Three Reasons Why Financial Freedom Is a Priority For Me

There aren’t many people in my life that know about my goal to retire by 45. While I love to talk about money and personal finance, only a few people know I’m spending most of my money trying to reach financial freedom (the point at which our investments produce enough regular income to cover our expenses). 

That said, when I get brave enough to share, one of the common reactions is incredulity. Some suspect I have a major trust fund (I don’t), or that Mr. Financier and I have inherited wealth (we haven’t); others are curious about the math behind financial independence; and others say, “Retire by 45?! Why would you want to retire so early - what will you DO with yourself!?”  

 The answer to that question is exactly why I’m so focused on financial freedom, so I’d like to share my perspective. I also recognize how lucky I am that my circumstances and hard work have put me in a position to consider leaving the workforce at a relatively early age. Here are three reasons why I’m so focused on this goal.

#1: I Need More Time for Hobbies

There’s a lot that I enjoy...reading, traveling, hiking, bicycling, volunteering, mountaineering, kayaking, discussing personal finance, bird watching, running, weightlifting, yoga, cooking, learning and taking classes, enjoying a nice glass of name a few.  With my current career, I am left with only two precious days each week - Saturday and Sunday - to focus on my hobbies. Realistically, those days are currently also filled with chores that get neglected during the workweek.

I get more enjoyment from a day that allows me to focus on the things that bring me joy. A day that starts with a morning yoga class, a post-class coffee with local volunteers to strategize about an upcoming campaign, followed by a hike in the woods and picnic lunch with my partner, ending with starting the first several chapters of a huge novel before a delicious home cooked dinner and glass of wine - that’s a dream.

If I’m lucky, I get 4 days like that a month.  If I’m realistic, it’s only 1 - and that’s depressing, to me. The idea that I might be able to escape the daily grind and have more time to spend on the things I enjoy is incredibly motivating, empowering, and liberating.

#2: I’m Sick of Working

I’ve been earning a paycheck in some way, shape, or form since I was 13. Before that, I babysat for neighborhood kids (I even had my own business cards and completed the American Red Cross Babysitting & Child Care Training) and did clerical work or physical labor as needed for my dad’s small business. When I was able to take a job outside the neighborhood at 13, I began earning paychecks. I’ve worked at a daycare center, served as a restaurant hostess, was a cashier at a sporting goods store, interned at a financial planner’s office, served as a lifeguard, and interned at a law firm...all before turning 21.

Since graduating from college, I have worked in consulting. There’s plenty to love about my career; the client challenges are fascinating, I work with smart colleagues, and I get to travel extensively. As most businesspeople know, traveling for work is both a pleasure and a grind; on the whole, I realize that I’m lucky to explore the world as part of my work. However, the massive time commitment and consistent stamina required of at a full-time job in management consulting is something I’d gladly leave behind. At the end of the day - it’s work. It's work I have to do because I need money to live.

#3: I Finally Realized That Experiences > Things

I think of 2011 as the year that the scales fell from my eyes around the value of material goods. I won’t tell you that I have sworn off beautiful things - I still salivate over a gorgeous pair of Louboutins. But, during the financial crisis, I was terrified I’d lose my retirement savings, job, and home. When the economy began to improve, I bounced back in a very financially counterproductive way. I rewarded myself with a lot of things. And those things weren’t necessarily making me feel happier or more secure. I’d often open up my credit card bills and feel nauseous about how much I spent on “stuff.”

That year, I started taking smaller steps to get my financial house in order. I stopped planning shopping afternoons with friends and instead suggested museums or picnic lunches. I canceled my recurring housekeeping service and began cleaning my own home. Mr. Financier and I started reviewing our budgets even more regularly and critically to look for areas where we were leaking money. We re-routed “fun money” that we had previously spent mindlessly towards investments. I got more serious about my career, knowing that if I grew my income, I’d have more to invest. Simultaneously I started exploring the FIRE movement and was very inspired by others that had saved enough to stop full-time work in their 50s, 40s, or earlier!

I began to internalize that, for me, life experiences will always deliver more value than material goods. And I’ve always been a fan of aligning money with your personal values. This series of realizations helped me put my money to work for my future, instead of on things I’d enjoy in the present.

