Financial freedom refers to a state in which a person has sufficient resources to meet expenses and is able to achieve financial goals without being dependent on others.
Freedom doesn’t come easy, and when it comes to financial freedom, it’s literally “earned.” Financial freedom means different things to different people. For some it may mean being debt free, for others it may mean having adequate cash flow.
Whatever the case, financial freedom is achieved when you have enough money in the bank to take care of your lifelong needs, or have cash flows in the form of interest or dividends, or benefit from companies that take care of your cash needs To take care of .
One cannot speak of achieving financial freedom by hoping to earn in the future. Without a plan, the dream of financial freedom remains a dream.
Here are some ways you can manage your finances to achieve financial freedom:
Keep track of your leniency
Lifestyle changes can help improve your quality of life, and retail therapy can give you a sense of confidence in your ability to spend. But a keen eye and a thorough review of both can help you avoid debt and eventually lead you to financial independence, Anil Pinapala, CEO and co-founder of Vivifi India Finance, told CNBC-TV18.com.
Time your purchases well
When it comes to making purchasing decisions and going shopping, plan out the things you need to buy rather than making impulsive purchases because you could end up paying a heavy price for emotionally-based purchasing decisions if you go overboard, he said Pinapala.
With a reserved budget, planned purchases help you spend responsibly and efficiently manage your purchasing behavior.
Plan investments and savings
In order to achieve financial freedom, it is extremely important to plan investments and put a lot of emphasis on saving.
“Planned and timely investments can prove crucial to your financial freedom. The power of compounding should never be underestimated,” said Vikas Garg, co-founder and CEO of Paytail.
Make a strategic plan
If you’re on the path to financial freedom, strategic financial planning is a must, Garg said CNBC-TV18.com.
“An important example from recent history is how the pandemic has thrown all plans in turmoil by exposing all the extra holes in your financial safety net. However, this acts as a wake-up call to take responsibility for the present and the future. It all starts with a financial plan and constantly updates with plenty of financial knowledge about what’s right and what’s not right for you. Since this term is subjective, having clear financial goals becomes extremely important to your mind as well,” he said.
When you are young you don’t realize how important it is to have an insurance policy. A mishap or an incident can ruin your life and that of your family.
The only way to protect yourself is to get comprehensive health insurance and term life insurance. Bonuses are low when you start early, Vikas Singhania, CEO at TradeSmart, told CNBC-TV18.com.
According to Singhania, achieving financial freedom early in life is all about learning and living the formula of compounding. There are two components to compounding your wealth – time and return on investment. The longer you stay invested in a quality investment, the higher your return.
That is why it is important to start saving early in life.
“You should start saving before you start spending. There are many mathematical tools that can help you achieve financial goals. For example, the 15-15-15 rule states that you must be a crorepati (have Rs crore in your account). should save Rs 15,000 every month for 15 years in an instrument that yields 15 per cent. A return of 15 percent is only possible with stocks. Investing in quality stocks or good mutual funds early on can help achieve the goal,” Singhania said.
Monitor your plan
Most plans start out promising but fail for a variety of reasons. In the corporate world, regular monitoring and course correction helps stay on track, the same goes for personal finances.
Investors need to regularly monitor their finances, especially those who rely on stock investments to meet their financial goals. Making adjustments to your investments, optimizing where necessary, is an important part of reaching your goal.
In short, if you want to achieve this freedom, you can take the path of skilful planning and strategic implementation. There will be hurdles, but what are the emergency funds for at the end of the day?
Hoping that all those who want to achieve financial freedom are one step closer to that Independence Day.
The views and investment advice of the investment professionals on CNBCTV18.com are their own and not those of the site or its management. CNBCTV18.com advises users to consult with certified professionals before making any investment decisions.