If you’re just starting out in your career, you’re going to find yourself faced with more financial decisions than ever before. Decisions that can have an impact on your wealth throughout your life, right into retirement. As daunting as that sounds, the truth is that most financial mistakes are committed by those starting out, preventing them from achieving the financial independence they crave.
Want financial independence now and into the future? It’s never too early to start managing your wealth with care and intent, and putting in place a secure financial foundation for your future plans.
Here are 5 top tips for achieving financial independence early on
1. Avoid a cash-strapped month end
Discipline is a key part of financial success. Young professionals have the potential to outgrow their earnings with every increase, and even every salary. Avoid cash flow highs and lows throughout the month by planning ahead for necessary expenses and differentiating between expenses and indulgences. Set a budget and get used to working within its limits, save regularly, pay off debts as fast as possible, and plan for future expenses to avoid further debt. Putting in place basic financial planning tools will help you be a better financial manager of your own wealth for years to come.
2. You don’t always get what you want
It’s important to understand and accept this concept and to distinguish between your needs and your wants. Your needs (living expenses, savings, retirement planning etc.) come first and your wants second if you wish to achieve financial independence. Spend wisely and with accountability; save for the wants. And don’t forget the all-important emergency fund – life is unpredictable but, as long as you’re generating an income, your financial situation shouldn’t be.
3. Cover the major risk situations
Building on the notion that planning for an emergency is a financial must, you need to plan for major risk scenarios such as accidents, health emergencies, unexpected emergencies, and death. Insurance is an important part of solid financial management – no one thinks they will suffer from a major emergency until it happens and proper planning can be the difference between a manageable emergency and a complete disaster.
4. If you want to invest, start as soon as you can
Time truly is your biggest investment ally – start as soon as you can, as young as you can. Time is the one thing you can’t buy back and it allows you the opportunity to ride out the downturns, and buy on a regular basis so you have more invested for longer during high times. It’s probably best not to engage in investing on your own – work with a reputable firm to ensure you learn while your investment grows.
5. Retirement is coming
While it might seem strange to think about the end of your career at the start of it, retirement can be a major stumbling block to financial independence. Retirement is an expensive inevitability for most people so the sooner you start planning (and saving) for it, the better your chances of retiring well – financially secure with the independence to make life decisions based on your desires rather than your financial circumstances.
Every working professional needs to work with a professional financial adviser who can help them manage their wealth. As independent financial advisers, we specialise in the finances of working professionals and aren’t tied to any one product or provider. Let us help you build a private wealth experience that will ensure your financial independence from as early on as possible.