Nigeria celebrated 59 years of independence last week. We know that in this period, we have not met expectations based on what we have been endowed with. Fortunately, we still have a huge opportunity to earn and to manage our resources properly to get out of this situation. 59 is a relatively short time in the life of a nation.
Just as you assess your country, take a look at yourself. What does 59 mean to you? How would you answer if someone asked you if you are on track to be financially independent at 59?
Too many people have gone through life without a firm plan and then find that there are more years of life ahead of them and no money to fund it. The good news is, that you can start making changes today that will help you along the journey to independence. However, you would need to make some drastic changes.
Financial independence typically means having enough income to pay for your living expenses for the rest of your life. Here are some habits that can make financial independence a part of your future.
Watch consumer debt
Debt can rob you of financial independence. While you are working, you can manage debt because you have regular income coming in. When you retire, everything changes. In addition to your pension, you will need other sources of income to be able to maintain the lifestyle you have grown accustomed to. The first step toward financial independence is to get rid of or at least reduce your high-interest debt and free up your money.
One of the main advantages of retirement is that it gives us the freedom to follow our dreams. However, the dream of travelling and enjoying your retirement can only happen if you are not broke.
Do not copy the Joneses
One of the reasons we spend so much money on “things” is to keep up with friends and neighbours. Most people cannot afford a mansion, luxury cars, expensive schools, designer clothes or fine jewellery, but particularly in a materialistic society like ours, many feel pressured to keep up appearances. This is one of the surest and quickest ways to financial ruin and eats into money you should be setting aside for your retirement.
Cut back on your expenses
[Tweet “There is no magic formula; the key to financial independence is to spend less than you earn”]. It will take discipline to consciously spend less. Upon retiring, you are often forced to give up some of the luxuries that were once considered essentials.
Track your expenses to see where your money is going and cut out things you don’t need. You must be prepared to adjust your lifestyle and spending habits. It is particularly challenging where you have been a corporate executive for many years with perks that you took for granted. One example to reduce your expenses is to consider downsizing and moving to a smaller home in a less expensive area or city.
Make passive income
Give some focus to generating passive income. Some examples include Interest from your bank deposits which offer a reliable, predictable form of income. Property is one of the most dependable assets when carefully acquired with professional guidance. It is a great source of passive rental income. The stock market has a good long-term track record, and many successful investors have built significant wealth this way. The right investments can ensure you get regular income from dividends or selling stocks that have appreciated in value. The truth is that every investment opportunity comes with risk so do seek professional advice.
Look for ways to generate additional income.
What do you love that you are very good at? Can you monetize it? Explore opportunities that can earn you additional income.
If you have been in business for a number of years, consulting is a good way to earn from your experience. Companies need support in many areas; from financial management, business strategy, HR, sales and much more. If you left your former employment on good terms, you may be able to offer your services. Retirement does not mean staying away; be sure to network and remain in circulation.
You could consider writing a book, or get into the corporate speaking circuit to impart knowledge based on your expertise. These opportunities keep you mentally active, relevant and earn you some money.
Think widely about the things you love to do. For example, are you a gardener? or a talented interior designer? can you teach? There are so many opportunities to keep you earning from what you already know. You can start by offering your services for free in the first instance to friends and neighbours. If you are good, the word will spread and you could end up with paid work.
Keep working if you do not have to Retire
If you find that you are not financially independent, and you are physically and mentally able to keep working, then do so. A few more years earning in full time employment can make all the difference; it will give you time to accumulate and invest additional funds for retirement. Additionally, a part-time job can help to stretch your long-term finances. Many people are still fully employed well into their seventies. The aim should be to work because you want to, and not because you have to.
Focus on your health
Healthcare is a very expensive part of life, and even more so as you age. Protect your retirement years by taking care of your physical and mental health. Focus on preventive care measures including regular exercise, rest and a healthy diet. When it comes to your insurance; this should have been in place for decades. However, there are plans available even if you are just starting.
Professional advice
A financial advisor has the experience to help you develop a financial plan. This can include short-term and long-term investments. They will carefully consider your risk tolerance, family situation, financial status and your goals. But it is necessary for you to understand the basic financial principles. You are ultimately responsible for your financial future.
Knowledge is power
You need knowledge to make smart decisions for a financially secure retirement. It is critical to have a plan in place in order to ensure you are prepared for that time when you can no longer work or no longer wish to work.
Take deliberate steps now, which need discipline, focus, commitment and time.
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Written by Nimi Akinkugbe | For more personal finance tips, contact Nimi: Email: info@moneymatterswithnimi | Website: www.moneymatterswithnimi.com |Twitter: @MMWITHNIMI | Instagram: @MMWITHNIMI | Facebook: MoneyMatterswithNimi
