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Plan For Financial Freedom This Independence Day

14 Aug 2019

The 73rd Independence Day on 15th August 2019 will be unique in a number of ways. This will be the first address by the prime minister in his second term. This Independence Day will also be unique because India will celebrate the day with the state of Jammu & Kashmir fully integrated into India’s constitutional framework.

Independence Day is the day for national fervour when hope and national pride springs eternal in every Indian’s heart. But it is also the time to sit back and ponder about our own freedom. We are not just talking about constitutional freedom (which we all enjoy). The question is about financial freedom.

Ticking off on the Financial Freedom checklist

Financial freedom is all about having the necessary resources and the ability in the future to enjoy life to the fullest. The last thing you want to worry about when you are 60 years old is about paying bills? Here is a quick financial freedom checklist.

  • Will I have enough savings when I retire so as to take care of my bills and other regular expenses?
  • Will I be able to take care of my medical bills so that I do not have to worry about hospitalization costs?
  • Am I debt free on retirement so that I do not have to worry about paying EMIs and other regular instalments?
  • Can I keep myself productively engaged by leveraging the skills and contacts that I built during my career?
  • Can I spend on add-ons like travelling, pursuing a long standing hobby, social work, charity, among others?
  • Can I leave behind a corpus for my children so as to give them the added social and family security in their lives?

If your answer to all these questions or, at least most of these questions, is “Yes” then you are assured of financial freedom. But this financial freedom does not come easy and it has to be targeted and planned. Here is how to go about it!

8 steps to Financial Freedom

It is a great feeling to be financial free, but that needs to be planned for. Let us look at the key steps to attaining financial freedom.

  • Start saving early. The earlier you start, the longer you save and the longer you save the more your money compounds. It does not matter if you start small, but it is more important that you start planning for the future. That is the first step to financial freedom.

  • Stretch your saving potential to the maximum. Financial freedom will only happen if you make savings your target and adjust expenses accordingly. If you treat savings as a residual item then financial freedom can be elusive.

  • You need to save and invest smartly over your career so that your long term needs are taken care of. For that you need to leverage the power of equities because that is where the power of compounding is best experienced.

  • Stick to your long term plan with commitment and discipline. Any plan that is left half way is not going to work towards your financial freedom. You need to create the plan and stick to the discipline.

  • Regularly monitor your long term financial freedom plan and ensure that it is in sync with your needs. Where you find it is not in sync, you must look to make changes to the investment mix or to the funds held.

  • Ensure that you are debt free by the time you cross the age of 55. Here we are referring to items like home loan, auto loans etc. High cost loans like personal loans and roll over credit cards must be strictly avoided as they can make a mess of your plan.

  • You are financially free when you have peace of mind and that is only possible when you know that your life, your assets and your health are adequately insured. Financial freedom means taking adequate insurance but don’t splurge on endowments. Ideally, pure risk covers are the best.

  • With rising life expectancy, most people are expected to live up to 20-25 years beyond retirement. So, don’t give up on equity investing even after you retire. Quality equities create wealth and give you the freedom to pursue your passion.

Financial freedom can be planned and needs to be worked towards. Once you have the pegs in place, financial freedom will follow. This Independence Day, let us pledge to strive for financial freedom!

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Plan For Financial Freedom This Independence Day

14 Aug 2019

The 73rd Independence Day on 15th August 2019 will be unique in a number of ways. This will be the first address by the prime minister in his second term. This Independence Day will also be unique because India will celebrate the day with the state of Jammu & Kashmir fully integrated into India’s constitutional framework.

Independence Day is the day for national fervour when hope and national pride springs eternal in every Indian’s heart. But it is also the time to sit back and ponder about our own freedom. We are not just talking about constitutional freedom (which we all enjoy). The question is about financial freedom.

Ticking off on the Financial Freedom checklist

Financial freedom is all about having the necessary resources and the ability in the future to enjoy life to the fullest. The last thing you want to worry about when you are 60 years old is about paying bills? Here is a quick financial freedom checklist.

  • Will I have enough savings when I retire so as to take care of my bills and other regular expenses?
  • Will I be able to take care of my medical bills so that I do not have to worry about hospitalization costs?
  • Am I debt free on retirement so that I do not have to worry about paying EMIs and other regular instalments?
  • Can I keep myself productively engaged by leveraging the skills and contacts that I built during my career?
  • Can I spend on add-ons like travelling, pursuing a long standing hobby, social work, charity, among others?
  • Can I leave behind a corpus for my children so as to give them the added social and family security in their lives?

If your answer to all these questions or, at least most of these questions, is “Yes” then you are assured of financial freedom. But this financial freedom does not come easy and it has to be targeted and planned. Here is how to go about it!

8 steps to Financial Freedom

It is a great feeling to be financial free, but that needs to be planned for. Let us look at the key steps to attaining financial freedom.

  • Start saving early. The earlier you start, the longer you save and the longer you save the more your money compounds. It does not matter if you start small, but it is more important that you start planning for the future. That is the first step to financial freedom.

  • Stretch your saving potential to the maximum. Financial freedom will only happen if you make savings your target and adjust expenses accordingly. If you treat savings as a residual item then financial freedom can be elusive.

  • You need to save and invest smartly over your career so that your long term needs are taken care of. For that you need to leverage the power of equities because that is where the power of compounding is best experienced.

  • Stick to your long term plan with commitment and discipline. Any plan that is left half way is not going to work towards your financial freedom. You need to create the plan and stick to the discipline.

  • Regularly monitor your long term financial freedom plan and ensure that it is in sync with your needs. Where you find it is not in sync, you must look to make changes to the investment mix or to the funds held.

  • Ensure that you are debt free by the time you cross the age of 55. Here we are referring to items like home loan, auto loans etc. High cost loans like personal loans and roll over credit cards must be strictly avoided as they can make a mess of your plan.

  • You are financially free when you have peace of mind and that is only possible when you know that your life, your assets and your health are adequately insured. Financial freedom means taking adequate insurance but don’t splurge on endowments. Ideally, pure risk covers are the best.

  • With rising life expectancy, most people are expected to live up to 20-25 years beyond retirement. So, don’t give up on equity investing even after you retire. Quality equities create wealth and give you the freedom to pursue your passion.

Financial freedom can be planned and needs to be worked towards. Once you have the pegs in place, financial freedom will follow. This Independence Day, let us pledge to strive for financial freedom!