Five steps to achieve financial freedom

Setting financial goals is the primary step of ladder to financial freedom. It is recommended to write down financial goals ranging from short term to long term, like paying of home loan, buying a car or going on a vacation abroad

Sep 08, 2014 05:09 IST India Infoline News Service

Each one of us aspire to achieve financial freedom, which can only come by taking more control of one's finances and strengthening the weaknesses. Financial freedom should not be confused with obsessing for money, but it is all about sitting relaxed and contended that the financial goals have been taken care of. Here are the list of some smart tips to getting that financial freedom.
 
Start with Financial Goals
Setting financial goals is the primary step of ladder to financial freedom. It is recommended to write down financial goals ranging from short term to long term, like paying of home loan, buying a car or going on a vacation abroad. The goals should specify the time and amount of money so that an appropriate amount of saving could be allocated to these goals.
 
Track your money
There are various mobile apps as well as online solutions available in India, which record daily expenses and provide an easy snapshot of the money spent. Keeping tab on every day expenses help figure out impulsive spending habits, which in turn greatly influences the way one manages his/her money. Also, tracking will help you to know if you are running on deficit or surplus by the end of month, which again could help straigten out usage of credit cards and other borrowings.
 
Budgeting
Tracking money for a few months will give a fair idea of spending pattern and it would help a person to prepare a budget on a more accurate basis. Though it sounds boring, but nearly half of the wealthy people cling to their budgeting habits, it simply saves from unnecessary cash outflow.
 
Emergency Fund
In India, people seldom give thought to having an emergency fund and even if some do have provisioning then it falls short of an ideal emergency corpus. Times are uncertain and there are higher chances that a person could face certain emergencies in day-to-day life, like a car repair or a huge credit card bill, owing to some surprise purchases, and, an emergency fund could just relieve you from a drag down on your monthly budget. Financial advisors recommend an individual to keep a minimum corpus of three to four months of expenses as emergency corpus, which should be easily accessible. 
 
In company of others
People tend to get inspired by others surrounding them more easily then by following some set principles or someone who is preaching from far off. Thus, it is prudent to be in the company of those who are financially more settled and free. Financial abilities are often reflected in the everyday activities of financially sound people, and it’s never too late to learn. 

Related Story