As you can see by these three reasons, the goal of achieving financial freedom is so important to me because time is an incredibly precious asset and given the choice (which I’m grateful to have), I prefer free up time for experiences outside of work. I’m curious if you’ve contemplated financial freedom - either earlier in your 30s or 40s or later in life. If so, what drove you to explore the idea? Let me know your thoughts.

 xoxo, Ms. Financier

The Magic Number Behind Financial Freedom

To me, financial freedom is the most glorious phrase - even better than free Manolos. What is financial freedom? It is the point at which our assets (investments and income from real estate, for example) produce enough regular income to cover our expenses. I find the idea magical! Financial freedom means we’ve invested so much that our own money has turned into our primary source of income. At this point, we no longer “need” to work for income.

At first, financial freedom sounds impossible. Only for the very wealthy, or for the tremendously lucky. I acknowledge that this magical concept isn’t accessible to everyone. However, the cold, hard math suggests that far more of us could achieve financial freedom if desired; it is a choice that requires us to prioritize growing our wealth.

You may aim to achieve financial freedom in order to retire in your 60s (or later). Or, you might be driven towards an earlier date; your 50s, 40s, or even 30s. I've shared that my goal is to reach financial freedom by 45 (or earlier). If the idea of a “work-optional” life appeals to you, there is one key number you need to understand. This number makes it possible to eliminate the need to work in a traditional career, or stop working all together! So what is it?

Four percent, which refers to the 4% safe withdrawal rate (also called the 4% rule). Why 4%? Several studies have confirmed that retirees can safely withdraw 4% of their nest egg every year, without the risk of running out of money, and without adding to their savings. While the returns on investments will vary (some years more than 4%, some years less than 4%), if you consistently withdraw 4% annually, you’ll avoid the risk of completely depleting your funds. Here’s a roundup of some of the most relevant research.

The most well-known exploration includes the Trinity Study, which originated at Trinity University. Professors explored market data between 1925 and 1995, seeking to understand what withdrawal approaches wouldn’t exhaust the retiree’s nest egg. They wrote, “Withdrawal rates of 3% and 4% are extremely unlikely to exhaust any portfolio of stocks and bonds during any of the payout periods [15- or 30-years].”

Even before that research, William Bengen’s 1994 study, Determining Withdrawal Rates Using Historical Data, analyzed and tested various withdrawal rates against historical market data. The maximum rate that retirees could withdraw without depleting their savings? You guessed it - 4%. One important assumption in this study is that 50% of the portfolios were in bonds. (It is common for retirees to place large amounts in lower-risk investments like bonds. I personally plan to have a longer retirement and will put far less than 50% in bonds).

Finally, Michael Kitces, a financial expert and lifelong learner who has many professional designations in the world of finance (see them all here), also examined periods of time going back to the 1870s - and he found that there isn’t a 30-year period in which a 4% withdrawal rate was too high. His fascinating post is here.

You can find endless information on the 4% rule and it is important to explore the studies, in order to understand the relevant assumptions. Importantly, if you believe the studies (which I heartily do) you can do some serious planning for financial freedom.

Let’s play along: if your living expenses are $75,000, you’d need to have $1.87M in order to fully cover your expenses. (You would withdraw 4% of $1.87M, which is $75,000.)

But, let’s say you spend some of that $75,000 on your mortgage (which you will pay off before becoming financially free), saving for retirement, and investing in a college fund for your niece (who goes to college next year). Then, these are expenses you won’t have to account for in the future; you might really spend only $50,000 each year! This lowers your investment requirement to $1.25M.

If you’re like me, you probably have lots of questions.

What about inflation? Simple answer: keeping some of your money invested in the market will fight inflation.

What if you want to spend more when you're financially free? That’s great; just up your budget appropriately and re-calculate the nest egg required.

What if 4% feels too risky for you? Change your withdrawal rate. Use 3.5%, 3%, 2.5%...whatever you feel comfortable with.

How can you know what your future budget will be? Short answer: create your best model based on your current budget. Longer answer: check out my next post.

In summary, the 4% rule gives you a tangible, specific number to work towards in order to achieve financial freedom. You may think the amounts required to generate income to cover your expenses sound impossibly big. You might ask yourself, “How the heck will I ever save $1.25M?!” I’ll tell you - one dollar at a time. The magic of compound interest will help you grow your money at a fast rate over time.

