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4 ways how Financial Literacy can help you to achieve Financial Freedom

July 15, 2021

Everyone seeks Financial Freedom but very less are able to achieve it. Why? The only reason is that those who are Financially Independent are also Financially Literate.

We've all felt that sinking feeling in our stomach when we see the bill for an unexpected laptop or phone repair. Right? We worry about what we are going to do to pay for it.

What if this expensive laptop or phone repair was only a minor annoyance? Instead of being concerned, you pay the bill without hesitation and completely forget about it a week later! The impact becomes so small on your financial status that it becomes barely a hiccup than some emergency. 

That's Financial Freedom.

Financial Freedom is basically a monetary stage in which you have enough money for covering your expenses. You are not required to work for a living or have an active income source to support those living expenses.

You’re not unduly concerned about the financial consequences of unexpected events since you are well-prepared. 

It is when the money you have makes more money, per hour, than you can when you work for money! 

You're just free to make decisions without being constrained by financial concerns, and your money works for you rather than against you. That’s something we all dream of, isn't it?

Once you achieve financial independence, you go on and pursue your passions - music, sports, art, travelling the world, and so on.

It doesn’t mean being exceedingly wealthy and living a lavish life, but having enough money. 

However, all this can be achieved only if you’re financially literate, which unfortunately is a big problem in our country.

Good financial management can alter our way of life and determine how secure our future is, but most people are not aware of it.

According to a poll conducted by the National Centre for Financial Education in 2019, 80% of Indians are literate but only 27% of them are financially literate.

There’s a 10-year gap on average between when a person starts earning and when  starts to invest. Now that’s a shocking figure! 

Everyone should know how it is possible to make life decisions without being overly stressed about the financial impact.

You should become financial literate and control your finances instead of being controlled by them.

Today, when the Covid-19 pandemic has put millions of lives in jeopardy around the world, it has also thrown countless individuals into financial ruin.

There's no doubt that the significance of being financially prepared is one of the many important lessons that this situation has taught us.

But what exactly is Financial Literacy? 

Financial Literacy, in simple words, is the ability to make informed financial decisions in order to manage one's resources and income.

Essentially, it is the ability to create a strong financial strategy. It is a fundamental life skill that has a direct impact on your personal happiness. 

Therefore, it should ideally be taught in schools and colleges so that we learn how to make sound financial decisions right from the start.

Learning personal finance and important money skills at a young age provides many possibilities to put them into practice in real life - like budgeting, saving regularly, investing, and spending sensibly.

In case we are unable to maintain a healthy financial strategy, it is important to seek advice from specialists.

This is where a financial planner, as well as financial planning websites and applications, may help. Thanks to the internet, we have instant access to all information today.

A simple Google search will return a plethora of materials on the essential components of a financial plan, financial planning fundamentals, and access to thousands of financial planners.

You should also check out these few habits which you should develop to begin your journey to financial freedom:

1. Get rid of your Debts

When you have debt, interest rates might cause your balance to grow faster than you can pay it off.

This can lead to a lack of control, making your relationship with money even more difficult.

Working for a debt-free life can give you back that power, putting you on the road to financial independence. 

2. Learn to manage your money

You won’t be able to move ahead without having a proper plan for your money. We understand it might be difficult, but stop living paycheck to paycheck.

Creating an emergency fund is an important first step towards financial freedom.

With an emergency fund, you can deal with any unforeseen disaster that life throws at you.

3. Look beyond the immediate crisis

Once you're debt-free and have started to save for an emergency fund, step outside of your day-to-day expenses and start saving for non-emergency expenses such as retirement, children's education, a mortgage, or vacation. 

This can take some consideration, but sitting down and figuring out how to divide your pay at the same time is critical.

Working out how you will pay your bills while also contributing to your savings goals can set you on the road to financial independence.

You should also learn about your investment options.

4. Be active and take care of your finances

Making the right financial decisions is the first step, but committing to managing your money and staying in tune with it for the rest of your life is crucial.

It is something you’ll need to return to in order to improve on your financial goals, providing you the best opportunity of achieving financial stability. 

Leaving your investments on autopilot won’t add much value. You should check your money on a regular basis and analyze every nook and cranny of it to realise what changes you need to make with the changing times.

Financial Freedom is unique for everyone and takes time, depending on your circumstances. It is not just about setting goals and cutting spending but building a healthy relationship with money.

But once you achieve it, you'll be able to do whatever you desire while knowing that your future is secure.

You know how you can start with a baby step? By starting to invest through Jar app, an automated daily savings app, which won't even burn a hole in your pocket.

Your money will be automatically invested in Digital Gold with its small investment plans, which everyone knows is a must have in your investment portfolio.

Read more about how Jar app works, how it saves your money and invests it in Digital Gold at the same time. This way your money is not just being saved, but also growing.


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