By Gaurav Jalan

Attaining financial independence not only alleviates the burden of financial risks but also allows a more stress-free life. It provides people with sufficient financial resources to meet their basic needs, pursue their passions, and achieve their aspirations.

For anyone embarking on the journey towards achieving financial independence, it is essential to keep in mind these six things.

Understand your financial standing

Understanding your financial situation is a critical first step towards achieving financial freedom. You need to be aware of any unpaid debts, including credit card bills, loans, and other financial responsibilities. Doing an analysis of your financial situation will help identify your financial strengths and weaknesses and determine where improvements can be made.

Spend carefully

Spending mindfully is a crucial aspect of managing your finances. It is imperative to make informed decisions when spending your hard-earned money. It is essential to note that even small changes in spending habits can make a significant difference in the long run.

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Having a risk cover

Having a risk cover is an essential aspect of financial planning for individuals, as it provides a sense of security and financial stability during uncertain times. A health insurance policy can help cover the medical expenses and hospitalisation costs that may arise due to an unexpected illness or injury. Furthermore, investing in an adequate emergency fund and insurance coverage can help avoid the financial burden and stress that come with unexpected expenses.

Adhere to the budget

Preparing a monthly, quarterly, or annual budget and adhering to it can bring significant financial benefits. Apart from allowing you to monitor your expenses, a budget can assist you in formulating a list of priorities and objectives, both short-term and long-term. It encourages people to eliminate unnecessary items, avoid impulsive purchases, and develop better saving habits.

Prepare a debt payoff plan

It is essential to prioritise paying off loans with high interest rates first, as they tend to accumulate more interest over time and can lead to financial strain. By allocating extra funds towards these high-interest debts, you can save themselves a significant amount of money in interest payments.

Make smart investments

By diversifying your investments across stocks, mutual funds, or bonds, you can potentially earn higher returns on your money, which can enhance your financial status and build wealth over time.

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No daily grind

* Financial freedom allows you to pursue your passions with having to worry about meeting basic needs

* The first step is to take stock of your financial situation — unpaid debts, financial responsibilities and your net worth

The writer is founder & CEO, mPokket