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16 October 2020 | 4 min read

Simple Steps Everyone Should Follow To Achieve Financial Freedom

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Accomplishing financial freedom is a dream for many. Especially when one isn’t a finance expert or cannot hire an expert investment planner, being able to achieve a sorted plan for your income and savings is a blessing and feels like instant relief.

It is always better to have a “safety net” ready when unexpected situations like a pandemic or recession hit. What does financial freedom feel like? A sense of relief even in dire situations; being able to take well-calculated risks; having the flexibility to work part-time; having the liberty to quit a toxic job – if you can easily do these things, you can rest assured you have achieved financial freedom. Imagine being able to do the following without burning a hole in the pocket:

  • Choosing a less paying job purely because you enjoy it.
  • Being able to go on holiday every year.
  • Being able to help the family in situations of their financial crises.
  • Being able to retire a few years earlier than you’d expected

These are just a few examples of what financial freedom looks like. Of course, the priorities and things of interest may vary from person to person.

Does this sound too good to be true? Do you think there has to be some loophole there? Well, you’re mistaken. Believe it or not, personal financial planning is much easier than you think it is. Here are the basic steps to financial freedom by being your investment planner.

1. Know your long-term financial goals

Long Term Financial Plan

When it comes to knowing and understanding your finances, you need to be more specific than just having a vague desire. Writing down your goals can be the best exercise. Make a note of how much balance should you have in your bank account, what is a must for you and what can you let go when it comes to lifestyle, at what age do you wish to achieve it, etc. Now, calculate going from your present age to establish points where each goal should be achieved. The more specific you mention your goals, higher the chances of achieving them. Mark this ‘goal sheet’ neatly at the beginning of your investment planner or financial binder.

2. Set a budget

Set a budget

Having a household budget every month and sticking to that spending limit is an ideal way to ensure that all bills are paid on time and money is saved. This discipline also prohibits you from giving in to frequent temptations to splurge.

3. Opt for auto savings

Auto savings

This way of money planning is quite easy. Simply enrol in the retirement plan offered by your employer and full avail benefits of any other matching plan that they may have. It is also advisable to enable the withdrawal for an emergency fund, which comes in handy for any emergencies. An automated contribution to a savings account or mutual fund SIPs, etc. should be opted for, and these contributions should be pulled right on the day you get your pay check.

4. The right time to invest is NOW

Start investing now

Personal financial planning begins with investments , and the right time for that is NOW. Bad stock market situations can often make people question this. But there isn’t a better way to make your money grow than to invest it, and this has been proved. Once you’ve set your long-term financial goals, made a budget, and picked your investment plans, go for it. Waiting for tomorrow or for the right time in stock markets is foolish if you haven’t even started yet!

5. Money planning is an ongoing journey

Money Planning

One cannot possibly choose an investment plan, sit back, and relax for the rest of one’s life. Constant reviews of better options available in the market, changing in the investment, taxation and finance laws in your country, is a must to reap the best benefits of any plan. If required, changes in your plan must be made in earnest to avoid losses.

6. Spend a little less than you can actually afford to

Track Expenditure

Yes! Believe it or not, spending way below your permitted limits is the best way to save and discipline one’s ways. Having a frugal lifestyle by living to the fullest with limited means isn’t as difficult as one may imagine. In fact, a lot of fortunes have been made by adopting this mindset, and many have risen to affluence with this.

7. Talk to (or hire) an investment planner

Investment planner

Once you have saved a decent amount of wealth – in liquid assets or mutual funds or other investments – you are going to need expert advice. Talk to an expert of better yet, hire one, to educate you with what can be done to make the most of your assets and investments. They may be able to suggest ways and plans that a layman may not be aware of even. This is the best way to make well-thought, calculated decisions.

These easy steps won’t guarantee the resolution of all your financial woes. But they will certainly help you develop healthy and disciplined habits for a better and secure future.

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