10 Rules for Women to Achieve Financial Independence
Financial independence can be defined in a number of ways. However, when most women think of financial independence they dream of a time in their lives when they are generating enough income to cover the essential expenses so that they never have to work again. For some, financial independence is far off into the distance, for others it's within close reach. Wherever you fall on the spectrum, here are 10 financial rules to follow if you want to achieve full financial independence someday:
1. Earn More Money Than You Spend
Most women love to shop! But be sure to obey this principle by always living below your means. Follow this simple rule, no matter what your income and everything else will fall into place. As your income goes up, so will the extra money for savings and investment.
2. Make a Budget and Stick to It
You cannot live within or below your means without knowing what your expenses are and where you can start cutting. The path to that higher knowledge is a budget. There are dozens of free budget templates online. Fill in the template blanks and you’ll learn some rather eye-opening facts about where your money is going. Follow that budget and see how spending discipline give you an immediate leg up on financial independence.
3. Eliminate Unnecessary Living Expenses
Take a critical look at your budget. Are you spending over $100 for cable TV, for example? Cut the cable and save an extra $1,200 a year. Look everywhere and be ruthless.
4. Get Into Daily Financial Awareness Habits That Result in Wealth Accumulation
If your daily habits include a stop at Starbucks for that $5 latte, you are spending $100 a month — another $1,200 a year. Make your own frothy caffeinated beverage from the mixes on sale at your grocery store. Look for ways to save costs and expenses through coupons and sales. Keep track of your monthly bills and look for ways to cut down on energy expenses, for example.
5. Concentrate on Doing Well at and Keeping Your Job
You cannot obey financial rule number one without the income from your present employment. There is a correlation between job satisfaction, promotion and ever-increasing earnings. If you are bored, unchallenged and unhappy with your work, you need to take steps to resolve the matter or you will be stuck in a financial rut.
6. Avoid Money-Making Schemes and Scams
No matter what the slick infomercials and compelling websites shout out, there is no shortcut to wealth. Anyone who advertises that buying their plan or paying to attend their seminar is mainly only interested in making money from you. That meets their financial goals, but detracts from yours.
7. Pay off Your Debts
If you are bogged down in heavy debt and your monthly expenditures are beginning to leapfrog your income, it may be time to consolidate your debts. There are many pathways to debt consolidation. Check around on the web. There is help out there.
8. Pay Your Monthly Credit Card Bill on Time
If you’re carrying a monthly balance on your credit card, you’re swimming upstream in your quest to get out of debt. Consider instead using a bank debit card, or at least get into the habit of paying off your monthly credit card balance.
9. Pay Down Your Mortgage
Your budget will show that your monthly mortgage payment is one of your biggest expenses. Paying off your mortgage early takes discipline and can eat into those excess funds you will begin accumulating through following steps one through eight. However, once your home is free and clear, you have the true wealth of the worth of your home’s market value. When the mortgage payments go away, you likewise have the income excess that becomes a powerful savings and investment resource.
10. Begin a Savings and Investment Plan
Start slow if you must, but save something each month. You’re in this for the long term and your goal is to be debt-free and to accumulate real wealth (i.e., to be financially independent). The savings and investment plan that is best for you depends on your age, situation, and how much you need for a comfortable retirement. Learn more about how to invest. Again, look around. There are financial experts and expertise out there ready to help. If you would like to increase your knowledge of personal finance, here is a list of 10 great financial books to read.
About Angela
Angela Dorsey is the founder and financial advisor at Dorsey Wealth Management, a fee-only financial planning firm based in Torrance, California, helping women prepare for retirement. Angela earned a BS in computer science from Loyola Marymount University, an MBA from UCLA Anderson School of Management, and spent 20 years as a Senior Compensation Specialist in large corporations before becoming a CERTIFIED FINANCIAL PLANNER™ professional and a Registered Investment Advisor (RIA). That background gave her the tools to couple with her passion for empowering women to make the best financial decisions possible. Angela lives in Torrance, California, with her husband. She enjoys spending time at the beach or surrounded by nature. To learn more about Angela, connect with her on LinkedIn.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.