Financial freedom is a term frequently used but comparatively less reasoned in real life. The diagnosis of this term is made contrastingly by distinct people. According to many, it may be having no obligation to work, or having no debt on their balance sheet, or planning an early retirement for working professionals, or sometimes having enough cash in hand to be able to buy whatever they yearn for without giving it much thought.
Speaking in a language common to all, financial freedom is when you can sleep peacefully without participating in a race to reach your financial goals. It is about having enough savings to keep you hydrated in the bright sun (i.e., able to meet day-to-day expenses) and an umbrella from rain (i.e., ability to handle an emergent situation or other unplanned expense). It is when, after crossing half a century, you can dare to follow your passion or a dream career without worrying.
Well, all this can be done, but let us first understand what financial freedom means and how to achieve financial freedom.
It involves a series of situations and their corresponding analysis that determines how far you are financially independent. Let us understand them one by one.
Analysis: You can now reserve an amount for possibilities.
Analysis: How long will it last? Or how much you can risk it? (Time)
Analysis: This will give you control over your retirement age.
Analysis: You now have the power to go risk-free.
Analysis: Here, you must have early planning to spend that fixed amount.
While considering all the above situations, you must keep the inflation rate in mind, exchange rates if planning to move overseas, and a little room for deviation as planned, i.e., lump-sum amount.
Mentioned below are some of the ways to achieve financial freedom:
It means where you stand now and your current position in the world of financial stability. You must know how many miles you need to cover to achieve financial freedom.
Your future goals will determine the path you take to achieve financial freedom. If you wish to settle abroad, learn how you will manage to make a money transfer to India or abroad for your loved ones in the native country.
You must know how close you are to financial freedom, or how much more you need to strive for to reach your goal.
You must create an emergency fund for contingencies, retirement, and other unplanned expenses before putting your earnings to any other use.
Being crafty with your monthly expenses can help you a lot, i.e., postponement of unnecessary expenses, avoiding impulse shopping, buying things wholesale, being less frequent while eating outside, walking and following a balanced diet to prevent any health problems, and being over the limit with regards to monthly expenses.
Look at some more ways to add to your knowledge of financial freedom:
The above steps need careful planning and execution for each individual. Executing them can be tough at times, but starting early and understanding the requirements correctly will take you towards achieving financial freedom. Good investing habits will provide a long-term dividend, proper planning and allocation of growth assets, and managing liabilities will keep your balance sheet sorted and profitable at the end of the retirement term. Starting early will allow you to give your money time to grow while also allowing you to correct any mistakes, mishaps, or losses by counterbalancing them.
Being rich is having money, being wealthy is having time.
Choose your prime.