There’s plenty of discussion on whether the 4% rule still holds true today, as time in retirement lengthens. I encourage you to explore alternative models and determine what would work for you.

One thing I can promise? You’ll never get there if you don’t get started. Your path to wealth all depends on what you do with the space between your income and your expenses. If you grow that space, by increasing your income and reducing your expenses, you give yourself a greater opportunity to achieve freedom earlier.

I'm also a big fan of starting small and persistently increasing your investments over time. Figure out the best estimate of your target nest egg and get investing. I’ll see you in financial freedom!

Do you believe the 4% SWR? If not, what withdrawal rate do you prefer? Let me know!

xoxo, Ms. Financier

I Have My Insurance Sorted - How Else Can I Manage Risk?

Researching and selecting the right insurance policies is a huge step. I’m proud of you for managing your risk! Protecting against life’s unexpected (but inevitable) speed bumps prevents an accident from stealing your hard-earned wealth.

However - we’re not quite finished managing our risks. I know, I know, this part isn’t very fun. But it is important, as anyone who has unexpectedly lost a partner or dealt with an incapacitated loved one will tell you.  

Do you have a will? With a will, you can document many important decisions. You can name who will serve as the executor of your will. If you have children, you can identify guardians. However, minors cannot inherit, so assets intended for young children will be managed by the court in their name - not by their guardian. Wills also become public documents when they are filed in court, upon death.

Is a living revocable trust right for you?  A trust isn’t just for the uber-rich and can be a very useful tool to ensure your assets go where you intend. It works like a financial briefcase - it holds assets you accumulate throughout your lifetime, and can be accessed by the people you choose. A revocable trust does not need to be filed in court (unlike a will) so the settlement and details of the trust remains private, assuming it is not challenged in court.

Do you have an advance healthcare directive? If you are incapacitated, a medical directive can provide valuable guidance to healthcare providers and empower trusted individuals to carry out the care you wish to receive. Medical directives received tremendous press during the Terri Schiavo case.

Do you have a durable power of attorney for finances? This allows you to empower someone to manage your money in the event you are unable to do so for yourself.

Whew! That’s a lot of information, and it’s not fun to think about. But - consider the additional stress you’d feel if your partner or family member passed, and didn’t have this documentation in place. Determine which of these is right for you, and seek out an estate attorney to put the right legal agreements in place to manage your risk and preserve your wealth. Your costs to create these documents will vary based on legal needs, attorney fees, and many other factors, but the costs I see generally range from $750 - $4,000 in the US.  

What legal protections have you put in place? How much did it cost you to create your legal plans? And thank you for adulting with me to explore this important topic.

xoxo, Ms. Financier

This post, like everything on this website, is for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect your legal situation.

Manage Your Risk: Step 5 of 5 Fabulous Steps to Financial Freedom


What’s the goal of this step? Prepare for the inevitable but unexpected twists life throws your way in order to protect your wealth.

Why is this important? Humans have an optimism bias; each of us tends to believe that we are less at risk of experiencing a negative event compared to others. It’s a beautiful term that puts our financial health at risk.

Our optimism bias makes us less prone to expect (and save/insure for) events like disability, illness, divorce and death. And, data indicates that women are under-insured - 43% of adult women have no life insurance, yet we comprise 57% of the labor force in the US.  

Appropriately mitigating risks improves your financial stability and makes you less prone to catastrophic costs associated with unexpected life events, which can drain your hard-earned wealth. Let me be clear - I don’t believe we should over-insure or purchase extravagant, complicated policies to manage risk. However, I do believe it is critical to have an appropriate level of insurance that you understand.  Let’s dig in.

When and how do I do it? There are four types of insurance I’d like you to consider.  

Let’s start with health insurance. This is a non-negotiable, as healthcare costs continue to rise. Your health insurance options will depend on factors like your employer, your income, and your health. Put this at the very top of your priority list if you are currently not insured. If health insurance is new to you, check out this summary of health insurance basics.

Life insurance is next. Many of you will be just fine with a term insurance policy, which provides coverage for a set amount of time (the term). The two big decisions you’ll need to make with this policy is which term to select, and how much coverage to purchase.  Don’t let analysis paralysis freeze you! This Investopedia article provides a succinct overview to the common factors people consider when determining insurance needs.

