Moving Towards The Goal of Financial Freedom 1

Moving Towards The Goal of Financial Freedom

What is your definition of Financial Freedom? Financial Freedom is not just a monetary term.So,having a higher income can not be taken as Financial Freedom.Even people with lower income too can enjoy this freedom.Financial Freedom is the state when you don’t have to worry just about the finances and you can enjoy your life to the fullest.You can get good enough time to be with your loving families.You don’t need to stuck to your 9 to 5 jobs all those years and you can plan your retirement from your work without compromising your finances.

Financial Freedom is all about Money Management.You need to manage your personal finances.Having fat income is of no use if you can’t manage it properly.My Dad used to say to me,” son, it is too easy to earn money but it is too difficult to manage it.” Honestly, I also learnt it the hard way.

We were talking that Financial Freedom is the Personal Finance Management.All you need is to be Disciplined towards your money and fix a Goal of getting Financial Freedom.And now,this is not a rocket science.Lets go through the to-do’s of achieving this Goal for you.

1. Cut Your Expenses – You may be earning handsomely.You have the right how you spend your money.But it is really important that you understand the difference between the Wants and the Needs.Needs are those which are necessary for your day to day routine and we all have to spend for those needs.Others are the Wants which we want for our gratification or fun.There is no end to Wants.So you should cut your expenses on these Wants without which also you can do good.Save Spend Invest Keys Show Financial Choices

A saying by Investment Guru Warren Buffet comes to my mind.He quote-

If you buy things you don’t need, you will soon sell things you need.

So,if you keep buying unnecessary things,this may lead you to a financial mess that you would need to sell your important things to make the mare go.We need to learn to live below our means.

2. Save Your Money – The money you saved by cutting unnecessary expenses is your Saving.You should always create the habit of Savings.In case of any unplanned or sudden expense,Savings take care of that.It is believed that when the recession hit the most of the European countries in 2007-08,India was insulated to that to large extent.This was only because of  Savings habit of the Indian people.The most people in affected countries were debt ridden because of easy credit available and no Savings.

So save as much as possible from your income.A thumb rule is that you should save at least 25% of your monthly income every month.

3. Invest Your Money – Now that you have saved your money by cutting the extra expenses,you should look to Manage this money.Leaving that cash idle in your bank accounts will yield nothing.The inflation rates are higher than the normal savings bank account interest rates.So your savings shall be eaten away by the inflation over longer period of time.

You should Invest the money in some asset class.Investing helps the money Grow.Investing beats the inflation in terms of Rates over longer periods of time and leads to Wealth Creation.You can choose any asset class like Equities,Mutual Funds,Property,Real Estate etc according to your preference and risk profile.

This Wealth would be your financial security.When you have accumulated enough wealth,you can plan your retirement from work and enjoy your time and life with your loved ones.The earlier the better.If you start your Goal earlier,you would be accumulating wealth earlier.

Summing up all about Financial Freedom,we can say that –

‘Live below your means,Save your money and Invest wisely’

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