Five steps to reaching financial independence

26 April 2023

Setting financial goals is a great way to take control of your finances and ensure that you are moving towards financial independence. Maybe you are working towards a deposit for your first home, having enough savings to send the kids to college or maybe you want to retire early, having a feeling of financial control will help ensure you reach your desired outcome in the most efficient way possible.

While it is always good to have goals, particularly financial goals, they are just that, goals, unless you have an actionable plan in place. A sound plan will help you to reach those goals and give you a sense of financial independence going forward.

By setting a financial goal, you take the first step towards significantly increasing your financial well-being. Every milestone achieved and euro you save will give you an added layer of motivation and drive so that, eventually, those financial goals become your tangible reality.

Here are five steps that you can take to help you reach your financial goals in 2023:

1. Define your financial goals

The first step in reaching your financial goals is to define what they are. This means setting specific and measurable personal finance targets that you want to achieve, such as paying off debt, saving for a down payment on a house, or starting a retirement fund. Once you have set your goals, write them down and keep them visible so that you can stay focused on achieving them.

2. Create a budget

Creating a budget involves tracking your income and expenses and identifying areas where you can reduce your spending, like reducing your utility bills, to free up more money for your financial goals. Remember to be realistic and flexible when creating your budget, as unexpected expenses may come up so ensure you leave some wiggle room to cover yourself.

Another way to manage unexpected expenses, is to have an emergency fund in place.

3. Pay off debt

If you have debt, paying it off should be a top priority in reaching your financial goals. Start by paying off high-interest debt first, such as credit cards, as this will save you money on interest charges. Make sure to keep up with your minimum payments and avoid taking on any new debt.

4. Build up your savings

Building up your savings is an important part of achieving financial independence. Set up automatic transfers from your checking account to a savings account to make sure you are regularly saving money.

Start with building up an emergency fund that covers at least six months of expenses. After that, you can focus on other savings goals, such as saving for a down payment on a house or for a vacation.

5. Invest for the future

Investing is a great way to grow your money and achieve your long-term financial goals. Consider working with a financial advisor to help you create a personalised investment plan that aligns with your goals and risk tolerance. Remember that investing comes with risks, so make sure you understand the potential risks and rewards before investing any money.

In conclusion, reaching your financial goals requires discipline, focus, and a solid plan. By defining your goals, creating a budget, paying off debt, building up your savings, and investing for the future, you can take control of your finances and move towards a more secure financial future in 2023.

The best piece of advice I can give here is to set up a household budget. Trying to manage finances without a budget is like trying to get to a destination without knowing what your starting point is. It’s impossible!
It doesn’t matter how you create a personal budget (using an excel spreadsheet, notebook, back of an envelope etc) but you do need some way to determine where your money is going each month. The trick is to find a way to manage your finances that works for you.

To instil some discipline on yourself, set a monthly alert on your calendar to check in on your goals. If you find yourself struggling, don’t fret, why not try thinking of another way you might be able to reach your goal? You could start with smaller increments and look for ways to increase your savings amount over time.
With the right planning and purpose, you will be able to build lasting habits that guide positive changes in your financial life.

Did you know An Post Money Manager is the smart budgeting app that does the work for you?
It securely links all your current accounts and credit cards so you can see all your spending in one place. And it’s free to use, whoever you bank with.
Find out more

An Post Money Manager

Do more with your money, not matter who you bank with! Stay in control with An Post Money Manager, the budgeting tool that lets you stay on top of budgets and know exactly where your money is going with smart insights.

Find out more