If you’re a parent who doesn’t work outside the home, please don’t skip insurance because you’re "not bringing in any income.” You are likely providing a valuable service, be it child care, household management, elder care - so consider a policy that would allow your survivors to continue to receive care.

Disability insurance is something I recommend considering if you don’t have a partner, and your own work is your primary source of income. When your financial security is solely on your shoulders, an unexpected disability could hinder your future trajectory. If you were to face a disability that put you out of work, you’d have enough to deal with - don’t add undue financial strain to the list. This article from Clark Howard provides a simple primer on disability insurance.

Auto insurance - if you drive - is last on my list because it's often required by law for vehicle owners, so you’ve probably already purchased a policy. My advice? Increase your deductible (the amount you pay out of pocket before your coverage kicks in) if you can afford to do so. That change will save you money on your premiums. Also, shop around at least once a year to see if you can secure a better rate.

There are many other types of insurance, but if you’ve explored these four, you’re far better off than many, and you’ve taken steps to mitigate your risk. Are there any of these you don’t have today? What insurance advice do you have?  

xoxo, Ms. Financier

I Have an Emergency Fund and am Investing in Retirement, What’s Next?

Strong work - you’re putting your money to work for you! A healthy emergency fund and retirement account are crucial to step 4 of the Five Fabulous Steps to Financial Freedom. Let’s explore a few other ways to save and invest your way to real wealth.

Are you saving for upcoming large expenses? A regularly funded “save-to-spend” account can ease future financial burdens. I have a save-to-spend savings account for travel, home projects, and car maintenance. I estimate the annual costs of these items, and automatically transfer a monthly amount into my save-to-spend savings. This is separate from my emergency fund, which I only touch in the event of a real emergency. No, a Caribbean vacation in the dead of winter does not count as an emergency!

Have you started college savings plans for your kids? You should only begin investing in this once you have secured your own retirement investments. Kids can take loans, work while attending school, start at a lower-cost community college to offset the tuition burden, and pursue scholarships. You cannot do any of those to fund your retirement!

Are you ready to invest outside of retirement? This is where you create additional financial security and flexibility. Investing in a “regular” (non-retirement) account means that you can access the money with ease at any point in time, which is a pathway to powerful financial freedom.

I intentionally shared saving and investing ideas in a specific order. First, get the “basics” nailed down in your emergency fund and retirement account. Then, focus on large expenses, college savings, and other investments. You may choose to split your efforts - for example, if you have $250 extra to save in your monthly budget, put $100 towards a save-to-spend account, $100 towards a college fund, and $50 to an investment account.

To recap, here’s the order I recommend:

1. Emergency Fund Savings Account: Cash savings account that could cover at least 3 months of bare-bones expenses (housing, food, utilities).

2. Retirement Investment Account: Investment account (often available through your employer) where you are investing the maximum amount allowable in low-cost index funds

3. Save-to-Spend Savings Account: Cash savings account funded automatically for larger expenses like travel, home projects, and car maintenance or replacement.

4. College Savings: Investment account like a 529 plan that is dedicated to funding future higher-education needs for your kids. (For those of you with children.)

5. Investment Account: Investment account that you open and fund with post-tax money where you are creating wealth.

Which savings or investment accounts do you currently have? What's next on your list? Do you agree with the order I’ve suggested? What's next? Go get saving and investing to build wealth, ladies!

xoxo, Ms. Financier

Save & Invest Your Money: Step 4 of 5 Fabulous Steps to Financial Freedom

What’s the goal of this step? Make your money work hard on your behalf to give yourself a financial cushion and grow your wealth.

Why is this important? Remember the two big levers to creating wealth? Money in and money out. In this step, we’re going to put the cash from the difference to work.

Women tend to keep 10% more of their savings in cash than men. Millennial women report a lower level of financial comfort - on average, we are less confident in our financial future, and less likely to feel “in control” or “confident” about our financial future. Knowledge is power, so let’s create a smart plan to save and invest your money. This will improve your financial control, confidence, and (most importantly) your results.

When and how do I do it? Start with the basics - do you have an emergency fund?  

