For personal finance, achieving financial independence is something of a ‘Tryst With Destiny.’ It is that defining point when you have enough money to see yourself through the rest of your life. Financial freedom is about taking ownership of your finances. You have a dependable cashflow that allows you to live the life you want. You aren’t worrying about how you’ll pay your bills or sudden expenses. And you aren’t burdened with a pile of debt. At this point, there remains no obligation for you to continue in the workforce in order to meet your living expenses. While it may seem like a concept reserved for a few, with the right mindset and smart decision making, just about anyone can start thinking about moving towards financial independence. It is essential that you have a thorough plan of action to achieve the same. In that sense, any good plan to work towards financial independence should include the following considerations:

• Identify and plan for your goals: 

You can’t achieve financial freedom without knowing your starting point. Looking at how much debt you have, how much savings you don’t have, and how much money you need can be a depressing reality. But this is a valuable step in the right direction. Hence, you have to understand your current position well in order to be able to decide where you want to go from there. By identifying clear cut goals on your journey towards financial independence you can develop the best strategies to achieve it. Detail multiple strategies to reach your different goals; quantify them and organise them into clear timelines. Always make informed decisions and never leave anything up to chance.

• Save sooner rather than later: 

A good way to start working towards these goals would be to begin saving early in your career. Earning a regular salary during this period is the most optimal scenario. By making cutbacks and living less lavishly, you will be able to cordon off a portion of your income towards a well-defined savings plan, that will compound in value over time. This can help you achieve some of your goals like buying a vehicle or a house, getting married, in the long run, plan for retirement till life expectancy as well. An important step toward financial independence is tracking your spending.

• Set aside an emergency fund:

It is essential to set aside a certain amount in liquid funds to deal with an emergency – like an accident, health issue, job loss and so on. This will protect your finances and also ensure that your plan towards independence does not get derailed and remains stable in the event of any contingency. The exact amount kept in this fund will vary from person to person, but a good estimate is to ensure that it can sustain you for up to six months in the event of no inflow of cash.

• Plan towards self-sufficiency: 

You’ve probably heard the expression “pay yourself first” before. But in case you haven’t, “pay yourself first” means putting a specific amount of money in your savings account before paying anything else, such as bills. And the act of paying yourself first has helped countless people inch closer to achieving financial freedom. By paying yourself first, you guarantee that you’re always putting money aside to invest in yourself. By doing the opposite, you only get whatever is left over, which usually isn’t substantial enough to help you experience financial freedom.To achieve financial freedom, you must be able to provide for yourself, ie. you need to be self-sufficient. Make sure all your goals are geared towards self-sufficiency; your savings and investment plan should also reflect the same. We should look at buying experience and not buy things. Life is made up of moments. The best ones come from quality time spent with friends and family. While some products can help bring you closer to your family (like weekly family video game night) most of them don’t add much value. Don’t spend money you don’t have to pretend that you have money.

• Review your finances and check for stability: 

One has to work towards being debt free. There are two main methods of paying off debt: snowball and avalanche. Snowball is when you pay off the smallest debt first. Avalanche is when you pay off the debt with the highest interest rate. This inches you towards investing and in the long run bearing the fruits of your financial decisions. Once you are able to achieve self-sufficiency, there is a need to maintain it. You will have to make sure your net income accounts for inflation and other such costs that you may incur overtime. Once you are convinced of stability in your income and continued sustenance, you can then confidently make the transition to independence. However, constantly review and re-assess your portfolio to see if any changes can be made to bring in more income. 

If you keep in line with these points, becoming financially independent can be made much easier. Financial freedom can help you take ownership of your finances and, more importantly, your life. It’s about living within your means, being a bit frugal, and making sure that money is spent on things you really need. By following the the tips shared in this article, you’ll inch closer to achieving the financial independence you deserve. So take a look at those finances, build additional streams of income, pay down that debt, and before you know it, you’ll be free. Seeking the advice of a certified financial planner or a wealth management firm can help you organize the necessary planning activities more efficiently, and move towards your goal of becoming financially independent much faster.