Financial | Freedom | 10th December 2021 | Virtual Wire
Have you ever heard of the term financial freedom? It is the freedom to have enough money to meet one's lifetime expenses without depending on others or going into debt.
It gives liberty to choose and live the life we desire.
Why is financial freedom important?
Money is one of the basic living needs. It gives us the freedom to make one's daily lives run smoothly. Can you even imagine a life without money? How would you have managed for daily bread? We tend to fall for the fancy market without a doubt.
Most of us want to travel all over the map, go on an expensive date, buy a new iPhone in the market and show off cars. But, It is not a great idea to buy things in instalments or spend more than you earn. Again, what is your opinion on this? Do you think it is right to payout extra every time? And that doesn't mean you can never achieve your dreams.
However, if you think a 9-6 job is enough to build freedom or achieve your goal. How would you consider the situation where millions lost their jobs due to covid? Losing a job is not an easy thing to digest. It takes another round to make things stable. But, if you had built a financial goal earlier, it is much easier to tackle such situations. Finally, financial freedom gives the liberty to escape the strong rat race of this world and saves from budget-restricted life.
Ways to build financial freedom!
1. Stick to a budget
Budgeting is the art of handling money. Creating a monthly budget is significant. It helps to track income and expenses. There are different ways to make a monthly budget. Here are a few ideas to follow:
Calculate net income.
Distinguish needs and wants.
Track monthly mandatory expenses.
Look into the 50/30/20 rule.
It is easy to make a written financial planner. However, it takes time and discipline to follow. Remember to stick to it and be honest with your income and expenses.
2. Pay down debt
Debt is dangerous. It may seem comfortable to take a loan during an emergency. But, how long will you be paying the interest? Similarly, a credit card can help to buy things immediately. Again, do you think it is the right choice? So, it is crucial to close the bills before you set financial goals.
3. Build an emergency fund
The word emergency itself sounds threatening. What would you do for a medical emergency? Create health insurance and hold on to cash at the account as an emergency fund.
4. Multiple income streams
It may not be a good idea to stick to a 9-5 job. It is equally important to start a side hustle or generate money through assets. Passive income gives confidence and freedom.
5. Save and invest
Pay yourself first. Save at least 10 per cent from your monthly income. It is mandatory to allocate some amount for a savings account. Saving money can build an emergency fund or help to buy assets. Investing money in different platforms such as real estate, stock market, mutual funds, and long-term savings schemes generates a reasonable amount of interest. Finally, they grow and multiply money.
Are the points mentioned in the article helpful? Do leave your comments below.