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Political Or Financial Independence?

As we near the celebration of our nation's independence next week (yes, it really is next week), I'd like to address a few different slices of my client list:

1) There are some who believe that our country is sliding into a pit of collectivist mire. And I'm not here to address the merits of this belief, per se (please -- I know I'm opening a can of worms here -- hear me out). What I'd like to encourage in those who may see things this way: Rather than railing against a system or a cultural shift, let's zero in on preparing yourselves and your family for whatever may come -- be it prosperity, or the alternative. Bring on the happy confidence, I say.

This week's Note is for you. As it is for another group in my client list:

2) There are some who think that those who believe that our country is sliding into said collectivist pit are sand-pounding crazy. And again, you may believe this to be the case, but may I suggest that you, also, work towards a considerate expression of your disagreements?

This week's Note is for you, too.

The best "argument" to be made in both instances is the quiet security and confidence which comes from becoming one with the ability to serve and help others, both financially and otherwise.

Honestly, I receive emails from both sides of the political spectrum about the particular Notes I send -- both of which accuse me of giving aid and comfort to their particular "enemy" in how I present my take on financial matters.

I suppose that's how it should be, if I'm doing my job well in writing these notes without bias, to be read and engaged with by all my clients, regardless of their perspective. And I will always want to hear from you, Lina, about how I'm doing, and will bring clarification when possible.

But I am MOST interested in serving clients -- no matter their political or economic beliefs -- in achieving their personal financial goals.

By saving you on taxes, helping you see your family's balance sheet rightly, and by being your encouragement for the fight that all of us face.

Thanks for giving me that chance ... (and see the end of this week's Note for a little something that will really help you do that!)

Tony Khait, CPA, PFS's
"Real World" Personal Strategy Note

How To Reach True Independence

Often, as we strive to keep our heads above water in these financially crazy times, it's easy to lose sight of why we're doing this. What is the goal? What is it we're trying to accomplish by earning wealth? For me -- and for many others -- the answer is Financial Independence.

I would define this as "having an income sufficient for your basic needs and comforts from sources other than paid employment". Financial independence implies freedom. It's the condition of having saved enough money that you can do whatever you choose. Whether you elect to keep working doesn't matter -- you have enough saved and invested to follow your dreams.

But is financial independence just a pipe dream? Is it something only for the lucky and the strong? No, it's a goal that anyone can fulfill, as long as they're armed with some basic knowledge, and make some smart choices.

As I see it, there are four keys to accumulating wealth:


1. Start investing as early as possible. It takes significantly less money to accomplish what you want, and you have more time working for you.

2. Be determined to save on a regular basis. It is an easy way to accumulate wealth -- especially when it becomes an automated component of your monthly plan.

3. Begin investing with the largest possible sum you can. You will have more money working for you over a longer period of time.

4. Reach for the highest rate of return you believe you can safely receive on your money over time. Each additional percent is important. The higher the rate, the less money it takes to accomplish what you want.

Financial independence is built upon these four guidelines.

What Holds Many People Back

In order to save money, you must fight to keep from spending it. I encourage you to set goals, to prioritize wants. Since money can be spent only once, you need to decide which wants are most important. To do this, it may be helpful to place a value on each of your wants.

So ... here's an exercise for the week: Pull out a piece of paper and list your wants.

These can range from a new house to a hot tub to a trip to London to a new blender for the kitchen. Next to each item, write why you want it. (You might want a hot tub, for example, because it would allow you to relax with family and friends.)

When you've finished, take another piece of paper and re-order the list based on how important each want is to you. If a trip to London tops the list, are you still willing to delay it by spending $40/month for that gym membership you rarely use?

Confront this issue first (keeping in mind those four keys mentioned above), and I'll be back with more thoughts for you next week.


Tony Khait, CPA, PFS
(347) 673-6360