How can I achieve financial freedom?
If you have asked this question, then, congratulations, as you are already on the right track. Financial freedom has lately gained a lot of importance due to rise of entrepreneurship and nuclear families. However, there is no specific way wherein this term can be defined as its more like ‘to each its own’. For some, yearly vacation abroad can be his/ her definition of financial freedom and for some, being financially independent can be to fulfill all his needs and then helping the needy. In simple terms, it is like, to not have to ask for money for your spending or other financial goals.
Let’s see some simple habits that can help you in being financially independent:
- Payoff your debt: The very first thing that you’ll have to start with is to pay off all your debts. In fact, having a debt and planning for financial freedom are two extremely opposite situations. It is true that all types of loans aren’t bad, but avoid indulging in loans for trivial things. Also, taking a loan to repay an earlier one is a big NO.
- Reduce expenses: Many people live on pay check to paycheck basis. The most important step in financial freedom is to manage your money. You should know where does your hard-earned money go. For that, differentiate between your needs and wants. If you love your elaborated lifestyle, making changes to them might be difficult but not entirely impossible.
- Save: Usually people say that, “I saved Rs. 10,000 at end of the month”. This is not the real idea of saving. On the contrary, saving should be done in the beginning of the month. You should be determining how much can you keep aside as soon as you get your pay check. Saving is an integral part of being financially sound.
- Build an emergency fund: The biggest roadblock to your financial goal can be, if you are hit by any financial emergency. Life is uncertain and incase if such uncertainty arises, your basic needs and standard of living might take a hit. This emergency fund can help you take care of your medical needs, day to day household expenses and other unavoidable expenses in case of loss of job, pay cut, any social unrest or the pandemic that we are currently facing etc.
- Invest: Investing is an opportunity to earn on your earnings. So, don’t just avoid this crucial part. Investing in right instruments and product can help you achieve financial freedom easily. Also, because of inflation, your savings might just not be enough and an ideal cash will start losing its value. Starting to invest early in life is an ideal situation but, never the less, at least start investing.
- Keep yourself updated on financial products: Attaining financial freedom is not a day job. You will have to keep working towards it on everyday basis. Keeping yourself well versed with financial products that suits you and updating yourself with any recent product is good for you. For that, stay in touch with your financial advisor.
Do not stress yourself on achieving financial freedom. It can be done only if you have a more practical approach towards your finances. So, act wise by saving and investing more, and; spending less.