How do I achieve financial freedom?
New Delhi : "Financial peace isn't the acquisition of stuff. It's learning to live on less than you make, so you can give money back and have money to invest. You can't win until you do this." ~ Dave Ramsey
Having 2 lakhs in your bank account, paying your debt, and simultaneously growing the money is a real art. It is meant to be spent if you earn; it is a universal truth.
Wealth creation and financial freedom go hand in hand. If dealt wisely, you will live the most satisfactory life in terms of finances, whereas if you lack planning and have zero intention of investing, you will end up pouring your finances into the drain.
This blog will help you in understanding,
- What is financial freedom, and why is it important?
- How to achieve financial freedom?
- What are the fruitful steps to create wealth wisely in 2022?
What is Financial Freedom for you?
One can save, but do you think they attain financial freedom by saving money?
In a nutshell, financial freedom often entails having enough savings, assets, and other related profits to afford the lifestyle one has wished and dreamt of providing themselves and their family. Apart from getting the power of affordability in life, it also means having enough money to pay back your debts and having enough funding in the bank so that you can retire peacefully or pursue your dreams.
Financial freedom means putting the money to utmost utilization to reap better benefits.
In my dictionary, financial freedom is having enough remaining funds to pay for my living and dreams. I don't dream of being a billionaire or having an account in a Swiss bank. But I have enough to meet my necessities to invest my time in doing something that I love rather than doing monotonous things to sustain my annual pay cycle to support my living costs.
It was my definition of financial freedom. Ever thought about what importance financial freedom holds for you?
How to achieve Financial Freedom in 2022?
The current generation is plagued by rising debt, financial emergencies, wasteful spending, and other crunches preventing financial freedom.
Let us get down to some of the best ways to achieve financial freedom in 2022, and they are as follows:
Have a Moment of Financial Retrospection!
Self-realization has always been beneficial, and this is the initial step that one needs to take in life before dreaming or urging to buy an iPhone 13 Pro Max when all you have in your bank account is 80,000.
Be a dreamer but not a daydreamer. When discussing finances, always try to set a practical goal that can be attainable or attainable after a certain period. To begin with, know how much money you have in your bank account. Then, match it with your desired lifestyle.
Note The more direct your attainable goals, the more likely you will achieve them.
Know your debts and other liabilities and make it the priority to finish them off at the earliest. Apart from that, know your budget, monthly expenditure, emergency savings, etc. Keep all these factors in mind, understand the financial obligations, and work accordingly.
Map Your Spending
Once you set achievable goals and understand your budget better, the next step is to stay on the plan religiously. It is possible only when you track your spending and understand the progress.
Here, tracking is a vital step toward financial freedom and wealth creation because it comes with the authority of accountability. Furthermore, it uncovers numerous unnecessary purchases that you make. Here you can understand whether you are an impulsive buyer or not.
If you are one, then it is a roadblock on your route to wealth creation and financial freedom. So beware, learn from tracking, and follow it religiously.
Don't Just Stick to One, Have Multiple Sources of Income!
If you are looking forward to successful financial freedom and wealth creation, then a regular 9 to 5 work may not be enough. Moreover, some financial experts believe that people should have at least five different sources of income to earn more and live a financially balanced life.
There are multiple methods to earn, such as:
- Freelancing
- Investing in Insurance
- Have an online marketplace
- Investing in stocks, equity, real estate, and many more
There are many such methods that one can use to have multiple platforms to earn. Choose what suits your pocket and time and start managing.
Insurance is an Effective Measure
While some believe that investing in insurance is not worth a shot, owning life insurance is the best possession you can have for yourself and your family (when you are not there to take care of them).
Life insurance aids in mitigating the effects of financial volatility.
For instance, you are the sole bread-earner and meet with an untimely death. What about your family and their financial assistance? Therefore, life insurance is the most effective approach to mitigate the financial burden. Even a medical emergency might derail all plans at any time. Insurance can cover such costs, easing the financial loads preparing a safety net.
There are multiple insurances available in the market and suit different people based on their different needs and pocket preferences. But, the best and the most preferred type of insurance in India is term insurance.
