Your Financial Freedom Checklist
Financial Freedom – two simple words, but yet such a mirage for most of us! We spend our lives battling loans and meeting expenses, often living pay check to pay check. The last thing most of us have is a life that’s devoid of money worries! Here are five things you can do right away to put yourself on the course towards being financially free.
Get the Basics Right
How can you possibly get ahead if your current situation is a big, out of control mess? So, start by getting the basics right – set up a written budget and get a financial plan prepared. If you’re married, commit to discussing money matters with your spouse and work out issues jointly. Make sure you’re spending at least 20% less than your net take-home each month. Simple enough, but more powerful than you think!
Clean Things up
If it’s Financial Freedom that you want, you’ve got to start with a reality check and commit to cleaning up any messes you may have made previously. High interest loans to buy things you didn’t really need, ill-thought out investments that turned out to be fruitless, and so on. Build an action plan to pay off high interest loans that are juicing you dry. The associated lifestyle sacrifice will be well worth it in the long run! Clean up your portfolio by exiting wealth destroying endowment plans.
Look Beyond Traditional
Are you the kind of person who has never looked beyond Fixed Deposits, PPF and Life Insurance? We’ve got bad news for you - with inflation eating away at your savings, you’re probably never going to be financial free in the true sense of the word. So, resolve to take baby steps into more non-traditional asset classes such as Mutual Funds. For long-term wealth creation, Mutual Funds Sahi Hai! In the long run, this will make a massive difference to the quantum of wealth you’ll create.
Make no mistake- a basic awareness of the pros on cons of various financial products is very important indeed. Without it, you may be taken for a ride by unscrupulous insurance agents, or make all sorts of emotion-driven investment decisions that you’ll regret later. Start reading a financial blog or a daily every day. Through this knowledge will come the ability to make better decisions with your money.
Planning ahead is vital. Even a simple checklist of your short term, medium term and long-term financial goals will be a good start. Define your goals as clearly as you can, by assigning them target dates, target amounts and priorities. Anchoring your recurring savings to your goals can have a profound impact not just on your investing experience, but on your state of mind too. With the background awareness that you’ve got a plan in place to achieve your important life-goals, you’ll be able to indulge in some guilt-free spending from time to time and have the peace of mind that characterises true Financial Freedom!