Category Archives: Financial Freedom

Financial Well-Being in America

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One out of every 15 Americans is a millionaire according to a recent UBS report. That’s 38% of all millionaires in the world.

Yet, headlines state that 58% of Americans are living paycheck to paycheck and that credit card debt is at an all-time high.

Two extremes of financial well-being in America.

The Consumer Financial Protection Bureau (CFPB) defines financial well-being as a state of being wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow them to enjoy life.

Consumer Financial Protection Bureau (CFPB) conducted the National Financial Well-Being Survey in late 2016. The findings revealed wide variation in how people feel about their financial well-being. Some subgroups fare relatively well, while a majority face greater challenges.

From 2017 to 2020, the average financial well-being score for U.S. adults increased slightly, reaching 55.

However, approximately 1 in 10 Americans still had low or very low levels of financial well-being2.

Unfortunately, recent reports indicate that financial struggles have intensified. In 2022, the average overall financial wellness score declined, and fewer workers reported being financially resilient.

Inflation has had a significant impact on financial well-being in America. When inflation hit 9.1%in June 2022, 83% of Americans were concerned about rising prices. Even though inflation has eased to around 3%, 73% still express concern.

Inflation continues to shape Americans’ sense of financial well-being and spending decisions, even as rates of inflation have eased in recent years.

References:

  1. https://www.consumerfinance.gov/consumer-tools/educator-tools/financial-well-being-resources/data-spotlight-financial-well-being-in-america-2017-2020/
  2. https://www2.deloitte.com/us/en/insights/industry/retail-distribution/consumer-behavior-trends-state-of-the-consumer-tracker/inflation-financial-wellbeing-consumer-spending-habits.html

Take Responsibility and Own Your Story

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Oner thing you must learn, understand and accept:

You can either keep making excuses for why your life isn’t perfect, or you can admit it’s not perfect and still try to make it better.

You can focus on what youcan change and stop worrying about what you can’t. Life keeps moving forward.

Take it upon yourself to be happy and build wealth. Stop worrying about distractions and what other people think.

Other peopl only know your name, not your story. People will always have different opinion about you. And that’s okay. What matters is how you see yourself as a person. No on can tell your story better than you.

Gratitude is a Superpower and the foundation of all success.  

Gratitude and Financial Freedom

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Practicing gratitude can have a profound impact on achieving financial freedom. Here are some key ways gratitude can improve your money mindset and financial well-being:

## Shifts Focus to Abundance, Not Scarcity

Feeling grateful for what you already have, instead of fixating on what you lack, fosters a mindset of abundance.[1][2] This positive perspective reduces financial worry and impulse spending, making you more patient and deliberate with financial decisions.[1]

## Increases Satisfaction with Current Situation

Expressing thankfulness for your present circumstances and material possessions leads to greater contentment.[2] This can curb the desire for unnecessary purchases and make you more willing to save and invest for long-term goals like financial independence.[1][2]

## Motivates Values-Based Money Management

Gratitude motivates you to align your finances with your core values and make choices that provide deeper fulfillment.[2] This could mean prioritizing saving for your children’s education, charitable giving, or working towards an early retirement.

## Improves Financial Resilience

Practicing gratitude, especially during tough financial times, can improve your mood, reduce anxiety, and provide motivation to work through challenges with resilience.[3] An attitude of thankfulness helps you stay present, solution-oriented, and decisive when faced with money issues.

In essence, gratitude nurtures a positive relationship with money. It allows you to feel financially secure with what you have while giving you the patience and motivation to manage your finances more effectively towards achieving true financial freedom.[1][2][3]

Citations:
[1] https://www.sagespring.com/4-ways-gratitude-can-improve-your-money-mindset/
[2] https://singerwealthmanagement.com/why-gratitude-is-essential-for-you-and-your-finances/
[3] https://www.northamericancompany.com/plan-for-tomorrow/gratitude-for-financial-wellness
[4] https://blog.gratefulness.me/money-affirmations/
[5] https://www.nerdwallet.com/article/finance/how-gratitude-can-help-your-financial-life

Retirement Isn’t An Age

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Retirement isn’t an age. It’s a point at which your finances are where you can permanently leave the workforce. ~ USAToday

Retirement refers to the time when someone permanently leaves the workforce, usually in their later years.