We talked about this after you did your financial inventory - it is the single most powerful cushion you can create for yourself.  

If you don’t have one, start by automatically transferring a set amount into a savings account immediately. Why a savings account? You aren’t looking for amazing growth; this is your safety net. Don’t put your emergency fund at risk. Schedule automatic transfers on pay day. You won’t get to 3 months bare-bones savings immediately, but you’ll never get there if you don’t start now.

Next, let’s talk investing - are you investing in a retirement account? Your employer may offer a tax-advantaged plan like a 401(k), or you may elect to fund an IRA for yourself, which can be tax-free if you’re under a certain income limit.

There are many, many ways to save for retirement. As a general rule, look for one of two things:

Pretax Contributions: Accounts where you can invest pretax dollars - earnings that you have not paid any taxes on. 401(k) and 403(b) plans are common options that allow employees to invest pretax. You will need to pay taxes on these in the future, when you withdrawal.

Tax-free Upon Withdrawal: These accounts allow you to invest money that has already been taxed, and you will not need to pay taxes on these in the future. Roth IRAs are a common type of retirement plan for tax-free future withdrawals in the US.

Many women get paralyzed at this point - which is better? Pretax or tax-free upon withdrawal? The most important step is to invest, and get your money working for you as soon as possible. Educate yourself and make the best decision you can, but don't let analysis paralysis slow you down. I have a post that breaks down investing into four simple steps - explore it if you'd like more detail. And, here's more on the difference between an IRA and 401k - it's pretty simple once you cut through the jargon.   

Many employers also match a certain percentage of your retirement investments - that’s free money! If your employer offers a match, I strongly recommend you take advantage of it. Your long-term goal should be to invest the maximum amount allowable into the retirement vehicles that are right for you. We’ll dig in and explore what and how to invest in future posts.

A strong emergency fund and regularly-funded retirement account create a very strong start to your savings and investing strategy. And, if investing is new to you - start exploring what investing in the market really means

In the next post, we’ll explore more saving and investing techniques to grow wealth. Where do you keep your emergency fund? How are you saving for retirement? I’m curious to hear!

xoxo, Ms. Financier

I've Tracked My Expenses, Now What?!

Let’s save some money! Once you’ve tracked your expenses - for a week, a month, or longer - I bet you’ve found a few things you can spend less on. And, I’m guessing you had a moment of, “Holy crap, I spend THAT on THIS!?” Yeah, we've all been there. (See: my shoe spending in 2013.) Is your wealth sneaking away from you in your shopping cart?

I’ve had the chance to review the expenses of many women - as a money nerd, I happily comment on and offer to review budgets. Here are the categories I find cause trouble for most women:

Food. Groceries and restaurants often represent one of our largest monthly expenses. Higher food costs often result from a lack of meal planning.

If you don’t plan your meals, you’re vulnerable to takeout and restaurants. We’ve all been there, hungry and without a dinner plan. Call the Thai place ASAP! This habit can add up to thousands of dollars annually for lunches alone. I enjoy restaurants, but go out meaningfully and occasionally (versus by default).

If you’ve skipped meal planning, you may enter the grocery store without a list. This puts you in a position to look for inspiration while shopping, which costs in two ways. First, you’ll pay more as you impulsively add items to your cart. Second, you’ll be more vulnerable to food waste - throwing away spoiled food that never made its way into a meal. Yes, actually throwing money away!

Drink. Enjoying a few cocktails at the bar can sneak our money away from us. The recommended markup for bar drinks is 75-80%, and provides an important source of restaurant profit. However, that doesn’t give us an excuse to blissfully over-indulge. Invite your girls over and learn how to make your favorite cocktails. Look for lower-cost but delicious wines like Bota Box (a Wine Enthusiast best buy wine) and raise your glass to the savings. Cheers!

Cell Phones. Providers like Republic Wireless and Virgin Mobile offer affordable, month-to-month plans. If your monthly cell bill is more than $40, you owe it to yourself to consider switching! These low-cost providers run on the same networks as the big guys and don’t require contracts. You may need to buy a new phone initially, but the cost savings can be tremendous.

