Five Steps To Begin Your Journey to Financial Independence - Money Coaches Canada (2024)

By Sheila Walkington, Co-founder and CFO Money Coaches Canada

I think most people would answer the question, “Would you like to be financially independent?” with a resounding; “Yes, please!” But in many minds, the idea of financial independence is tied to a lottery win or some other out-of-their-control lucky turn of events. Financial independence is often the fantasy of unlimited wealth, and not something most of us can realistically aspire to.

But is that how we should view financial independence? Is it only for the lucky few? Is it just about wealth? (Hint: it’s not!). What if I told you that a solid plan, and a real commitment, could make financial independence an actual possibility?

Here are the five steps that could change your life.

Step One – Take a Deep Dive into Your Reality and Your Values

The typical definition of financial independence is having sufficient wealth to live without being dependent on employment. But that’s very vague. What is sufficient to one person may be insufficient or excessive for someone else. So to start, you have to decide on your own definition of sufficient.

To do this you will have to be clear on your values, and your desires. For example, what items on this list are essential to your vision of life?

• Travel
• Contributing to community
• Education
• Having children
• Education for your children
• Owning a home
• Owning additional homes or cottages
• Having one or more vehicles
• Pursuing a passion

Then it’s important to be clear on your goals for each of those items. For example, does travel mean a road trip each summer, staying in campgrounds, or multiple air travel destinations and hotels throughout the year? Does contributing to your community mean an amount of money? Or is it more important that you have the financial freedom to work less, or not at all, so you can give your time and ideas to a cause.

There are no right or wrong answers. And you don’t have to aim for a grandiose lifestyle when imagining financial independence.

Once you are clear on your version of the “good life”, you need to honestly evaluate your current financial picture.

• Do your habits aid or undermine your values and vision?
• How much debt do you have?
• What are your current assets?
• What are you willing to change to have the life you want?
• What are you already doing that is in support of your goals?
• What obstacles are in your way?

Remember earlier; when I said wealth is not the only determining factor in financial independence? What I meant was, you don’t have to aim for a lifestyle in which you don’t work—many, many people enjoy work. The goal should be to have the financial freedom to do the kind of work you enjoy, while still meeting your financial and lifestyle needs.

Step Two – Start Building Momentum Today

Time is a vital ingredient for creating financial independence, don’t squander another minute. Nor should you waste time regretting past financial decisions. Take in any lessons to be learned and start moving forward.

You have determined what you want and where you stand at this moment. Take the biggest step you can take today, even if the biggest step is only a baby step. You can’t build momentum sitting still.

Step Three – Track Results

In step two I talked about building momentum with action. But along with actual financial gains, it’s equally important to build a mindset momentum. Every attitude shift strengthens your belief that you can change, every win makes you feel like a person who succeeds. That’s why you need to set goals that have concrete results. You need to pave your road to success with big and small wins.

Financial independence will encompass multiple areas of your life. You may not see your savings increasing as fast as you would like, but perhaps you have paid off your student loans, or credit cards. Keep track of all your results. And celebrate them!

Break long-term goals into monthly even daily goals if you can. The more immediate your goals are, the more you can stay focussed on results. If you aren’t getting results, re-examine your strategy, or ask for help.

When making goals pay attention to your entire financial picture.

• Can you increase your income?
• Can you decrease your spending?
• Are you paying down your highest interest debts first?
• Do you have the right life insurance for your needs?
• Can you increase your investment contributions?
• Are you getting the best return you can on your investments?

Step Four – Decrease Your Financial Footprint

I stated that everyone’s version of success is different and that there are no right or wrong choices. But I will qualify that by saying; make sure the things you believe make you happy, really do add quality to your life.

We live in a very consumer-oriented culture. We often exchange a momentary shopping high for long term happiness. We are bombarded with things to buy, and sold a version of success that exalts having the best of everything.

But you’ve probably noticed the shift to the idea of minimalist living. Books about a pared down lifestyle are riding the bestseller lists for months at a time. Why? Because the emotional freedom from spending, spending, spending is another form of financial independence. The less stuff you need to bankroll, the more opportunity there is to enjoy life without the weight of debt, or fear that if you slow down for a moment, your lifestyle will collapse.

Step Five – Never Stop Learning

Money is one of the most powerful tools we have for living the life we desire. Money doesn’t just provide things, it provides security and opportunity. You can help so many people and causes with money. Yet so many people avoid taking the time to learn about it.

If you want to be financially independent you’ll need to understand money. You don’t need to learn everything at once, pick an area that has some meaning to you. Maybe you want ideas on managing your cash flow, or maybe you just want to understand more about how stock trading works.

We live in the information age; it couldn’t be easier to access knowledge from multiple sources. There are wonderful books on money that aren’t dry academic tomes, they are written for everyday people who want to be informed. The more you read, the more the veil of mystery around financial independence will slip away.

If you can’t imagine sitting down with a financial book, start with magazines, blog posts, or YouTube videos. (But do be sure that your source is credible). The more you learn about money, the more naturally you’ll make wise choices. And wise choices are what will bring you closer to the dream of financial independence.

Financial Independence Doesn’t Mean Figuring It Out Alone

If you have a life partner, you’ll need to be on the same page (working together will get you there faster). Becoming financially independent takes work, so don’t be afraid to reach out for help or guidance. Minor tweaks, good support, and the expertise of a professional can have you taking big strides towards your vision more quickly. A knowledgeable advisor will boost your confidence and make the process easier and more fun too. If you would like to speak with a Money Coach about financial independence, we would be happy to assist you.