Financial freedom can help you take ownership of your finances and, more importantly, your life.
You might be someone who just received his/her first paycheck, or a mid‑level executive in the early 40s, or a CEO with a fat paycheck. Irrespective of what stage in life and career you are in: How to be free from financial worries? How to retire early? might be questions that you are seeking answers for.
I have a friend who comfortably retired at 40 and is pursuing his passion.
These are the 10 simple secrets he shared. I am hoping that these simple secrets could be the answers that you are seeking.
If you are born poor it’s not your mistake, but if you die poor it is your mistake-Bill Gates
#1 Pay Yourself First: Pay yourself first before you pay someone else. First save, then spend what remains. “Income – Saving = Spending”. This helps you to achieve 2 things: you become richer and you stop getting poorer.
#2 Be Wise with Your Buying Decisions: Avoid whimsical buying (“If you buy things you don’t need, you will soon sell things you need” – Warren Buffett)
#3 Set Aside Money for the Rainy Day: Create an emergency fund corpus that helps you tide any unseen health conditions, job loss, or other calamities. The funds should be able to cover at least 6 months of your expenses. Do not TOUCH this emergency fund for non-emergency reasons.
#4 Chalk Out Clear & Concise Financial Goals: You might want to start your own company, buy a dream house, retire to an island, or save up for a foreign trip, set weekly, monthly, and yearly targets for yourself. Stick to those targets by being extremely disciplined with yourself.
#5 Buy a Medical Insurance with Good Coverage for you and your Dependents: A medical situation with you or anyone in your family can wipe out your life’s savings. Research and buy a good medical insurance that covers your entire family.
#6 Buy Term Insurance: Understand that insurance is not an investment. Your family gets a specific amount (sum assured) in the event of your untimely death. The only life insurance you should be buying is a low-cost term insurance. Based on your income level and commitments, decide on a “sum assured” amount that will adequately support your family.
#7 Never borrow money to buy liabilities: Never avail a loan to buy something that will lose value over time, e.g.: car, electronic gadgets, etc.
“A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain”
Robert Frost
#8 Pay off loans: Pay off loans, the high-interest ones first.
#9 Create Passive Income: Invest money to create assets that generate income. Be it a fixed deposit in the bank, shares of profit-making companies that give generous and consistent dividends, a side job, .i.e., tutoring, freelancing, or consulting that can provide you income even when you are not actively employed.
#10 Keep learning, upskilling, and reinventing yourself: Be a life-long learner, stay relevant, reinvent yourself, you will be fine.
Let us know in the comments section below, what you think?
Precise and crisp
I feel like reading few books summary.
As a person who whish to taste the fruits of financial freedom but who is lost in this hosh posh of virtual glittering life around this is the perfect article to start with.
Keep writing and Keep enlightening
Thank you Harshal. Happy that you liked it.
Very informative 👍
Hi Thaman,
Thank you. Really appreciate you reading it!!
I will definitely implement these tips in my life when I am done paying off a high-interest loan.
🙌🏼🙌🏼🙌🏼🙌🏼more power to you sir!!!🙏🏼🙏🏼🙏🏼🙏🏼
Hi Bharath,
Thank you. I am sure you will.