A potential client approached me, and let’s call him Ajay. Ajay used to work at a senior position in an MNC. He had a stable income with a couple of income sources.
He shared with me his vision to leave his job in a few years and live a comfortable life while starting his own business. He wanted to ensure that he could continue to thrive even without his current income.
Ajay approached me to plan his finances to reach his goals.
We began by mapping his plans, goals, risk levels, and income. We focused on securing necessary insurance policies, started SIPs, and explored other investment options that would help him achieve his objectives.
Around 10 years later, he’s now working on his business, living a comfortable and stress-free life. The financial cushion we created is helping him live smoothly and confidently.
But why am I sharing this story with you?
Well, the reason is that most of us can attain financial freedom if we plan for it.
What Is Financial Freedom?
Financial freedom does not mean having 10 different income sources; it means to be able to live life as you wish. It also means to live life comfortably, having achieved major life goals, no major financial burden or debt and having the flexibility to spend your time on yourself.
Why Is Financial Independence Important?
- It is important to live life without financial stress or constant worry about how to arrange for next month’s expenses.
- Financial freedom allows you to fulfil your dreams and follow your passions without looking at your wallets.
- Financial independence ensures you retire early and do not have to depend upon your children to provide for you.
- It works as a safety net in uncertain circumstances, such as sudden hospitalisation, etc.
- It is one of the best approaches to follow if you wish to leave a legacy or pass on wealth to your children or grandchildren.
5 Basic Steps You Can Follow To Achieve Financial Security
You can start your journey towards financial freedom with these five steps.
- Goals: Set clear goals for yourself such as retirement age, savings amount, income levels, etc. Clear goals will help you decide what kind of plans and decisions to make.
- Budgeting: Now, track your income and expenses. Cut unnecessary spending and save as much as you can. To increase income, look for different ways to make more money. Also, don’t fall into the trap of lifestyle inflation.
- Emergency fund: Next, save 6 months worth of expenses for emergencies. If you can’t save that much, start with a small amount and increase gradually.
- Investing: Look for investment avenues and study about them in detail. Choose the ones that align with your objectives and start investing your money. Don’t withdraw unless absolutely necessary. Let compounding do its magic.
- Pay-off debt: Become debt-free as early as possible. Pay off high-interest loans first and others later. This will reduce your financial burden and free up savings for investment.
Achieving Goals Can Help You Feel Secure
However, you might not be able to relate to the definition of financial freedom and you might feel that fulfilling your financial goals makes you feel like you are on top of the world.
Let me share one more story.
A client of mine, let’s call him Biswajit, wanted his son to study music abroad, but the course was super expensive. Biswajit being a government employee had a decent income, but still wanted a solid plan to save enough for his son.
Fast forward to today, his son not only graduated but is now working on a big project at a major company overseas. It’s a great example of how smart financial planning can help achieve big dreams.
Hence, no matter what your dreams are be it:
- Buying a home
- Funding children’s education
- Planning a vacation
- Retirement planning
Or anything else. All you need is a solid financial plan to achieve your goals. It’s not about how much money you make, it’s about how you choose to spend your money and manage your finances.
Final Words
Financial freedom is about taking control of your finances and living a stress-free life. Start with setting clear goals, building a savings habit, preparing for emergencies and managing your debt. A solid foundation is necessary for a secured and flexible financial future.
Do not forget to consult a professional to make better financial decisions for yourself.
(The Author is Rahul Agarwal and all views expressed are of the author. The company does not claim any right in this content and the opinions expressed in it.)
