Financial independence is a major goal for many Americans, but it can seem hard to attain. While working hard and saving for retirement can certainly help you enjoy your later life, many people are focused on saving money more quickly and retiring early.

What does it mean to be financially independent? Generally, it means that you have enough assets that you can live without having to work. Of course, how long you plan to do this is important — you need a lot more wealth to retire at 40 than at 65.

How can you work toward financial independence, and how do you measure your progress? Here are some tips.

Get Rid of Debt

The first step in any move toward financial independence is to pay off debt. While there are a lot of gurus who are happy to help you, be sure you take their advice with a grain of salt. They often have good advice about staying motivated to pay off debt, but their advice about wealth isn’t as strong.

How do you get rid of debt quickly? The two things you need to do are reduce your spending and increase your earnings. There are other strategies as well — it’s usually best to pay off the higher interest debt first, but it can be more motivating to focus on small debts and work your way up to larger ones.

Spend Less

A major part of retiring early and achieving financial independence is reducing your expenses to what you consider essential. This doesn’t mean you need to become a hermit in the woods. In fact, your essential expenses will have a lot to do with the lifestyle you want to have.

Sometimes cable TV is a major source of entertainment for a family, so it’s an essential expense. Others easily cut the cord and watch shows online or only use Netflix. Some enjoy eating out from time to time, while others love buying gourmet ingredients to cook.

There’s no right answer about what’s “essential,” and trying to follow someone else’s lead will probably result in you not having the lifestyle you dreamed of. Don’t cut what you don’t want to cut, but be realistic about the lifestyle you want to live when you stop working.

Earn More

This is where most of the financial gurus fall down. While they’re great with advice about cutting spending and reducing debt, they aren’t honest about what it takes to build wealth. Many of them have become extremely financially successful, but not by following their own advice.

Generally, to earn more you need to invest outside your full-time job. You’ll need leverage (debt) to make these investments effective, but you can be wise about what you choose to invest in so that you get excellent returns.

Many people enjoy investing in real estate. To succeed as an investor, you need to work with a local real estate agent who can help you choose the right properties. Decide whether you want to “fix and flip,” or whether you’re interested in being a landlord.

Other options for earning more include starting your own business or investing in the stock market. Taking a second job can bring in some income, but often you don’t earn as much for your time as you do with other investment choices.

Run the Numbers on Your Portfolio

Once you’ve got your spending down and your income up, it’s time to crunch the numbers to see how close you are to financial independence. You can use a financial independence calculator or run the numbers yourself.

The returns you can expect to get over time fluctuate a great deal, so it pays to be conservative. You’ll also want to think about how much you’ll want to withdraw each year and make sure you have enough saved that your withdrawal percent is below your growth percent.

For instance, if you want to withdraw $30,000 a year and expect to get a 5% return, you’ll need a portfolio that’s big enough that $30,000 is only 4% of the portfolio. That way you’re earning more per year than you’re using.

Recently, people have been using projections that use a 15% expected return, because the markets have been booming. While that can help you feel encouraged, it’s not realistic. When the market turns south, you can get discouraged and even consider giving up entirely.

Fortunately, there’s no reason to despair. Just take your time and follow your plan, and you’ll reach the independence you want.

Get Started With Property Investment

One thing that holds a lot of people back from investing in property is they feel it’s very expensive. In fact, there are a lot of creative financing options that can help you get started – you can even rent your own home when you move, instead of selling.

Interested in what’s possible? Our Clever Partner Agents can tell you more. With the right property and the right goals, financial independence isn’t so far away after all.