Blog — Sisters for Financial Independence (2024)

A waste audit doesn’t have to be strictly at home. Take a look at what is in your office desk bins. If you work in a office, you probably have your individual waste baskets. What trash are you generating? Can you bring some of these things from home instead so that you can avoid purchasing? You would be surprised at how much we spend just at work. If you work in a city like I did at one point (I worked in Manhattan), prices are definitely higher than normal anywhere else. Relative to income this may be OK but it’s still a cost. For me as an example, there was a period of time where my desk trash bin consisted of a few coffee cups, a foil wrapper for my bagel and a Styrofoam or plastic container for my lunch. What this actually meant was that I was spending at least around $25 a day just to eat. If we translate that further, I was essentially spending some of my time at work just to pay for my meals. It's sobering to start quantifying these things because they add up. The solution for me in the end was to have breakfast at home and bring lunch. It took a few habit changes, but it worked out in the end. I would just double dinners or prepped during weekends so that I have some to take to work. This resulted in me producing less waste, but also saving money in the long-run.

Another area to look at is what you are throwing away while you are out and about. Are you buying these things out of impulse or desire or real need? Sometimes, we get caught up in the "basic" lifestyle so we start spending like everyone else. If we want an unconventional life, we have to start thinking, living and spending our money differently. We have to start thinking about the consequences of our consumption. It is actually our consumption that is depleting our natural resources. There is an excess demand for extra stuff. This results in more being made and manufactured. The outcome is not only waste byproducts, but also wasted materials. The lifestyle of product is so short nowadays that it essentially goes from the store to our hands to the trash in a matter of days or even minutes. This means that the flow of our hard earned money also goes from our pocket to the trash pretty quickly. I also write over at Mother Earth Living and I have posed a few challenges if you are interested to see what you are consuming and how it affects the Earth and your wallet.

Continue with your trash audit, going room and by room and figure out what is being wasted. There's a lot of solutions out there to refuse, reuse and reduce. One other thing too, we take for granted that it also costs money to haul our trash away. If you live in a community where you have to pay for the size of your trash bin, it's worth looking into reducing this and saving yourself a few dollars a month.

Some other suggestions:

- If you have lots of packaging in your bins, take note of what they are for. Can you get these things second hand instead so that you can skip the packaging and save some money?

- If you have lots of food items, do a fridge and cupboard audit before going grocery shopping. Have your list handy along with specific recipes for the week. Start saving some jars to reuse for leftover storage and invest in a good Tupperware (I personally like the glass because it's easy to see what's inside though it can get heavy to carry) or stainless still lunch box so that you can bring leftovers to work, on picnics, etc. Learn to store food properly. Save the Food is a non-profit that encourages people to reduce food waste. Download their Save the Food Skill on Alexa and use it to learn how to store fresh vegetables and fruits.

- If you are seeing lots of coffee cups, invest in a reusable cup so that you can make your coffee at home or get a few cents off when you see it at Starbucks or other coffee shops. Make it a point to not get coffee if you don't have your cup. I recommend the Klean Kanteen Stainless Steel Insulated Cup with the loop cap (which I personally use) because you can seal it and just dump it in your bag and it keeps things cold or hot for hours and produces no condensation on the outside. The 16oz is a Grande at Starbucks.

- If you are seeing lots of plastic water bottles, invest in a reusable bottle. Again, I recommend the Klean Kanteen Stainless Steel Insulated Bottle. Bottled water is sometimes 100x the cost of tap water, it's not regulated and contains microplastics.

- If you are seeing lots of mailers and catalogs, time to opt-out of these shopping temptations and curb the online shopping. You can contact the stores to get your name removed from the list or head to Opt Out Prescreen to get your name removed from a few general mailing lists.

- If you are seeing remnants from bad habits like lots of cigarette butts or alcohol bottles, re-assess if this is where you want your money to be going.

I also want to briefly talk about donations because while this isn't trash per se, it is still the discarding of items. We sometimes give ourselves a pat on the back because we are donating items to organizations, but buying things that we don't need or use is detrimental to the Earth as well as to our pockets. Let's not give ourselves the excuse that "I can just donate an item later" when I get bored of it. Let's really think carefully about what we buy and what we spend our hard earned money on. Donations provide deductions, but it will never be as much as just saving the original dollar amount. I also want to drop a bit of reality into our good intentions of donating. Sometimes, some of these items end up in the trash anyways because there is 1) already an influx if stuff in the system that it's difficult for organizations to manage and store it, 2) some of the items are of low quality (like fast fashion) that other countries don't even want to deal with it and lastly, 3) the stuff is just outdated.

