Do you operate a successful business that generates high cash flow but you haven’t yet achieved financial independence? Do you have debts associated with the business or feel constrained by the operational hours?
At Collins Mann, we can help you learn how to be financially independent and enjoy more freedom in your day-to-day life so you can retire early.
In this article we will review:
- What is financial independence?
- How to become financially independent.
- What being financially independent can mean for you.
What is Financial Independence?
Financial independence: sounds great, right? However, according to The Australian Bureau of Statistics, more than 3 in 10 Australian households are deeply in debt, and high-income households are even more likely to be over-indebted.
If this is the case, it’s no wonder that financial independence can feel entirely out of reach, even for wealthy Australians. Thankfully, there are proactive steps you can take no matter your current financial situation. Start with our Financial Planning 101.
How to Secure Financial Independence
There are a number of ways to secure financial freedom. For some, this may mean building a property portfolio or business that generates income without the need for your supervision.
In more recent years, this has been the focus of the FIRE movement. This stands for Financial Independence, Retire Early and the goal of this movement is to aggressively save and intelligently invest. By using 50-70% of your income towards saving and investing, and reducing your living expenses, financial independence can be achieved much earlier.
There are some great habits you can practice to help you become financially independent. Try some of these:
- Avoid credit card debt - Credit card debt attracts high interest. When you skip credit debt, your money is free to be put to work for you.
- Consistently spend less than you earn - this one takes practise. Setting up a clear budget that still allows you some funds for fun is the best way to approach this.
- Ignore trends, competitive spending and collecting of things - Just because someone you know has the newest iPhone, doesn’t mean you need one too! Before buying more things, whether it is clothing, homewares or even groceries, ask yourself ‘do I need this?’
- Pay yourself first, always - Commit to paying into your savings account before you do anything else with your salary. Setting up a direct debit for immediate transfer when you get paid is a great way to ensure this happens.
- Buy assets that appreciate in value and or can generate income - This could be property, but it can also be art or collectibles.
- Invest intelligently and for the long term - Just because one investment doesn’t work out, doesn’t mean you shouldn’t pursue investment opportunities at all. Investing is a long-term strategy.
No matter your financial situation, it is possible to successfully become financially independent. At Collins Mann, we can help you take these steps further, strategising with you so you can learn how to be financially independent sooner.
We assess your current situation and create an easy-to-follow plan that will maximise your chances of retiring early.
What Becoming Financially Independent Could Mean for You
Most of us dream of retiring early; working well into our 60s or later is not something we aspire to – unless of course, you seriously love your job! For those of us who do want to retire early, focusing on becoming financially independent can mean escaping the daily grind well in advance of retirement age.
Being financially independent doesn’t just mean the possibility of early retirement, it also opens the door to other opportunities such as time to grow your personal wealth; reduced stress; more time to spend with loved ones; time to undertake a hobby, try something new or invest in your own health and wellbeing; the freedom to travel; or the opportunity to be generous with your time and money.
At Collins Mann, we believe you should have choices and not have to compromise in your retirement. Helping you work towards financial independence is just one part of achieving this.
In addition to supporting our clients to achieve financial independence, we offer expert advice on superannuation, wealth management, retirement planning, high net worth financial planning, and so much more. Our goal is to set you up for a financially secure future so you can retire comfortably.
If financial independence is something you are working towards or need support to achieve, contact Collins Mann today on 07 3251 3200.
Financial independence is defined as ‘having enough income to pay one’s living expenses for the rest of one’s life without having to be employed or dependent on others.’ Will you be in that category when you retire?