Planning For Financial Independence

Set Personal Goals:


Financial independence is an important goal for most of us. Many of us, however, miss opportunities to become financially independent because of indecisiveness, procrastination, or a lack of knowledge. Understanding and evaluating your personal financial situation is the first step to taking action. The second step is to develop a sound investment plan or goal.
You have to determine your net worth (your assets minus your liabilities) and what percentage of your resources you can apply to meeting your financial goals. Net worth is the primary measurement of your wealth. The best way to increase your net worth is to increase your assets and reduce your debt. The other variable to look at when evaluating your financial situation is your net income (your gross income minus taxes and other expenses).


Tracking your expenses and gross income for period of time will help you to determine your current financial situation. This information can help you budget your current spending and determine how much money you can set aside for meeting future needs and goals.

To get your money to work for you, ask yourself the following questions:


  • What goals do I want to achieve? Do you have children that will need college tuition, or are you planning for your retirement?.
  • When do I want to achieve them? How long before you plan on using the money? Are you planning for retirement in 5 years, a child's education in 15 years, or world travel in 10 years?
  • How much will it cost to achieve my goals? Setting measurable and realistic investment targets requires some homework. If paying for your child's college tuition is your goal, then find out what the experts are estimating tuitions will be when your child graduates from high school, and set your goals accordingly.
  • Are my goals realistic? Is what you want attainable with what you have? What can you reasonably expect from an investing program? Over the long term, the stock market returns an average 12% per year. Therefore, in most cases, a goal of 100% per year would be unrealistic.
These are the types of questions you need to answer before you can develop a strategy and plan to attain your goals. The importance of investing early and adding to your investments regularly cannot be stressed enough. The sooner you get started, the easer it will be to meet your goals.

Write down your goals and make them specific – otherwise they are mere wishes; not goals. A well written goal specifies want you want to achieve, how long you have to achieve it, and how much it will cost.