Happy Financial Independence Day

Happy Financial Independence Day

To win independence India had to wait for 200 years. Consider yourself lucky enough that to become financially independent, you need not to wait that long. By the way what it takes to become financially independent?

As per definition if you can achieve all your financial goals without making any further investment, you are then truly financially independent. But in real world this definition may not work for most of us. So how and when can we become financially independent? We need to secure only 3 things:

(1) We cannot achieve all our financial goals today itself. Fine. Agreed. And we need not to worry for that, because we are earning well and will keep on doing the same for years down the line as long as we enjoy our work. But life is unpredictable - so we need to secure our family's future in case tomorrow I am not there for them. So calculate and get adequately insured yourself. Also take sufficient amount of health cover to cater to medical emergencies and hospitalization. Last but not the least keep emergency fund (equivalent of 4 to 6 months of expenses) ready always. This helps you to live a stress free life.

Two more points: (a) Invest in yourself. If you improve / sharpen your skill-sets regularly then only you can expect a steady upward earning curve. (b) Exercise. Have good and healthy food in time. Keeping yourself fit is a must.

(2) Manage your liabilities properly, if any. Ideally you should live a loan-free life. With loans running, you can never taste the sweetness of independence. Can you? But at some phases of life, most of us have to live with liabilities. That is ok, if loan has been taken for some crucial goal. But again affordability should always be kept in mind here. It is desirable that our loan EMI never crosses 30% of our net monthly income. Never. And we should also have a clear road map ready to payoff the loan as soon as possible but not in the price of sacrificing any critical family goal.

(3) We should also be able to make sufficient investments to achieve all our financial goals - number one among them is retirement goal. While making investments for our goals preferably we should not assume that our salary will keep on increasing steadily and hence we will make increased investments in future. Better we go for a fixed SIP approach instead of a top-up SIP approach. Your salary will increase, but so is your expenses and social status. Then why take additional stress? After all we are talking here about financial independence. How much to invest for each financial goals of yours? Click here to calculate in detail. There you can plan your goals and come to know how much to invest. Or better call your financial advisor and ask him/her what, when, how, where about all your investment queries.

Take necessary steps today. And check your steps at regular frequency to make sure that you are on the right path. If you start taking your finances a little bit seriously and with lots of discipline then no one can stop you from becoming FINANCIALLY INDEPENDENT.