7 Tips to Attain Financial Freedom

Updated on: 27 Jul 2023 // 16 min read // Home Loans
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Usually, people take the “Savings = Income – Expenses” approach. However, is it the right way to attain financial freedom? Warren Buffet thinks differently. According to him, “Expenses = Income – Savings.” The mathematician in us will ask, “What is the difference between the two equations. We shall explore the same that will lead us to the tips to attain financial freedom.

1. Have a Budget in Place

If you want to progress in life, you should have a budget in place. Take a piece of paper and list out your expenses one by one. As you do so, you will notice that a lot of costs were not worth expending. Automatically, you will strike it down thereby increasing your capacity to save. Use technology to develop smart saving habits. It can help you make the transition smoothly.

As you practice this technique for a couple of months, you will end up becoming a smarter spender. Thus, you will conform to the Warren Buffet approach. You will start to save more and spend less and not the other way if you take the usualpath.

2. Have a Clear Goal

Have a clear goal in mind. Planning is the best way to have one. If you plan to buy the new smartphone worth 80,000 in about four months’ time, it is better to start saving 20,000 from this month. By the time the smartphone hits the market, you will be ready with the funds.

You should also have plans in place for the long-term goals. You might need to buy a house in the future. Save for the margin money to Apply for the Home Loan from today. You could end up borrowing less or go for a property of higher value if you plan well.

3. Check Out Your Loan Portfolio

Study your loan portfolio carefully. Make a list of the high-cost loans and try to repay them off as soon as possible. Your PersonalLoans and Credit Cards come under this category. Your Home Loans not only cost less but also provide savings by way of income tax concessions.

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Hence, keep paying the regular installments of your housing loan while enhancing the EMIs (Equated Monthly Instalments) of the expensive loans. Compare two personal loans to check out the prepayment or foreclosure penalties. Foreclosing a mortgage has an advantage in the fact that you save on the interest component.

4. Go for a Housing Loan, if You Do Not Have One

The housing loan provides you with acquiring an asset today while paying for it in instalments over a period. Check out the online Home Loan service providers like MyMoneyMantra and compare different products of various banks before youapply for a housing loan.

If you have higher eligibility for your housing loan, it is advisable to go for it. You can save more on the income tax front. Reducing your tax liabilities is also an excellent way to save money and attain financial freedom.

5. Plan Your Taxes Well

You have various investment plans having a tax saving component. You can use these instruments to reduce your tax liabilities. The Public Provident Fund is one such instrument. It provides for a long-term retirement option and saves tax as well for you in the bargain. If you wish to fulfill a medium-term financial goal, you can opt for the tax-saving bank fixed deposits.

6. Strategise

Having a clear strategy is like winning half the race. Plan your investments depending on your goal’s time frame. Invest in the less risky bank fixed deposit and recurring deposit plans to meet your short and medium-term goals. Investing in stocks is a good idea to cater to your long-term goals. They can take care of the inflation risk. It is a better idea to invest in equity mutual funds if you find it difficult to invest in stocks.

7. Do Not leave what you Can Do it Today for tomorrow

Procrastination is the biggest evil. The more you delay investing, the higher are your chances of earning lower profits. It is because of the compound interest factor. Starting early with your savings can help you reap the benefits of compounding of interest. Seconds, you get the chance to make amends and take corrective action should something go wrong.

Keep it simple. Make a plan and find your way towards financial freedom.

Also Read: Seeking an Instant Home Loan? Take the Digital Route!

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