Objective information about retirement, financial planning and investments


5 Tips for Financial Independence


With July 4th upon us it seems like a good time to think about our own financial independence.  This may mean different

saving and spending

things to different people and I’ll leave each of you to define financial independence in your own way as it pertains to your unique individual situation.  However you define it, here are 5 tips to help you get there:

Set specific financial goals.  Putting money aside for the future versus spending it now on something you might want but don’t really need is easier if you have a goal in mind.  Maybe that is a nice retirement on the beach, or that new sports car you’ve always wanted, or perhaps ensuring that your kids can get through college.  The key is to establish goals that are quantified and have a definite time frame attached to them.  This way you know when you will need the money and how much you will need to have saved.  This allows you to track your progress as well.

Spend less than you earn.  The amount of money left over for saving is a direct result of your lifestyle choices. Since you will typically want a similar lifestyle during retirement, your lifestyle decisions now will impact the quality of your life down the road. Step one is to get a handle on what you spend and determine what, if anything can be eliminated. This would typically include reducing nonessential expenditures, such as entertainment, dining out, and vacations. Another strategy is to find ways to spend less money on the things you currently buy. For instance, obtain quotes for car insurance from several companies, placing any premium reductions into savings. It is vital to track your spending via a budget.  Online tools can be a big help here.

Save money before you see ever see it.  Set up an automatic savings program where money is automatically deducted from your paycheck or your bank account on a regular basis and deposited directly into an investment account. One great way to do this is to sign up for your company’s 401(k) plan, where funds are withdrawn every pay period. The money is  invested on a pre-tax basis, offering even more savings.  Make sure that you at least contribute enough to earn your company’s full match if one is provided.  You can save in a similar fashion into an IRA, a taxable brokerage account, or into a savings account to build an emergency fund.  I can tell you from personal experience that I have a number of clients who have accumulated enviable sums for retirement via regular contributions to their 401(k) plan.  While the 401(k) sometimes gets a bad rap from the financial press it can work well for those who take full advantage.

Don’t let debt derail you.  If a significant portion of your income is going to pay interest on loans that leaves less available for saving and accumulating wealth.  Work to eliminate all debt except your mortgage. Pay cash for purchases so you don’t incur additional debt, take the attitude that if you don’t have the cash you can’t afford it.  Pay down your existing debts beginning with the debt with the highest interest rate. Once that debt is paid in full, start paying down the debt with the next highest interest rate, continuing until all of your debt is paid in full.

Invest with a plan, don’t just save.  A financial plan should serve as the foundation for your investing activities.  A financial plan is like having a road map for a car trip.  With a map you’ll know where you are going, you’ll be able to track your progress en route, you’ll be able to adjust your route for unexpected developments such as road construction, and you’ll know when you’ve arrived.  Starting with a financial plan in place will help you develop an investment allocation that combines a level of risk that you are comfortable with while reaching for the level of return that will allow you to reach your goals.

These are just a few ideas for achieving financial independence.  What would you add to the list?

If you need help evaluating your financial situation or with financial planning to achieve your goals please feel free to contact me to discuss your situation.


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  1. Pyper B. says

    Love this. Making a plan feels very liberating. Quite appropriate for the time of year too. Thanks for the great tips.


  1. […] Wohlner of the Chicago Financial Planner brings, just in time for the 4th of July, 5 tips for financial independence. Coming from an experienced financial planner, these tips, ranging from setting goals to paying off […]

  2. […] Chicago Financial Planner, Roger Wohlner reminds us that financial independence means different things to different people. Like so many activities in life, personal finance choices are personal. I like that Fidelity is setting approximate benchmarks to quantify the retirement decision. But, review these numbers with caution and an eye for your personal goals and values. […]

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