Different people can have different goals and parameters when it comes to financial independence. For some people, buying a big house, a car and a lavish lifestyle could be the parameter of financial independence. On the other hand, for some people, financial independence could be to have enough bank balance. People choose their financial independence in their own way on the basis of their priorities.
Financial independence is a mark of how comfortable a person is living his or her life with proper savings and investments and zero debt. Many people think that attaining financial independence is a Herculean task which is not at all true. If a person keeps proper check of one's expenses and income regularly, then he or she can get the financial independence they have been aiming for long.
#1. Set Your Priorities
The first step and the most basic step towards gaining financial independence is to set your priorities. A person should always be sure of what are the things that he or she wants in order to be financially independent. Whether you want that luxury car, lavish bungalow or are you okay with a smaller one but a good bank balance and cash in hand, you really need to think about all these things and sort things in the initial stage only. Your priorities are going to set the future course of action in the long run. Also, a person who is 20 years old would have different priorities than the one who is 50 something. They have different goals in life when it comes to financial independence. Therefore, think thoroughly and then decide what your priorities are in the long run.
#2. Budget
The second and the most important step towards gaining financial independence is setting up a budget. Budgeting is the process to set up a budget for oneself by measuring income and then subtracting your expenses form it. Once you have done that, you will get an idea where you are spending the most of your income. This will help you to divert the difference to your goals. Setting up a monthly budget is always a good idea. It will help you to track your expenses on a regular basis. This will make it easier for you to decide where do you need to spend your income the most and what are the things you can avoid spending money on. So, if you want to be financially independent, it is always a better idea to budget your expenses.
#3. More Income, Fewer Expenses
In order to sustain a good life and be financially independent, it is always better to follow the principle of more income and fewer expenses. Your expenses should never exceed your income. It is always a good idea to save at least 10-15% of your income every month. Living a luxurious life and spending all your income on a lavish lifestyle will always act as an obstacle in your way of achieving financial independence. A better idea is to cut down all your extra expenses and adhere to a lower living standard and fewer expenses. This will definitely help you to save more money for investments and savings.
#4. Eliminate Debt
You definitely cannot expect to be financially independent if you are spending a good amount of your income in clearing the debts. This is a thumb rule of being financially independent that one should never take debt and should have zero credits. If you have taken debt from someone, then there will be really less scope to save as you will have to take out money from your income to clear that debt off.
#5. Download Apps To Track Your Expenses
We live in a digitalized world. There is nothing that technology cannot do these days. If you find it difficult to keep track of your monthly expenses and lose the way in between, then you need not fret over these things. There are many apps available online that you can download on your phone which can help you to keep track of your monthly expenses quite efficiently. All you need to do is download them and keep a tab of your expenditure on a regular basis. Spending Tracker, Bill Guard are two of the apps that can be used to track one's monthly expenses in an organized manner.
#6. Consider Your Career
Financial independence cannot be achieved without a steady income which can be achieved only through a good career. If you feel that you are not getting enough income from your current job and you deserve more, then you can try and reconsider your career. One cannot really save and invest a good amount of money without a good salary. However, another aspect of this story is that you cannot really quit your job and start your career afresh if you do not have already saved enough. If you are already behind your financial goals, then this decision becomes even more difficult. In such cases, you can try and save a decent amount of money and then create a strategic plan to reconsider your career goals after some time. You can also work part-time to expand your work-related income. This will help you to give some more time for your career as you would have enough money to sustain without an income for a certain time period.
#7. Take Help From Books
There are many books available in the market that can guide you in saving your incomes and managing your expenses in the best possible way. Books such as 'Rich Dad, Poor Dad' by Robert Kiyosaki act as incredible guides to revise your investment and saving plans and pick up the best ones for yourself. If you feel that you do not have enough knowledge about the investment plans or the ways to boost your income and become financially independent, then you can always take help from these books. They will not only serve the purpose of selecting the best investment plan for yourself but will also give you better ideas to increase your income.
#8. Downsize
A personal evaluation of the property, items and the amount of money you need to be financially independent is very important, whether you are of 20 or 50. It will help you to keep track of the unwanted expenses you have done in the past which has influenced your savings. There is a higher possibility to achieve financial independence if you cut your overall living expenses. For example, if you stay in a bigger house which is greater the size you require then you can consider selling it and buying a smaller one. This will help you to save your costs of maintenance and taxes.
#9. Invest Regularly
In order to be financially independent, it is very important to invest regularly a fixed amount of your income. you can go to your bank and ask about the number of options that are available for investment purposes. There are many options which banks offer such as fixed deposits, recurring deposits, mutual funds in which you can invest money and get some interest from the bank. This also helps you to keep track of how much money you have saved in a particular period, for e.g. on a monthly or yearly basis.
#10. Buy Assets
It is always good to buy assets such as property, gold and more. These things will always keep on giving you profits throughout your life. Buying property is always the best option when it comes to investing in an asset. The rates of property are increasing day by day. If you want to be financially independent then it is a very good option to save some money and buy a piece of land from it. It will always yield more profits than saving your money in a bank or even investing in mutual funds and all.
#11. Track your Financial Independence
Financial planning is not just confined to making set financial decisions and investment plans. The real struggle begins once you have planned all this. You need to be flexible when it comes to financial planning and track your financial independence on a regular basis. You are required to implement all the plans that you have made to be financially independent. You can also revise your plans on the basis of a track that which investment is giving you results and which one is futile and not giving you any positive results. A track on a regular basis will help you to make more concrete and better plan to gain financial independence. No matter how good it is, your plan needs to be revised after some time on the basis of your needs, expenses, priorities and financial goals. A good financial plan is always flexible. Therefore, it is always advisable to keep track of your financial independence by checking if or not your current investment plan s are proving to be successful enough to yield good results in the long run.
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