Blog — Sisters for Financial Independence (2024)

FAQs

What is the average income for financial independence? ›

The cost of living comfortably: On average, Americans feel they'd need to earn over $186,000 to feel financially secure or comfortable, a 20 percent drop from 2023 but still more than two times what the average full-time, year-round worker earned in 2022 (about $79,000), according to Census Bureau data.

What are the 7 steps to financial freedom? ›

You can too!
  • Save $1,000 for Your Starter Emergency Fund.
  • Pay Off All Debt (Except the House) Using the Debt Snowball.
  • Save 3–6 Months of Expenses in a Fully Funded Emergency Fund.
  • Invest 15% of Your Household Income in Retirement.
  • Save for Your Children's College Fund.
  • Pay Off Your Home Early.
  • Build Wealth and Give.

How much money to be financially independent? ›

It doesn't take an exorbitant salary, either. Americans say they'd need to earn about $94,000 a year on average to feel financially independent. That's about $20,000 more than the median household income of $74,580.

What is the formula for financial freedom? ›

In reality, the rule is extremely straightforward. 50-20-30 rules is an easy way to know how to achieve financial freedom in 5 years. Split the cash-in-hand into 3 equal parts as per the rule. 30% of income is spent on wants, 50% on needs, and 20% is set aside for savings and investments.

Can I retire at 40 with 500k? ›

Yes, it is possible to retire comfortably on $500k. This amount allows for an annual withdrawal of $30,000 and below from the age of 60 to 85, covering 25 years. If $20,000 a year, or $1,667 a month, meets your lifestyle needs, then $500k is enough for your retirement. Is $500k nough?

What is the 4% rule for financial independence? ›

Key Takeaways. The 4% rule says people should withdraw 4% of their retirement funds in the first year after retiring and take that dollar amount, adjusted for inflation, every year after. The rule seeks to establish a steady and safe income stream that will meet a retiree's current and future financial needs.

What is the 50 30 20 rule? ›

The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings.

What is the 30 day rule? ›

The premise of the 30-day savings rule is straightforward: When faced with the temptation of an impulse purchase, wait 30 days before committing to the buy. During this time, take the opportunity to evaluate the necessity and impact of the purchase on your overall financial goals.

What is the Ramsey method? ›

The snowball method that Dave Ramsey refers to here means that you start by paying off small debts first and work your way up to the bigger debts. Debts can include paying off your car, credit card debts, and student loans.

At what age do most become financially independent? ›

Among the key findings: 45% of young adults say they are completely financially independent from their parents. Among those in their early 30s, that share rises to 67%, compared with 44% of those ages 25 to 29 and 16% of those ages 18 to 24.

What percentage of Americans have $100,000 for retirement? ›

How many Americans have $100,000 in savings? About 26% of U.S. households had more than $100,000 in savings in retirement accounts as of 2022, according to USAFacts, a nonprofit organization that analyzes data from the Federal Reserve and other government agencies.

At what point are you financially free? ›

You'll know you've achieved financial freedom when you have enough income streams or assets to cover your basic living expenses, as well as any additional discretionary spending you desire, without having to rely on a traditional job or career.

How much passive income to be financially free? ›

So, if you've been wanting to know how much you need to be financially independent, it comes down to the “4% rule”. The 4% rule means you can safely withdraw 4% from your investment accounts each year, adjust your withdrawal for inflation, and never run out of money.

What is the secret to financial freedom? ›

Key Takeaways

Make a budget to cover all your financial needs and stick to it. Pay off credit cards in full, carry as little debt as possible, and keep an eye on your credit score. Create automatic savings by setting up an emergency fund and contributing to your employer's retirement plan.

What is my fu number? ›

To be sustainable, your savings and investments will need to produce returns that can support your lifestyle without being depleted. Therefore, your financial independence number is the total assets you need to live without withdrawing more than 4% a year.

What is the average salary to be financially stable? ›

More than 2,500 US adults said they would need to earn, on average, $233,000 a year to feel financially secure and $483,000 annually to feel rich or to attain financial freedom, according to a new survey from Bankrate.

At what point are you financially independent? ›

In this case, financial independence means having enough in your savings and investment accounts — around 25 times your annual expenses — so you can retire early. FIRE devotees are dedicated to saving and investing as much of their paycheck as possible in order to retire long before the traditional retirement age.

What net worth is considered financially independent? ›

2) Net worth is equal to or greater than the number of years left in your life X living expenses. For example, $3 million with 30 years left to live is FI if your living expenses are no more than $100,000 a year.

What amount is considered independently wealthy? ›

Most financial experts agree you need at least 25 times your annual expenses to be labeled “independently wealthy”–that is: $42,000 x 25, which is $1.05 million. You need to save up to $2.55 million or have passive income that gives up to $102,000 every year. Only then are you considered “independently wealthy.”

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