Let me put up a very interesting question to you. What’s your take on the biggest achievement of your life? Ah! I know you have come up with lots of answers which depicts your achievements and success in life. Although each of your achievemnets are important but acquiring Financial Freedom in your life is truly one of the biggest achievement that you should strive for in your life. Having said this, acquiring Financial Freedom is not an instant process, it is rather a gradual and step by step process with the end result being that you have Financial Freedom with you.
But what exactly do we mean by Financial Freedom? According to me it is the ability and capability to live life to its fullest. It also encompases many other aspects such as a happy family life, good bank balance, living a debt free and risk free life and the capacity to full fill your cherished dreams and desires of your life. Financial Freedom lets you to be in control of your money rather than money controlling your life. Financial Freedom gives you the power to live life according to your own terms. It is the real victory and one of
the greatest achievements of your life.
Having now understood and realized the importance of Financial Freedom, it is the right time to embark on the steps for Financial Freedom. How would you going to achieve Financial Freedom for yourself and family is the subject of discussion in this article. Here we put down 8 Steps for Financial Freedom before you. Each of these steps leads you towards the goal of acquiring Financial Freedom. We would discuss each of them one by one.
Step #1: Budgeting
Developing a budget is one of the big steps you need to take for Financial Freedom. You need to know exactly where you spend and what are your eanings. As a matter of fact nearly 55% millionaires prepare their budget. Once you start having a budget, you would soon figure out the areas in which you over spend and also things which require spending. The activity would help check your spending habit so that you can better channelize your money. You can keep a notebook, go for some online tool like Mint or you can also use software application like Microsoft Money so as to keep track of your spendings and prepare a budget for yourself.
Step #2: Saving
After being successful in budgeting activity you would exactly figure out how much money you can save on a month on month basis. So Saving Money is the next thing in line for Financial Freedom. One thing very important with Saving is that you you need to continue saving each month and also need not use your saved money. Save for your future and not to meet out present needs. Saving should be inculcated as a habit. Saving is the basic and the most fundamental activity that would eventually lead you to become a millionaire. You can go for opening a Saving Bank Account or can even use a Piggy Bank for that purpose but Save regularly. As you know little drops can make an ocean so your small efforts would turn out to be very crucial in the path for Financial Freedom.
Step #3: Investment
Once you have accumulated enough savings you can then surely check out for investing your saved money because unless you invest your money, you would never be able to create wealth for yourself and family. As a matter of fact, there are various investment options from which you can choose to invest money. You can invest in Stocks, in Mutual Funds, ETFs, Gold, even go for Systematic Investment Plan, etc. The primary factor in choosing an investment option depends upon your expectations for returns and your risk bearing capacity.
Step #4: Tracking
Whatever and where-ever you invest, it is of prime importance to keep a track of your invested portfolio. You need to see is your invested money earning you a good rate of return or is performing below par and making losses. Only tracking your investments can give you the real control over your invested sum. So if you keep track of your invested sum, you can minimize your losses to a great extent as then you would instantly quit that investment option and buy another one in place. Like Saving, tracking should also be developed in a regular habit. Atleast once in a quarter you should check how your invested portfolio is performing.
Step #5: Debt Free
Living a Debt Free life is really a blessing these days as most of us find ourself living under the influence of one debt or the other. Be it your presonal loans, home loans, credit cards or some other kind of loan or debt. So one of your chief priorities should be to pay all your debts as soon as you possess the capacity for it. And you can even start paying your debts in installments too. This would not effect your monthly budget and you would also be able to pay off your debts in due course of time.
Step #6: Emergency Fund
Apart from meeting your regular expenses you should also allocate some portion of your earnings to Emergency Fund as well. You never know when life would require you to meet the emergency in your life. Emergency Fund is created with the sole purpose of meeting any of your emergency situations in your life. It can be an accident, some critical illness, even a car damage, any kind of unforeseen event in your life which invariably requires money to come out of the situation. If you have an Emergency Fund in place, you would never fall in a debt trap. So apart from regular saving you should also save in your Emergency Fund as well. For detailed information on Emergency Fund you can refer our earlier post, “Importance of Creating Emergency Fund”.
Step #7: Be Insured
Another crucial step towards financial freedom is getting insured. Having an adequate life insurance would certainly protect and safeguard your family and provide you the required financial security in the event of your death. For further information you can refer our earlier articles, “10 Reasons why you need Life Insurance”, and “Why you need Life Insurance”.
Step #8: Earn Extra Money
Apart from saving and investing your money another very useful tool which would boost your earnings and propel your Financial Freedom is the Extra Money Earned by you. So to increase your earnings you can take up to pursueing your hobbies, go for entrepreneurship and start your own business, working to get promotions, taking up a part-time job, selling things as much more. Every extra penny earned by you matters. Afterall at the end of the day your basket of money increases in size with more money.
So you see that having a Financial Freedom requires you to pursue a series of steps. Every step leads to the other and strengths your goal of financial freedom. Financial Freedom gives you the ability to survive in the times of crisis and the power to realize your dreams. Happiness is synonymous with Financial Freedom so you should not delay to step on the path of Financial Freedom, the path of financial success and glory.