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Michela Allocca has a seven-figure net worth at the age of 30 thanks to increased income, diligent saving, and prudent investing.
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After working in the corporate world for many years, she is now a full-time content creator in the personal finance space.
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She says the first step to achieving financial freedom is knowing where your money is.
A 30-year-old with a seven-figure net worth says the first step toward financial freedom isn’t budgeting, investing, or cutting expenses. It just knows where your money is.
Michela Allocca, founder of personal finance brand Break Your Budget and author of “Own Your Money,” said people need to have a clear understanding of what they already have before focusing on growing their wealth.
How much money is in your retirement account? Do you have multiple retirement accounts? Do you have a brokerage account? If so, how much is in it and are you actively donating? What about cash – do you have enough cash, or too much cash because you’re afraid to invest?
If you can’t answer these questions, set aside a weekend morning or weekday evening to sit down and conduct an “account audit,” says Alloka, who spent years working in the corporate world before transitioning into a full-time role as a content creator. Since quitting smoking, her income has quadrupled.
Once you know where you’re starting, you can calculate how much money you’ll actually need to reach your goals, whether that’s early retirement or a job option.
“The first step is to understand where your money is actually going,” Alloka said. From there, she recommends using a financial independence calculator to set realistic goals.
Let’s say you’re trying to start Coast FIRE, an offshoot of the financial independence, early retirement movement where you no longer have to contribute to a retirement account. Instead, the amount you’ve invested is expected to grow and compound over time, enough to support you in retirement and allow you to “glide” into your golden years.
“You can Google a financial independence calculator, put in your numbers, and it will tell you, well, you need to invest $250,000 in your retirement account by this age to achieve Coast FIRE,” she said.
Maybe you’re closer to the $250,000 figure than you thought, or maybe you’ve already surpassed it. Regardless, now you have a concrete goal and know exactly how far or close you are from achieving it through a financial audit.
