Financial freedom is a concept that fuels the saving and investing habits of many. After all, who doesn’t want to enjoy a steady flow of income to take care of all their expenses? Typically, financial freedom is also defined as a situation where you are not dependent on your work to generate income for your regular expenses. But how to achieve financial freedom? Here’s how you can start making your way towards attaining true financial freedom.
- Understand your expenses and income: You must first figure out your financial inflow and outflow. If you are making X amount and spending X amount, you won’t have anything to put towards a financially secured future. So, identify all your monthly income sources (for many people, it’s just their salary) and your expenses. Next step is to compare the total income with your total expenses and take note if your expenses are in your control.
- Draw up a budget for your goals: If you are happy with your current lifestyle and want to maintain it, your current expenses need to be taken care of as you strive to be financially free. However, if you have other financial goals like higher education for your children, a bigger house, or a comfortable retirement, you need to draw up a budget and a plan for those future expenses.
- Spend frugally: Now that you know how much income you need to either maintain your current lifestyle or meet your future expenses, it’s time to check your spending habits. Although frugality may seem like the cheap way out, it’s what could help you in the long run.
- Automate your savings: With your expenses managed within your means, you will have surplus money to save for your future needs. But to save enough to reach your financial goals, you need discipline and consistency. To ensure that you never forget to save, prioritise and automate your savings. As soon as your income comes in, your savings should be put aside.
- Start investing: How to get financial freedom with your savings? You can make your money work for you by investing it smartly. In other words, dont just save, but invest the savings to make it work for you. Choose investment instruments such as stocks, mutual funds, ETFs, or any other assets that matches your risk profile and start investing.
- Create additional sources of income: If you are wondering how to achieve financial freedom in 5 years, you need more than one source of income. Any disruption to your main income source should not derail your investment habits. Work towards creating new sources of income to support your financial goals.
An important step towards achieving financial freedom is taking expert help. Don’t hesitate to seek expert help when it comes to attaining financial freedom. Signing up for financial advisory services could help you to determine the right investment avenue based on your risk appetite and the duration within which you want to fulfill your financial goals through goal-based investing approach. Reach out to an expert today to plan your way towards financial independence.