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Declare your financial independence day
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As we get close to the 4th of July, you may be thinking of where you’ll be going to attend a picnic, watch fireworks or engage in any of the other activities that accompany the holiday. And while it’s always meaningful to commemorate our nation’s many freedoms, you may want to take this opportunity to think about another celebration of liberty -your own "Financial Independence Day."

However, unlike the 4th of July, Financial Independence Day won’t just show up on the calendar - you have to work to make it happen. Here are a few suggestions for doing just that:

Liberate yourself from debt. You don’t have to be a free spender to rack up a lot of debt - the cost of living is high, and sometimes you need to use loans and credit. But the more money you owe, the harder it is to achieve financial independence, so try to reduce, consolidate or eliminate as many debts as possible. You may have to drive that old car one year longer or postpone that vacation until you can pay for it up front, but these and similar moves may pay off down the road.

Emancipate your investments. To achieve your long-term financial goals, you need your investments to provide you with the combination of growth potential and income that’s appropriate for your individual needs. To accomplish this, though, these investments need to be "free" from being raided constantly to pay for the costs of everyday life. That’s why you should establish an emergency fund containing six to 12 months’ worth of living expenses. By keeping this fund in a liquid account, you won’t have to tap into your investments the next time you have a major car repair, need a new appliance or face an unexpected medical bill.

Unchain the potential of your retirement accounts. Every time you get a raise, boost your contributions to your retirement plan at work - i.e., your 401(k), 403(b) or 457(b). Your money has the potential to grow on a tax-deferred basis, and you typically contribute pre-tax dollars, so the more you put in, the lower your annual adjusted gross income will be. But if you’re not contributing the maximum allowed, or at least as much as you can afford, you’re putting "shackles" on the ability of these plans to help you attain the retirement lifestyle you’ve envisioned.

Free your family from threats to your income. Without your income, would your family be able to pay off the mortgage? Or send your children to college? Or meet any of the financial goals you’ve set? Financial independence will always be elusive unless you protect your family from the potential loss of your income - and that’s why you need adequate life insurance, especially in the years when your children are young and you’re still paying on your house. At the same time, you may need disability insurance to replace your income if you can’t work due to illness or injury. Your employer may offer a disability policy, but it might be insufficient to meet your needs, so you may need to add extra coverage.

By taking these and other steps, you can go a long way toward turning Financial Independence Day from a goal to a reality - so take action soon.


Submitted by Laura Evans, a financial advisor with Edward Jones in Richmond Hill.

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