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Focus on Your Financial Freedom with These Five Steps

Picture of Randall E. White

Randall E. White

Discover five financial freedom tips to update your financial plans this July and work towards achieving greater financial independence.

July is a great time of year to think about assessing and updating your financial plans. Why? Well, as we celebrate America’s Independence on July 4th, you might also take the opportunity to think more about your own financial independence and what it can mean for your lifestyle, peace of mind, and more. Just a few years ago, an AARP study found that 53% of adult households in the United States did not have an emergency savings account. The pandemic applied even more pressure to struggling Americans, exacerbating that anxiety. The fear of not having financial security can feel overwhelming, but you can take this moment to embrace the American ethos of “land of the free and home of the brave” and apply it to your money management. In this article, we’ll share five financial freedom tips to help you on your way to reaching your personal money goals and achieving greater financial independence.

1. Commit to Getting Debt-Free

Achieving a lifestyle free from debt is a significant indicator of financial freedom. Eliminating debt and maintaining that status can allow you to save money for the future. However, it’s important to recognize that not all debt is the same. Good debt, such as student loans or a mortgage, can be an investment in your future, while bad debt, like high-interest credit cards, can burden you with hefty payments. According to a 2020 Experian report, the average American carries about $92,727 in total debt, marking the highest level ever recorded. If you’re dealing with debt, know that you are not alone. There are several strategies and steps that may help, but research them before deciding which makes the most sense for your needs.

2. Maintain an Emergency Fund for the Unexpected

Life has a way of throwing curveballs from time to time, doesn’t it? The COVID-19 pandemic, and the economic and employment downturn it spurred, is the most recent large-scale even that forced many people to turn to emergency savings, yet smaller instances occur for Americans every day. Whether it’s replacing an old furnace in the dead of winter or receiving an unexpectedly high healthcare bill, having emergency cash in the bank can give you back the freedom that comes from having peace of mind.

Exactly how much you should set aside is a personal equation based on what you afford today and your cost of living. However, a good estimate is to put away three to six months of expenses. You can utilize any type of savings account, but an FDIC- (or NCUA-) insured account at your bank or credit union is ideal. Set a monthly goal for how much you can contribute to savings and look for ways to automate the process. Once you build it up to a certain amount, you may want to consider having your money work for you. If you exceed your emergency fund goals, keep saving and consider setting aside a portion to invest in a low-risk fund to maximize yield.

SEE ALSO: Navigating Financial Stress During Life Transitions

3. Gain Control Over Your Spending

Feeling financially free isn’t about being able to spend whatever you want today. It’s about knowing that you’ve saved enough that you don’t have to worry about your future. Setting a budget does force you to curb spending in the short-term but setting up those fiscal guardrails is one of the surest paths to financial independence, which is why smart spending is on our list of financial freedom tips.

If you have a high income, you may feel you don’t need a budget; after all, you can afford all your necessities, plus many lifestyle perks, too. Consider this, though: having a budget can provide a deep sense of calm and reassurance. Once you know how much money is coming in and how much you can spend, you have a holistic picture of where your money is going. Think of a budget as a road map. You wouldn’t set out on a cross-country trip without any idea of which road to follow. Living without a budget is like driving blind. Setting targets, defining priorities, and giving every dollar a job can help you get to where you need to go by putting you in the driver’s seat. What better way is there to achieve the greater financial freedom you desire?

4. Plan Ahead for the Future You Want

The terms financial freedom and financial independence mean different things to different people. However, for many people, it’s about being able to enjoy a comfortable retirement free from financial stress and anxiety. Here are a few simple things you can do today to help prepare for tomorrow:

  • Maximize contributions to any tax-advantaged retirement savings accounts, like an IRA or a 401(k) plan.
  • Take advantage of any employer-matching contributions so you can receive the full amount offered.
  • Diversify your investment portfolio with a mix of asset classes.

Making short-term sacrifices for a more comfortable future can be challenging but stay focused and remember that you’re providing yourself with the gift of financial independence.

SEE ALSO: Loving Your Golden Years: How to Cultivate Your Retirement Mindset

5. Pay it Forward and Let Freedom Ring

Maybe financial freedom tips 1-4 above are already ingrained habits in your financial management, and you’re looking ahead to what comes next. If you already feel financial independence, consider celebrating this July 4th holiday by helping others. Determine how much you can set aside for charitable giving and help support the missions of causes and organizations you find important and meaningful.If you have children or grandchildren, you might also consider setting up or funding their 529 college savings accounts. If you don’t have relatives that need help, consider donating to a child-focused charity, particularly one with a focus on education. Investing in the next era of earners can help us all enjoy more financial freedom in the years ahead.

Implementing Financial Freedom Tips This July 4th and Beyond

Freedom holds different meanings for everyone, but on July 4th, we collectively celebrate the opportunities that independence brings. Achieving financial freedom can boost your confidence, provide a sense of control, bring peace, and allow you the freedom to live the life you envision. We hope these financial freedom tips will help you reach your goals now and into the future.

If you’d like professional guidance as you work to build wealth, plan for the future, and gain greater financial freedom, the TriCapital team can help! Please contact us today to schedule a conversation and learn more about the comprehensive financial planning services we offer. We look forward to hearing from you!


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