Financial independence is a concept that is still very much alien to most people. Although there is no shortage of students who are finance graduates, most of them lack adequate financial knowledge. They may score good marks by taking finance homework help from professional homework helpers, but they lack the practical aspects of finance. No matter how good your finance assignment help is, just writing an assignment will never prepare you for the harsh realities of the world. Financial independence gives you total control over your life, peace of mind, and more flexibility to pursue your passions and dreams. So, here we discuss nine ways how you can attain financial independence –
Spend as you earn
Loans and credit cards are two of our most essential financial tools. It is hard to find someone who doesn’t have any burden of loans or credit card bills on them. Although both these help people to buy many things to maintain a better standard of life, both of them can potentially destroy your finances as well.
Once you get accustomed to living on credit, it becomes very tough to manage your finances. Many people make unnecessary and expensive life choices depending on the credit tools until those come back to haunt them. Hence, always follow the 50-30-20 rule of budgeting. Allocate 50% of your income for your essential needs, 30% for your impulsive shopping, and 20% for savings.
Make savings and investing mandatory
A common problem for most salaried people is they always spend first and then try to save what is remaining at the end of the month. However, the ideal process must work in reverse. You must determine an approximate amount that goes for your monthly expenses. Keep the amount aside and save the rest of your earnings.
You can save money in bank accounts or invest it in other sectors. Instilling a habit of saving from a tender age is a very good habit. Even if you haven’t saved much till date, it’s never too late to start investing. Look for profitable shares, stocks, and other traditional investment options and make it mandatory to save something every month.
Make investing a habit
Most eminent financial experts advise making a habit of investing from childhood. Through long-term investments, people can enjoy the magic of compounding. Over a long period, even a small investment can grow into a large corpus. Save from wherever you can. If you are a student, you can save your pocket money in a student account. You can convert that account into a savings account as you enter the professional world. But if you continue this habit, you can eventually get a large sum in the long run when you actually need that money.
Increase your savings rate
A lot of responsibility also falls on the shoulder of the parents to educate their children about financial independence and the role of inflation. Inflation is a concept we often overlook and end up investing an inadequate amount for their future. Hence, many people find themselves far from getting financial independence despite saving their whole life.
Always consider that your expenses and the price of commodities will rise over time. The pen you buy today for ten bucks won’t be the same after five years. Similarly, the stock price won’t remain the same after ten years. So, decide the investment amount considering these options. Do enough research and take guidance from investment experts before making an investment choice.
Borrow less
Having too many financial obligations to take care of makes it difficult to get financial independence. Avoid taking loans from banks and private lenders at all costs. Try to limit your expenses within your earnings. This habit can make you self-sufficient with time, and you will feel less urge to borrow money from someone else. However, if you have a loan or pending dues, always try to finish them off as soon as possible. The longer you drag your loans, the more interest you have to pay, which in turn holds you back from achieving financial freedom.
Maintain an emergency fund
There is no certainty in our life. Since it can end anytime, it is crucial that you have a fund ready to serve your family in such emergencies. Hence, you must always ensure your life with enough coverage that guarantees to provide your family with a similar lifestyle that you are providing. You can calculate how much you need to save in your emergency fund by plotting a human life value.
There are many online calculators that can easily show you how much you need to save for your family. Another benefit of creating an emergency fund is that it helps your family to get a stable ground to recover from the financial loss from the demise of an earning member. It also helps the family members to clear off debts if required.
Plan your taxes
To achieve financial freedom, you need to plan your taxes in advance. Always ensure that your tax planning is synced with long-term financial goals. There are several options that offer the dual benefit of tax saving along with wealth creation. Explore various websites to find a suitable insurance plan that can take care of both your needs.
You can also look at Tax-saver Fixed Deposits and ELSS Mutual Funds if you want to create wealth while managing your tax obligations.
Review your financial situation
Money management is not an easy thing to do. One mistake many investors make is they forget to review the financial health of their investment and savings. They invest in a stock and expect it to give them financial freedom after the lock-in period. Unfortunately, that is never the right way.
You must always review how your investments are performing biannually. Take your portfolio statements and track the last six months’ performance of all the sectors you have invested in. This habit will help you be updated with the performance, and you can make strategic decisions to boost your earnings by selling or buying your stocks.
Invest in yourself
There is also no alternative to reading if you want to understand and implement financial independence. Read books of entrepreneurs, investors, and industry leaders who have achieved financial independence after starting from a small position. You can learn about many tricks and habits these experts follow and find yourself more avenues to achieve financial freedom.
Summing Up:
Here we have discussed financial independence in detail and how you can achieve one by becoming a little more learned and disciplined. Always remember that there is no correct time to start investing. You can always work towards attaining financial freedom irrespective of your age. However, whatever decision you make, you must be solely responsible for those decisions. Many people lose money by investing under peer pressure. Every individual’s financial situation is different; hence never blindly follow someone before investing. Instead, follow these tips and keep working towards unlocking financial freedom.
