Financial freedom is very important nowadays. That’s because financial freedom relieves us of the undue stress that financial issues can cause.
Overall, any person having financial problems also experiences severe stress. This stress is in addition to the ones we already face because of work and other external circumstances.
Basically, financial freedom keeps us free from worries about money and helps us to enjoy the kind of life that we always wanted.
So, how to achieve financial freedom? Obviously, there are no magic keys to financial freedom.
However, following a few simple steps in your day-to-day financial matters can help you to gradually achieve financial freedom.
Now, let’s get this very clear: financial freedom is totally different from financial independence. Therefore, let’s start by understanding the vast difference between financial freedom and financial independence.
This would help you to better comprehend the importance of financial freedom and the ways and means to achieve it.
Financial Independence v/s Financial Freedom
In simplest words, financial independence means you don’t have to depend upon anyone for money.
It means, you are working or have your own business and therefore, can manage your expenses and save some money or invest.
On the other hand, financial freedom means having enough money and the liberty to spend it the way we want, to enjoy life to the fullest.
This involves a lot of things, that I will be discussing later in the article. A person or family that has financial freedom enjoys a better lifestyle and has overall higher levels of happiness.
There are several benefits of financial freedom too.
Benefits of Financial Freedom
I will list the benefits of financial freedom. This would definitely drive you to achieve financial freedom.
Having surplus money after meeting your basic needs of food, clothing, shelter, education and other expenses is a sign of financial freedom.
You can enjoy with this surplus money, without having to bother about anything else. For example, you can go or take your family on a holiday in a foreign country or buy an expensive car easily.
Zero Financial Stress
Overall, people with financial freedom have zero stress due to their financial condition, as I mention earlier in this article.
As a result, they perform better at work or business. They don’t have to live with anxiety over money or stress that arises from a shortage of funds or overstretched incomes.
Instead, they can live knowing happily that they have enough money for anything they like.
Absence of Loans and Debts
A financially free person also doesn’t have loans and debts.
If we observe closely, anyone having a loan or debt to repay causes a drop in happiness levels and the lifestyles of such women or men take a severe nosedive.
That’s because of that nagging worry about repaying the loan, which always lingers at the back of their minds. Therefore, having financial freedom means living a loan and debt-free life.
Surely, these benefits would make you want to achieve financial freedom at the earliest. If that’s your case, then continue reading.
Because now I’ll be discussing time tested and proven ways to achieve financial freedom.
6 Tips on How to Achieve Financial Freedom
Before I discuss ways to achieve financial freedom, here’s something important to remember. Achieving financial freedom isn’t an overnight process.
It could take several months or even a couple of years to become financially free. However, if you are really serious about achieving financial freedom, the time to start is right now.
Here are my ways to achieve financial freedom.
1. Implement Financial Discipline
The first and foremost step to achieve financial freedom is to bring or implement financial discipline in your life. This consists of a lot of things.
Take stock of your current financial situation and set short-term, mid-term and long-term goals that would help you achieve financial freedom.
This means, taking into account your current income and spending, outstanding debt and investments if any.
Once you have these details ready, find ways and means to increase your income while wiping off all debit and credit that you might have accumulated over the years.
Also, find where you are investing and if necessary, rework your portfolio to get the highest possible returns from the money market.
After all, it’s your money and you could be wasting a lot of it by means of interests on Equated Monthly Instalments for that new mobile phone, Annual Purchase Rate on credit card and other outstanding debts.
Eliminate the as quickly as possible so that you can enjoy the benefit of a full income, without having to pay anyone.
2. Use the Income Minus Savings Formula
This is something I always advise people who wish to gain financial freedom. Use the Income minus savings formula.
I’ll explain this a little more. Generally, most of us spend on our household expenses and whatever else we require from our income.
And save any money that remains after meeting all expenses. Instead, it should be the other way around.
Fix an amount that you would like to save every month and deduct that from your income. Spend only on the remaining amount.
