In the previous article (PART-I) we published about how to achieve your goal by acting on some behavioral aspect of your life, get some financial management knowledge and be discipline in your life.
You can read the article on?PART-I
Having implemented the above thoughts in your life, you are already on the track to fulfil your dream. Now you just have to develop some financial aspects and financial knowledge that will make you to financial freedom:
Below Are Few Simple Ways To Achieve Financial Freedom:
We are free to live our lives the way we want to (as long as we keep it legal!), we can make our own decisions and choose our own paths. And yet, there are some parts of our lives where we are not as free as we should be. One such problematic area is money?we often do not have the financial freedom we should, and worse, it’s because of our own decisions. Fortunately, achieving financial freedom is not difficult once we take some mindful decisions.
- Make a monthly budget and stick to it: Budgets may sound like a lot of unnecessary work, especially if you?re financially comfortable. But if you?re not tracking your spending, you may be surprised by how quickly it adds up, and which expenses are costing you the most. As 2018 begins, set a budget and work on sticking to it for three months. Track your performance and revise the budget, as needed. Don?t aim for perfection; instead, work for incremental improvement. Also try to clear your high cost debt to remain debt free.
- Save before you expense: How much money you are earning now is not so important, rather than important is that how much money you are saving now, that will make your future financially stable. Change the equation of ?Income ? Expenses = Savings? to ?Income ? Savings = Expenses?. If now you are earning less, try to expense less and save some part how little may be it.
- Keep a tab on expenses: The easiest way to save more is by spending less. Unfortunately, spending less is not as easy as it sounds. One way to keep a tight leash on your expenditures is by creating a budget and noting down where your money is going. You can figure out categories for your top expenses and decide how much you want to spend on each. Such a budget will stop you from not spending more than you need to and allow you to save more.
- Stop Saving, Start Investing If you make money, your natural reaction is to probably stuff it under your mattress or in your bank account. However, saving your money does absolutely nothing. Instead, create a savings account that can protect you for a few months, but not forever. It may be risky, but the only real way to create massive wealth is to invest as much money as you can.? If you want to be financially free in few years, you have to diversify your investments. Find different things that you?re passionate about that don?t require a ton of time and invest in them. There are many investment avenues available like equity, Mutual Funds, Bonds, Fixed Deposits, PPF, Real Estate and so on, that can give you more return than simple saving account.
- Keep some emergency fund: First importance is unforeseen event that may impact you badly. Life is full of unexpected emergencies. Having extra cash on hand in an interest-bearing account can help keep a serious illness, repair or other sudden need from derailing your finances. Prepare for unpredictable expenses by putting aside three to six months of expenses in an easily accessible cash-equivalent account.
- Caution with Plastic: We often tend to overuse our credit card; as we don?t feel the pinch when we pay with plastic. If you want to keep your expenses on a tight leash, go slow with your credit cards, and set a monthly limit on its use. Or even better, swipe your credit cards only during absolute emergencies.
- Staying Debt-free: Always try to get rid of the debt crunch. Take debt only in case of emergency and if you are unable to fund it from other sources. This is a no-brainer: squaring off debt on time, or even before the due date, will help you achieve financial stability. The best way to deal with multiple debt is to consolidate your existing multiple debt into a single one with lower rate, longer tenure and other favourable terms.
- Insured Your family adequately: Buy health insurance, Term Insurance: Medical emergencies are unforeseen and expensive. A sudden medical issue can burn a big hole in your savings and derail your finances. The best way to stay prepared for such emergencies is by buying health insurance. A health insurance policy for a substantial cover can be bought for a small annual premium. A good insurance policy will take care of medical emergencies and as an added benefit, you can also claim tax-saving deductions on the premium you pay. You can also have a term insurance that will protect your family in case of any mishap.
- Diversify Quickly: A lot of people say that focus is extremely crucial to success, but to remain financially stable I believe you have to more than one source of earnings at the same time. You never know what can happen. Don?t count on one salary, business or opportunity. Try to create multiple opportunities for yourself so that if one does hit a snag, you?re not completely screwed.
- Take Calculated Risks: Most people who have achieved financial freedom will tell you that they took some gamble that paid off big for them. It is not recommend to taking any risk, rather recommend taking a calculated risk. Life is all about playing the odds in your favor. Figure out the ROI in every risk and compare it to the possibility of failure. If you find out an investment has a 50% chance to fail but can make 3x the original investment, it?s a risk but calculations show it?s worthwhile.
Achieving financial freedom is an amazing goal that everyone should set for themselves. Being financially free will also take time, but it will be well worth the effort. Once you achieve financially freedom, you are enough rich to live a happy life.