9 SMART Ways to Become Financially Independent

By David S. Chang

Some folks are in a fortunate financial situation where they don’t need to work. The vast majority of us, however, need to work in order to live.

If you are in this group, you probably dream of becoming financially independent and only work because you want to, not have to. Here are 11 SMART steps that can help you achieve your goal of becoming financially independent!


1. Understand What Your Motivation Is

What does financial independence mean to you? this question is very important because you need to be able to decide this for yourself, not have others decide this for you.

What is your motivation to become financially independent? Is it to retire young so you can travel the world? is it to pay for your kids’ education and make sure they are set up for success? Or is it to pursue hobbies that you have?

Your motivation is your why. If you know your “why”, then you can endure any what. Having a strong emotional connection to your why will help you stick with your goals. It will help you pick yourself up when you fail and overcome any obstacles even if you have some problems.


2. Start Small

The next step is to start small by tracking every dollar that you spend. The reason many people fail is that they try to do too much at once. It becomes overwhelming and eventually, they revert back to bad habits.

It is more important to do one small thing consistently over the long haul rather than doing a lot of big things inconsistently. After you are able to make a small task an unconscious habit, then you can add and build onto it.

This is the key to long-term success. Our willpower is a muscle. If depleted it becomes much more difficult to be disciplined. But by starting small, you can anchor that task to become a habit much easier. Then you don’t have to worry about willpower as much if it is an unconscious habit instead.


3. Set SMART Goals

Make your goals SMART

  • Specific
  • Measurable
  • Achievable
  • Relevant
  • Time-based

If your financial goals are vague, difficult to measure, and out of your reach, then it will be much more difficult to achieve them. Is your goal to save a million dollars? Is your goal to have a certain amount of income per month in retirement? Is it to buy a house? When do you want to retire?

These are important because they will determine how you will plan for your goals. If they are too vague then they become difficult to know what you need to do to achieve them.

It should be realistic and something you know can stick to. It’s ok to be ambitious, but setting impossible goals will harm your efforts in the long run. Is your goal to save a million dollars? Is your goal to have a certain amount of income per month in retirement? Is it to buy a house? When do you want to retire?

These are important because they will determine how you will plan for your goals. If they are too vague then they become difficult to know what you need to do to achieve them.

It should be realistic and something you know can stick to. It’s ok to be ambitious, but setting impossible goals will harm your efforts in the long run by setting yourself up for failure.


4. Create a Budget

A budget assigns every dollar that you earn to an expense or savings. Track every single thing you spend. thankfully with today’s technology, you can easily do this with an app or your bank’s online software. You can also use an Excel spreadsheet or even a simple notebook.

Do whatever best works for you, and remember to start small and to build on there. If you are trying to create a budget in an hour when you have a complicated financial situation, it will only become discouraging.

All that matters is you are able to get to the point where you are tracking everything. This will give you a good idea of how you are spending your money. You’ll be able to take an objective look at your situation. You may even find that it deters you from making unnecessary purchases.

You can use the information you have found tracking to figure out where you need to cut back on your spending. You may even want to start by analyzing how you spent money the past several months to give you a good idea of how you will need to budget.

There are different strategies for creating a budget. One is the envelope method, where you withdraw specific amounts of money each week/month and place it in an envelope corresponding to a specific expense.

For example, you could have an envelope for food shopping, an envelope for entertainment, and so on. The goal is not to take money from other envelopes to use for different expenses. If you have money left over you let it build up or invest it. This method gives you an incentive to try to be frugal when shopping, not overspending, and being more aware of where you are at financially.

I recommend that three envelopes be used for saving and investing. One is for retirement and long-term saving, the second for short and mid-term savings, and the third for your emergency savings. They don’t necessarily have to be in a physical envelope. If your bank digitally it is important to keep the concept of separating these buckets of money.

An emergency fund can help you whether your car has broken down or you need to leave your job. The goal is to save 3 to 6 months. don’t invest your emergency fund but put it in a bank account where it is liquid so you have immediate access to it. This is something that should only ever be used for real emergencies – it isn’t for vacations or new gadgets.


5. Spend Less Than You Earn

The only way you can save and invest is by spending less than you earn. The goal is to look at your budget and see where you can cut. Try to maximize your surplus and use that to invest. This simple yet most difficult piece of advice is the most important. Why?

You can do all of the other steps but if you still spend more than you make, there is no way you can be financially independent. It means you will be financially dependent. This simple advice is also the most difficult to follow. Why? Our habits determine how we spend. Start small and start there!


6. Find Ways to Make More Money

Another way to increase your budget surplus is by increasing your income. Look for ways of making more money. It can be a side gig, asking for a raise, or looking at expanding your skills so that you can get a higher-paying job. The main thing is that by focusing on saving more and also make you more, it becomes a multiplier giving you more money to save and invest.

Create passive sources of income. The idea of this is that you’re not swapping your time for money anymore. Being financially independent means being able to do what you like with your time without worrying about cash. Passive income may cover just one bill to begin with, but eventually, it could cover your living expenses and more.


7. Create an Investment Strategy

Investing is absolutely key if you’re ever going to achieve financial independence. investing means you are having your money work for you. There are only 24 hours a day. So even if you are to increase your hourly wage, there still will be a cap because of the limit of time. Investing in a smart way greatly expands how much you can earn by having your money work for you.

There are plenty of resources online or you can find a financial professional to help. There are lots of different types of investments such as stocks, bonds, real estate, and other alternative investments like gold, which you can learn more about in this article.


8. Get Rid Of Bad Debt

Get rid of credit card debt and anything else that could cost you more in the long run. Credit card interest can ruin your attempt at financial freedom if you don’t pay everything off as quickly as possible. Once you have gotten rid of your bad debt, you can start hitting your savings and investments hard.


9. Don’t Allow Lifestyle Inflation

When you start earning more, it could be tempting to start spending more. Maybe get a more luxurious car, a bigger house, or even a fancier TV package so you can watch brand new films. when you are making more money, don’t raise your standard of living but raise your standard of saving. I doing that you will have more of your money working for you so you can achieve financial independence faster. As you start making more money, you should be focusing on saving and investing more, not finding ways to spend more.

when you are making more money, don’t raise your standard of living but raise your standard of saving. I doing that you will have more of your money working for you so you can achieve financial independence faster. As you start making more money, you should be focusing on saving and investing more, not finding ways to spend more.

David S. Chang

Award-Winning Entrepreneur, Wealth Manager and CEO | Chief Editor, Author, Keynote Speaker, Consultant ArtofThinkingSmart.com | Political Consultant | Army Officer National Guard | Living To Fulfill Needs, Solve Problems, and Live Passionately!

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