Financial independence is about taking charge of your finances, monitoring investments, paying attention to expenses, and increasing sources of income; create a balance between income and expenses so that your income weighs more than your expenses; manage the funds in a way that provides you with a cushion of security and stability, which then allows you to live your life as you see fit.
Financial independence is not easy and requires a lot of planning and then implementation. But rather than complicate the whole process of achieving financial independence, let’s list some tips to simplify it.
Everything about personal finance starts with saving. You can start small, build a habit, and work your way up to saving more. Saving, however, does not essentially just mean keeping a sum of money aside for a rainy day; it means being mindful of your spending. So it’s best to draw a budget to make sure you don’t end up spending unnecessarily on wants because often what we want isn’t what we need, and draw a line where it’s needed will help you save more than you think.
Know your goals:
Having a clear idea of your short and long term goals will help you make informed choices to invest wisely and choose the right time to achieve your goals. Whether short term or long term, the idea is to be able to achieve these goals; and thus establish yourself effectively financially. What you set out to achieve also largely depends on your risk appetite, which invariably hinges on a thorough understanding of financial products, how the market works and how to navigate, so read on and be prepared.
Use your savings to invest:
Invest now, invest wisely and above all, invest to fight inflation. Your money must grow to serve you well. To be financially free is not to be debt free. Having debt brings discipline in repayments as well as in considering your money as a whole. It is important to understand that what you save today will not be enough for tomorrow as its value will change with changing inflation rates. To secure yourself tomorrow with the money you can save today, you have to find the right investment strategy. You can invest in mutual fund SIPs, recurring or fixed deposits, PPFs or bond funds – whatever suits you. Or, choose stocks if your knowledge of the markets is solid and your ability to read the finer details of direct stocks is strong.
Investing in more than one asset class will ensure risk reduction because if/when you experience a loss, the loss is limited. Add a number of uncorrelated assets for a balanced return, as you will always have an asset to fall back on in time when one of your chosen investment assets declines, due to market movements. It also mitigates the volatility of your investment portfolio.
Build an emergency fund:
Always have an emergency fund ready. It’s what you need when the hard times come. To ensure that you are not dependent on anyone for your financial needs, you must ensure that you can rely on yourself, which is why your health insurance, term plans, readily available cash in case of emergency – must be well planned and kept ready. Having a personal line of credit also takes care of emergency needs. A personal line of credit with FlexPay will give you the flexibility to withdraw an amount as you wish and use it for your needs. Also, keep your credit history clean and healthy, as this will determine the availability of any funds/loans you may need in the future.
Know your rights:
Whether it’s equal pay or the division of property, women must be well informed and educated about their rights. What is rightfully and legally yours is yours to claim. While we’ve come a long way in breaking down gender stereotypes and biases, if you find yourself at the end of a pay or property disparity, bring it up. You matter, and so does your income, which should match the work you do, regardless of your gender.
Invest in your skills:
It’s wise to have more than one source of income because it not only provides better financial stability, but also allows you to invest your time and energy in something you really enjoy and turn that skill into a source of income. With the digital boom, there are opportunities knocking at your door, if only you take notice, use them and have the security of an alternative income.
Financial independence is an educational process and can be achieved if you work on it, but without emotionally draining yourself. You’re doing this for yourself, so don’t be too hard on yourself; start slow, gather knowledge, put money where it grows, and slowly and steadily claim what you set out to do.
The opinions expressed above are those of the author.
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