Financial Independence: A Lifestyle to adapt in the current uncertain times

 I had my own association with this concept. It is a very intriguing way to find out what kind of lifestyle suits you. Having lived outside in different cities since 2008 have shaped my way of what I associate with being successful. And yes it is no longer owing a house , car or even have billions stashed away in bank.

The two main concepts I wanted to write all along is about Being Minimalistic and also on FIRE.  I am neither agreeing with the concept of Retiring early. I really enjoy my work and would want to keep learning. It has taken me probably a lot of time to understand what I really enjoy.  I do still want to bring across few discussion pointers which has inspired my own way of investing.

Step1 : To reduce the amount of debt you currently have:

 Reducing your debt is the first important step towards financial independence. In India you have a CIBIL score that keeps your track of the credit history. The healthy payment track record is crucial to get mortgage loan or even car loan. Debt Management is one of the least taught subject and even not well understood. There are two main parts of it one is to pay the loan amount on time every month or quarterly or yearly based on the payment plan. Another key thing is to avoid the use of the credit cards. The things about credit cards it carries high rates of interest . Additionally paying minimum amount is another loophole we must not carry forward the amount of credit card payment from one month to another as you end up paying more than what you accrue.

Step2 : To make use of the power of compounding:

I started investing at the age of 23. I did have a lot of variable incomes as I am not new to experiment with jobs or even with breaks . But what had been consistent with me is my love for investing. I was introduced to it by my mother and I have been hooked to it ever since. You do not have to be from finance background but the concept is start early and to be in the market invested for long. SIP is the name for the systematic investment plan and it is a safe route to invest in  the stock market. SIP is what you can start with as small as 100 INR or 30 CZK. It is same amount deducted every month/quarter etc. and gets invested in various instruments. There is a proportion of equity and debt. The younger you are the equity exposure can be high compared to senior citizens. We are making the savings to work for us you are putting your money to work to make more money.

Step3 : To reduce the expenses:

This has been the most important lesson we all have received from the parents however when it comes to us as a millennial generation we have our own ways to spend. I cant stop spending on books neither on eating out. I was crazy  with taking coffee from starbucks . One coffee costs 100 CZK equivalent to 300 INR when multiplied with 2 times a week costs 600 INR 200 CZK or 2400 INR or 800 CZK. This is crazy when you see the small expenses impact on the month. I realized I need to reduce unnecessary expenses and it happened with adopting a parallel lifestyle. I still enjoy coffee but I prefer to make at home or more so using the small coffee machine I have at home. We get starbucks capsules and it does the job.

This is just one example. We like eating out we were able to replace it with cooking more at home as we feel healthier and we enjoy more varieties. Still few expenses we cant avoid rent or any other fixed expense.  It is better to negotiate and get the best prices wherever possible.

Step4 : Create an Emergency Fund:

Even being financially aware I tend to learn this lesson late but its very critical in being financially independent. During the uncertain times of COVID the jobs are at stake it is very critical to create an emergency fund. This fund is 6 months salary saved . Once the emergency fund is created over and above this starts the actual savings. Every individual should focus on creating the emergency fund. This will come handy at the time of the crises and you would thank yourself.

Financial Independence is a lifestyle to adapt in the current uncertain times.