“More essential than how we achieve financial freedom, is the why,” according to Robert Kiyosaki. Discover your motivations for wanting to be free and prosperous.”

So, WHY & HOW does the journey of financial emancipation begin? The WHY is up to you to figure out, but the HOW is what we’re here to help you with today.

Let’s take a look at some basic strategies to get started on your path to financial independence.

How to achieve financial freedom?

1. Know yourself & Set your priorities straight

 It’s critical that you understand the lifestyle you want, the assets you want to possess, and the bank balance you want to maintain. After you’ve planned everything out, the next step is to act on it and, most importantly, stick to the plan.

When it comes to priorities if you want to save Rs. 2,00,000 in a year, it should be your first priority. You have 365 days to complete your assignment, therefore you should respect it rather than squandering it. As a result, getting to know yourself and deciding on your priorities should be the first steps in your planning process.

2. Make a Second source of Income

 “Never depend on a single income,” Warren Buffett argues, promoting the idea of various income streams. Make investments to establish a secondary source of income.” Individuals can produce cash flows in a variety of ways in today’s corporate world. Once the source of revenue has been determined, the individual can plan their next steps.

3. Scan your Expenses

 Individuals in Japan, which is renowned as the world’s savings powerhouse, have a habit of recording, budgeting, and tracking their expenses. The technique is known as kakeibo in Japan. The premise is as follows: at the beginning of each month, one must sit down with their kakeibo (home financial ledger) and plan what they will spend, save, and do to achieve their objectives. After that, you evaluate your accomplishments.

Isn’t this a lovely way to scan your expenses? You can come up with your own strategy or simply follow the Kakeibo method, but always remember to scan your expenses to avoid unneeded ones.

4. Plan for Contingency 

 Life is analogous to ECG equipment that records one’s heartbeats, in that it continues to go up and down. Our lives are like a see-saw: on some days, success reigns supreme, while on others, suffering reigns supreme.

One must remember that both of these stages have an end and that planning for contingencies will guarantee that bad day are manageable and brief. One method to do this is to take out insurance, which is an excellent risk management strategy. Keeping an emergency fund is another method to prepare for the unexpected.

5. Invest! Invest! Invest! 

 This is the most crucial aspect of getting ahead of a level playing field. Consider two friends who recently graduated from the same university and are employed at a similar pay scale; one of them is an active saver, while the other is a slacker, and thus his or her savings are sitting idle in a savings account; it is an obvious answer that, given their similar lifestyles, the former will achieve financial independence at a much earlier stage in their career lifecycle.

Investing should be goal-oriented; an investor should assess their risk tolerance and, as a result, concentrate on churning their portfolio as needed. Along with knowing one’s aim, an investor should carefully calculate the time horizon over which they may invest their money. This will allow them to balance the risks and rewards over time while also reaping the benefits of compounding. “Compound Interest is the eighth wonder of the world,” Albert Einstein correctly stated. “He who knows it earns it, he who does not pay it.”

6. Patience, The golden virtue

 Compounding, like “Rome, wasn’t built in a day”, doesn’t reveal its full potential in a year or two. A speculator is someone who isn’t clear about their aims and keeps their money invested for a long time. An investor is someone who is clear about their goals and keeps their money invested for a long time.

“The stock market is a venue to move money from impatient hands to patient ones,” Warren Buffett summarises. Most of us must have read the story of the golden egg-laying chicken in elementary school, and if we remember the teachings by heart, we know that “the day we plant a seed is not the day we consume the fruit.”

Do you find all of the preceding stages to be a little tedious? Finology has an answer to all of your problems.

Plan your goals by going to Recipe by Finology: The anticipated corpus you’ll need for retirement, the amount you’ll need to be insured, and the many places where the majority of your income goes.

Conclusion

Life is unpredictable, so one must plan their life to the best of their abilities. Unprecedented circumstances might degrade the quality of one’s living standard if one does not have strong financial preparation in place.

Financial planning promotes long-term prosperity; it cannot be taught like the alphabets of English because it is unique to each of us. Finally, a comment from Chris Brogan wonderfully captures the essence of financial independence: “The goal isn’t more money; the goal is to live our lives on our own terms,” and that is exactly what financial freedom entails.