Becoming Financially Independent on Independence Day: Know How?
Financial independence is when you can spend your money to meet your needs without facing a budget crunch. It also implies that debts aren’t a concern for you and you can borrow money with the confidence of being able to repay it. We have come up with ways in which you can achieve and sustain financial independence.
Invest When You Can
Systematic Investment Plans (SIPs), Mutual Funds, Public and Employee Provident Funds are just some of the most common investment schemes. In addition to it, you should save more to be able to apply for loans and invest in real estate or purchase your own car. Moreover, choosing the right investment plan can also offer tax benefits like deduction up to INR 1.5 lac under Section 80C.
Look For Multiple Sources of Income
Just because you have a steady source of income, doesn’t mean it has to be your only source of income. For example, investment banking can yield high returns when calculated risks are taken. Investing in securities, real estate and government funds are various sources that you can invest in to diversify your portfolio and earn from simultaneously.
Emergency Funds Are Saviours
As you start earning, you should set aside an emergency fund for unexpected situations where you require financial support and stability. Whether it is a high-debt situation or medical emergency, these funds help you get through tricky conditions. Not just that, purchasing insurance plans like life insurance and health insurance gives you the opportunity to manage bulk expenses without causing a dent in your savings.
Plan a Budget and Stick to It
Maintaining a monthly budget and adhering to it can help you keep a check on any unnecessary expenses. Reducing these expenses increases the funds you can save for investment and helps you multiply your savings. Segregate your monthly budget into income and expenses to dedicate a fixed budget to savings and investment regularly.
Credit Is Not a Boon
Credit money is convenient but it is also an expensive affair. Despite clearing your credit dues beforehand, the opportunity to avail credit makes unnecessary purchases lucrative. Going over credit limits and being unable to pay them not only increases expenses but also puts you under debt.
Financial independence is all about managing your finances effectively. This can shift your purpose of earning money to saving for future, rather than just paying off debts and loans.