Key Takeaways

• • • Financial Independence is defined differently by each individual.
    • Peace of mind is one of the greatest benefits of achieving financial independence.
    • Explore actionable steps that can guide you toward financial independence.
    • Budgeting, managing debt, and saving are crucial to achieving financial independence.

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    Financial independence might seem unattainable, but anyone can achieve it with some thought, work and planning. If you’re wondering why it matters, think about how having enough money to feel secure can make life less stressful. Whether it’s buying things you need, planning for the future, or not relying on others for money, financial independence is about feeling comfortable with your finances.

    Let’s Get Started

    Very generally explained, financial independence or financial freedom, means living comfortably without money worries. More specifically, financial independence means different things to different people. If you’re interested in working toward financial independence start by determining how you define it. Consider that financial independence can mean:

    • Having no debt, or no debt outside a mortgage or vehicle loan.
    • Paying bills with money left over for saving and enjoyment.
    • Accumulating savings for retirement and/or college for children.
    • Making ends meet without help from family or others.
    • Being able to retire early.

    Of course, financial independence depends on your situation and history, and your definition can change over the years and circumstances. Spend some time determining what financial independence means to you.

    Step by Step, by the Numbers

    Now that you’ve defined what financial freedom looks like for you, it’s time to dig deeper:

    • Calculate what you owe—like credit cards, home loans, car payments, and any other money you’ve borrowed.
    • Plan your next steps—maybe you want to be financially independent without help from others. Figure out how much you need to cover your monthly bills and how you’ll make that money.
    • Consider your timeline—if you’re saving for retirement or your kids’ college, decide when you’ll need that money. You might be able to save for both at the same time if your kids are young!

    With a clear idea of your financial goals, you can make a budget, pay off debt, and start saving.

    Build a Budget

    Building a budget is simple, and once you have one it’s easy to review and revise as your circumstances and goals change. Start by listing everything you spend money on each month. If you use a tool like Lake City Bank Digital, you can easily track your expenses each month. In addition, Lake City Bank Digital has Financial Tools that can automatically create a budget for you.

    After that, subtract what you spend from what you earn every month. This is when you can start planning how to reach your goal of financial independence. Review each item in your budget to see if your spending will help you meet your goals as planned. Are there places where you could spend less now so you can have more money later?

    Frugal isn’t a Character Flaw

    Being frugal isn’t about being cheap—it’s about being smart with your money. If you want to achieve financial independence, living below your means is key. Here’s how:

    • If you have two incomes, try living off one and saving the other.
    • Take a close look at what you truly need versus what you want and cut back where you can.
    • Keep in mind that the sacrifices you make now will lead to greater rewards later.

    Tackling Debt

    Debt can hold you back from achieving financial freedom. As of 2023, the average person in the U.S. owes almost $24,000 in non-mortgage debt and over $104,000 when mortgages are included.¹

    Keep track of your total debt over time to see if it’s increasing or decreasing. Also, assess how much of your monthly budget is going toward paying off debt. Eliminating debt is crucial for reaching your long-term goals faster, so it’s essential to have a clear plan.

    Consider these two approaches for tackling credit card debt:

    • Start by paying off the card with the highest interest rate. Once that’s paid off, move on to the next highest interest rate card.
    • Alternatively, begin with the credit card that has the smallest balance. Once that’s paid off, move to the next smallest balance, and so on.

    No matter which method you choose, be sure to make at least the minimum payments on your other credit cards and loans to avoid late fees.

    Ready, Set, Save!

    Your savings will add up faster if you budget for it.

    • Decide how much you want to save each month and set it aside first, so you’re not tempted to spend it.
    • Set up automatic transfers to move money directly into your savings account from your paycheck or checking account.
    • Adjust your savings whenever your income increases or you pay off a big expense.
    • Utilize savings tools such as Goals² in Lake City Bank Digital to monitor your progress and achieve your financial milestones.

    And don’t forget to reward yourself for taking steps along the way. You’ve earned it!

    Want to Get Started?

    There’s no better time than now to start shaping your financial future! Take some time to map out your goals, establish a plan, and leverage tools like Lake City Bank Digital and Goals for a smoother path to saving success.

     

    ¹Experian site with debt data https://www.experian.com/blogs/ask-experian/consumer-credit-review/#s4

    ²Goals, as referred to herein, constitute the Goals Account described in Section E Investment Accounts of the Personal Account Terms and Conditions.