I’m sure, that when we were children, we never used to worry about money and our parents used to look after it. But as you start growing older, we get to know that money holds great significance in the world we live in.
We all had a dream of leading a life where we didn’t have to take the stress of a 9 to 5 job, live paycheck to paycheck, and go on multiple international vacations.
But how many of you know what is financial independence back then? All your financial freedom goals can be accomplished only when you have at least achieved financial independence. In other words, financial independence is the first step to achieving financial freedom.
But do you know what it means to be financially independent? Let’s find out everything about financial independence and FIRE (Financial Independence, Retire Early) in this blog!
What is Financial Independence?
Simply put, financial independence is a stage of life where you don’t have to constantly work to meet the basic necessities of life. For example, if your monthly expenses including home EMI/rent, food, commute, and entertainment are about 50,000 INR, you need to have the same level of income to become financially independent.
However, you also need to consider the inflation and thus need to level up your income standards to match the increasing cost of living.
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Factors Influencing Financial Independence
Now that you have a fair idea of what financial independence is, let’s understand the factors that influence an individual’s financial independence.
1. Psychological Perspectives
Based on my personal experience of working with the wealth management industry for 23 years now, I can confirm that achieving financial freedom is not just about money but you need to have the right mindset. When your relationship with money is healthy, positive, and strong, you can attract a lot more money than others.
Hoponopono prayer for money is the fastest way to improve your relationship with money and start attracting abundance in your life.
2. Behavioral Finance Perspectives
Other than a healthy attitude towards money, your behavioral patterns also influence your financial independence to a great level. For example, if you have impulsive buying urges and have less control over your savings, it can become a huge roadblock in your journey to achieving financial freedom.
The good part is, that when you recognize these patterns and take action to overcome them, you can change your financial trajectory to a great extent.
Having a financial coach who helps you identify your limiting beliefs and actions towards money can be a game changer for you. They ensure that you make the right financial choices that match your long-term goals without compromising your current and short-term planning.
Also Read: The Best Financial Books You Should Read Today!
What is Financial Independence Retire Early (FIRE)?
If you have been following the path of financial independence lately, I’m sure, you must have come across the term of FIRE (financial independence retire early). And if you don’t know what is financial independence retire early (FIRE) so far, let us tell you that it’s a movement that encourages a lifestyle of heavy savings and investments. The movement and term became particularly popular among millennials in the 2010s and got extra traction with the support of online communities, shared blogs, and online discussion forums.
The whole purpose of the Financial Independence Retire Early (FIRE) movement is to focus high on savings and build a portfolio that can take care of your financial requirements without you working actively for it.
Now that you know what is financial independence and what the Financial Independence Retire Early (FIRE) movement is all about, let’s find out how you can achieve financial freedom.
Also Read: Top Financial Freedom Quotes That Will Change Your Money Reality
8 Steps to Achieve Financial Freedom Faster
Follow these steps to get one step closer to your financial independence! When you follow this with discipline, you can you would be able to experience soon what financial freedom looks like.
1. Set Clear Financial Goals
If you don’t know what you want to achieve financially, you will never have it. The first thing to achieve anything in life is about having clarity and roadmap for it. So I recommend you to set specific, measurable, attainable, relevant, and time-bound (SMART) goals for money.
Whether you want to have a certain amount of passive income or a net worth target, once you have a clear picture of what you want, a money coach can guide you further to take the right actions.
2. Spend Mindfully
When you want to achieve financial freedom, it becomes super important that you spend money mindfully and carefully. When planning your monthly budget, you should focus on your needs rather than your wants while making conscious spending decisions.
Spending mindfully not only helps you save more but also prepares you for a simpler, more sustainable lifestyle that supports your financial independence goals.
3. Have Multiple Sources of Income
When you have multiple sources of income, you can reduce your dependency on a single stream of income, helping you continue your commitment to financial freedom. You can have multiple sources of income like investments, side businesses, or other passive income opportunities that you do other than a main job/business.
4. Prioritizing Debt Repayment
When you have huge debts on you, it can become a barrier to achieving your financial independence goals. So the first step you need to take is to repay your high-interest debt first while developing a strategy to manage and eliminate all other debt, if any!
When you repay all your debts, it will support you in saving more money and thus make space for investing money.
5. Invest Strategically
Investing is such an important of financial independence that you can’t ignore it at all! It’s a secret key to creating wealth. The best way to make the right investment choices would be to either learn everything about finances or have a money coach who can help you make the right choices.
6. Have the Right Insurance
The next action you need to take to become financially free is choosing the right insurance plans for you and your family members. When you have the right kind of insurance, you can have adequate financial protection against life emergencies of health, life, disability, and property.
7. Build an Emergency Fund
Living a life of hand-to-mouth without any extra savings and strategic planning is not an ideal way for you to become financially independent. To execute your plan of financial freedom, it’s important to build an emergency fund by calculating your monthly expenses and multiplying it by three or six to secure your short-term future. You can use this fund in case of emergency and adversity.
8. Plan for Retirement
Last but not least step to achieving your financial freedom is planning your retirement. For this, you can use a financial freedom calculator and see how much money you need to start saving and investing now to achieve your financial goals. Plus, consider factors such as inflation, healthcare costs, and your desired lifestyle while planning for your retirement.
Achieve Your Financial Freedom With the Right Money Coach in India for Women Entrepreneurs
I hope all the information that I’ve provided about financial independence and how can you achieve it has helped you with what you were looking for! Remember, it’s a long-term game and when you have someone to support and guide you through the roadmap, it becomes easier for you to make the right choices.
I’ve 23+ years of experience in the wealth management industry and have helped many HNIs manage their portfolio of thousands of crores. If you need any guidance about attracting and managing money, feel free to reach out to me at 8320310332!
Frequently Asked Questions about Financial Independence
What is the meaning of achieving financial freedom?
The meaning of achieving financial freedom is to live a life where there are no financial restrictions and have sufficient money to pay your monthly expenses.
How to gain financial freedom?
To gain financial freedom, you need to have enough amount or income sources along with effective investment strategies to reach your financial goals.
How to achieve financial freedom at a young age?
To achieve financial freedom at a young age, you will need to start planning your finances from a young age while following your monthly budgets of expenses, savings and investments.