Financial freedom refers to living life on its own terms. When you can bear your own expenses without having to depend on others and save so much that you do not have problems after retirement, you will be truly financially independent. Being financially independent is a great thing, but you have to try it. You will have to increase your money through job as well as savings and investment, otherwise you may get into trouble in future. Even after what you earn, you are not able to save enough and your earnings are also fixed every month. How can you achieve financial independence in this situation? So through this article, we are going to give you information about achieving financial freedom.
To achieve financial independence 8 steps
The biggest enemy of financial freedom is your laziness and laxity. If you keep avoiding today’s work tomorrow and tomorrow’s work for the day after tomorrow, you can never achieve financial freedom. So use the steps mentioned below and make yourself financially independent.
Save and invest for financial freedom
You should cut unnecessary expenses through your discretion and save at least a part of your salary. You should save at least 25-30% of your monthly salary. If you invest a part of your savings by saving more and more, then your money grows very fast. You have to understand the strength of compounding. For example, if you invest 5 thousand rupees every month in a mutual fund scheme through SIP for 10 years and you get a return on this investment at an estimated rate of 11%, then after ten years you will get around 11 lakh rupees. Will meet. This is the power of compounding. Now today you can think that if you invest 20-25% of your salary, then after maturity, how much amount you will get.
Include equity in your investment portfolio
Investing in equity yields manifold returns. Be sure to invest in equity at an early age. You can invest in equity mutual funds and shares for a long period. You can choose to invest in equity mutual funds through SIP. It is a way of investing in mutual funds. Through this, you can invest a certain amount regularly in your preferred fund. Equity can help to create adequate funds and achieve financial independence at an early age.
Plan for achieving the goal
Investments for different periods are required to achieve various financial goals such as health, marriage or higher education. That is why you should do research before investing. Also, invest only on the basis of your risk profile. Do not take any decision in a charge. Also, keep an eye on the market situation.
Create emergency fund
Create an emergency fund with the help of which you can run your expenses for at least six months. If you are unmarried and do not have special responsibilities, you can make this fund for three months. Invest in a liquid fund for an emergency fund. This fund can come in handy when your job is lost or you have any health related problems etc.
Keep track of investment
Investing is not something that you forget once you do it. If you want good returns through investment, then you have to constantly monitor it and keep an eye on the market. Along with this, be flexible in your investment. Take corrective action in investments and diversify portfolios when needed. It can be foolish to get overly confident by investing.
If you want to achieve financial freedom at an early age, reduce your unnecessary expenses. Keep an eye on all your expenses and pay bills on time to avoid penalties. If your total wealth is 25 times more than your annual income, then you are financially independent.
Get rid of debt
You cannot add money until you repay all your debts. So get rid of debt as soon as possible. Try to take any type of loan only in an emergency, because usually a higher rate of interest is charged on the loan. This affects both your budget and savings. If you have already taken a loan, try to repay it as soon as possible.
You must take a life insurance plan. This will help your family members financially in the event of your untimely demise and they will not have to worry about anything in your absence. Along with this, you should take a health insurance plan to get cover against the amount you spend on your and your family members during illness. Life and health insurance are the mainstay of financial freedom.