12 Essential Steps to Achieve Financial Independence by 60
Have you ever wanted to retire early for a life of leisurely afternoons and never-ending Netflix binges? Well, achieving financial independence by 60 might just be your ticket to that dream. Here are 12 essential steps to help you achieve financial independence by 60.
1. Budget Like a Boss
First things first, let’s talk about budgeting. Your budget is like your financial diary, and it will help you know your expenses like the back of your hand. Keep it real, and make sure you’re not spending your future yacht money on avocado toasts. Without a budget, you won’t have any idea about how much your ingoings or outgoings are.
2. Crush Your Debt
Debt can be a real party pooper, especially when you’re trying to save for those golden years. Whether it’s student loans, credit card debt, or that IOU from Uncle Bob, make a plan to tackle it head-on. Remember, each interest-free dollar is a dollar that can grow a retirement fund in your savings account.
3. Make Savings Your New Favorite Hobby
If you thought hobbies were limited to knitting and obscure sports, think again. Saving money is the hobby that pays you back – literally! Even if it’s just a small percentage of your income at first, your contributions will grow over time, and you’ll be able to celebrate it all by the time you turn 60.
4. Invest Like You’re Planting a Money Tree
Investing might sound extremely complex, but it’s actually simpler than you think. Investing means putting your money to work so you don’t have to. Think of it as planting a money tree—it’ll grow while you’re busy living life. If you’re new to the game, start with low-cost index funds so that you can set it and forget it, which is exactly the way to do it.
5. Boost Your Income
Since there’s a limit to how much you can cut expenses without moving into a cardboard box, increasing your income is the next best thing. Whether it’s freelancing or selling your craft, find your niche. Working on your side hustle means you’re able to use your unique skills to quietly boost your income, all while maintaining your day job as your financial anchor.
6. Live Below Your Means, Not Your Dreams
Living below your means doesn’t mean you have to give up your dreams of sipping piña coladas on a beach. It’s about making conscious choices to spend less than you earn. This might mean going for a staycation instead of a lavish getaway or choosing a used car over a brand-new one. You just want to make smart and value-driven decisions.
7. Make Frugality Into a Fashion Statement
Forget what you know about being frugal – it doesn’t mean you’ve got to be cheap. Being frugal means stretching your dollars to their maximum potential while still loving life. So, get creative! Try hosting potluck dinners instead of dining out, or give DIY projects a go. Make it fun, and you’ll soon find that you’re saving more than you think.
8. Boring but Beautiful Retirement Accounts
Sure, retirement accounts might not exactly be very fun, but they’re the workhorses of your financial independence journey. Put some money in your 401(k), especially if your employer matches contributions – that’s free money! An IRA is like a sedan – it may not be glamorous, but it’ll get you where you need to go.
9. Set Ambitious Financial Goals
The journey to financial independence is a marathon, not a sprint. As such, you need to set ambitious and achievable financial goals for yourself. Work out your FI (Financial Independence) number by multiplying your annual expenses by 25. This number is your target net worth for living the dream without using up all your funds, so keep it in mind!
10. Elevate Your Financial IQ
Knowledge is power, especially when it comes to personal finance. So, how can you get smart? By reading books and listening to podcasts, of course! These can turn complex financial concepts into easy-to-follow strategies that you can apply yourself. If you keep teaching yourself, you’ll be prepared to make smarter financial decisions.
11. Track Your Net Worth Religiously
Tracking your net worth is no different from using a fitness app. Just like you might obsess over every calorie you burn, keep a close eye on your net worth. Tools like Empower make it easy to link all your accounts in one place and give you an overall view of your financial situation. With every dollar, you’re one step closer to financial independence!
12. Keep Your Eye on the Prize
Finally, remember to stay focused on your financial independence. Yes, it can be easy to get sidetracked by impulse buys or discouraged by setbacks, but just remember why you started this journey in the first place. Think about your future self, free from financial worries and enjoying the fruits of your labor. You can do it!
The Final Word
Achieving financial independence by age 60 is possible, but it requires discipline and a solid plan. If you follow these 12 essential steps, you’ll be on the path to financial freedom in no time. Remember, the journey is as important as the destination, so enjoy the ride, learn from your mistakes, and keep pushing forward!
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Tamila McDonald is a U.S. Army veteran with 20 years of service, including five years as a military financial advisor. After retiring from the Army, she spent eight years as an AFCPE-certified personal financial advisor for wounded warriors and their families. Now she writes about personal finance and benefits programs for numerous financial websites.