Financial freedom refers to having enough savings, investments, and cash available to live the lifestyle you want for yourself and/or your family. Having a nest egg allows you to retire or pursue a new career without the need to worry about a yearly income.
However, many Canadians aren’t prepared for full financial freedom. Luckily, there are steps you can take to work toward having more financial freedom.
“There’s a lot to consider when it comes to envisioning the future you want,” said Orr. “The sooner you start planning, the better.”
There are three elements to consider when it comes to developing a plan to achieve financial freedom:
- Consider what your lifestyle requires
- How much do you need to have in your account to support that lifestyle
- What age is your deadline to save that amount
You can begin by setting milestones at regular intervals based on your age deadline. Keep track of all the amounts and deadlines, and refer often to your goal sheet.
Create a monthly budget
Creating a monthly household budget and sticking to it is the best way to make sure that bills are paid and savings are on track. Keeping to a routine can help reinforce your goals and avoid the temptation of over-spending.
“Having a well-constructed plan brings all areas of your financial life together, ensuring that you’re working toward the same goal,” said Orr. “Even in turbulent times, it’s important to work with a professional to not only develop a plan but make a point to stick to it.”
Set up automatic savings
Always pay yourself first. It’s a common phrase for a reason. If you have the option, enroll in your employer’s retirement plan and make full use of any matching contribution benefits. It’s also a good idea to have an automatic withdrawal that will be put into an emergency fund.
Pay off your credit cards in FULL
Credit cards, along with other high-interest consumer loans, are toxic to building wealth. It’s important to make a point to pay off the full balance of these each month. Other debts such as student loans, mortgages, and similar loans tend to have lower interest rates, meaning paying them off isn’t as much of an emergency. However, paying low-interest-rate loans on time is still very important, especially when it comes to building credit.
When the stock market is bad (also known as a bear market), people may question whether it’s a smart move to invest. Historically speaking, investing has proven to be a great way to grow your money. Compound interest alone can help grow your money, but you do need quite a bit of time to see significant growth.
“Investing for beginners can seem complicated or even scary to get into for some, but with some education and guidance, investing can grow your money significantly,” said Orr. “Getting started as soon as possible gives you the best chance to see significant growth.”
Work with a professional
Once you’ve gotten to the point where you’ve grown your wealth through liquid or fixed assets, get a financial advisor to keep you on the right path. Financial professionals spend years studying the market and the art of wealth management, making them an essential tool for you and your financial future.
For Orr, he says working with a professional is key to seeing good returns on investments, as well as developing a concrete plan for financial growth in the future.
“Of course, you don’t necessarily need a financial advisor to begin investing – but help and guidance can be invaluable to growing your wealth over time,” he said. “Professionals like myself live and breathe numbers and stocks; it’s our job to use our knowledge to grow your money. And that’s what we want for our clients, to have the security they need to achieve the future that they want.”
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The comments and opinions expressed in this article are solely the work of Clinton Orr, not an official publication of Canaccord Genuity Corp., and may differ from the opinion of Canaccord Genuity Corp’s. Research Department. Accordingly, they should not be considered as representative of Canaccord Genuity Corp’s. beliefs, opinions or recommendations. All information is given as of the date appearing in this article, is for general information only, does not constitute legal or tax advice, and the author Clinton Orr does not assume any obligation to update it or to advise on further developments related. All information included herein has been compiled from sources believed to be reliable, but its accuracy and completeness is not guaranteed, nor in providing it do the author or Canaccord Genuity Corp. assume any liability.
Tax & Estate advice offered through Canaccord Genuity Wealth & Estate Planning