Financial independence is about taking ownership of finances. It refers to a state where an individual has enough resources at their disposal to meet expenses and is as well as able to accomplish financial goals without being dependent on others.
However, the concept of financial freedom may vary from an individual to another.
To mark the occasion of 75th Independence Day, here are some key tips to achieve the financial freedom:
Don’t be over-leveraged
According to Anil Pinapala, CEO and founder of Vivifi, individuals must not be over-leveraged in order to achieve financial independence.
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"The payment burdens should not exceed monthly requirements. Ensure some room to play in the payment burden. Keep a check on indulgence and do not let it take over the salary. Time purchases well," Pinapala suggests.
Have an adequate emergency fund
Pranjal Kamra, CEO of Finology advises individuals to have an adequate emergency fund which is needed to cover household expenses in case of any financial crisis.
Based on average monthly expenses (living costs), everybody should have an emergency fund that can allow them to survive without income for at least six months.
Kamra further tells that it’s important to buy a term plan and health insurance to secure oneself from any possible rainy day that may erode the entire wealth savings.
Start saving early
For financial freedom, Ankur Maheshwari, CFO at Freo suggests individuals to start saving early in life and let compounding do its magic.
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“While doing so, take advice from financial planners and avoid falling for false recommendations and investing in the wrong assets," he tells.
Pinapala of Vivifi asks individuals to invest wisely, only after researching.
"Individuals could choose whatever suits them – real estate, mutual funds, chit funds, recurring deposits, or fixed deposits,” Pinapala points out.
Don’t delay payments
As per Maheshwari, it's equally important to pay off loans or any kind of credit on time.
"This practice will help individuals build a strong credit score and they will be able to secure loans at reduced interest rates in future," he tells.
Also, it's vital to understand that financial independence does not mean being debt-free. On the contrary, it’s better to have a debt for it brings discipline in repayments as well as in taking cognizance of money in totality.
""The debt and savings together will establish financial independence," Kamra opines.
Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.
First Published: IST