Financial Atmanirbharta – Why It Is Not Too Difficult To Achieve?
27th Jun 2022
“Money cannot buy happiness”.
We have heard this time and again. While this may be true to a large extent, it is equally true that money can buy many things that can make us happy. Financial atmanirbharta or financial independence simply implies having adequate passive income or sufficient wealth to take care of one’s living expenses without being employed or depending on others.
Believe it or not, it is possible to become financially independent with time by following a few simple and practical steps.
Here’s a list of things that can help you achieve financial independence:
##Understand where you stand presently
“Knowing yourself is the beginning of all wisdom” – Aristotle.
The first step towards becoming financially independent begins with knowing where you stand currently in terms of your finances. The idea is to create a clear picture of your current financial position, the number of outstanding liabilities you have, your total savings, monthly expenses, your income, etc.
##Determine how much income you need
Setting goals is the first step to turning the invisible into the visible. Hence, it would be best if you determined how much income or wealth you will need to achieve financial independence. There is no specific number that is suitable for all. Based on your current monthly income and expenses, you can determine the amount of money you require to enable you to live freely and follow your passions.
##Invest first and spend later
Most people make the vital mistake of spending first from their income and investing whatever is left. Ideally, it should be the other way round. One should invest first and spend whatever is left. As a thumb rule, you should invest at least 30% or more of your monthly income every month to create a substantial corpus over the long term.
Avoid impulse buying. We often buy things we don’t need due to our sudden shopping impulses. The next time you think of purchasing something impulsively, take a deep breath and think about your goal of achieving financial independence.
When you invest consistently and regularly, the power of compounding can multiply your investments over time and create enormous wealth.
##Invest in the right avenues
Depending on your age, risk appetite and time horizon for investment, you should create a well-diversified portfolio of multiple asset classes that will balance the risk and deliver optimum returns. Bank deposits and small savings schemes carry low or zero risk but offer low-interest rates, which are inadequate to beat rising inflation. On the other hand, direct equity and mutual funds offer high returns but come with high risks. If you are not sure about how to go on with this, it is always better to seek expert advice.
##Create additional passive income sources
To achieve financial independence early, income from a regular job alone may not suffice. Hence it is essential to build multiple streams of income. Options for creating passive incomes can range from investing in property to generate rental income, writing a book to earn royalty income, or investing in shares to earn dividend income.
You may also acquire a skill that can generate additional income in your free time. It could be becoming a freelance photographer, designer, or teacher. You simply have to choose what works best for you and take those baby steps towards starting an additional source of income.
To conclude, financial independence is all about living on your terms with adequate income to take care of your expenses without being employed or depending on others. Following the above steps and using a disciplined approach can help you to easily achieve financial independence.
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