Everyone has a different definition of financial freedom. For some, it is just the ability to pay off the debts; for others, it can be about being able to own a private jet. In between the pessimists and the dreamers, there are some people who may define financial freedom as having enough passive income to take care of all your expenses.
In practice, having a dependable cash flow and having adequate savings such that you don’t need to worry about sudden expenses is enough to be in control of your finances. There are many ways and steps to achieve this goal, but none of these methods will work if you don’t get rid of some bad habits and replace them with good ones.
Here are 10 good habits that would help you get on the path to financial freedom. You won’t need to make any fundamental changes in your life; just a few tweaks to imbibe these habits in your day to day life would do wonders for you in the long term.
Know where you stand. The path towards being financially strong starts from properly analysing your current financial situation. No matter how big or small your household turnover is, take stock of all the assets, liabilities, incomes, and expenses and make it a habit to keep the status updated.
Identify the top spending categories and optimise these expenses and spare some extra for investments.
Prepare a budget statement for every month, not just in your head, but on paper or a spreadsheet.
Decide on the amount to save monthly, keep the savings aside at the start of the month and manage the monthly expenses in the remaining amount.
Do a no-spend challenge periodically—no need to make drastic changes in your lifestyle. You can amass a significant amount of money by changing some little things. The aim is to help you cut out on non-essential spending.
Raise your savings each month, even if it is by a small amount.
Automate your savings and investment portfolios with algorithm run financial planning to achieve faster returns.
Keep an emergency fund stashed away. This amount can be anywhere between your three to six months of expenses.
Maintain a better credit score for getting lower interest rates on credits and lower premiums on policies.
Get financial advice from a qualified financial advisor and not from your barber or a gym buddy.
Developing these healthy habits will set you on the path of financial freedom and help you achieve your financial goals.