How to Achieve Financial Freedom
Happynessfactory.in is a Goal-Based Financial Planning platform. We help you take purposeful money decisions and invest in a HappyRich tomorrow.
11 Aug, 2018
Money holds varying meaning and serves varying purposes for everyone. A lot of our beliefs, values and motivations are often deep rooted, making our relationship with money a little tricky. Almost everyone, no matter what the level of their income or degree of planning, experiences some level of anxiety to meet their needs and goals. This financial stress is something that hinders the pursuit of our financial goals and thus, our happiness.
So, what actually prevents us from achieving financial freedom? Is it our lack of planning, misinformation or continuously chasing high returns?
Over the past 12 years we’ve been helping over 1000 families plan their investments and we realised most of them just want to know one thing – “Am I doing ok?” It’s not a surprise that making investment decisions by first thinking about which product to invest your money in, doesn’t help families answer this simple question. As a matter of fact, we all want to invest in top performing funds or create an all-star portfolio but how many of us have actually succeeded in doing so? Beating unrealistic benchmarks isn’t a Financial Plan. It is only when you invest in something that truly matters to you do you stick to the plan and more importantly, experience true happiness.
All of us have the capacity to achieve financial freedom but that’s possible only if we spend some time on planning our finances in the right way. A good place to start achieving financial freedom is by answering these five questions which will ensure more clarity during the planning process.
- How much money do I need?
- How much can I reasonably save?
- When will I need this money?
- What is the rate of return I will get?
- What is it that I want to leave behind?
While only five questions might seem insufficient to build your entire financial future upon, they can be thought of as five separate choices that provide the necessary balance to your financial plan.
In addition to answering these questions truthfully, there are additional measures that you can undertake to ensure that you decrease your anxiety with respect to your finances.
- Start with defining your vision and your financial goals and let these act as the guiding force for all your investment decisions.
- Avoid getting confused by every new plan that gets introduced in the market. Altering your investments strategy based on the introduction of a new fund into the market may do more harm than good. Thus, sticking to the plan is more important than creating a new one.
- Resolve to say ‘NO’ to financial pornography in the form of newsletters and notifications about new funds, innovations, experiences being offered by anyone. All these do is confuse you and lead you away from your decided path.
- Maintain a Savings budget as opposed to an Expense budget. This ensures that you save but also indulge at the same time. The idea is to set a savings target of 15-25% of your gross annual income in a mental account called ‘My Goals’.
- Safeguarding assets is extremely important. Thus, creating a will is the best thing you can do for yourself and your future generations because it will ensure that your estate gets distributed according to your wishes.
While money might not be able to buy happiness, getting a grip on your finances and knowing where you stand with respect to achieving your goals provides you with the most valuable assets in the world- freedom from financial worries, a worry free life and achieving YOUR version of happiness.
As Carl Richards rightly put it, “Financial decisions aren’t about getting rich. They’re about getting what you want — getting Happy”.