At Modern Family Finance, we believe in helping clients achieve financial independence early when possible to set them on a path to find their best work.
Financial planning afforded us the freedom to make the leap from salaried security, take our family around the world, and pursue dream ventures. You can read more about our path to financial independence.
Financial planning for those who want to become work-optional, or achieve financial independence, differs in several ways from traditional financial planning. Here are a few key differences:
Focus on saving: The primary goal of work-optional financial planning is to accumulate enough savings and investments to cover living expenses without needing to work. Therefore, a sometimes unconventional portion of income is usually allocated to savings, investments, and debt reduction.
Understand your expenses: In order to become work-optional, it’s essential to be intentional about your expenses and have a solid grasp on your cost of living. You may consider tradeoffs in your lifestyle to reduce your spending in order to increase your savings goals.
Focus on passive income: Work-optional financial planning places a heavy emphasis on generating passive income through investments, such as rental properties, dividend-paying stocks, and other income-producing assets. The goal is to create enough passive income to cover living expenses without relying on earned income.
Asset allocation: Work-optional financial planning requires a carefully planned asset allocation strategy that can generate long-term passive income.
Retirement planning: Work-optional financial planning is essentially a form of early retirement planning. However, unlike traditional retirement planning, the focus is on achieving financial independence and the ability to retire early, rather than on a specific retirement age.