Residents of the connected world, millennials are much more passionate than the previous generation. They want to travel the world, pursue a hobby and look at life with a different perspective. They also want to retire before 50. Having such dreams makes life worthwhile but first, you need to achieve financial freedom.

Now, what is financial freedom?

As per Investopedia, financial freedom generally means having enough savings, investments and cash on hand to afford the lifestyle we want for ourselves/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. It basically means, you can quit your job anytime without being stressed about financial liabilities. This can be achieved only when you are prepared for it. 

Remaining debt-free:

The biggest roadblock to financial freedom is debt. So, first thing you need to do is start clearing your debt. And we all know that worst kind of debt are credit card bills and personal loan. So, the most logical step would be to start with such bill. Once you have cleared them, stop using your credit card and do away with the habit of taking personal loans.

Also, though it is true that all loans are not bad loans – like home and educational loans, which provide you tax benefit, but being debt-free is even a better option than a good loan. Whenever, you get a good amount of money in hand, let say a hefty bonus pay it towards the loan.

Start planning ahead:

Let’s take the example of retirement. First try to decide when you want to retire. Consider the years you expect to live after retirement (on an average), your lifestyle, inflation, and then calculate how much money you need. Save and invest accordingly. It is always better to financial advisor on board who can do the calculations more accurately.  From holidays to children’s education to retirement – financial planning for each goal can be done much ahead. This can save you from unnecessary financial stress.

Start Investment early:

You have heard this before and you will hear this again. The old adage holds true. Start investments early, even if it is in small amount, and the power of compounding will help it grow many rounds more.

Building a contingency fund:

This fund is created to meet some urgent or unforeseen expenses. Suppose, you have already set your budget for a month and kept a certain amount as savings. Now, your car breaks down and needs immediate repair. Instead of using money which was set aside as saving (which most of the time is the only measure), we withdraw the money from our contingency fund. Financial advisors recommend that at least two to three months’ expenses should be put away as contingency fund.

 Live below your means:

A car may be necessary, but we can do without a BMW.  It may sound philosophical but leading a frugal lifestyle is the first step towards attaining financial freedom. Try not to splurge on luxury articles. Aspirations for expensive articles compels you to spend more and sometimes even compelling us to avail credit.

Healthy Lifestyle:

Even if you have all the money in life, it is not worth if you don’t have the good health to enjoy it. So, taking care of your health is as important as taking care of your money. Good health is your biggest wealth.