Financial freedom is the state in which you have accumulated a corpus for all your financial goals and inflation-adjusted expenses. This means that you don't have to earn extra income. It gives you the freedom to live for your other interests or interests outside of work.

One can achieve financial independence in the following ways:

Set your life goals

Mapping clear and measurable goals is the first and most crucial step towards achieving financial freedom. They can be short-term or long-term. "Goals can vary, such as" "children's wedding," "" "buying a new home" "or" "special holiday" "or" "heritage creation." ""

Cost analysis

Making a budget to understand where your money is going and identifying areas where it can be saved and invested is a great option to stay away from debt problems. It fosters a more responsible financial approach, helps you achieve goals, and helps you live your way. Control of expenses and the monthly installment outgo will allow you to create the right surplus that you need to set aside for your goals.

Invest wisely

Based on the duration of the goals, the right mix of assets should be decided to provide the best returns. The ARC formula (Asset Allocation, Regular Deposit, Compounding) takes you to your corpus at the desired age. Delaying this implementation can lead to the loss of years of joint efforts to increase wealth and achieve financial independence.

Risk Management and Emergency Funding

An unexpected financial crisis can easily jeopardize financial freedom. Adequate term and health insurance cover, depending on cash flow and number of family members respectively, will help in controlling the risk. India is facing a severe challenge of underinsurance, one of the biggest reasons why families are losing financial independence.

Emergency funds help you navigate through periods when you're not generating income. This life stage can occur due to multiple circumstances, such as a layoff, family emergency, or external issues such as in the case of the coronavirus pandemic. Money for six months' expenses should always be invested in liquid funds.

Periodic Tracking and Reconstruction

As the targets come closer, some allocations should be delinked from market-linked assets and moved to the non-volatile fixed income category. Investors often don't track and rebalance, which harms their long-term planning. The asset allocation made during the first execution cannot be continued permanently. That's the message to investors. With this clarity, families are more likely to achieve financial independence faster than planned in some cases.

Estate planning

As the targets come closer, some allocations should be delinked from market-linked assets and moved to the non-volatile fixed income category. Investors often don't track and rebalance, which harms their long-term planning. The asset allocation made during the first execution cannot be continued permanently. That's the message to investors. With this clarity, families are more likely to achieve financial independence faster than planned in some cases.

Consult a financial advisor.

Financial advisors registered with the Securities and Exchange Board of India can help develop a plan for acquiring the corpus and chart the path towards it. The current market for advice is quite structured.