Seven Steps to Financial IndependenceFinancial Wellness
Financial independence is about not having to rely on other people (such as your parents) or lending institutions (such as banks, savings and loans or credit unions) for financial security. This is more achievable when you follow the seven steps outlined below.
1. Bring Debt Under Control
Excessive debt can be a serious roadblock to financial independence. If you’re looking to pay off multiple debts that are each charging a different interest rate, you should start by increasing the monthly payments toward the debt with the highest rate. Once you’ve paid off that debt, start paying extra toward the debt with the next highest rate…and so on.
2. Live Within Your Means
Spend less than you earn. Overspending is easy to do, especially with online shopping and credit cards luring you into impulse buying. Set up a household budget with the help of an online home budget calculator.
3. Pay Yourself First
Put part of each paycheck into savings before you’ve had the chance to spend the money. You can contribute to your 401(k), 403 (b), or 457 workplace retirement plan through automatic payroll deductions. You can also sign up for automatic monthly transfers from your bank or credit union account to an IRA or other savings account.
4. Save for a Rainy Day
Start building an emergency fund if you don’t have enough money set aside to manage a financial emergency. If you ever have high medical bills, a job loss, or costly repairs to your home or car, an emergency fund can keep you from incurring more debt to stay financially afloat.
5. Take Advantage of Your Employer- Sponsored Retirement Savings Plan
You can get major tax advantages by contributing to a 401(k) or similar workplace retirement plan. Your pre-tax contributions not only reduce your taxable income for the current year, but investment earnings on your plan account are tax – deferred until distribution.
6. Be Properly Insured
When the unexpected happens, insurance can be a financial lifeline. Make sure you have the right type of insurance to protect your earnings, your home (or at least its contents), your vehicles, and your health.
7. Get Help from a Professional
For one-on-one, personalized, and confidential guidance on achieving financial independence, contact a financial planner.
WAEPA’s Free Financial Wellness Program
WAEPA provides free financial wellness planning through our partnership with EY. As a WAEPA member, this program gives you access to important tools and financial advisors to help manage your day-to-day finances and build a retirement plan for your future. Log in through the WAEPA Member Portal.
You can apply for Group Term Life Insurance1 at any time of the year (no Open Season or qualifying life event required). After more than 75 years of serving Civilian Federal Employees, WAEPA is the life insurance choice of over 46,000 Feds and their families. Calculate how much coverage you should consider and apply today.
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1Underwritten by New York Life Insurance Company, 51 Madison Ave., New York, NY 10010 on Policy Form GMR-FACE/G-30280-0
*Group Term Life Insurance is not available in the following US Territories: American Samoa, Northern Mariana Islands, U.S. Minor Outlying Islands, Micronesia, Marshall Islands, and Palau.
**Louisiana residents please contact WAEPA Member Services at (800) 368-3484 for more information on applying for coverage.
***Michigan Residents: I understand that I may use a producer/agent to assist me with the completion of this application at no cost to me.