Do you think you have the Financial Freedom?
There’s freedom, spiritual freedom, and then there’s financial freedom, which is the modern-day equivalent of retirement. Until a few years or a couple of decades ago, a person had to work hard from a young age through until retirement to enjoy the money he had earned. The established norm was to work hard, save for retirement, and relax after retirement. But that is slowly changing in the millennial era. People are more about experiences and living in the present rather than saving for later. The concept of saving for later is followed a little less than it was in the baby boomers and Gen X generations.
“56% of millennials don’t have any money saved in a retirement account. The numbers were only a little less bleak for older generations: 39% of both Baby Boomers and Gen-Xers have nothing put away for their golden years.”
Now you might be wondering how one can be able to have all the experiences they want yet have their financial future secure. Are they rich? Is it only for the rich? What about medium-waged people? Nope, don’t get me wrong. Financial freedom does NOT mean being or getting rich. Some might think that financial freedom means living a lavish life or buying anything without looking at its price tag. It simply means having a good amount of money left even after you have paid all your bills, made all the essential purchases, and invested in important things.
It is a rather new concept to understand and inculcating it in your life might take some time. But, where does one start this journey of attaining financial freedom? Here’s how you can pave your way towards financial freedom.
What is Financial Freedom?
“According to a study conducted by The National Endowment of Financial Education, only 24% of millennials demonstrate basic financial literacy.”
Just like how, before going to the advanced level of anything, we learn the basics, understanding the definition of financial freedom is equally important. It can be defined as feeling secure around your money. It should help you achieve your goals rather than standing in the way or causing you great stress.
You can reach this level of stress-free in financial matters through:
- Paying monthly bills on time: The first step to financial freedom is to pay all the basic bills on time every month and not worry about overdue.
- Being debt-free: This is a dream to a lot of us in the present day. Taking a house loan, bike loan, or car loan to fulfill your necessities or dreams leaves you in debt. To clear off these loans/interests as soon as you can, you lose up on savings instead. Work towards clearing your debt by making a proper plan, sticking to it, or having another income source.
- Saving at least three months of basic expenses: Keeping a reserve or safe deposit always helps in emergencies, especially ones like Job-Loss, Covid-19 etc.
- Saving for more than just emergencies: In one of the previous levels, you considered keeping only few months’ worth of basic expenses. Now, here at this level, you are going to save more money that will come in use for costs beyond the basic ones. Save them for that luxury trip you’ve wanted to take for a long time, your life with your future partner, or anything that is your long-term or short-term goal.
Statistical data published by The Global Economy indicates that the average financial freedom was 49 points. Data of 177 countries were taken, and the highest value was in Australia with 90 points, while the lowest value was in North Korea with 0 points. Wondering how much India scored? Well, we stand at 40 points (below average) and rank 116.
- Hardly pre-occupied with financial concerns: This level may seem a little challenging to reach, but it is reachable. A little bit of worry is alright, as it is important to be aware of your current status. But it would be best if you did not overdo it. And one way to not do so is to make sure all the bills are paid, not indulge in unwanted spending, and keep your credit score in check. When you are in a state of freedom, you tend to look at bills or other issues with confidence, an open mind, and optimism.
Give away like there’s no tomorrowGive/Treat responsibly: Yes, now you are on the last level of financial freedom. No, that does not mean you spend like there is no tomorrow. Use your liberty but be in limits. Make sure to think twice – or thrice if that’s what it takes – before spending on yourself or anyone else. You wouldn’t want to start from level 1 again.
Ideas and inspirations are all around me. When not working, I explore mobile photography, read, stalk nature photographs and dream of travelling. On a mission to travel as many places as I can.