As India enters its 77th year of independence, we thought it would be apt to share some tips and suggestions which could help you to start walking on the path to financial freedom. Even though we are a country with a 1.40 billion-plus population, many of us still need and seek knowledge on how to handle our finances well and how to plan our financial freedom.
Here are our 5 tips that can help you take the first steps to financial freedom.
Budget: One cannot achieve financial freedom without proper budgeting. A budget is like a guide map that helps you to understand where the money is coming from and where it is going. Budgeting helps to get your savings on the right path. However, just because you follow a budget, it does not mean that you will be financially free, but budgeting helps to garner an understanding of what you can save and how much you can invest.
Invest: The next step to financial freedom is investing. A lot of times people ask “When should I start investing?”. The answer is now. If your money is not invested it will not grow and compound. If it’s not growing how could you think of financial freedom then?
Investing can be self-managed or assisted. Investing needs expertise and experience, so better to invest with the help of a SEBI Registered Investment Advisor.
Create Passive Income: Financial Freedom means that you have the freedom of time to pursue your likes with a dependable income source to take care of your daily or monthly household needs and lifestyle. Invest such that you can create this cushion of passive income. Understand that investments can be made in different ways to manage risk and return, for different goals and milestones at differing time horizons.
Stay away from debt: Financial freedom could also mean that you are debt-free and stress-free, as debt and EMIs do cause some stress in our finances and life. Try to pay off your debts earlier. Low or no EMIs gives flexibility to your cashflows and help you to get closer to achieving financial freedom. If you already carry debt – use one of two approaches to pay it off, the first one is snowball style where you clear the smallest amount of debt and move forward, while in the second avalanche method, you start to pay off the debt where the interest rate is higher.
Invest in yourself: Financial freedom is not achieved in a day. Investing in yourself means developing financial literacy, as well as developing new skills. Financial literacy will keep you on the freedom path. New professional or work skills will help increase your income while keeping your expenses in check. Upskilling could possibly be one of the faster ways to reach your financial freedom goal. This requires you to continuously work on advancing your career, or your profession or business. If you are an employee, developing a valuable skill set can help you to increase your value and remuneration. If you are a professional or self-employed you need to continuously think about new growth strategies to keep your profession or business moving forward, thereby increasing your overall income.
On this auspicious Independence Day, take these few simple steps to free yourself from the shackles of financial illiteracy and step forwards on this journey called Financial Freedom.
Do write, share and comment on what is your idea of financial freedom and how you liked this blog. We would love to hear from you.
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