Financial Freedom: Step-By-Step Stages for Goal Setting

financial freedom

I definitely dream of financial freedom. I would love to just have so much money that I don’t have to think about money ever again. Of course, that’s not going to be realistic for most of us. However, we can start small and then go step-by-step to increase how close we can get to financial freedom. A recent Forbes article laid out the 8 levels of financial freedom, which provide a good guide for setting personal finance goals.

Start By Earning More Than You Need

If you’re living paycheck to paycheck then the first step is to get out of that rut. Cut back drastically on spending. Do all that you can to increase income. If you can’t save money then you definitely can’t ever reach financial freedom.

Save Enough Money to Take a Work Break

Most people want financial freedom because they don’t want to work so much. When you’re in that paycheck-to-paycheck phase, it feels like you’ll never be able to stop working. Therefore, the next step is try to save enough money to give yourself a small taste of that life.

For example, create a savings account that will allow you to take a sabbatical from work. Even if you decide not to take it, having the money in that account will make you immediately feel like you have so much more financial freedom. Personally, I love my work, but when I feel like I have to do it just to get by then I start to resent it. That savings helps a lot.

Work Towards Small Luxuries and Extra Savings

Once you have enough in savings that you feel like you can breathe, it’s time to start thinking about your daily life. Financial freedom means that you’re able to buy the things that you want. Of course, I don’t think it’s useful to just splurge on a lot of unnecessary spending. However, I do think it’s good to recognize what small little luxuries will make your daily life better. The goal at this stage is to balance your income and spending so that you get to enjoy those luxuries regularly while still setting aside savings from every paycheck.

Financial Freedom: Money or Time

The Forbes article says that “freedom of time” is the next level. I actually think this is super important. I consider it to be one of the first steps, prioritizing it over a work sabbatical or those small luxuries. However, everyone has different needs and desires when it comes to financial freedom. For me, freedom of time means that even though I work a lot, I’m able to do so on my schedule. I’m also able to be location-independent. Those things make me feel like I have the freedom that I want.

Plan for Retirement

Once you are living comfortably, it’s definitely time to think about setting aside money for retirement. After all, that’s when you’re really going to need financial freedom. Forbes breaks this down into two levels. First, save enough for a decent basic retirement. Then, once you’ve achieved that, start saving for the type of retirement that you really want to have.

Of course, life happens, and we can’t always work through these steps in a linear fashion. Nevertheless, they provide a great guideline for some basic goal setting with financial freedom in mind.

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Do Smart Homes Save Money?

smart homes

I was thinking about adding some smart technology to my home. I had been visiting a friend who had Alexa set up to control all sorts of different things in the house. I got a kick out of saying, “Alexa, turn on …” and choosing the lights I wanted on and off, the music I wanted playing, and so forth. I’ve seen those commercials with the refrigerators and ovens that practically do everything themselves with just the sound of a voice. We’re all moving towards having some version of smart homes. However, when I looked into the costs of just a few of those things, I wasn’t so sure anymore.

Do Smart Homes Save Money?

I’ve always figured that smart homes generally cost money to set up but have the potential to save money in the long run. However, I think that type of thinking primarily comes from the type of smart technology that makes a home more energy-efficient. When it comes to all of the technology available today to make a home more convenient, it may not actually save money. In fact, setting up a smart home can probably cost a lot of money that you don’t recoup. So, I’m trying to figure it out; do smart homes save money? Or do they at least have the potential to pay for themselves?

Energy-Saving Technology Can Save Money

Doing my research confirmed what I expected. It is possible for smart homes to save money if you’re talking about smart technology that saves energy. In other words, if you update your house to reduce energy waste then over time you can save a lot of money on energy bills. I found a helpful infographic that showed how some of this technology pays for itself then saves you money over the long run.

In fact, that research reminded me that I can make small investments that could make a difference. For example, I never thought about getting smart power strips. I use tons of power strips in my home already. Smart power strips monitor energy usage and turn the power off when it’s not in use. That could be really convenient. It could save energy. I like the green aspect of saving energy in addition to the fact that it helps me save money.

