What does financial independence mean to you? For some, it means getting on top of student loans or paying off credit card debt. For others, it means finding the money for a new car, a home or retirement account. And some may want to do all of these things and more, but aren’t sure where to begin. We hear you! And we can help. Here are five tips to get you started:
1. Write down your goals. Use EBSA’s online worksheet to prioritize your goals and figure out how much you need to save to reach the most important ones.
2. If you are already saving, keep going! If you’re not saving, it’s time to get started. Start small if you have to and then increase the amount when you can. The sooner you start saving, the more time your money has to grow.
3. The trick to saving for any goal is to spend less than you earn. That can be hard if you have trouble making ends meet. But if you set up a cash-flow spending plan, it will be easier for you to figure out how to spend less. Each year, review your spending and make changes for next year’s budget to help you reach your goals.
4. Paying off debt can be an important step toward financial security. Money that goes to pay interest and late fees could be saved and invested to reach your goals. Get your debts and bills organized with our online worksheet. If you need some help with your debts, check out these resources.
5. Take advantage of your job. If your employer offers a retirement savings plan, such as a 401(k) plan, sign up and contribute all you can. Often, there’s free money involved in a 401(k). (Do we have your attention?!) Many employers contribute to their employees’ 401(k) accounts once the employee begins to put money in. If, for example, your employer matches 50 cents for each dollar you contribute, that’s an immediate 50 percent return. Find out how your employer’s plan works and take advantage of it.
Take one or two steps towards financial freedom this July. Then make this an annual opportunity to stop and take a look at how you are doing with your goals. Celebrate your progress and make changes if needed to stay on track for financial independence.
Phyllis C. Borzi is the assistant secretary of labor for employee benefits security.