Gifts and Presents. Gifts can be a double-whammy. Events like birthdays can sneak up on you (creating a surprise expense) and there is tremendous social pressure to gift generously. Gifting often falls disproportionately on women, who are often purchasing on behalf of others. I suggest budgeting for regular gifts, and giving memorable experiences or high-quality homemade gifts.

Most of us do not need more “stuff” but would appreciate an experience tailored to our interests. Think about gifts like: a restaurant-quality meal at home (served, cooked, and cleared by a close friend); a museum, art gallery, or winery visit; or a carefully planned day hike complete with a delicious picnic!

Beauty. This is a tough one for women. It’s incredibly easy to fall prey to the $60 billion dollar beauty industry. But, do we really need all the makeup and skincare goodies we buy? Will the latest miracle cream be that much better than what we're already using? Haircuts, coloring, makeup, and skin care represent a huge expense for women.

I used to spend a ridiculous amount on high-end skin care and makeup. Each individual purchase was small…until I added them all up. Now, I’ve switched largely to drugstore brands. For example, I splurge on Kiehl’s sunscreen and Dermalogica moisturizer, but buy Maybelline makeup, and wash my face with Dove.

For kicks, I compared my Maybelline Great Lash® mascara to YSL’s Mascara Volume Effect Faux Cils - the price difference was 400%! If you love mascara, this may be well worth it. But, if you splurge on every beauty purchase, these “small luxuries” will add up and create a barrier to saving and investing.

Target, Costco, Kohl's. Your store may vary, but this concept comes up all the time! This is the store you “swing into” for one item, but leave with a full shopping cart. “It’s just shopping,” you may say. But over time, you’re putting less and less wealth in your pocket.

Stores are carefully designed to separate you from your hard-earned money. I don’t blame the retailers - they don’t force us to spend more than we planned! However, next time you go to “your” store, stick to the items on your list. Before making an unplanned purchase, ask yourself, “Do I really need to this item?” This will prevent money from sneaking out of your wallet!

The most important action to take when you’ve freed up some money? Save it, automatically.

How? Let’s say you decide to cut the cord on your $150 cable bill (seriously, *do it* - more on that later). Immediately set up an automatic deposit for $150 to your savings at the same time your old cable bill was due. You will not miss the money, you will not “accidentally” spend it, and it will be creating a lot more wealth for you each month.  Boom!

What are you trimming back on? Are there different categories you spend too much on? Let me know. Managing what you spend is hugely important in creating the gap between income and expenses, which is where real wealth comes from. You got this!

xoxo, Ms. Financier

A version of this post also appeared on the Fairygodboss blog - I love their mission to improve the lives and workplace for women, through transparency.

Manage Your Expenses: Step 3 of 5 Fabulous Steps to Financial Freedom

We’ve talked about income - let’s stop being polite and start getting real. Time to dig in and explore how we spend that hard-earned money.

What's the goal of this step? Reduce and manage your expenses over time (and understand your current expenses) to increase your wealth.

Why is this important? Remember, there are two big levers to creating wealth - money in and money out.  Today, many of us are pay our daily expenses with a debit or credit card. Studies show that cards encourage extra spending. It is much easier to lose track of the money we spend when we only have to swipe a card - compared to the physical act of removing cash from our wallet. Further, so many of our expenses are discretionary that reducing smartly in a few key categories can have a huge difference.

When and how do I do it? Start today by tracking your expenses, if you aren’t already. Over time we’ll look to smartly reduce your expenses to create more space in your budget. There are many, many ways to reduce and manage your expenses - let’s begin with the basics.  

Where is your hard-earned money going? I started cataloging my expenses in Microsoft Money when I was a teenager (yes, I am a money nerd.) Since then, I have continued to use technology to track, categorize, and analyze spending. This allows me to find hidden areas where I over-spend (like eating out, which can add up fast), and identify costs that I don’t budget for (but should) like car maintenance and gifts.

There are several apps that will connect your bank accounts and provide a complete view of your household expenses. I have been a Quicken user for years. Two others to consider are YNAB (You Need a Budget) and Mint.

You work really hard for your money. You owe it to yourself to truly understand where your money is going, so you can effectively target areas to reduce and therefore grow your wealth. Further, if you track your money, you can budget more effectively, too.

So - how are you going to track your expenses?  If you’re already tracking, what tools do you find useful?

