By Sachin Gupta

Personal finance is an essential aspect of one’s life. It is about the management of an individual’s financial resources especially in an environment where inflation is high. Inflation, which refers to the general increase in prices of goods and services, can affect one’s purchasing power, savings, and investments.

However, with the right personal finance strategies, it is possible to achieve financial independence and secure one’s financial future. No one can make millions and keep millions without understanding personal finance.

Here are some personal finance strategies to achieve financial independence amidst a high-inflation environment:

1. Develop a budget

One of the most critical aspects of personal finance is creating a budget. Budget tells your money where to go instead of wondering where it went. A budget is a plan that outlines one’s income, expenses, and savings. By creating a budget, individuals can track their spending and identify areas where they can cut back on unnecessary expenses. This will help them save more money and achieve their financial goals.

Also Read: 8 easy ways to cut your expenses and save money

2. Invest in inflation-proof assets

It is a common human mentality to spend on liabilities instead of assets; in a high-inflation environment, it is essential to invest in assets that can beat inflation. This means investing in assets that generate returns that are higher than the inflation rate; like Real Estate, Gold, Mutual Funds, and Stocks.

3. Diversify investments

Putting all eggs in one basket is never a wise decision. Diversifying investments is critical in order to minimize risk and maximize returns. To achieve better returns one can invest in a mix of asset classes, such as equities, fixed-income instruments, and alternative investments like real estate and commodities.

4. Avoid debt

In a high-inflation environment, debt can be a significant burden. It is essential to avoid taking on unnecessary debt, especially high-interest debt like credit card debt. Instead, individuals should focus on paying off their existing debt and avoid taking on new debt.

5. Invest in yourself

Humans are the most promising asset ever. One of the most critical investments individuals can make is in themselves. This means investing in their education, skills, and health. By improving their skills and knowledge, individuals can increase their earning potential and secure their financial future.

6. Have an emergency fund

Inflation can also lead to unexpected expenses, such as medical emergencies or job loss. Pandemics like corona have made everyone realize the importance of financial stability and savings. It is crucial to have an emergency fund that can cover three to six months of living expenses. This will provide individuals with a financial cushion and prevent them from dipping into their long-term savings.

7. Review and adjust investments

It is important to review and adjust one’s investments regularly. This means monitoring the performance of investments and making changes as needed. Individuals should also rebalance their portfolios regularly to ensure that their investments are aligned with their financial goals.

Finally, achieving financial independence in a high-inflation environment requires a combination of strategies, including budgeting, investing in inflation-proof assets, diversifying investments, avoiding debt, investing in oneself, having an emergency fund, and reviewing and adjusting investments regularly. By following these strategies, individuals can secure their financial future and achieve their long-term financial goals.

(The author is CEO, Share India Securities Limited)