Financial Freedom is about having enough money in savings and Investment to live a life that one might wish to. The definition of financial freedom might vary from person to person. For some they might achieve financial freedom by having $1 Million Dollar, for some it might be $10 Million.
Financial freedom helps one to not worry about market trends and job security. Having enough savings to retire anytime is a luxury that very few have.
This article was long overdue. Personal finance is a topic that is alien to me. None in my family has a good understanding of handling finance. But this is true for about 70% of the people on earth.
How can I make more money? How do I grow my money? What are side hustles? Which side hustles to follow? These questions have been in my mind for months. But the good thing about curiosity is, it leads to discovery.
Being curious and having an urge to learn and grow is the very first step towards financial freedom.
This article is the first in a series of articles on financial freedom. Here I will write about how to make money by exploring different side hustles that you can try and also how to grow money. In the rich dad’s words, ”Make money work for you.”
This series is the result of my frustration while trying to learn about financial freedom and different ways to make good money on the internet.
There are tons of financial gurus on the web and many give crappy advice. Some are good but none teach how to make money. All the financial gurus are about investing in stocks, buying bonds, mutual funds, etc. I understand these are very good investment options but how do you make money in the first place?
After reading books and blogs on personal finance, I thought of creating a space for myself where I could share knowledge about my journey to financial freedom. Though this space is more for me than for anyone else. I thought of writing and forcing myself to do things more often.
So what should be your first step to financial freedom? I thought it would be investing. That is what most of the books and finance gurus say. But boy I was wrong.
Disclaimer: I am no financial expert and I don’t give financial advice. This content is just meant for educational purposes. Kindly consult experts before making financial decisions.
You Can’t Build a Great Building on a Weak Foundation.
There are 2 important aspects of gaining financial freedom. The first is having a firm base and the second is building a tall tower on the base with multiple offices in it.
The base refers to strong savings and emergency funds.
Before venturing into investing and trying to build multiple sources of income, create a good emergency fund. The fund can help you survive and sustain your lifestyle for 1 year. I will write in detail about the emergency fund in a future article.
Simple guide on 3 Steps to Financial Freedom.
The 3 pillars of financial freedom are something that I believe is the most important aspect ,and are the foundation of a healthy financial life.
The 3 things include Good savings, Emergency funds, and Investment. These 3 are the foundation of good financial health.
Emergency funds are the first thing to look into before starting with investment. I am currently following the 50–25–25 rule. Where 50% are Wants, 25% Savings, and 25% emergency funds.
Now how do you determine the amount for the 50–25–25 rule? The first thing to consider is the emergency fund. For this amount, you will need to check with your monthly budget. Budgeting is a completely different topic and I will write about it in an upcoming article.
But for example, if your monthly budget is ₹20K, then the total annual amount is 20*12. Which is ₹2.4L/year. This is the amount of money you will need to survive a year without your daily job. So to round it off we will consider the emergency fund of ₹2.5L. Now then the essential needs become ₹5L and the savings becomes ₹2.5L.
So if you put it together your amount of savings-needs-emergency fund according to the 50–25–25 rule for a monthly budget of 20K becomes 5L-2.5L-2.5L.
These 3 Pillars of financial freedom form the base of your financial management. If you are through this and your base is firm the next step is to try to grow your money.
The above budgeting technique doesn’t account for any investment. So once you save enough for emergency fund, then use the 25% for investing.
If the Plan doesn’t work, Change the Plan, not the Goal.
These financial plans sound very fancy and intimidating, but many fail to execute them. I am telling this because I failed myself too. I believed in achieving financial freedom and for that to happen, a plan was essential.
What worked for someone might not work for you. Because all of us are in different situations. But as I mentioned earlier the first step is curiosity, and the attitude to solve problems. The problems are not easy to solve and we don’t always know what to do next.
At times like these, a quote by Bruce Lee inspires me “Long-term consistency Trumps short-term Intensity.”
The first step is to plan for a backup, what if I don’t have a job tomorrow. So for that, I need an emergency fund. Once you decide on the amount in the emergency fund, start saving for it. Once you build the emergency fund then start growing your savings.
And then start exploring ways to make more money and start investing. Money is a complicated topic and it’s always good to do your own research before investing.
People on the internet(me as well) suggest different things but it’s up to you to make the final decision.
Expense Tracker Notion Template.
One of the best pieces of advice I got related to money management, was to track my expenses. You can control your money flow if you know where your money is flowing. This is the best advice for attaining financial freedom.
You need to log in your incomes, expenses, and Savings. This will help you understand how much you are underwater. Also keeping track of your expenditure will not only help you monitor spending but also control it. You can use the free notion expense tracker and track your daily expenses. The tracker will help you to track month-wise expenses and make smart money decisions. Click below to download the Expense tracker notion template.Get for FREE on
The Next Step:
Take a look at your own spending. Are you spending too much? Are there things that you can cut back on? Decide on the amount that you will spend each month and the amount you will save.
Once you create an emergency fund look towards savings and investment.
In the upcoming article, I will try to take one topic at a time and expand on the same. This article is just meant to get me started on the path.
Financial Freedom will be achieved when your money works for you. Having multiple sources of income should be your next step. More sources of income mean less dependency on a single path. So even if you lose one source you will still have other.