From Dependence to Independence : Winning Your Financial Freedom..!!
While we celebrate this proud occasion of our nation’s independence today, it is also a good reminder for us to hold on and reflect back on our own independence too. Independence - one word with different meanings, perceptions and definitions for each one of us. For some of us, it is about retiring rich, for some it is about living a debt free life, for many it is about having the power to take any decision, for some it can be about wealth creation and what not. Well, all of this requires one common habit - the habit of financial discipline. In this fast moving world, we get carried away by the latest trends and we get thrilled by credit card points. Our country fought the chain of colonial rule to attain this Independence that we are celebrating today. It is now time for us to break some financial chains which limit our financial freedom. This Independence Day, choose your own financial freedom by breaking these financial chains, starting right away
* Living Paycheck to Paycheck - living Hand to Mouth
A major part our country’s population is living a life which is just enough for their survival and this chain is the most difficult to come out from - simple reason being most of us have more responsibilities and aspirations and income is limited
Break this chain -
* Build your 3-6 months of emergency corpus in any highly liquid financial instrument.
* Track your expenses - make a budget, note your spendings and cut down on the unnecessary ones.
Azaadi Tip : Save like it is another bill that you need it pay to yourself first. Automate your savings and always and always save before you spend - this is your salary - from you, to you, for you.
* Credit Cards and EMI - The chain of Debt Trap
With consumer loans becoming so easily available and credit card points becoming our life goals, EMIs have become a part of our lives
Break this chain -
* Use the snowball method to pay credit card bills - pay the smallest bills first.
* Use the avalanche method to clear off loans - pay back the loans with highest rate of interest first.
Azaadi Tip : Start Good EMIs in the form of SIPs for yourself. And yes, treat credit card points just as a bonus and not as financial goals.
* Impulse Spending - Falling into the trap of Lifestyle Inflation.
We all know this feeling - where we just buy things because either our friends/colleagues have it or because Amazon and Myntra have huge discount offers for us. And sadly, every time our income increases, our spendings to meet our lifestyle aspirations increase but our savings never increase.
Break this chain -
* Use the “Cooling-off” rule - wait for 24 hours before making any purchase.
* Set spending limits for yourself.
* Don’t get carried away by emotional triggers - Impulsive Buying is not a therapy.
Azaadi tip : Gift yourself “Guilt Free Money” every month with a capping limit. This will help you enjoy your money while being careful and conscious.
* Lack of Financial Education - Not knowing the art of making your money work for you.
Well, personal finance is not rocket science. It is just about discipline and knowing the right things to make your money work for you.
Break this chain -
* Read books on personal finance and listen to financial podcasts to upskill yourself.
* Talk about money with your family, partner and kids - the more you talk about it, the more you will learn about it.
Azaadi tip : Start small by learning one concept a week - compounding
Today, don’t just celebrate freedom - but claim it for yourself. Break these chains that are holding you back to create the life that you are dreaming of. You don’t have to do it all together, but you need to start somewhere.
This Independence Day - Choose Financial Freedom, Choose YOU!!
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