A Ten-Step Plan for Achieving Financial Independence

The key to achieving financial independence is having a written plan and following through with it. Of course, it will need some adjustments occasionally, however, remember to stick with it, which will involve a level of discipline and sacrifice.

Step 1

Accept that you can achieve financial success and make a commitment to yourself to attain it.

Step 2

Set goals. Know where you want to be in five years’ time. Do you want a new house, your own business, an education fund for your children, a holiday home, a retirement fund, a debt-free home, a job promotion or a new career? The goals should be in areas that you get excited about.

Step 3

Assess your current financial position. Establish your net worth and your cash inflow and outflow. When doing this you will recognise areas which need improvement.

Step 4

Develop your plans. Decide what action you are going to take to move closer to the achievement of your goals. These plans should direct your behaviour over the next one or two years, they should be specific, and they should have a time constraint.

Step 5

During the next six months concentrate on developing a greater awareness about your finances and about the many money-making opportunities around you. Focus at least initially, on improving your cash flow.

Step 6

Use cash savings to repay personal debt. Once your personal debt has been repaid, the amount previously committed to debt should be earmarked for investment. Always keep some savings accessible to take advantage of those attractive investment opportunities that invariably arise.

Step 7

Closely monitor the performance of your investments and your rate of savings. Particular attention should be paid to your rate of wealth growth. This review should be carried out every three months.

Step 8

Commit additional savings to build up of investment in the most attractive areas based on the boom/bust investment cycle.

Step 9

Investigate other forms of investment opportunity with particular emphasis on generating a greater cash flow. This should be done after personal debt has been repaid and after very secure income earning investments are in place.

Step 10

Review and reward. Review your performance annually and reward yourself if your targets are achieved.