People often cite “financial freedom” as their goal and pledge to seek it and yet Financial Freedom is one of the most misunderstood concepts, especially by the younger generation. They believe that having enough money to buy whatever they want, do whatever they do or simply being rich is called Financial Freedom which is clearly not true.
Financial Freedom does not mean having a lot of money so that one can spend as much as they want. It means having enough to spend on your necessities so that you do not work to earn a livelihood, but to be free of money worries so that following your passion becomes easier. It means that you get to take life decisions without getting stressed about money being a hurdle in its way. Imagine not being able to do what you really want to do because it is not something that would make money in the beginning. Arpit Arora says that “Money is the biggest distraction on your journey towards your Passion”. And the constant chase of money can be really stressful. Everyone must seek financial freedom in order to achieve and cherish their goals and live passionately.
This concept is very simple but can hold different meanings for different people. For few people, freedom to be able to choose a career of their choice without having to think about money is financial freedom. For other few, freedom to choose their retirement age without having to think about money is financial freedom. People can have an understanding of it involving their life goals into it, but the essence remains the same, being free of money worries.
Few Important steps need to be followed in order to have Financial freedom in life. Those are:
Manage the money that you already own
One really needs to learn to manage the money they own in order to make the most out of their existing corpus. The money left idle in the bank is burning on a day to day basis, even the money invested in a land or property which is not getting you any rent is de-growing. In Fact any set of money not growing more than 10% is reducing due to our light lifestyle inflation. And there is a serious need to look into the matters of money and make appropriate arrangements for investing the money.
There are so many options available in the financial market today, serving all kinds of investors, big or small, risk-averse or risk-lover. What one needs to do is actually put their mind to assess what they own, check if it is growing or making any kind of growth and cash flow or not, if not then one must also be active enough to re-allocate the funds to where they know they will be getting much better returns.
The assets should be chosen according to one’s current need for money, long-term goals and risk-taking ability.
Make a budget and act on it
Once you are done managing your wealth, you must also check what you are doing with your monthly income from all the sources. Do not spend too much. This is the era of consumerism and this generation loves to spend a lot on things. As much as we love shopping, we need to ask ourselves if we need that thing or not before buying it.
Warren Buffet once said “If you always spend money on the things that you want, one day will come when you will have to sell the things that you even need.”
We must get a hold of our finances by making a budget and having each rupee assigned for something. Budget should be made keeping in mind that you only need to spend on what is required and not on what you want.
Savings and Investment
Once you are done making a budget, you need to act on it. You will have savings at the end of the time period. These savings need to be invested again in the financial assets. You may also keep some money allocated as an emergency fund as that is also very important. The emergency fund is supposed to be liquid in nature. Fixed deposits, bank money and other debt investments can be highly liquid in nature.
Merely saving will not help, investing is also very important. Savings and Investments should go hand in hand so that the pain that you are taking by not spending on that thing you liked in the store does not go in vain.
Financial freedom will come to you, but not easily. You really need to take efforts for this. You need to not take the money that you own for granted and stop the mismanagement of money right there. If you do not value the money that you own right now, there will be a time your money will not value you.
