Financial freedom is a word which we come across every day and wondered what this means. Well, financial freedom is defined by different people in various ways. Some say that it means to be rich, while others say it is to live without any debt and to be able to support ourselves. There may be a lot of definitions of different people. But the core concept of it is having enough residual income to cover our living expenses.
It is not about being rich but to spend time on things which we love to do instead of stuff just to earn money. We will be able to focus on what we love and do it without getting tensed about money as a person who has attained financial freedom will be able to cover his living expenses as he or she had taken the decision to save and invest money at an earlier point of time in their lives. It is because of that great decision which they took, they are able to focus on things which they love to do. Everyone has got things which they love to do which may include practicing various art forms, writing, etc.
They were able to achieve this stage because of financial planning which made them to take such great decisions in the early stages of their lives. You too can attain financial freedom, it just needs a bit of financial planning and you will be able to focus on things which you love doing the most.
Let’s take a look at things that we need to do to achieve financial freedom:
Many of us take credit cards at an early stage of life which just restrains us from attaining financial freedom. Some of these credit cards charge huge amount of interests and charge which ranges from 30 per cent to 40 per cent. It is better that we don’t take any loans as it is always better to stay away from all sorts of debt.
Start investing early:
We all have heard this at some point in our lives. It is better to start investing in various asset classes early and witness the magic of the power of compounding. People who start to invest early attain financial freedom earlier and their investments grow tremendously with the power of compounding.
Have an emergency fund:
There’s only one thing that can hinder our progress toward attaining financial freedom and that are certain uncertainties that happen in our lives. To overcome this, it is always better to set aside an amount equal to meet expenses for at least six months as emergency fund and this can be used to meet the expenses arising from these uncertainties.