5 Steps Toward Financial Independence

Personal Checking, Personal SavingsView Blog


By nbkc bank

Most of us think financial independence means saving enough money to live out the rest of your life and never work again (a.k.a. retirement). Again, for most of us, that idea seems completely impossible — even by the time we’re “supposed” to retire.

But if you think about it beyond traditional retirement — the idea becomes a bit more realistic. A more flexible definition says steady work is no longer required to afford your standard of living. Or, alternatively, you have enough savings or passive income to make choices in your life independent of your employment situation.

Want to take a year off to travel? Do it.
Itching to go back to school? Apply now.
Not jiving with your new boss? Put in that two-week notice.

Sound good? Getting there takes effort and planning. But you don’t have to go from zero to 60 right out of the gate. Here are a few ways to get started.

Assess your finances

Assess your finances

If you don’t know where your money is going, you won’t know how to save it. Take stock of your income, debts, and essential expenses (like housing, insurance, food, and utilities) to figure out how much it actually costs you to live.

Then assess your non-essential expenses like dining out, most of your clothing, entertainment, hobbies, gifts, and general fun. This part is not so fun. But adjusting your spending habits now will give you more money and flexibility later. We’re talking about delayed gratification, here.

Spend less than you earn

Spend less than you earn

This is more than just a temporary adjustment — it should be your new outlook on life. If you continually spend more than you’re bringing in, there’s nothing left over to save. Remember what game we’re playing? (It’s the long one.)

Start out small like cutting down on streaming services, repairing versus replacing things, and cooling your sneaker habit. Then think about where you can cut down your larger expenses, too. Get a roommate. Move to a smaller apartment. Plan to drive your car long after you’ve paid it off.

Increase your income

Increase your income

Eventually, you’ll have cut down your expenses as far as you’re willing to live with. Now you should think about new opportunities to increase your income. Lowering expenses and bringing in more money will get you moving twice as fast toward financial freedom.

The more income boosting you can take advantage of, the better. Get more out of your main hustle by negotiating a raise or promotion. If you work for yourself, look for new opportunities to expand your business.

Passive streams of income are even better. Investments are a great option and you don’t even need a ton of funds up front to get the ball rolling. Here are some great low-risk, low-investment options for beginners.

Make a plan

Make a plan

Now that you’ve assessed your finances, built a budget, and know how to increase your income — it’s time to set a goal. First, establish an emergency fund large enough to cover 3-6 months of living expenses.

Then plan to set aside enough to live one year without a steady paycheck. Then scale your efforts and keep going. Your definition of financial independence should work for you. Whether that means having enough to work part-time or not at all — do what you need to do to make it happen.

Get a better bank

Use smarter money tools

An easy way to save hundreds? Get a better bank. Find one that doesn’t charge you fees to bank there — and better yet, pays you interest on your balance — and offers built-in budgeting tools that help you plan and save. Research free checking and savings accounts to find one that can give you the best return on the money you already have. (Ahem...we think we know a pretty good one...just saying.)

Interested in what nbkc has to offer?

Earn interest. No minimum balance required.
Save, track, and budget your money with our built-in smart tools.
Bank online from anywhere 24/7
$0 overdraft fees
$0 ATM fees at any MoneyPass® ATM
$0 minimum balance fees

Spend. Save. Track. Earn.

One easy-to-use account.
Open it online for free.

Ready to get started?

Switching is easy.
And our interest rates are so good it's like we’re paying you to bank here.

*Annual Percentage Yield. Rates may change after opening. Fees could reduce earnings on an account. Rates effective as of 06/16/2019.