Live Low-Key
If you want to prepare a financial safety net for yourself, frugal living is one of the best suitable options that will help you cut down your expenses to a significant level. Here, all you have to master is the 'less is more' lifestyle. However, many successful people made a habit of living below their means before becoming affluent. Elon Musk and Tata are millionaires, but they never show off.
None is asking you for your already accumulated things. It is all about making minor modifications by discriminating between what you need and desire. It is all about prioritizing.
Why is Wealth Creation Important?
As mentioned earlier, financial freedom and wealth creation are sailing on the same boat. One should consider wealth creation in their early twenties (when they start earning) because you have the rage to earn and multi-task at a young age.
Wealth creation is vital due to multiple reasons, and they are as follows:
- Health crises and untimely death come uninvited. If you have saved and have money in your kitty, well and good. But, if you face a monetary crunch, that is a matter of concern.
- Childbirth and marriage are happy additions to the family, but along with additions comes financial responsibility. People spend lakhs to satisfy society in marriage, but you go bankrupt once the wedding shenanigans are done. Similarly, after kids are born, starting from their basic amenities to having their education planned, parents need to save to provide their children with the best in all.
- Have a stress-free retirement phase where you can fulfill your dreams, go on vacation, and many more.
- Not many wish to have a mundane 9-5 job, some dream big like entrepreneurship. Starting a business from scratch is not a game. It takes a lot of money, patience, and resources.
- Wealth creation is a much-needed thing in everyone's life. Since your earning age, if you follow it, you can save and invest much to have a long smooth run without lending money from anyone.
How to Achieve Financial Freedom with Life Insurance?
Investing in life insurance is one of the best remedies for financial freedom. But, there are many life insurances in the market. How to chalk out the best for your pocket?
Don't panic; I have got your back. The following are some of the best life insurances that are comprehensive and inclusive of all amenities that one can use at every possible stage. They are as follows:
Aditya Birla Sun Life Insurance DigiShield Plan
If comprehensive and inclusive term insurance had a face, it would have been Aditya Birla Sun Life Insurance DigiShield Plan because it has got the back for every type of audience. This term insurance comes with 10 plan options that meet your varying protection needs depending on age, necessity, and other factors.
The 10 Options under this 'Sabka Vala Term Plan' are as follows:
- Level Cover Option
- Increasing Cover Option
- Sum Assured Reduction Option
- Whole Life Option (Level Cover)
- Whole Life Option (Sum Assured Reduction Cover)
- Income Benefit
- Level Cover plus Income Benefit
- Low Cover Option
- Level Cover with Survival Benefit
- Return of Premium (ROP)
Life insurance coverage is available for one year or until the age of 100, offering complete financial assistance. Even if you are lucky enough to hit a century, Aditya Birla will be there as a pillar at such a fragile age.
Benefits and Features of ABSLI DigiShield Plan
Enhanced Life Stage Protection: As you grow older, earn better, and have a home of your own, parents persuade you to move to the next stage of life, and that is marriage. Later, it is followed by children. Now, if you choose this particular plan, this benefit will help you enhance your life cover without undergoing any medical tests.
Death Benefit: Under this feature, if the policyholder passes away during the active term period, the death benefit will be paid to the Nominee (s)/legal heir(s) selected by the insured.
Terminal Illness Benefit: This feature is a blessing in disguise. Here, suppose the insured is diagnosed with a terminal illness during the Policy Term, and the policyholder is aged less than 80. In that case, they will receive a lump-sum payment of 50% of the relevant amount assured on death, up to a maximum of Rs. 2 crores, and all future premiums will be canceled.
Maturity Benefit: This Policy does not provide any maturity benefit. If Plan Option 10 is selected, the Total Premiums Paid less modal premium loadings will be due after the Policy Term.
Note: Always look at the options before investing. As different options come with other exceptions.
Conclusion
Financial freedom and wealth creation don't happen overnight. It is obtained by instilling healthy money habits in your daily life. Not major but minor changes in lifestyle, investment, and expenditure can bring in positive changes in your pocket.
