January 1st 2020 the New Year is just a day away. You must be thinking of the New Year parties and all those beautiful beaches. There’s something more important. Have you made the financial resolutions for the New Year 2020? If you have not, well it’s time to make them fast.
This article touches on something more important. Financial Freedom for the New Year 2020. Financial Freedom is living life on your own terms. It’s having the money to do what you want, without worrying on the daily expenses. Yes, Financial Resolutions are very important for New Year 2020, but Financial Freedom can get you there. It takes care of retirement and all your dreams and passions.
So, how to attain financial freedom in New Year 2020? Let’s find out. Managing money is an art, learnt at an early age. This is why you must attend interactive sessions on wealth generation. Enroll and participate in the Financial Freedom Workshop by C S Sudheer just by leaving a missed call on +91-8655097256. You will also be eligible for one-year membership to the Millionaire’s Club of IndianMoney.com.
This is a simple exercise that is making an account of every rupee earned and spent. A budget gives you an idea of where your money is going. The budget doesn’t curb spending. It diverts money towards what matters and helps attain financial goals.
A budget must be flexible. If you overspend in one area, make sure it’s balanced in another area. Tweak your budget to adjust to life’s changes.
This is a must if you want to enjoy financial freedom. Get rid of debt in a hurry. Repay personal loans and credit card dues first. Banks charge 24-36% interest a year on credit card. Personal loan interest rates are 14-22% a year. If you don’t repay high-interest loans, you will land in the loan trap.
Opt for credit counseling or take the help of a financial advisor if you are struggling with many loans.
See Also: How to Set Financial Freedom Goals?
Build an emergency fund with at least 3 months of living expenses for a rainy day. Make this 6 months of living expenses if you are married. Keep the money in an FD or liquid fund and break it in an emergency.
Set up automatic transfers from savings bank account to the emergency fund. This is a simple strategy to protect the emergency fund. Out of sight is out of mind.
Well, you just must save and invest if you want to enjoy a happy retirement. Invest for retirement based on risk profile. An aggressive investor looks at Equity mutual funds, ELSS, Stocks and NPS for retirement. These offers high returns at high risk. A conservative investor looks at PPF, FD, NSC and Post Office Saving Schemes for a happy retirement.
Look at the tax-efficiency of an investment before retirement planning. EPF and PPF enjoy EEE benefit. You get the Section 80C tax benefit up to Rs 1.5 Lakhs a year. Interest earned and withdrawals are tax free. ELSS is also another excellent tax-efficient investment for aggressive investors.
Don’t invest just to save tax. Invest for specific financial goals like buying a house, early retirement with specific time horizons. Look at what an investment offers and study it carefully. Check interest rates, hidden costs and safety of the investment along with tax-efficiency which is basically after-tax returns.
Invest in financial instruments that are suitable for your financial goals. Investments are for the long term. So, you better check before putting in your hard-earned money.
The more you save, the faster you reach financial freedom. Let’s have a simple example showing how much you must save to enjoy financial freedom. If you save 10% of income, you spend 90% of earnings. You can easily take a year off for every 9 years worked. This means you can support a year of expenses. This example ignores the time value of money. So, you must invest each year for 9 years you have worked, just to enjoy 1 year of financial freedom.
Save and invest for financial freedom. The more you save and invest, the faster you reach financial freedom.
See Also: Learn How to Achieve Financial Freedom
Well, there’s no financial freedom without life and health insurance. Get a term life insurance plan which is risk protection. On the death of the policyholder within the term of the plan, nominees get the death benefit. This money can be used to repay any loans like home loans or car loans and for the daily living expenses of the family. You can achieve financial freedom only if your family is safe from an untimely demise. So, there’s no financial freedom without term life insurance.
A health insurance plan protects you in emergency hospitalization. Hospitalization expenses can blow away savings.
Well, you cannot attain financial freedom with just your salary. You need a second income. This could be rental income or freelancing income or royalty from writing books.
Advance your career with certifications in your field and enhance take-home pay.
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