By Millicent Hicks, Wealth Advisor, Scotia Wealth Management
Achieving financial independence is one of life’s most rewarding accomplishments. The peace of mind you gain from having enough wealth to live on is incomparable. The sense of empowerment you feel when you’re in control of your professional and personal decisions is deeply satisfying. You can invest your time and energy how you want, whether that’s focusing on work you enjoy, spending quality time with family and friends, or even just relaxing on vacation.
Your plan to achieve financial independence must be thoroughly personalized, a roadmap designed just for you. It must account for your opportunities and challenges while reflecting on your current wealth, income, expenses, and goals. Crafting an effective financial independence plan requires the expertise and support of a complete wealth management team, but there are common considerations all of us share. Giving thought to these considerations is a great way to start laying the groundwork for your financial independence.
Know your expenses. You need to know where your money is going. Document every expense you have, from that morning cup of coffee to college funds for the children, from haircuts to car payments. Do this for one to two months diligently. Not only is this information crucial to your financial independence plan, but seeing it all laid out in front of you will make it very easy to identify what you consider to be essential expenses. It’s these essential expenses that you really need to account for in all of your future plans; these are the expenses you need to save enough to cover for a minimum of two years in order to be truly financially independent. Ask yourself – would I be willing to give up this expense if it meant I could retire tomorrow? If the answer is yes, why not get a head start by cutting back or eliminating that expense now?
Predict future expenses. There are always going to be costs, especially health-related expenses that are impossible to predict in advance. But there are many that you can start thinking about now. Will you downsize your home after you retire, or maybe even choose to rent? Does your family plan to own a cabin or house down south? Will you be prepared for an extended retirement and the associated health care cost? Do you anticipate making a contribution toward the education costs of grandchildren or even great-grandchildren? If it feels too abstract to predict expenses, have an in-depth discussion with your wealth management team. They are the experts and will be able to help you figure out what’s most important to you.
Save and invest. Your time is your most precious asset. It is life itself. When you spend money on non-essential expenses, the true cost is the time you could have enjoyed being financially independent. It can be hard to deny ourselves the instant gratification of buying something we enjoy now, especially when retirement and financial independence seem far away. The good news is that with an effective financial independence plan in place, you can overcome the desire to spend more now. When you see your savings grow, when you see your plan working, it gets easier. With a clear view of the bigger picture and how you are working toward your financial goals, even a few extra dollars of savings each week can feel as gratifying as the guiltiest pleasure.
Your path to financial independence may be short or long, winding or easy. It doesn’t matter where you start and how far you have to go; the important thing is to start today. You deserve to reap the benefits of financial independence. If you have any questions about mapping your path, please do give me a call at 1.709.576.7123.
Millicent Hicks, Wealth Advisor,
Millicent holds the Certified Financial Planner® designation and draws on the expertise she has developed over her more than 15 years in the financial industry. She works with families of high net worth, business owners, women in business, widows, and successful professionals to help them achieve their financial visions with clarity and conviction. Being able to truly listen to what clients would like to achieve enables Millicent to successfully build the comprehensive financial plans that are involved in managing complex affairs and significant wealth. Millicent engages her clients by using language they can understand, being objective, and adding a dash of humour to keep things interesting!