Last year, at my workplace, I had a colleague who was non-arguably the ‘Rachel Green’ of our team. She spent most of her income shopping online every week and adding to her collection of expensive watches. For a fresher with a low to medium-level salary range, it was hard to do, but she did it anyway. This obviously burdened her pocket. As an independent adult, she did not want to ask for financial support from her parents. Instead, she found a way out of it. She sought ways to increase her income and achieve financial freedom without compromising her desires.
Financial freedom can mean different things to different people. For some, it means having a solid monetary backup to fulfill their desires, having control over one’s time without trading it for money or being able to shift to your dream job.
Unfortunately, most of us fall behind in financial freedom, even without financial emergencies. Overspending without increasing your income simultaneously and escalating credit card bills are the primary reasons that troubled my colleague.
Among those who are reading this, some might relate to my colleague. Some of you must be looking for a side hustle to increase your source of income, and there must be some who wish to boost the revenue of your business. The change or growth you seek lies in achieving financial freedom. But how to do that?
There is no rocket science behind this; it is something anyone can pull off just by making a few amends in their daily life. For me, it’s finding ways to increase my income and investing my money, just like my colleague, to buy everything that’s waiting for me in my shopping cart.
10 Tips to Achieve Financial Freedom
1. Define Goals
As said earlier, financial freedom can have different meanings for different people. So, you need to specify your goals precisely. The more specific you get, the higher the chance of reaching your goal. Pen down your objectives, what your lifestyle requires, how much funds you need to make that happen and set a deadline for yourself. For someone who plans to switch his/her career path, setting goals can include choosing short-term courses that will help to gain new skills in a particular time frame and how to seek opportunities in the field of interest. It can appear overwhelming at first, but with the proper guidance, you can easily choose the right course.
2. Calculate Monthly Budget
Whether you are a student, working professional or an entrepreneur, making a monthly budget and restricting to that benefits all. This way, you can track your spending and determine the focus areas. Budgeting will help you pay your bills on time and even the same amount. It will help you understand where most of your money goes and accordingly, you can find ways to avoid over expenditure.
3. Create Automatic Savings
Enroll in retirement plans, choose a high-interest rate savings account, use automatic savings tools, and save some amount from every paycheck. Do everything that you can think of to boost your savings funds. This way, you can add up to savings little by little every month. As a full-time employee, you have facilities like an employee provident fund, which is extremely helpful.
4. Start Investing
Some of you might find investing your money in mutual funds or shares a risky thing to do compared to the in-hand cash and savings in your bank account. But this fact cannot be denied that it is an excellent source of investment, helps beat inflation and helps you even enjoy tax benefits. According to Forbes Advisor India, there are several investment methods other than shares, such as National Savings Certificates, government bonds, gold bonds, etc., which are less risky. Some of them are even government-secured. Besides this, upskilling and enhancing one’s niche skills can also be a way to invest in your career in the long term as a corporate employee. By investing in learning and adding levels to your existing skills, you can grow professionally, ultimately leading to salary increments.
5. Create Assets and Not Liabilities
People who have read Rich Dad Poor Dad by Robert Kiyosaki and Sharon Lechter must be aware of ‘Rich Dad’s’ rule one, that is, to buy assets, not liabilities. Assets add money to your pocket directly or indirectly, but liabilities will be a monetary burden. Buying a fancy new car won’t generate money, but purchasing a real estate property or gold will enhance your financial freedom. This is a significant difference all working professionals and business owners must understand.
6. Stay Educated on Financial Issues
Well, this is the most essential thing to do. You cannot achieve something if you don’t know about it. In order to strengthen your financial capability, you must try to learn about financial issues. An article by Asian Development Bank states that as per a report by RBI, only 27% of Indian adults and 24% of women meet the minimum level of financial literacy.
7. Adopt the 50/30/20 rule
It is a guideline popularized by US Senator Elizabeth Warren in her book ‘All Your Worth: Ultimate Lifetime Money Plan’. It focuses on the after-tax income, that is, your in-hand income, and divides it into three categories. 50% of the income is for fulfilling needs, 30% is for wants, and the remaining 20% is for savings and investing. This brings discipline to your spending limit without compromising on your lifestyle.
8. Consistent Growth in Career
This holds immense value for working professionals. In this highly competitive world, updating your knowledge and skills is crucial. Especially when technology changes every other day, adding new challenges and opportunities for you. Therefore, to survive and grow in your career, you must go for skill-based certifications to accelerate your professional growth. Moreover, if you are someone who intends to change his/her career path, pursuing additional courses is an ideal way.
9. Passive Income is the Way to Go
Who doesn’t want additional income, right? Earning some extra bucks is definitely a demanding task, but its results are consistently profitable. For this, you must go beyond your 9 to 5 routine and find sign-up passive income methods. Depending on your interest and skills, you can choose to become a freelance writer, photographer, or video editor, or you can take up virtual assistant jobs on platforms like Upwork, become an affiliate marketer or obtain new skills from online learning platforms and monetise those skills. From students to working professionals and homemakers, everyone can benefit from this.
10. Avoid Conspicuous Consumption
It is one of the easiest ways to gain immediate control of your financial freedom. Adapt minimalism and steer clear of consumerism. If I look at my shopping cart, there are many things that I don’t necessarily need or are overpriced for showbiz. Andrew Latham, a certified personal finance counsellor and managing editor of SuperMoney.com, once said, “There are two paths to financial freedom: you can buy all you want or learn to need less.”
The money you spend on such things can be utilised in skill enhancement and personal growth that has long-term benefits.
These methods mentioned above are not the magic words to wipe out all your financial worries; they give you a direction on how to begin and discipline your actions concerning financial activities. No matter if you are a full-time employee or business owner, adopting these habits in your life will turn fruitful in the long term. The bottom line is that you should prioritise the things where you need to spend money and question how this will benefit you in personal growth or yearn for profitable results in business. By embracing these habits, the Rachel Green of our team mentioned at the beginning, was able to achieve financial freedom, and so can you.
Aayushi is an avid reader, writer and travel enthusiast. She has been working as a Content Creator for 8 years and has been employed in the Education industry for the last two years. She has worked in multiple niches. She is always looking for opportunities to learn new things and grow; and wants to contribute maximum to the cause of education, upholding the Sustainable Development Goal 4.