Financial Independence Starts Here: Smart Money Moves to Make This Fourth of July
While we celebrate our freedom with barbecues, fireworks, and people who matter the most, let’s think about our financial freedom. Financial freedom is the ability to live without financial stress, which includes having enough resources to cover your needs and pursue your goals. Financial independence doesn’t happen overnight, especially when you’re looking at the fireworks exploding in the sky, but you can take small, meaningful steps toward a future where your money works for you.
Put Your Plan In Ink
Our brains are filled to the brim with work tasks, home improvement tasks, logistics of family gatherings, and so much more. It’s a lot to keep track of, so it’s understandable that sometimes our financial goals fall by the wayside. If your financial plans are getting lost and jumbled up with the rest of what’s going on in your head, find paper and a pen. Put your plan for financial independence in ink. Once you put your plan in writing, it lightens the load and makes it real. Here’s how to make your plan:
- Ask yourself what your financial goals are. Make sure to include everything, such as:
- Paying off debt
- Saving for a home
- Funding your retirement
- Building your kids’ college fund
- Buying a car
- Investing
- Match each goal with clear, reachable action steps with deadlines.
Then, put your plan into action. Start meeting the deadlines and move toward financial freedom.
Move Forward On Those Action Items
After you have your plan in place, it’s time to make meaningful changes in your daily financial habits. These changes will build toward your financial freedom. Here’s how you can start.
Paying Off Debt
Take a stand against your high-interest debt. High-interest debt, like credit cards or payday loans, drain your resources and holds your money hostage. The money you could put toward investments is tied up in making your next credit card payment. Take control of your debt by picking a strategy: the snowball or avalanche method.
Both strategies require you to make a list of all your current debts, including the remaining balances and current interest rates. Then, make the minimum payments on all your debt except one. Finally, throw the extra money toward the last debt. This is where the strategies differ.
- The snowball method requires you to put that extra money toward your smallest balance remaining. The idea is that you will pay off this debt sooner, then you can continue to build momentum by reallocating the money from that now paid off debt toward your next lowest debt amount.
- The avalanche method requires you to put that extra money toward your highest-interest debt. The idea here is to save more money in the long run. By paying down your high-interest debt, you pay less interest over the life of the debt.
Both of these strategies can be implemented tomorrow. Evaluate your debt. Choose a strategy. Implement it!
Savings Plans
The key to financial independence is having the resources to cover your current costs and future goals. Tackling your debt is usually the first step. Then, it’s all about savings. Saving for your future house. Saving for your kids’ college fund. Saving for your retirement. Having savings set aside for these means you will have the resources to meet these future goals.
If you currently don’t have much savings set aside, that’s okay. You can slowly start building it now. There are a few ways to go about it.
- Automate your savings. Again, this is something you can do within the next week. You select a portion of your check to get automatically deposited into your chosen savings account. This is one of the easiest ways to save because once you do it, you’re building savings without trying.
- If you want to earn more on your money than a traditional savings account (which offers less than 1% in dividends typically), then you should open a JUMPstart Term Savings account with Partners 1st Federal Credit Union. With JUMPstart, you can still choose how much and how often to save (and it’s automated) and earn 4.07% APY on your money for 24 months.
- Move money manually. This is more work on your end, but it’s up to you to move money from your account whenever you feel like you have breathing room into your savings account. If you go this route, we recommend having a savings goal in mind and reviewing frequently if you are trending toward success.
- Look for tax-advantaged savings accounts. For those bigger goals, like retirement and college, look for specific accounts, either offered through your employer, government, or local financial institution. This can be a 401k, traditional IRA, or 529 College Savings Plan. These accounts are designed to help you reach these specific goals and are often incentivized.
Celebrate Your Wins
Reaching financial freedom is sometimes a long, arduous journey. Make sure to stop and celebrate the wins when they come. Wins include:
- Making on-time, consistent payments for a year
- Paying off one of your high-interest loans
- Being able to increase your savings contribution
- Reaching a savings goal
All of these goals mean you are on the right track and will reach financial independence with your continued diligence and hard work.
This Fourth of July, while you’re celebrating freedom, take a moment to invest in your financial freedom too. Small, intentional actions today can lead to greater independence, stability, and peace of mind tomorrow. Whether you’re reviewing your budget, strengthening your savings, or planning ahead, you’re building a future where you have more choices and more control.