7 Steps to Achieve Financial Freedom
India has achieved independence 75 years ago. How do you feel when we say you can also be financially independent in life? Meaning, that you don’t have to work till you live. We earn lots of money in life but due to poor money management, we keep working for money till we die. But If we can manage money with discipline, we can be financially independent at the time of life we want.
Let us show you a 7-step financial plan which can make you financially independent so you will not have to work for money till you live.
Just imagine what you did with your first salary. Must have bought a mobile phone or a dream bike, isn’t it? Or probably some stuff for parents. But let me tell you, the first thing to buy once you start earning is Insurance. Let’s Deep Dive into this.
Insurance – The savior in Emergency
Consider a recent example of Covid 19. People had to pay hospitalization Bills In lacs. What if some of them were not insured? In such cases, you have to either borrow money to pay bills or make a daunting in your savings or investments. So it’s always advisable to buy health insurance once you start earning.
What if a situation comes where you do not have a job in hand for some time? In that case, how you will pay fixed monthly fixed expenses? Start accumulating funds to the size of your six months fixed monthly expenses and park them in a liquid fund or a separate saving bank account.
Good Loans & Bad Loans
When you buy a car on loan, it comes with a lot of expenses along with higher interest rates. A car is a depreciating asset so its value will keep decreasing. Ideally, we call it a bad loan. In fact, credit cards, personal loans, etc are also an example of bad loans because it comes with a higher interest rate. You should get rid of such loans asap.
On the contrary, good loans are loans that can give you benefits of saving tax as well as the value of assets keeps increasing. Say Home loan.
Investment Planning to achieve goals faster
Once you are done with the above three steps. Now is the time to list out your goals and start investing as per the goals. Explore wealth creation tools like Stock Investing, Mutual Funds, Bonds, etc & consults your financial advisor to construct an investment plan.
Planning taxes can save a lot of money. Yes, it can. Make effective use of the taxation system and save a lot of taxes. The saved money can be invested in investing tools like MFs or Stocks.
“Retire from work, but not from life.
So if you want to retire early from the work and be free from all financial liabilities, you have to construct a strong retirement plan and stick to it with discipline. A financial advisor can help you prepare a plan that is suitable for your needs.
Record what you do
Even a small investment of a thousand Rupees shall be recorded somewhere. All your investments & insurance shall be recorded in a single place and family members shall be aware of that. Just in case something happens to your life, your family members will not have to face a tough time tracking where your investments are.
In this 75th Year of independence, follow these seven steps & enjoy the freedom of being financially independent.
Stockbook can help you analyze all the financial information of the companies you want to invest in.
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