Tips for financial independence for Millennial Workforce

Wondering on how to best plan your financial life at the beginning of the career itself? Well, while it may be the right thought coming to you, it is not quite easy a task. In case you are just recent fresh graduate or fresh into the job market, several life transitions are on your way, and it is all in your hands to handle several financial situations from now on. It is essential to plan and guide the present and future successfully.

Be it just fresher in a career or starting a new life in a new city or taking major life decision, financial decisions always play a vital role in your life. You may have trouble to think about planning finances and cash flows, we understand that. Being just the beginner, you would need the help of some tips and tricks which can possibly guide you on the path of financial freedom. Let us see a few of the life changing tricks in this article.

Financial plan

There is nothing like having a tentative plan for future and present finances. They are like backbone which helps you to know the smart goals. Create a list of important financial goals and life goals and make a log. Make sure you create a dream board which can tell what all you want in life and finances you would require for that. Along with that, create life goals, possible life events and finances, regular expenditures, long term savings, and retirement goal. These will help you be prepared and know what is in store for you and what your responsibilities are. This may be a first home, marriage, parent’s health plan, travel and so on. Taking a good time to create this list is important as this will help you prioritize on finance plans as well.

Begin to create a budget every month

One cannot emphasize the importance of creating a budget every month. This is a realistic and flexible idea of knowing what is in store for you. This will also give you the financial freedom to know what you can spend on, what can you splurge on and how much to save. On average, Indians generally do not have the habit of creating budgets and spending plan in general. However, this may not be as difficult as you may think so. Creating a few guidelines at the beginning of the month does no harm but instead is good. you can also follow through online and digital tracking tools to create a comfortable budget and spending plan. Make sure you divide into savings as well, with short term saving, emergency fund, future savings, savings for a particular goal in the near future and so on. This will help you evaluate the expenses and know what is essential for you.

Create automatic savings

Once you make your spending plan, you can also go ahead and put a savings plan. While savings is done by many, the right savings plan should be taken into consideration as per income source, consistency, life goals and so on. One important thing is to make an emergency fund which is maintaining six months of minimum living expenses in case of unforeseen incidents. This will help you get sorted at the first level and then think of long term savings. One can create automatic savings as well where at the beginning of the month, the savings are automatically debited from your account and are deposited in respected realms. Make sure you have automatic savings through the deduction for at least ten percent of your income consistently.

Clear your Debts

While we know a few exceptional situations may throw us to take debts, it is crucial to make sure there are no underlying debts at first. Personal loans, debts should be first cleared before you begin saving a goal. Further, do not load up your credit card balance; make sure to pay it up on time always. That is why the emphasis on the emergency fund is also made so that debts situation may not likely arise in the future of unforeseen circumstances.

Limit on your temptations and spending

There are various aspects and things in life which we may want. But prioritizing them is firstly required. It is not simply ending of life in case you do not acquire the thing you need. However, one does not need to forgo necessary and required dreams as well in life. Hence once you chalk out your plans for savings, do not get tempted for spending on things which you may regret later in life. Withdrawals from savings should be limited to least extent in the case of most required purpose in life or for what you sincerely wish to have in life. Or else, in other cases, it is not recommended to withdraw and use up your savings for short term temptations.

Financial priorities and financial independence

Once you make sure you do not have any debts or outstanding balances to pay, then you have to make sure of prioritizing every financial aspect. For instance, you took an education loan for your studies, and you got a job. The first thing is to pay off all the educational loans you have in hand. These should be viewed as a priority. Further, just like this case, you have to chalk out your preferences every month in even small spending behavior and actions. You want to buy two things in the month; you should see
what is required for you and what is splurging. You can take a wise decision in this way.

Always remember, financial freedom is just not about earning much and saving much but knowing what it means for you and how freely you can have an idea of finances planned, goals planned and emergency sorted. It does not really matter on how much you earn, what matters instead is knowing what to spend on and what not to. it is knowing what goals you have and want to achieve and what you look forward in doing. Now one should note that this definition keeps changing for everyone. Hence make a plan and prioritize on every financial aspect in your life, from short term to present to future. This will enhance your clarity.

