9 simple ways to achieve financial freedom

As published in Telegraph on 10th August, 2016

Taking care of your wealth is the same as being healthy — it takes continuous discipline and effort. So, take good care of your wealth just like you do with your health.

Here are nine steps to your financial freedom:

1. Check your health chart and set a goal:

So you weigh more than you should? Or are your cholesterol levels a little high for comfort? Whatever your problem is, you make it your goal. Similarly, set a goal for your finances too. A Rs 5-crore retirement fund, Rs 30 lakh down-payment for your house, your child’s college fund — it could be anything as long as you attach a realistic figure to the goal.

2. Give yourself a deadline:

You cannot become healthy overnight, can you? No, it takes time for you to achieve your target. For example, you can aim to shed 10 kilograms in three months. This way, you can break up the target — shed 3.5 kilos every month. Makes it easier, right? Your financial goals too need time. Whether you are investing for the short-term or longer period of time affects how your money grows.

3. Approach a dietician:

Almost everybody on the path to good health refers to an expert. This could be your gym instructor, a dietician or any other specialist. The bottom line is clear: you need guidance. Why, then, do you proceed without any help in managing your finances? There are plenty of good financial advisors available today who can help you grow your money.

4. Cut down your junk:

The first advice almost any health expert gives is to avoid junk. Many also suggest cutting down portion sizes. In financial parlance, this could refer to your extra or unwanted expenditures. Find ways to spend less. This can automatically help you save more. Alternatively, you can invest first and spend whatever remains. This can help you save more.

5. Good food v/s bad food:

Different health goals involve consuming various types of food. For example, you would rather increase protein if you want to build muscle. If you are diabetic, you would prefer food items with low sugar content. Apply this concept to finances too. There’s no point in investing in Bank Deposits if you want 13% returns every year. Equity would be the way to go. Learn asset allocation.

6. Monitor regularly with health checkups:

You need regularly checkups to monitor your health. How else would you find out if your cholesterol or sugar levels are normal? Similarly, conduct regular checkups for your finances too. This could be as simple as looking at your portfolio returns. That said, you should meet your financial advisor regularly for an in-depth check of your finances.

7. Use savvy health tools:

Diabetics use sugar testing strips. The health-conscious use apps like 10,000 steps, Fitbit, etc. In fact, most smartphones come with their own Health apps. The financially savvy have a wide range of such kits too to monitor savings and investments. Some examples include the SIP calculator, the Children Career Planner, the Financial Health Check, the Goal calculator, etc.

8. Review every milestone:

When you are working out to lose weight, every kilo you shed is a milestone. This makes the whole process less arduous and more exciting. In the same way, set milestones for your investments too. This serves two purposes. One, it tells you that you are inching closer to your goal and motivates your further. Second, these milestones can help your measure your performance.

9. Replan in case of hits and misses:

Not every plan is successful right away. It’s a constant case of re-planning and changing strategies. So gym didn’t work? No worries, try kickboxing! At every milestone, see if your portfolio of investments is working for you. If not, it may be time to rethink your strategy. Sell a few Mutual Funds and buy a few others that may help you achieve your goal.

KEY TAKEAWAYS

  1. Plan for your wealth and work for it every day just like you take care of your health

2. Set a goal, put in place a strategy and work towards it. Make every day count.

3. Monitor your health and wealth regularly. Use annual checkups and other tools for the same.

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