What is Financial Freedom
Financial independence, as odd as it may sound, is all about control, namely power over your own finances. As a result, one of the better ways to define financial freedom is to have enough residual income to live the life you desire without worrying about how you'll pay your bills or deal with an unexpected expense.To put it another way, financial freedom does not always imply being wealthy or possessing a large sum of money. Instead, it's about being in charge of your financial present and future.
1..First and foremost, pay yourself.....
Paying yourself first is depositing a set amount of money into a savings or investment account before paying for anything else, such as bills, discretionary spending, rent, and so on.
Many people have gotten closer to financial freedom by just paying themselves first. And the reason this works is because it encourages us to look for other ways to cut costs.
For example : if the remaining authorised expenses are insufficient for you, you will be required to take additional steps. This might be as simple as adopting tiny lifestyle changes to reduce your existing spending or as complex as starting up a side venture to complement your present income.
2...Spending Less.....
Money that is save is money that is earned. However, saving one rupee does not equate to earning one rupee. Because you end up earning a lot more when you invest that Rs. 1 rupee.Now, saving money does not imply sacrificing your current lifestyle or living frugally.
Financial independence is primarily about wise spending, which may be accomplished in a variety of ways. Learning to create tasty cuisine at home and so decreasing your eating out expenses is one of the most prevalent ways. Set up automatic debits to avoid paying late fees on your credit cards.
3...Keep your career moving forward at all times....
One of the quickest methods to achieve financial independence is to increase your income while keeping your spending levels stable or under control. This necessitates constant effort on your part to advance your profession or business.
For example: by learning new and useful skills and improving your worth to your employer, your career and hence your salary can advance more quickly. If you're self-employed, this involves developing growth strategies to keep your company going forward.
4.... Increase your income by diversifying your sources of income.....
A 9-to-5 work may not be enough for the majority of people who are serious about financial independence. To put it another way, you might need to hunt for revenue sources other than a job. Indeed, some financial gurus advise consumers to find as many as five different sources of income. So, if you work a 9 to 5 job, consider yourself lucky since you just have one source of money. Now it's up to you to find four more!
There are two ways to earn more money. The first method is active income, which is exchanging time for money. The other way to generate extra revenue is to do it passively, which means you complete the work once and the money comes in automatically.
5...Recognize your current situation...
Knowing where you are now is the first step on the road to financial independence. This includes knowing how much debt you have, how much money you have saved, your monthly costs, your income, and so on.
In other words, you need a good understanding of your personal financial statement, including your income, expenses, assets, and liabilities. Once you have these figures, you may continue on to step two of your financial independence path, which is to write down your objectives.
6...Make a list of your objectives......
Why do you require funds? It could be to pay off a student loan, establish a business, vacation, plan weddings for your children, save for retirement, and so on. These are the goals you wish to achieve as soon as you have enough money.
As a result, money is merely a tool for achieving your financial objectives. However, until you set down your objectives, your money will be meaningless and you will have no idea how to make the most use of it. So, on a piece of paper, put down your top five goals for the following 1, 5, 10, and 20 years.