6 things to keep in mind for achieving financial freedom
Whether it be the time when we reached up to hand the shopkeeper a rupee coin for some toffees or getting our parents to buy us an expensive toy, we're aware of the importance of money from an early age.
As we grow older, the reality of this situation is even more firmly imprinted on our mindset as we start paying bills and begin laying the foundation for a secure and comfortable future. The point at which we can be relatively assured that those goals will be achieved is where we start reaching a semblance of financial freedom.
Of course, based on those goals, financial freedom might mean different things to different people. For some, it could simply mean living securely with the knowledge that their essential spending will be taken care of, while others might not see financial freedom as anything less than being able to spend their post-retirement years without a care in the world.
Regardless of how you see your ideal vision of financial freedom, here are six essential things to keep in mind:
Know where you stand financially
No matter which point of your life you're at, it's important to be fully aware of your financial standing. After all, before you know how far you still have to go, you've got to know where you're at.
So total up all your debt, calculate your expected income and circle any warning signs on your overall financial picture, such as insufficient emergency funds or lacking insurance schemes.
Living within your means
Biting off more than you can chew is not just an uncomfortable dining situation but an even bigger issue if you wish to achieve financial freedom!
Prioritize laying down a strong foundation of savings before guzzling money away on wanton spending and risky investments. Unless you're on the receiving end of heavy inheritance or are assured of winning a lottery anytime soon, make a habit of living within your means with a focus on saving your money whenever possible.
Covering your risks
Life comes with its fair share of risks, and as such, you'd be wise to make provisions for at least some of them. That means purchasing sufficient health insurance. While that, of course, involves paying a premium, you're relatively free from having to set aside any additional money in the event you incur heavy medical expenditures down the road.
Check spends, trim budget
If you're a young professional light on savings or investments and are living paycheque to paycheque, for the most part, it may feel like your nest egg is a distant dream. But hold on, it's never that bleak.
Spare time aside to sit down and analyse where you're spending your money. Otherwise, it will be difficult to figure out where you have room to make adjustments to your spending. Track your spending for an entire month. List down what's essential and what's not. You might be surprised to find just how much you're blowing on that Starbucks coffee that you've developed a habit of consuming, or how many streaming apps you've subscribed to but hardly ever watch.
Once you're done figuring that out, put together a new budget, where you implement your findings. Perhaps going through some of your typical expenditures might also move you towards bringing about significant lifestyle changes. For example, if you find you're spending too much on your vices, such as cigarettes or alcohol, this could be the perfect reason to give up those unhealthy habits.
Creating a debt payoff plan
Freedom from debt goes a long way towards attaining financial freedom. Once you start working and begin earning, focus on putting any extra money towards paying off your biggest debt, such as a student loan. Or you could focus on the loan that's draining you at the highest interest rate.
Make this is a habit for the rest of your life. When you eventually take a home loan, keep wasteful spending such as luxury purchases and risky investments to a minimum till the loan is paid off.
Building your nest egg to live comfortably by the time you approach the sunset of your career might be difficult without trying your hand at investing some of your hard-earned money.
With the rising cost of living, many are leery about investing. But it's important to remember that many people become considerably wealthy simply by ensuring they save and invest their money on a consistent basis for most of their lives. When you buy stocks, or go for mutual fund investments, ensure you go about it fully informed and make your choices wisely. Consult an expert if needed.
At mPokket, we are very cognizant of the need to ingrain the importance of financial freedom from a young age. After all, our purpose is to provide financial independence to youth. With world-class technology, transparent communication and quick decision-making, we enable today's youth to attain financial independence.
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