Navratri 2023: 9 financial lessons that you can learn this festive season

 

Live below your means

 

One of the fundamental principles of achieving financial freedom is to live below your means. This means spending less than you earn. It’s essential to create a budget, track your expenses, and prioritise saving and investing over unnecessary expenditures.

 

A fundamental principle where one can spend less money than one earns, practise prudent expense management, and prioritise saving and investing for the future. This approach encourages a lifestyle that emphasises financial security in pursuit of long-term goals over excessive spending. It involves budgeting, careful spending, and making informed financial decisions to ensure that expenditures remain lower than income, enabling you to save and invest for a more stable and comfortable future.

 

 

Save first spend later

 

Precedence should be given to one’s savings and investments before allocating funds for discretionary spending. This involves setting aside a portion of the income for saving or investing immediately upon receiving money and treating it as an essential aid in planning for retirement, emergencies, or other financial goals. This fosters financial discipline and gradual accumulation of wealth by making savings a primary objective.

 

 

Diversify income streams

 

Generating revenue from multiple sources rather than relying solely on a single income stream aims to mitigate concentration risk, enhance financial stability, and potentially increase overall income. Individuals can explore part-time jobs, freelance work, rental income, or passive income streams like dividends that will provide financial resilience and flexibility, reducing vulnerability to economic fluctuations or job insecurity.

 

 

Invest wisely and early

 

It emphasises the importance of making well-informed investment decisions and starting as early as possible. By investing intelligently and commencing your investment journey at an early stage, individuals may take advantage of compound interest and have the potential to achieve long-term financial goals more effectively.

 

Compound interest is a powerful concept that can significantly impact an individual’s long-term financial goals. It refers to the process of earning returns on an initial investment and then reinvesting those earnings to generate additional earnings in subsequent periods. Put simply, it’s the snowball effect of your money growing over time. The longer you leave your money to compound, the more substantial the growth potential.

 

 

Debt management is the key

 

Managing debt is indeed a critical aspect of personal financial well-being and stability. High-interest debts can be a significant obstacle to financial freedom. Individuals should prioritise paying off high-interest debts, such as credit card balances, as quickly as possible and avoid accumulating new debt unless essential. Responsible debt management, which includes making on-time payments and reducing outstanding balances, can positively impact your credit score. A good credit score is essential for accessing favourable lending terms in the future, such as lower interest rates on essential loans.

 

 

Set clear financial goals

 

Financial freedom requires a clear roadmap and financial goals will provide an individual with a sense of direction and purpose for making decisions. Set specific, measurable, achievable, relevant, and time-bound (SMART) financial goals that will keep one on track and make necessary financial adjustments.

 

 

Stay informed and educate yourself

 

In a rapidly changing world, staying informed allows you to adapt to new situations, technologies, and opportunities. It helps you stay relevant and competitive. Financial success often hinges on financial literacy. Educating yourself about personal finance, investing, budgeting, and other financial matters can lead to better money management and wealth-building strategies.

 

 

Be patient and persistent

 

Achieving financial freedom takes time and discipline. Patience allows you to endure delays and setbacks gracefully, while persistence empowers you to keep moving forward, adapt to obstacles, and ultimately reach your desired outcomes. Together, these qualities are key to long-term success and resilience in the face of adversity.

 

 

Review and adjust your plan regularly

 

Financial freedom is not a static objective. As circumstances evolve rapidly plans need to be revised so reviewing budget, investments, and goals regularly will ensure it is relevant and align with one’s aspirations.

 

In conclusion, financial freedom is not an elusive dream but an achievable goal. By making well-informed financial decisions, living within their means, prioritising financial goals, and staying disciplined, individuals can progressively work towards financial freedom.