Unemployment is near record lows. Salaries appear to be growing. Consumer confidence is as high as it’s been in years. But at the same time, recent stock market turmoil has scared the crap out of many people. With Trump seemingly trying single handedly to ignite a trade war, many investors are beginning to realize that stock market investing isn’t always as easy as picking a few index funds. Fear not, you can still achieve financial freedom.
Here are seven steps to take now to stay on track for Financial Freedom.
Get Started Saving Today
The first step is always the hardest. The earlier you started saving for retirement the sooner you will be able to achieve financial independence. This is the day when working becomes an option and not a necessity. I’m guessing many of you reading this are living paycheck to paycheck. A trusted financial planner can help you get your financial house in order so you can sit back, relax and enjoy your dream retirement.
One of my long-term financial planning clients recently described his finances as running themselves. “My finances seem like they’re almost on autopilot,” he said. “It’s fantastic that I know my financial plan is working and that I don’t have to spend a lot of time working on it or worrying about it.” I’m here to tell you that you can do the same.
If you prefer to pull out your few remaining hairs when thinking about your finances, you can STOP READING NOW. However, if you are looking to improve your life, and make the journey through your working years more financially fabulous, follow these financial freedom tips.
Automate Everything Possible
Technology is wonderful and it can help save you time and avoid stress. Try and make as much of your financial life automatic. Set up a payroll deduction to your 401(k) plan at work. Pay yourself first, automatically, with monthly deposits into your long-term savings.
Pay all of your bills automatically on a credit card (pay it off every month) versus manually paying every bill. While that may only save you a few minutes per bill, it can add up to hours and hours over a year.
Don’t Be an Idiot – Get your Full Employer Match
For most of you, this could easily be a million-dollar mistake. For others, it could be a multi-million-dollar mistake. You must, I repeat, you must get all of your employer 401(k) matching contributions. This is like free money. Would you turn down a raise? Figure out how much you have to contribute to the retirement plan at work to get the full match, and make sure to contribute at least that much money, per year. Skipping this one simple step could be a (multi) million-dollar 401(k) mistake.
Don’t Try and Time the Market
Before the financial crisis, I had a conversation with a friend who claimed he was waiting for the market to tank so he could buy low. I recently checked in with him to ask when he decided to get into the market. He responded “no way the market was way to scary to buy during the down turn.”
For some, it might be scary to buy when the market is doing well. For others, it could be a difficult decision on whether or not to buy when the market is performing poorly. I personally don’t think either of these things will be as hard as the retirement for someone trying to live off Social Security (SS) alone. The average SS check wouldn’t cover the cost of an average one-bedroom apartment here in Los Angeles.
Dollar-cost average into a diversified investment portfolio and go back to enjoying your life. This will nearly eliminate the need to worry about short-term market volatility. You buy more shares when prices are low and less shares when prices are high. That won’t eliminate risk, but it should greatly reduce your stress.
Turn off the 24-Hour News Cycle
The stock market goes up and it falls. Over the long term the trend has been steely rising. Paying little to no attention to cable news will help you have a better retirement. However, if I happen to be appearing on one of those cable news programs offering tips on how to have a better retirement, then you should definitely watch. Stock market forecasts, the Mueller Investigation, GDP, the list goes on, really have little to do with you and your journey to financial freedom.
Work with a Fiduciary Financial Planner
If you thought you had cancer, would you want to go to a doctor who only got paid for giving you more chemotherapy? Many so-called financial advisers are actually stock brokers with a more marketable name. They are not supposed to dispense financial advice and may only be thinking about making their commission instead of putting your best interest first.
A good financial planner will help you set up a comprehensive strategy to reach your specific goals and help you stay on track to reach those goals on your time frame. Additionally, a financial planner can carry all the stress of the day-to-day movements of the stock market while you relax and enjoy your drink of choice on the beach.
Take a Proactive Approach to your Financial Future
Every day we are all a little bit older and a little closer to full retirement age. While thinking of getting older is about as enjoyable as budgeting, being proactive can make both of these things less miserable. The younger you are the easier it will be to save enough for a secure and relaxing retirement. Starting late may require you to work longer or make more drastic cuts to your lifestyle in order to afford even the basic necessities of life. Be proactive and start saving now. Let compounding interest work its magic. You will be amazed at how even a small amount of money can add up over time.
I’d guess many of us spend more time prepping to take and post the perfect photo to social media than we do planning for retirement. Of course, there’s nothing wrong with that if you already have a financial plan and are on track for financial freedom. Take some time and get your financial house in order so you can have more time taking photos and making memories.