Keys to Financial Freedom


Financial Freedom in early 40’s, sounds like dream come true. Let’s accept the fact all of us want financial freedom in our life as soon as possible. But do we know the exact definition of Financial Freedom? It’s basically living life without doing any job, maintaining healthy & same standard of living. For an earning person financial freedom is not a huge issue if he or she starts investing early and tactfully. Firstly, we have to figure out the proper way to reach the financial freedom. One can start this with allocating his or her income into three heads:

  • Necessities
  • Contingencies
  • Investments


When we think of necessities, the amount to be spent varies with level of income and articles to be purchased depend upon the standard of living. From food, shelter & clothing to luxuries each item has different parameters in budgets. So, the calculation of estimated expenditure on necessities should be done on separate basis.

Life is full of uncertainties and each uncertainty can become Pandora’s Box if we do not take proper measures. These contingent requirements may be theft, fire, accident, health issues, and even death. To ensure the safety against such unprecedented incidents we insure ourselves and even our possessions. Most of the times life insurance is mistaken to be investment and people buy endowment plans for getting returns but end up paying higher premiums. So, it’s better to take a term plan paying lower premium and getting high sum assured so that the deceased person’s family can get better monetary help.

Only the people who aim to be financially independent are aware of the fact that without investing a good chunk of income one can never sustain in this inflationary economy. We have too many options for confusing our brain if it comes to investment. Equities, Bonds, Debentures etc. Having different denominations and different credit ratings are present the list of choices. But if we want a short cut without risking the whole sum into small group of financial instruments we can go for the mutual funds to get decent return of 10-15% annually. To fasten the process of earning we have to enter direct investment in stocks with proper advice from a financial adviser. Still common people in India invest in Fixed Deposits which are very low risk & low return financial instruments. Remember if you are not willing to take risk at an early stage in life you will have to work hard till the end of your life.

One should never forget these thumb rule if they want to retire early with financial independence:

  • Mistaking insurance for investments
  • Waiting too long to start investing
  • Keeping money in fixed deposits

To gain we need to suffer some pain as well, which is limiting our cost of necessities. If succeed in that we will be left with a higher proportion of income for investments. There is another easier process for this, stop following the Equation No.1 and start working with equation No.2:



If you want to be financially free, you need to become a different person than you are today and let go of whatever has held you back in the past”- Robert Kiyosaki

Published by Sweta Sharma

I am a Research Associate working in an Equity Research Company having knowledge and experience in Equity Fundamental research.

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