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Oakstree | February 27, 2020

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Basics to Financial Freedom

Basics to Financial Freedom

Financial freedom is something that every youngster needs. Some see it as there first achievement in life other just need it coz they want it. Achieving financial freedom is easy if you know follow some of the basic rules in your day-to-day life.

#Never cut your expenses, CONTROL them

Cutting expenses is a common practice among people around the world to save money. Though it helps you in saving a bit of money but against it, it gives mental distress which brings irrelevant thoughts in one’s mind and his dependencies. It pulls you away from a comfortable lifestyle. That’s why I never recommend one to cut his expenses, but yes I do recommend one to control them. Controlling expenses and cutting expenses are completely different aspects. Where cutting expenses stops someone from spending on what one needs, controlling expenses lets you spend on your needs. All you need to do is to make sure you purchase a commodity that you need and in the right quantity. Unnecessarily purchasing excessive of something simply leads to wastage of money and the commodity which otherwise would have added something to your savings. Never spend your money on things that have no utility for you.

#Only Spend from what you earn

There a lot of people who spend a lot, many beyond there monthly income(thanks to credit cards). But they forget that they need to pay a amount higher than what they actually used. So from now onwards avoid using credit cards and spend the money you earn in the current month. Avoid using your savings for your regular expenses till the age you are earning. Never take a personal loan until and unless it is extremely necessary. Keep a target to save atleast 30% of your earnings.

#Invest regularly in a systematic way

Normally money that we save and keep in our savings bank account grows at an average of 4% per year which is even less than the rate of inflation currently being faced globally. Inflation means rise in general price level. So you should decide a certain amount that you wish to add in your liquid cash reserve each month and invest the rest at appropriate places. Like when I started investing I used banks fixed deposits with monthly interest payout facility. I looked upon it as a second income and it was necessary for me during that time. After that I started investing in mutual funds through SIP route as they provided a number of other advantages.

If you have any queries related to investments, you can always contact us for advice.

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