There are various workarounds which can fast track your way to financial freedom or help you smash any other financial goal. Let’s have a look at 10 such tips:
1. Use tax breaks
• Taxes paid by an individual can quickly add to a significant chunk of extra outflow of money over the years. That does not mean you shouldn’t pay taxes. Pay them smartly.
• Use tax incentives, refunds etc., wherever possible to reduce your taxes.
2. Retirement planning
• One of the epic financial blunders people make is delaying their retirement planning, thinking they have plenty of time.
• However, the delay makes it more difficult to amass a substantial corpus amount, which requires the power of compounding, which is only useful if you have enough time left.
3. Pay off debt
• Debt is a massive burden on an individual's financial life and a consistent source of cash outflow. It reduces one’s ability to invest surplus cash in productive assets like stocks and bonds.
• Therefore, getting out of any debt on priority is definitely a smart move.
4. Create a budget
• One of the most effective financial tools, a budget not only monitors your expenses but also helps you optimise them by highlighting unnecessary areas of spending.
• Discipline is the key: After creating a budget, you have to follow it strictly to see the results.
5. Create multiple sources of income
• No one complains about having two or more sources of income. It’s a no brainer that higher the income, better would be your financial life.
6. Long-term investments
• Investing is probably the most crucial aspect of financial freedom and a cornerstone of wealth creation. To get the benefit of compounding, start as early as possible and invest for the long term. • Try to stay away from short-term trading unless you have the required skillset.
7. Create emergency fund
• Your emergency fund is your umbrella on a rainy day. Life is full of uncertainties, and no one can guess what future holds.
• An emergency fund is absolutely necessary to take care of unexpected expenses in the future. Ideally, an emergency fund should be worth three months of your expenses.
8. Live below your means.
• To be financially stable, the easiest way is to spend less. Either reduce your cash outflow by minimising expenses or increase your income.
• Either way, you would manage to stay in cash surplus.
9. Buy assets, not liabilities
• Assets generate additional cash flow in the form of regular payments like interest on bonds or capital appreciation.
• On the other hand, liabilities only take money out of your pocket such as a debt. Hence, always try to accumulate assets, not liabilities.
10. Have an insurance
• Life insurance is a must to protect your family and should not be skipped at any cost. Medical insurance also holds high importance as hospital bills these days can skyrocket to exorbitant amount.