Consider an example of Shyam’s life to understand this aspect better –
Just like Shyam, financial independence is a choice for us all. But many of us choose not to enjoy this aspect of life until we face its pressing need. When teaching kids about its importance, some people fail miserably as they haven’t experienced the same in life.
As a millennial, if you want to be independent money-wise, it is crucial not to put financial education later. It will help if you learn about spending money for the right things, paying taxes, and investing in the best term insurance policy after careful consideration of term insurance meaning.
Here are four ways you can follow to achieve financial independence early in life:
Save or Invest Regularly
You might have heard your parents emphasize the need to set aside an amount or invest the same. Regular savings helps you create an emergency fund, while smart investments over time can give significant returns. You can choose either way, depending on your risk appetite. What matters most is the financial discipline, i.e., not skipping to save or invest a certain amount every month as per your preference.
While you can choose several financial instruments, it is always better to gain a deeper understanding of them beforehand. For instance, if you want life cover and maturity benefits, investing in the best term insurance plan in India with a return of premium facility would fulfil your objective.
Follow a Budget
Have you seen your father drawing up a list of regular expenses on a piece of paper every month? It is what you call ‘budgeting’ - one of the first few steps towards achieving financial dependence. In simple words, you can only avoid worries related to money matters if you have a clear idea of your expenses and earnings.
Budgeting helps chart out the expenses as per needs vs. the income. It also allows to cut down on unnecessary expenses where money can be saved. The positive difference between the income and expenditure in your monthly budget will add up to build your savings and support various financial goals in life.
Plan for The Later Years of Your Life
A common misconception amongst many millennials is that future planning should be left for a later age. The truth is quite easy to understand with an analogy – if you need to walk a mile in an hour, you must take the first step right away, not when the hour is about to end.
Your age determines the outcome of your plans for the time ahead. Hence, it is best to build the foundations of future planning when you are young. You can start by investing in the best term insurance policy for life cover or build a retirement fund with regular investments in retirement plans. Such financial decisions ensure that you will never have to ask for monetary help or put your goals aside because of financial constraints.
Pay Off Debt as Soon as Possible
For many millennials, debt becomes a part of their financial picture early in life. Their parents need to borrow education loans for their higher education. Similarly, they might depend on personal loans to handle various liabilities in life. Since these loans can have a long repayment period and higher interest, it would be best to plan how to repay them all at the earliest.
If you have also borrowed such loans, plan to repay a sizeable amount every month from your income. Also, make sure that you increase the repayment amount when your income grows. Doing this will leave you with adequate financial resources and ensure that you will live a debt-free life.
To plan for achieving financial independence early in life is not a bad thing. It is achievable with careful future planning and keeping the expenses in check. You need to think of regular savings/investments and financial security under the best term insurance policy as the financial pillars in life. While investments help you build wealth, the best term insurance plan in India will ensure financial stability for your dependents. Make sure you assess your needs while investing hard-earned money in any of the financial instruments.