How to Become Financially Free and No Longer Need An Income

I recently spoke with a man who after working over 30 years with a company was told his job was being eliminated.

Approaching 60 years old and with plans to retire in a few years, he was not looking forward to beginning a new career. After meeting with his financial advisor, he found out that the investments he previously made had already prepared him for this moment. With a few minor changes, his advisor determined he could continue to live his lifestyle without depending on income from a full-time job. He has truly achieved financial freedom! Financial freedom is when you do not carry debt and no longer need an income to maintain your lifestyle.

Interested in living a life of financial independence? Here are a few tips to help prepare you:

 

1. Create margin in your finances today

The ants are not a strong people, Yet they prepare their food in the summer.   Proverbs 30:25

It's a struggle for most of us to spend less today in order to prepare for the future. There is always more stuff to buy and more ways to spend. No matter how much we have, we are tempted to spend it all. Being prepared for the future requires that we limit our lifestyles today. This requires living on a budget or spending plan. To begin saving for the future, we have to get in the habit of spending considerably less than we earn. 

2. Invest a portion of every income you receive

The wise have wealth and luxury, but fools spend whatever they get.   Proverbs 21:20

Your first saving priority should be to build an emergency fund of 3 to 6 months of living expenses. After reaching this goal, begin saving 10% to 15% of your monthly income in long-term investments, such as IRAs and pretax retirement (e.g., 401(k), 403(b), or SEP plans).

If your company offers a matching 401(k) program, invest up to the portion the company matches as your current budget permits. This is like getting free money! It also lowers tax liabilities.

 

3. Avoid get rich quick schemes

Steady plodding brings prosperity; hasty speculation brings poverty.   Proverbs 21:5

If I could count the number of 'opportunities' presented over the years. You know, the opportunities presented with phrases like:

With a High Rate of Return . . .

No time or effort are needed . . .

No Money to invest . . .

Only a small amount to invest . . .

It's a No Brainer!

Slow and steady wins the race. Instead of jumping towards a wishful opportunity, decide to make savings automatic. You do this by setting up automatic drafts into a savings or investment vehicle on a regular frequency. After setting this up once, you begin accumulating wealth, truly with no additional time or effort!

4. Diversify your investments

There is another serious problem I have seen everywhere—savings are put into risky investments that turn sour, and soon there is nothing left to pass on to one’s son. The man who speculates is soon back to where he began—with nothing.   Ecclesiastes 5:13–15

 

Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.   Ecclesiastes 11:2

A few years ago, the Enron Corporation scandal highlighted the risks of putting all your money in one investment.  Enron appeared to be a profitable investment and true 'no brainer'. However many people who solely invested lost their life’s savings when the company folded.

The Bible encourages avoiding risky investments and instead diversifying over multiple investments.  Regardless of how amazing an investment may seem, it’s simply not wise to “put all your eggs in one basket.”

  

In the Memphis and Mid-South area? We would love for you to join us for our next FREE workshop, Understanding Your 401k. Click HERE to register now.