Six Levels of Financial Freedom

Six Levels of Financial Freedom

09 Jan 2020

We generally nurture dreams of attaining a certain degree of financial freedom at some point in our lives. We earnestly hope for the day when this pipe dream becomes a reality.

Most of us relate financial freedom with not needing a job. However, this may not be entirely true! True financial freedom generally means having enough savings, investments, and cash in hand to afford the lifestyle we have always wanted for ourselves and our families — and a growing nest egg that will allow us to retire or pursue the career we want without being driven by earning a certain amount each year. Financial freedom also includes an adequate cash flow for mandatory and discretionary expenses, for the rest of our lives, without being dependent on anyone whatsoever.

Prima facie, financial freedom may appear to be a herculean or insurmountable task. However, with disciplined savings and investments coupled with prudent career choices, one can reach this journey easily and that too early on in life, instead of waiting for till retirement.

In this blog, we attempt to assist you in your journey towards achieving financial freedom by outlining a few simple steps which you need to follow up to retirement carefully-

  • Judicious use of your salary: Financial experts are of the view that at least 10-20% (if not more) of your monthly salary should be invested for future goals in asset classes which can generate meaningful returns over the long run and help you build a substantial nest egg. With an increase in your income, there should be a proportionate increase in the quantum of your investments also. Further, your monthly EMI’s should not take up more than 30% of your take-home salary, ideally.

    Saving and investing at an early age is the key to achieving financial freedom early. It would help if you also safeguard your monthly salary from falling prey to the modern consumerist tendencies of being directed too much towards lifestyle and ostentatious or unwarranted expenditure. After all, do always keep in mind the proverbial saying “Money saved is money earned”.
  • Explore better career opportunities: If you feel that you are currently in a toxic job, which is doing nothing to add value to your career, and at the same is proving to be highly stressful, you should immediately start exploring better opportunities. Hone your skills regularly so that you become competent enough to secure better well-paying career prospects.
  • Take the entrepreneurial plunge: You may consider taking some time off to explore alternative career opportunities or create your own startup or business venture, without neglecting your financial commitments over that period. During such time, you can live frugally in this period and keep strict control over your expenses, till such time, your venture breaks-even and starts generating revenues/profits.

    If your entrepreneurial pursuits pay off, and you can sustain your business, you would be well on your way to achieving financial freedom at an early age. Examining the age of a few successful entrepreneurs when they launched their companies shows it runs the gamut. The ages, from the youngest to the oldest - Facebook (20), Microsoft (20), Apple (21), Google (25), Twitter (30), Amazon (30), Tesla (34), Oracle (35), Netflix (37), Zynga (41), Walmart (44) and McDonald’s (53). Experience is a crucial driver for many of these entrepreneurs but is not required, as seen in the spectacular success stories of Facebook, Microsoft and Apple.
  • Become debt-free: In your quest for financial freedom, the earlier that you can retire or ultimately pay off your debts, the better it would be for you. Being debt-free means that no one, but you alone, has a claim on your income. A better option would be never getting into debt. In 2004, at the Berkshire Hathaway annual meeting, Warren Buffett, Berkshire’s Chairman and CEO, advised young professionals that one should never get into debt. He said that “It’s very tempting to spend more than you earn, it’s very understandable, but it’s not a good idea”.
  • Earn well and save wisely to retire early: One of the best ways to achieve financial freedom at a relatively young age is to make prudent career choices, earn well over several years and decades and maintain a disciplined lifestyle bereft of ostentatious expenses; this way, you will also be able to retire early from the hustle and bustle of a regular full-time job and pursue other interests.
  • Invest in taking care of your lifestyle for the future: The investments that you make during your working years will not only take care of your lifestyle for the rest of your life but also facilitate funding your passions like charitable work, donations, overseas travel or create an inheritance.

Work methodically towards achieving financial freedom and the benefits would be there for you to see! We wish you all the best in this journey!

Founded in 2005 by new–age entrepreneur Abhishek Bansal, the Abans Group has evolved into a globally diversified conglomerate, providing expertise in Broking Services, Non-Banking Financial Dealings, Financial Services, Agri-Commodity Services, Warehousing, Realty & Infrastructure, Gold Dore Refinery & Manufacturing, Trading in Metal Products, Pharmaceuticals, Software Development & Wealth Management. The Group is a comprehensive financial and non-financial services and solutions provider, aiming to provide end-to-end solutions to its clients.