Financial Independence - Your Path
So you just graduated from school and you want to become financially independent. Big ideas, great plans, but how the heck do you build wealth. Some people are going to say set goals, get a great job, or maybe have a vision that you are wealthy. They are all great ideas. But if you want to become financially independent you first have to know where you are at because if you don’t know where you are at, how do you know what goals or what steps you will need to take to get you where you want to be.
Whether you are just graduating from high school or retiring from your job. The first step in building your wealth is to create your budget. To start your budget you need to create a list of all the money you have coming in and all the money you have going out. Here is a list of possible income sources and expenses.
Income
Take home pay
Overtime Pay
Pension
Social Security
Investment Earnings
Interest
Alimony/Child Support
Other Income
Total Income
Expenses
Rent/Mortgage
Property Insurance
Property Taxes
Electricity
Gas
Water
Telephone
Cable TV/Internet Services
Insurance (life/disability)
Charity
Credit Card Payments
Groceries
Clothing
Day Care/Tuition
Car Loan
Car Insurance
Gas
Entertainment
Dining Out
Misc. Expenses
Total Expenses
Monthly Net Income (Income minus expenses)
Now that you have your list, what do you do? You need to compare your income against your expenses. Then you need to make any changes either to increase your income or decrease your expenses so you have enough money to save each month.
The only person who can make the budget work is you. If you aren’t making enough money, find a way to make more. If you are spending too much, find a way to spend less. You are your own boss.
The bottom line is if you want to become financially independent you have to do a budget because if you don’t, you will never have a handle on how much money you are spending.
Comment by Barb on 14 June 2008:
Sounds like you’re on the right track! Keep up the postings!