Finance September 21, 2016 Last updated September 19th, 2016 2,013 Reads share

The Power of Free Financial Planning in Building Lasting Wealth

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The American dream of owning your own home, becoming financially independent and enjoying a fulfilling, worry-free retirement is alive and well. Achieving the dream might require more flexibility these days. The old-fashioned approach to a career; work 20 years with a company and enjoy your pension and healthcare until the day you die, is long gone for most.

But, there is a way to make that kind of outcome happen in your life. Yes, you’ll probably hold

Saving $103 per Month Equals Millionaire Status in Retirement

There are many paths to financial independence. But, few are cheaper and less stressful than this simple trick for becoming a millionaire in retirement. Starting at age 25, save $103 every month and invest it in an average performing mutual or index fund. If you average a rate-of-return around 12 percent, by age 65 you’ll have $1,008,686 in the bank. And yes, that millionaire status is AFTER INFLATION.

If you’re over age 25, don’t worry! You can calculate your own path to millionaire status with this online financial planning calculator. If you’re 45 and want to be a millionaire by 65, $1,100 per month will get you there by 65, using the same calculations as the example at 25.

The key to this is long-term saving. The markets will fluctuate in the short-term, but long-term investments in solid mutual and index funds (preferably ones without a lot of fees) perform well. How well? The S&P 500, from its inception in 1928 to 2014, has returned an average of 10% for long-term investors.

In the next section, we’ll discuss ways to diversify your income. A side hustle is a great thing but, maybe you’re passionate about helping a friend or family member get their business off the ground. Before deciding to invest a portion of your retirement savings, take a moment to understand how ROI is calculated on an equity investment in a single business.

Even if your returns aren’t amazing, I’ve never met someone that regretted saving money for retirement. Although, I’ve met quite a few people that had the opposite regret in what was supposed to be their golden years.

Diversify with Multiple Streams of Income

So, you’ve committed to saving money each month towards your retirement. Great! You’ll eventually become a millionaire if you stay committed to practicing sound financial habits. How quickly you get there will depend on your income, and how you care for the money that passes through your hands. Let’s take a moment to focus on the income side of the equation.

The best thing you can do to earn more money is find ways to monetize your free-time. The hours outside of your day job represent an opportunity to earn extra income on your terms. What are you passionate about? Could you monetize that passion?

My first side-hustle involved landscaping in my neighborhood. I started young. I was in middle school and I was tired of trying to make my weekly allowance support my video gaming habit. So, I started mowing lawns. I knew how to use Microsoft Publisher, and I invested a few weeks of allowance towards printing 300 fliers at the local print / copy shop.

Then, I hopped on my bike and went door-to-door signing up my first clients. I charged way less than the professional landscaping services in our neighborhood, and I always showed up when promised. Plus, all those years where my parents took full advantage of lax family child-labor laws really paid off. I knew enough to make a yard look great, and I didn’t charge an arm and a leg.

Then I quickly became overbooked. My weekends were filling up, and my parents wouldn’t let me sacrifice academic pursuits for extra money. So, I recruited a few of my friends. Fast forward to my high school years and I was the scheduler / promoter, lining up yard work jobs for the neighborhood kids that wanted an extra buck.

I was attending high school full-time, and I was leveraging my free time to create income for myself. Was it enough to live off of? No, of course not. In the beginning, it was enough to buy all the video games I wanted. But, as the business grew, I could have kept on going. By the time I graduated high school, I could have worked it full time and cleared 6 figures a year without question.

Find your passion, or at least something you’re good at. And I know what you’re thinking. Yes, hobbies that you already enjoy during your free time already can count, if you make a profit. If you’re running short on ideas, check out these 55 business ideas, courtesy of!

Get Out of Debt!

Once you’ve figured out the income side of the equation, congratulations! But that’s only step one. Step two is solving the debt side of the equation. Student loans, car payments, credit cards, mortgages and anything else that you are paying off each month needs to be minimized and / or eliminated. Dave Ramsey likes to call this the “Debt Snowball”. If you can eliminate debt, you can take total control of your finances and leverage the interest-earning power of money.

Financial planning is easy if you only focus on the basics. Don’t overcomplicate things. Focus on generating new sources of income. Vanquish debt and become debt-free. Live a cash-based lifestyle that lets your money take care of you.

You can do it! I believe in you. Just take that first step, and keep on stepping. It’s not about being smart, it’s about setting good habits. Good luck!

Image: Financial Planning Accounting Report Spreadsheet Concept