Retirement is often synonymous with the idea of financial independence, which is when your savings and investments are sufficient to cover your living expenses and support you for the rest of your life.

Many Americans think of retirement as a certain age. And certain retirement benefits are indeed associated with a specific age. For example, the minimum age to start collecting Social Security benefits is 62, but you’ll have to be 66 or 67 to collect your full benefits.

However, retirement isn’t an age. It’s a point at which your finances (the magic number) are where you can more than cover your monthly living expenses and permanently leave the workforce.

The “magic number” rule of thumb for retirement is to have 25 times your annual expenses or to spend only 4% of your portfolio per year during retirement.

Source:  https://www.usatoday.com/money/blueprint/retirement/what-is-retirement/

Retirement Planning

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Planning for retirement is a way to help you maintain the same quality of life in the future.

You should start retirement planning as early as financially and emotionally possible, like in your early twenties or thirties. The earlier you start, the more time your money has to grow.

That said, it’s never too late to start retirement planning, so don’t feel like you’ve missed the proverbial boat if you haven’t started.

Keep in mind, every dollar you can save now will be much appreciated later. Strategically investing could mean you won’t be playing catch-up for long.

Additionally, retirement planning isn’t merely about counting the days until you hang up your work boots and calculating your magical financial number.

It’s about ensuring that your golden years exudes comfort, financial security, personal relationships, meaning and purpose. Here are five financial steps to guide you as you prepare for career and life transition:

  1. Know When to Start: Determine when you want to retire. Will it be an early retirement at 62 or a grand finale at full Social Security benefits age (around 67)? Remember, the earlier you claim Social Security, the less you will receive monthly, but delaying it can enhance your benefits.
  2. Calculate Your Magic Number: Calculate how much wealth or nest egg you need to sustain your desired lifestyle. Consider living expenses, healthcare costs, and the joys you wish to indulge in during retirement.
  3. Prioritize your financial goals: Pay off debts, build your savings, downside if necessary, and calculate your monthly expenses.
  4. Choose Your Accounts: Explore retirement accounts. Will it be a 401(k), an IRA, or both? Each has tax advantages, contribution limits, and investment options. Mix and match wisely.
  5. Invest Wisely: Your investments must propel you toward your financial destination. In your youth, invest aggressively. As you approach the retirement, dial back to a more conservative mix.

Whether you’re a few decades or a few years away from retirement, having a plan can help you feel confident that you’ll be prepared when the time finally arrives.

Source: https://www.nerdwallet.com/article/investing/retirement-planning-an-introduction

You’re Responsible for Managing Your Money

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“Don’t be like a ship at sea without a rudder, powerless and directionless. Decide what you want, find out how to get it, and then take daily action toward achieving your goal. You will get exactly and only what you ask and work for. Make up your mind today what is it you want and start today to go after it! Do It Now!” ~ Napoleon Hill

When you understand that you alone are responsible for managing your money and building wealth, everything changes. It’s not up to the government or your neighbor—it’s all on you.

Take control and make it happen.

It is ultimately the choices and actions you take with your money that have the greatest impact on your financial well-being.

It is about developing disciplined spending and saving habits, being responsible with debt, making wise investment decisions, and exhibiting patience and long-term thinking when it comes to financial goals.

Start by thinking about your end financial goal. What is the number (amount needed for retirement) you are aiming for? Once you have that number in mind, consider what actions you need to take now to make it a reality. If you’re unable to invest a lot right now, think about what steps you can take to change that situation.

Break down your goals into smaller, more manageable tasks, and you’ll be surprised at how much progress you can make.

Even if you cannot afford to invest $1,000 monthly, do not allow that to discourage you from investing. Beginning with more modest amounts such as $25, $50, or $100 can be a great starting point. It is crucial to make investing a priority, no matter how little, and then gradually increase your investments as time goes by.

When striving to build wealth and for financial freedom, don’t forget the importance of maintaining good health. True wealth is not only the freedom to pursue personal goals, but also the presence of good health. Without good health, financial freedom holds little to no worth.

While a healthy person desires numerous things, a sick person longs for just one: good health.

Quotes

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“Quality of life is having the freedom to make choices that are not fear based. Whether it’s the ability to choose the kinds of projects I want to take on and can learn from, or the ability to take a month off to travel. Freedom to choose is the ultimate luxury.”

~ Interior designer Danielle Colding on the ultimate luxury

Source: In the Company of Women​