating your budget, we typically suggest you include a plan to maximize your contributions to any tax-advantaged retirement savings accounts you may have. Additionally, even though the markets may experience volatility from time to time, over the long-term we generally believe it’s still a smart idea to think about investing in a low-fee, diversified portfolio of securities. Establishing a habit of saving as much as you can today and investing it wisely can help you achieve long-lasting financial freedom.
#5. Help others find liberation.
Once you’ve tackled your finances and begun to secure your own financial freedom, it’s time to think about how you might be able to spread your wealth and achieve something more than just saving money. This could mean finding a charity that does work in line with your passions that you can begin donating to on a regular basis, or maybe you want to look into setting up a donor-advised fund to help manage your charitable donations in a tax-savvy way. You can even make this a family affair by getting your children and grandchildren involved in your charitable efforts.
If money is still too tight to give back in the ways that you’d like to, don’t forget that time is a valuable resource, too. There are many organizations and causes looking for helping hands.
Final thoughts on achieving the financial freedom you deserve.
We believe financial freedom is about so much more than just dollar signs and savings. It’s about building a stronger and more resilient foundation for yourself and those you love. By trying to get out of debt, prioritizing spending your money on what really matters rather than on impulse buys and building an emergency fund, and investing in your future, you can be better positioned to achieve a sense of financial independence and security. When your finances are in order, you can feel more confident, peaceful, and free.
At Aviance Capital Partners, we take pride in using our expertise to guide our clients as they work to achieve true financial freedom. If you think you might benefit from talking with a financial professional about how to secure your financial situation, please contact us today. We look forward to helping you achieve your goals!
Aviance Capital Partners, LLC (“ACP”) is an SEC registered investment adviser located in Naples, Florida. Registration as an investment adviser is not an endorsement by securities regulators and does not imply that ACP has attained a certain level of skill, training, or ability. While information presented is believed to be factual and up-to-date, ACP does not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. Not all services will be appropriate or necessary for all clients, and the potential value and benefit of the ACP’s services will vary based upon the client’s individual investment, financial, and tax circumstances. The effectiveness and potential success of a tax strategy, investment strategy, and financial plan depends on a variety of factors, including but not limited to the manner and timing of implementation, coordination with the client and the client’s other engaged professionals, and market conditions. This should not be construed as specific investment, financial planning or tax advice tailored to an individual reader. ACP suggests that readers consult a financial professional, attorney or tax advisory professional about their specific financial, legal or tax situation. Past performance does not guarantee future results. All investment strategies have the potential for profit or loss, and different investments and types of investments involve varying degrees of risk. There can be no assurance that the future performance of any specific investment or investment strategy, including those undertaken or recommended by ACP, will be profitable or equal any historical performance level. Additional information about ACP, including its Form ADV Part 2A describing its services, fees, and applicable conflicts of interest and its Form CRS is available upon request and at https://adviserinfo.sec.gov/firm/summary/146597.