A smart thermostat is another really popular device in smart homes. It seems to also pay for itself in terms of quickly offering cost-effective energy savings. Of course, one could argue that simply setting your own thermostat to appropriate temperatures would achieve the same effect. So it’s not that we need the technology to save energy, necessarily, but it might be a small investment to make doing so more convenient.

Convenient Technology Doesn’t Necessarily Save Money

Some of the other technology in smart homes doesn’t seem like it pays off, though. For example, that same infographic shows details about smart refrigerators. A smart refrigerator can actually show you when items are about to go bad. Arguably, you might then use more of your food in time, and not wasting it could save you money. But it doesn’t save you that much. According to the infographic, it takes thirty years for a smart refrigerator to pay for itself. That’s before you would even start saving money thanks to it. Technology often needs frequent updates and repairs so it’s unlikely you’d keep that refrigerator much longer than thirty years (if you even make it that long).

Will I Invest In Smart Home Technology?

So, here’s what it boils down to … it doesn’t make financial sense for me to buy most types of smart technology for my home. The things that are most fun and add convenience generally cost more than they save. However, there might be a few small changes (smart power strips, smarter lighting) that could actually save me money in the long run. I don’t need them. It’s not something I’m going to get at this time. But as the technology keeps changing, I’ll keep reviewing the costs and benefits. It may make sense for me to look at smart homes again in the future.

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Best Places to Retire Depending On Who You Are

best places to retire

I’ve been looking at some recent lists of the best places to retire. They aren’t bad options. However, I think retirement locations really depend on the individual. No matter how cost-friendly it is, a place isn’t the right place if you don’t love it. After all, you’ve worked your whole life to reach retirement; you should definitely love where you live in those later years! Luckily, the lists do tend to reflect a variety of options for people with different lifestyles.

Retiring on the West Coast Requires Money

Forbes recently came out with their 2019 annual list of the 25 best places to retire. They specifically note that you’re not going to find many options in the Northeast or anywhere on the West Coast. That’s because affordability is one of the main factors that they take into consideration when ranking this list. Yes, the West Coast can be very expensive. If you want to retire in a place like the San Francisco Bay Area then you need to have a decent amount of money in the bank.

That said, I love San Francisco. I love living here. In fact, I really don’t want to live anywhere else. Will I be able to retire in San Francisco? I don’t know. I’m working towards it. But even if I can’t, chances are that I’ll want to stay somewhere on the West Coast. It’s the way of life that I prefer, even if I have to sacrifice financially in other ways to make it happens. Therefore, these lists of the best places to retire often exclude the very places I want to live.

Variety in Options of Best Places to Retire

Although the list excludes much of the West Coast, it does offer a lot of variety in other ways. The 25 cities they claim are the best places to retire range in population from 8000 (Brevard, North Carolina) to 1.5 million (San Antonio, Texas). While that excludes the largest cities in the US, it does offer a decent range for people to choose from. There’s also a range in median home price from $135,000 (Savannah, Georgia) to $297,000 (Wenatchee, Washington). That’s not a huge range but it reflects the opportunity to choose from different living styles. Whereas most cities listed are in warm locations, there are a few cities for those who think the best places to retire have many months of snow.

US News offers even more variety in their report. They include 100 best places to retire. These are generally larger cities than those on the Forbes list. Population ranges from 500,000 in Santa Rosa, CA (a West Coast option!) to the many millions of New York City (which actually ranks #16 on this list of best places to retire.) The difference between these two lists really highlights that people seek many different things when it comes to retirement and therefore it’s not easy to rank cities this way at all.

You Don’t Have to Retire in the US

Of course, these lists all offer options in the United States. However, you don’t have to retire in the US at all. If you’re adventurous, have family elsewhere, or just want to spend your later years somewhere new, then you might consider retiring abroad. US News has listed the ten best places to retire in Latin America, and many of the cities on that list hold broad appeal. So, if you’re looking towards retirement, don’t just rely on lists or what others have to say. Really think about who you are, what you want, and what’s realistic for you in your later years.

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