Grow Your Income: Step 2 of 5 Fabulous Steps to Financial Freedom

Who doesn’t want more money? If managed effectively, more money won’t create more problems, but real wealth.

What's the goal of this step? Plan to increase your income over time (and understand your current sources of income) to build wealth at a faster rate.

Why is this important? There are two big levers to creating wealth - money in and money out. A plan to grow your income over time covers half of that equation. This concept is particularly important to women, as we generally face a wage gap relative to our male counterparts. Women are also more likely than men to take time out of the workforce - often to serve in highly valuable but non-paying caretaker roles for children and parents.

When and how do I do it? Decide now which path you’d like to prioritize to grow your income, and start pursuing it today.

There are many, many ways to grow your income, and we’ll continue to explore this topic together over time. To get started, let’s explore a few common options:

Get more from your current job. If you’re currently working outside the home, a pay increase and / or promotion in your current job is a logical place to explore. With pay data increasingly available on sites like Payscale and Salary, you can have a more informed view on what your role is truly worth. Asking for a raise requires both research and preparation; here's how to ask for a raise in four steps.

Create a side hustle. Today’s technology gives us access to many potential side hustles. This post lists 99 ideas for your consideration! Simply put - applying your skills to the hours in which you’re currently not working creates an additional income stream.

Pursue a job or career change. Your position today might not be ripe for income growth, or you’re ready to move on. Whatever the case may be, changing jobs can result in bigger income increases than sticking with your current employer.

Improve returns on your money. This is applicable to those of you that have money invested or saved that isn’t giving you as much income as it could be. For example, do you have a mutual fund you inherited but don’t understand? Or, have you been sitting on more cash than you need because you’re unsure how to invest it? Put your own money to work for you more efficiently!

Each idea to grow income will take time and planning - but step one is to decide which is right for you.  So - which are you going to prioritize to grow your income over time?  Or, is there another approach you’re going to focus on?  I’m curious to hear from you.

xoxo, Ms. Financier

A version of this post with additional details also appeared on the Fairygodboss blog - I love their mission to improve the lives and workplace for women, through transparency.

I Have My Financial Inventory, Now What?

Congratulations! You’ve built a complete inventory of your finances. Next, let’s walk through each section to identify how to grow your wealth. In this post, we’ll focus on creating a strong financial foundation.

Let's start with the assets you have. Address the questions below to determine if you should take immediate actions to strengthen your assets.

  • Emergency Fund: Do you enough cash to cover at least 3 months of bare-bones expenses (housing, food, utilities)?  If not, let’s add this to the top of your priority list.
  • Consolidation: Have you found assets that aren’t creating value? You might want to consolidate these. For example, did you find a small savings account or old savings bond that has come to maturity? If you consolidate into fewer banks and fewer accounts, manage your finances is even easier.

What about your liabilities? Debt can be overwhelming. Review the questions below and rank the debt you want to pay off. Determine what debt is first priority, and after that is paid off, know what comes next.

  • High-Interest Debt: What is your highest interest-rate debt? If it is student loan or credit-card debt, consider it as a potential #1 payoff priority. We’ll work together to make (or find) money to pay this debt off faster.
  • Stress-Creating Debt: Not all debt is created equal. Is there a debt that really stresses you out? This is often personal debt like a loan from a family member, or student loan debt that can be both large and impossible to discharge in bankruptcy. Identify your stress-creating debt and consider that as a payoff priority.
  • Tiny Debt: Do you have a debt that is much smaller than the others? Consider paying the tiny debt off as fast as possible, and then re-directing the payment amount towards your next highest priority debt.

How are you doing on insurance? Many of us are intimidated by insurance policies. However, the right insurance can play a critical role in reducing our risk and guarding our wealth. Explore the questions below to decide if you need to change your insurance coverage. (We'll talk even more about insurance in Step 5.)

  • Health Insurance: Do you have health insurance? If not, selecting and funding a plan should be at the top of your to-do list.
  • Confusing Insurance: Do you have a policy that you don’t fully understand? While there are many quality insurance products on the market, there are also expensive policies that provide rich commissions to the salespeople that recommend them. If you don’t understand it, call the policy provider and educate yourself to understand if the policy really works for you.
  • Life Insurance: Does your lifestyle depend on income from someone else? For example, are you partnered and you split the mortgage and bills with your significant other? Or, do you not work outside the home and depend on the income from someone else? If the answer is yes, consider a term life insurance policy to protect against future loss at a modest cost.

