Taking control of your finances involves setting up and sticking to a budget. With greater control over your financial life, you can save more, track and cut out unnecessary spending, pay off debts quickly and enjoy greater financial independence.
Being financially independent goes beyond having a regular income to cater to your everyday expenses to have sufficient resources to aid you in your times of need. It involves building a sizeable retirement corpus for yourself to help you maintain your standard of living.
Here are four ways to become financially independent
1. Develop a fund for emergencies
There could be several moving parts in your overall financial picture, which is why it is best to set aside a pool of liquid money for unforeseen circumstances. An emergency fund can cater to you in some of the following situations:
- Job loss
- Major health expenses
- Unforeseen home repairs
- Sudden automobile damages
- Unanticipated travel
- Weddings or any other events
To get started on an emergency fund, you can start by investing in fixed deposits. This way, the money is inaccessible, ensuring you don’t spend unnecessarily. You can, however, liquidate it when faced with an emergency.
2. Spread your investments
No single investment can be stated as the best, so diversifying your investments is an ideal option. Pick fixed deposits for security and easy liquidity; equity investments for tax-saving and high returns; debt funds and property for long-term security and for earning rental income in the future. Various investment options are available, depending on your risk appetite and favoured tenor, so choose wisely. It would be best to have a mix of high and low-risk investments to maximise your gains.
3. Get the right advice
You immediately consult a specialist when you have an ailment or a renowned architect to build a house. But, rarely one seeks professional help for financial planning. So, take this step and seek advice from an expert.
This will help you secure your financial future in the best way possible. Remember that there will always be divergent views on what works best. Prepare yourself to decide based on the information provided to you for your specific situation and needs.
4. Do your research
Think of your investment portfolio like a cricket team. Every team member or investment vehicle must perform well for your team to win or for your portfolio to grow. For continued growth, adjust your investments over time.
This ensures lucrative earnings and avoids losses due to market fluctuations. To keep your investments on the growth path, do your research and ask your advisor relevant questions. You can read books or browse the internet for more investment-related advice so that you make the right decisions.
Investing is not enough. Watch your investments to ensure that you’re on track to achieve your financial goals. You can bring your financial plans to fruition as long as you provide for emergencies, diversify your investment portfolio, seek reliable assistance and track your investments.
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