Achieving financial independence while still working (or prior to retirement) requires a proactive and strategic approach.
The number 1 reason why more than 85 % of Kiwis are not financially sorted at the current retirement age of 65, is that they didn’t take correct action on this much earlier.
If you are earning, you should be saving and investing.
Getting into the saving/investment mode early in life, has an incremental impact over time, growing wealth, year after year, until you have enough wealth to pay for your lifestyle.
So, if you dream about achieving financial freedom at (or preferably prior to) 65, read on.
Key Factors To Consider When Working Towards Independence
If you want to achieve financial independence one day, you’ll need to make the right choices and build your way towards it, step by step.
Here are 5 top tips to help you reach your goals while still in the workforce:
1. Know your budget (Income-Expenses = money to invest).
This simple equation will help you start on your saving/investing journey as soon as you start earning.
Your surplus is the amount of money you still have after deducting all non-discretionary expenses.
Non-discretionary expenses are those that you have little choice about, such as electricity bills, rent, mortgage, groceries, and other `essential’ expenses.
When you arrive at a surplus figure, it is enticing to think `I’ll use this to buy that new I-Phone (or other luxury item).
However, before we spend on `lifestyle’ items (discretionary spend) – it is wise to determine what we can save and invest first.
As Warren Buffet famously advises:
2. Set Clear Financial Goals.
Once you have created a budget and know how much you will be able to save/invest each month, it is time to start defining your financial objectives and aspirations.
Whether it’s saving for a down payment on a house, setting funds aside for education or retiring early, having specific and measurable goals provides clarity and motivation on your financial journey.
Take some time to reflect on your life and your future dreams.
- How much time would you need to achieve financial independence?
- How much income will you need?
- What does financial freedom look like?
- How much investment will be needed to create the passive income?
- What are some of the things you would want to do?
Establishing clear goals not only offers a focused direction but also transforms your financial journey into a more structured and achievable endeavour.
3. Invest Wisely for The Future.
Take advantage of good investment opportunities to grow your wealth over a long period of time. Think about diversifying your investments across various asset types to mitigate risk and maximise returns. Regularly review and adjust your investment strategy, as needed to adapt to ever-evolving market conditions and financial goals.
4. Plan For Retirement Early.
Initiate your retirement planning early to ensure a financially secure and comfortable future.
Did you know that nearly 90% of Kiwis are not sorted at retirement? To avoid being part of this statistic, you should consider seeking out professional financial help from skilled and qualified financial advisers to start planning for your future.
As mentioned earlier, even if retirement appears distant, early planning is key to a prosperous future.
5. Seek Professional Financial Advice.
No one can reach the top of their profession or achieve their goals on their own.
Tiger Woods had a number of coaches who helped him become a 15-time Major winner.
This included coaches for his short game, long game, nutritionists, physiotherapists, mental strength coaches and many others.
Achieving top financial results for yourself is no different and you don’t have to be super rich to afford obtaining advice and guidance.
The experts who can be on your own `Wealth Creation Team’ include financial advisers, mortgage specialists, solicitors, and accountants.
One of the smartest moves you can make for boosting your financial game and stepping closer to financial freedom is teaming up with a skilled financial adviser. They’re like your financial coach, helping you craft a solid plan and tackle money challenges head-on. Check out 5 tips to become financially independent in 2024 for some guidance.
Make sure to find an adviser who really gets you and can offer advice that’s custom-fit to your life and goals.
Finding The Right Financial Help For You In New Zealand
Achieving financial independence while working requires discipline, strategic planning and proactive financial management. By setting clear goals, living within your means, investing your money wisely and seeking financial advice when needed, you can take control of your finances and work towards a secure future.
At Home Advantage, we strive to help people just like you reach their goals and build a better future for themselves and their loved ones. Our experienced team can help with everything from financial planning, goal setting, investment advice, to estate planning, and we’re here to speak to you about your needs.
To get in touch, all you need to do is call us on 027 522 4682.
Navigate your way towards financial independence with Home Advantage.