Remember, it’s always possible to save a lot of money from our expenses. If you check your previous month’s expenses, you’ll definitely come across areas where you have spent a lot of money on unnecessary stuff or things that really wouldn’t matter to your family or your lives.
If possible, use a superb budgeting app to make sure to track your expenses. And above all, eliminate every unnecessary and frivolous expense, at least for some time.
3. Learn to Invest
From the money, you save to invest in a Systematic Investment Plan to buy top-performing Mutual Funds or stocks and Exchange Traded Funds that provide high returns.
Actually, SIPs are a wonderful way of forced savings. Your bank will automatically deduct the specific amount of money every month to pay the Asset Management Company with whom you have a SIP.
The value of your money rises when the Net Asset Value of each unit of the Mutual Fund you are holding goes up.
The stock exchange is also a superb way to invest and make high returns.
You can make money by intraday stock trading or simply buying stocks and holding them in your Demat account for their values to increase over a span of years.
If you wish to play it safe, invest your money in Recurring Deposit or Fixed Deposit accounts at any good bank of your choice.
The best possible investment in my humble opinion is real estate. Meaning, invest in buying a house for yourself at the earliest.
Even if you are having your own house at the moment, you could buy another one if possible and lease it out or keep paying guests. This gives you a steady monthly income.
4. Develop Multiple Income Streams
One of the best ways to gain financial freedom is by developing multiple streams of income.
I’ve already written about some of these above, such as investing in stock markets and Mutual Funds and Fixed Deposits.
However, you can also use some spare time to make a lot of money. One of them is blogging. Nowadays, blogging has become a very major source of income, if you get the basics correct.
You can open a free blog or a paid one. Write interesting, engaging and relevant content on any subject that you are good at and upload it on your blog.
There are several ways to make money from blogging. One of these is Google AdSense, to which you can subscribe free of cost.
When you subscribe to Google AdSense, you are actually permitting Google to display ads on your blog site. And whenever anyone clicks on these links, you get some money.
The other amazing way to make money from blogging is through affiliate marketing. There are several superb affiliate marketing programs worldwide.
One of them is Amazon Associates, from the single largest online retailer, Amazon.
You can join the program, make links to various products available on Amazon and post on your blog with reviews.
If someone buys the stuff using your affiliate link, you get some money from Amazon.
The third way to make money out of a blog is by accepting sponsored posts and paid advertisements. All these add up to your income to give you financial freedom.
5. Acquire New Skills
Regardless of whether you are working somewhere or have your own business, it’s always best to acquire new skills.
That way you are ensuring that your skills are relevant and latest. That way, you can stay ahead at your job while gaining an edge over competitors if you are in business.
Nowadays, it’s very easy to acquire new skills. You can get some wonderful online courses from various e-learning platforms.
And then we have free courses too from topmost universities that can teach you some basic skills on something new.
Having new skills means you can also switch jobs or try for higher positions and pay at your current workplace.
And higher pay automatically leads to financial freedom. You will also enjoy a better lifestyle.
6. Stay Healthy for Financial Freedom
There’s an ancient axiom that clearly says “Health is wealth.” You cannot enjoy financial freedom unless you enjoy good health.
Therefore, it’s best to stay fit by going to a gym for regular exercising and other fitness-related activities such as jogging and Yoga or even playing a sport.
Getting rid of vices such as excessive consumption of alcohol or too much smoking can also ensure good health.
While booze itself isn’t bad for your health and nor is tobacco, using them occasionally is fine.
However excessive use can lead to addictions and consequently, ill health and loss of financial freedom. Including fitness in your daily routine is rather simple.
And in the long run, it will pay you rich dividends by keeping various kinds of lifestyle illnesses such as diabetes, obesity and overweight, high cholesterol levels at bay.
These are the six topmost ways to achieve financial freedom in India. As we can see, these are very simple ways.
And almost everyone can do them if they are serious about achieving financial freedom. Therefore, you can start working on these steps right away.