Back to the library
Financial • 5 minute read

Achieving Financial Independence & Peace Of Mind

Achieving Financial Independence & Peace Of Mind
By Mason Frenzel
Published by Ruby

Ruby helps you and your family work together to prepare and organize finances.

Learn more >>

What does it mean to be financially independent and have peace of mind?

Also known as F.I.P.O.M! For most people, it means having enough money to pay the bills without having to work. Adding some fun money for travel or a hobby is the icing on the cake.

 

To see how far you are down the road to financial independence, consider these five Smart Steps:

1. Don’t have many financial obligations: 

When you’re young, accumulating money may be a goal. To some people, multiple houses, expensive vacations, fine art, and luxury cars mean they’re living the high life.

But all those debts come due and must be paid.

Often people who live the simplest of lives are the happiest. They don’t have to worry about the day to come when they can no longer afford to live lavishly. If you have multiple days of reckoning coming because of your lifestyle, shed those extra burdens.

2. Live debt-free. 

Pay off all your consumer debt. Get rid of those high credit card balances. If you’re still servicing student loans on behalf of your children pay them off as quickly as you can. You may not be able to pay off your mortgage – and there may be tax-related reasons why you shouldn’t – but make that the only debt you carry. In the worst case it’s an asset you can sell.

3. Understand your financial life cycle. 

Everyone has a financial life cycle. It starts with early accumulation when you’re just starting to save. It then moves to rapid accumulation – which is often coupled with rapid spending.

As you start to look toward your retirement years, rapid spending decreases and you save more because you can see that day coming when you don’t want to work anymore. You realize that a $25,000 car gets you to the same place as a $100,000 car (and maybe you don’t mind that dent in the door from the mishap in the parking lot so much).

4. Spend less. 

It takes less money than you think to live a full and satisfying life.

Gone are the days when you could walk into the butcher shop and plunk down $100 on a few ribeye steaks without thinking about it. You might just learn that a flatiron steak is just as good at a fraction of the cost. Make it a sport – finding the best deals on clothing, groceries and other necessities that save you money without impacting your quality of life.

There’s an old saying, “Never pay retail.” Live it.

5. Have a clear picture of your finances.

Figuring out how much money you have and how much you spend seems like a daunting task, and it is.

But! If you’re thorough you’ll only have to go through the financial planning process once and then update the plan periodically.

The best way to accomplish this is to find a certified financial planner.

Many people can honestly claim the title of financial planner. But if they are also bankers or stockbrokers they have an interest in selling you their products. Certified financial planners don’t sell anything. They are licensed and have to stick to strict ethical standards. If you’re not sure of your financial ability to retire, working with a certified financial planner will definitely help with peace of mind.

 

Reaching financial independence is not some kingdom reserved for the very rich.

So many of the middle class think it’s unattainable. The reality is most people are nearing financial independence and peace of mind if they’ve been good stewards of their income.

 

You’re closer than you think.

One indicator that you might be financially independent is if your net worth is 7 to 10 times your living expenses.

And that doesn’t seem like such a high mountain to climb after all.

 

How Ruby Can Help

With Ruby, you can see a clear picture of your (or your loved one’s) finances in one place. With a weekly snapshot delivered right to your inbox, you save time and energy checking in at multiple institutions.

Join Ruby today and take the first Smart Step to F.I.P.O.M.

Sign up for the Ruby Newsletter!

Sign up for the weekly Ruby Newsletter to get caretaking advice and financial guidance delivered to your inbox.

Your email address will never be shared elsewhere, read our privacy policy

By Mason Frenzel