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Follow the Path to Financial Freedom

Written by Dian Herdiana on 7:27 AM

Retirement may still be a few years, or even decades away, but there’s no time like the present to start planning for your future. However, not enough people are doing it.

According to a recent GoodLife survey by Stowers Innovations, Inc., less than 20 percent of adults over the age of 18 have a definite plan for retirement at a specific age. Now is the time to take control of your financial future and declare your personal financial independence.

“The only person you can count on for your financial security is you,” says James E. Stowers, founder of American Century Investments and author of “Yes, You Can… Achieve Financial Independence.” “When you count on yourself, you are in control of your own circumstances and with this control comes peace of mind. With unwavering determination, anyone can achieve financial independence.”

Follow this six-month plan to begin your path toward financial freedom.

Month One — Make a commitment and determine your priorities. The first step toward financial independence is making a commitment. Sign your own Declaration of Personal Financial Independence as a reminder of your personal pact. You can find a Declaration of Personal Financial Independence at

Once you’ve committed, establish your priorities. Determine what is truly important to you and how to live your life in a way that allows you to attain these things. Financial priorities can encompass many things including education, family unity or fulfilling basic needs like transportation. Once you set your priorities, form a plan to meet them. For example, you may start saving for college, a family vacation or a car.

Month Two — Eliminate debt and establish a budget. Debt is an American epidemic. More than 70 percent of surveyed adults reported living with debt. Thirty-five percent had over $8,000 in debt. Analyze your current payments and find ways to pay down your debt as quickly as possible. Options range from borrowing money at a low interest rate to pay off high interest credit card debt, to stopping all other investments and using that money to bring your unpaid balance to zero.

After you establish a plan for eliminating debt, create a budget and be determined to live within your means. This can help you achieve your goals and stay debt free in the future.

Month Three — Audit your finances. Take stock of your progress to-date. Each week, perform an audit on a different area of your finances. Review your spending pattern and make certain your spending matches your priorities. Re-calculate your debt to determine the impact of your debt elimination plan. Analyze your budget to see if it is working for you. Lastly, look at your complete financial picture to view your financial puzzle as a whole instead of individual pieces.

Month Four — Increase your financial IQ. From children to newlyweds to retirees, continued financial education is important for people of all ages. Increase your financial knowledge through a variety of outlets including newspapers, financial books and seminars. Learning about mutual funds, investment opportunities and savings plans can diversify your finances and put you in a better financial position for the future.

Month Five — Start thinking long term. Now is the time to plan for your financial future by paying yourself first and setting up an emergency reserve.

The concept of paying yourself first is one of the most effective ways to save and begin building a foundation for your future financial security. Each month, before you do anything else, put a set amount of money into a high yield savings or investment account.

Since life is full of risks and financial pitfalls, build an emergency reserve to sustain you during hard times. It is advisable to save between three and six months of living expenses in an easily accessible saving account. The amount of your reserve will depend on the flexibility of your budget and your comfort zone. Remember your emergency reserve is not intended to cover all possible risks. For complete protection, take advantage of the many insurance options available to you.

Month Six — Resolve to stay focused. Congratulations on making it to the sixth month. Take time to reassess your finances and your complete financial picture. Determine what has worked well during the previous five months and what you can do better. Then reconfigure your financial plans to take these things into account.


The first step toward financial independence is making a commitment. Stowers Innovations, Inc. offers the following Declaration of Personal Financial Independence as a reminder of your personal pact.

Declaration of Personal Financial Independence

In order to enjoy peace of mind and live a more meaningful life, I, _______________________, hereby declare my intent to achieve personal financial independence.

Only I can secure my financial freedom. Therefore, I will:

* Establish my priorities – I will decide what is truly important to me and create a financial plan that will help me achieve my goal.
* Practice responsible credit card use – I will reduce and eliminate outstanding balances on my credit cards. I will only use my cards if I have the money to pay for it each month.
* Create a budget – I will set up a budget and keep track of my expenses to stay within my budget. I will make sure I am getting my money’s worth.
* Pay myself first – I will save for my future. I will deposit a percentage of my monthly earnings into long-term investments.
* Get help – I will promptly seek professional assistance if I don’t fully understand what I am doing.
* Think long-term – I will invest for my future and take advantage of my employer’s saving and retirement plans.
* Increase my financial IQ – I will stay current on the latest financial and economic news. I will continuously research and look for better ways to accomplish my financial goals.
* Expect the unexpected – I will create an emergency fund to cover unexpected expenses.
* To thy own self be true – I will be honest with myself and continue to be determined to be financially independent by living within my means.

Signed ____________________________________ on this date _______________

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