After completing your inventory, and reviewing the questions above - let me know what you’re tackling first. Create a very specific (prioritized) to-do list - I use Wunderlist - and give yourself deadlines. Each change you make strengthens your financial foundation. You’ve got this!

Inventory Your Finances: Step 1 of 5 Fabulous Steps to Financial Freedom

Let’s get started with the basics - our first step towards financial freedom.

What’s the goal of this step? Create and maintain a full view of your finances so you can more easily accomplish your financial goals.

Why is this important? Knowledge is power! An inventory helps you identify gaps, eliminate unnecessary accounts, and better manage your complete financial picture.

When and how do I do it? Start building your inventory immediately, and re-visit it at least annually to keep it current.

Here’s how you do it: Decide where you’re going to keep your inventory. Some of us prefer everything on the cloud, so consider a secure option like Google Docs or Dashlane. Others prefer good-old handwritten notebooks.

Catalog your assets - the accounts and items that have value. For each asset, log its current value. Common assets include:

  • Bank accounts: Checking and savings accounts

  • Investment assets: Retirement accounts like 401(k) and 403(b) plans, IRAs, pensions; investment accounts; bonds; college savings accounts

  • Real estate

  • Other non-financial assets: Valuable items like automobiles and jewelry (I recommend focusing on only the most valuable of these items)

Next, focus on your liabilities. These are your debts and obligations - what you owe. For each debt, include the original loan amount, current balance, and the institution (or person) you owe; the interest rate; and applicable terms (years on the loan, for example). Include all credit cards, so you can easily compare interest rates.

Common liabilities include: student loans, credit cards, vehicle loans, mortgages, medical debt or personal loans.

Finally, catalog your insurance. These are the policies you (or your employer) have in place to manage against the unexpected. For each policy, record the provider, what the policy covers, the deductible, the insurance amount, and the premiums you pay.

Common policies include health insurance (dental or vision plans), life insurance, disability insurance, auto insurance.

This inventory will help you plan. It may take you time to collect all the information, and that’s okay. Next, we’re going to analyze the health of each category, to help you craft your financial freedom action plan. If you work with a financial planner, or are working on a will or trust, this type of inventory ensures you’re not missing any important information.

I’m curious if you have any surprises as you create your inventory. Are there any other categories you included? Let me know what you find, I’d love to hear from you!

xoxo, Ms. Financier

Five Fabulous Steps to Financial Freedom

What is financial freedom?

Financial freedom is when our assets (investments, real estate, etc.) produce enough regular income to cover our baseline expenses.

Take a minute to re-read that. How incredibly magical! This means we’ve invested so much that our own money has turned into our primary source of income. At this point, we no longer “need” to work for income (though we can choose to...which is a completely different ballgame.)

Many women aim for financial freedom at retirement - age 60 or later. I am aiming for financial freedom by 45 - or earlier. (Here’s a bit more on why financial freedom is a priority for me.) There are countless others who set their goals more aggressively, for age 40, 35, and even 30! In a future post, we’ll explore your target age. Along the way, we’ll educate and inform each other on how to get there.

How do I get to financial freedom?

I have defined five fabulous steps: Inventory your finances, Grow your income, Manage your expenses, Save and invest your money, and Manage your risk.

The order is intentional and designed to help us continuously grow wealth over time. So - don’t get overwhelmed. Let’s tackle the fabulous five one at a time, and revisit them regularly to keep growing our wealth.

Another key to financial freedom is making ongoing, deliberate improvements over time. One of the many amazing things about money is that modest improvements free up both mental and financial resources. Cutting a $55 monthly expense frees the worry of that bill AND creates a $660 annual cushion in your budget. This expense reduction gives you $6,600 over next ten years - more if you invest that savings.

We’ll tackle each of the fabulous five in order, together, and revisit them in detail over time. I’m curious about your thoughts on financial freedom - have you set a target age? How does it make you feel - scared, excited, anxious, motivated?  Let’s get started - you got this.

xoxo, Ms. Financier