Know the smart saving behavior

Further, it is not just about savings but doing the right savings. Know more about savings behavior in your country. In India, people save mostly in the form of real estate, gold, deposits, bonds, shares, and mutual funds. Now one should know to what percentage of savings one should keep in these. Not everyone can depend on one formula due to differences in salary, lifestyle, savings goal and life goals, along with necessities. Hence know what you want to invest on at first, and how you want to diversify your savings.

Further, do not under estimate the tax saving method too. Know what suits your best, talk your HR in the office and know how you can take advantage of saving tax through your savings every month. for instance, you are planning to buy a home then you know how much you want to do EMI and how much down payment through which you can save particular portion of the tax. Further, know tax savings bonds, and tax savings schemes in the country like National Savings Certificate and so on. The employer can help you get an idea on taking full advantage of tax savings which can help you a better plan.

Being at the beginning of the career, you are at the right point of time in knowing how to begin and get to know the foundation of achieving real financial freedom. This is the time you can clearly start with planning financial choices smartly. While many of us do not really understand and learn these financial lessons, it is essential for a graduate to know how to plan smart, celebrate the goals and set life’s stage early and in a transparent way.

Influence of money mindset on financial freedom

When can we save or spend wisely? It is not when we earn more salary or money but rather when we inculcate wise spending behavior and the right mindset on money management. That is when any individual can instill and achieve financial freedom. While many have been earning more as per their required levels, they are literally not best in terms of financial literacy as the money management is not an easy task. The financial decision making plays a key role in tackling real life situations.
In this article let us consider the different methods of changing to right mind set on money to achieve financial freedom.

Assessing financial literacy

Well, how many of the recent college graduates or new in the job market among young age individuals know what is financial literacy? How many of them really know how to save and how to plan a budget? Financial literacy can be defined by a set of things which can help know better about your financial situation, budget, expenses, and savings. The basic questions one needs to ask themselves is:

  • How to create a budget?
  • Do I regularly follow budgeting?
  • What may be my regular expenses and what are hidden expenses that I may fore see in this month?
  • How to reduce expenses and spend wisely?
  • Do I create an emergency fund? Is it necessary to make one and how to do it?
  • How to save for long term plans?
  • What all methods of savings do I know in general?

These set of questions should be well known firstly before we inculcate and know more on financial independence. One can achieve the right financial mindset only when these questions are wisely answered. The budgeting is important amongst them, and the spending should always be lower than income.

Achieving financial independence

A healthier lifestyle in case of financial planning and freedom is required for peaceful mindset. Financial issues can certainly disturb our life in general, and hence the foundation is to maintain regret free spending and maintain financial goals. It is important to always resonate with ideas and spendings. Let us see what will help in achieving financial freedom and changing the regressive financial mindset.

Money is not an end

It is not about earning any time. It is rather about spending. You may earn much more than your peers in general, but if you cannot save on an average from income, then there is certainly no financial freedom for you. The net impact should always be calculated of a situation in prior, and one should fore see certain things always for better safety.

Freedom for right spending

You may have a pile of money, but there is no point as well in case you are not able to spend on everyday use or on what you love. This does not mean again unnecessary spending. Hence make a list of priorities. Keep a table with yourself. Mark urgent and essential category vs. non-important and non- essential ones.

It is not just about spending less but rather being protected from the unexpected

In case you are thinking all that you need is to spend less, then you are again wrong. It is about having the financial freedom to spend when in an emergency or when you are least expecting the expense. It is not just about simply saving money after paying bills and shelter but rather know correct insurances and have positive cash flow.

Financial freedom is knowing that you have to take care of responsibilities

You should realize that you are grown up and how much expenses you have to take care and incur in the upcoming future. Managing money is what you need now, not about saving money or spending less.
Hence key here is to take responsibility for yourselves. Know more about financial expertise and enhancing spending habits.

Inculcating habit in everyday life

There are no shortcuts. Success can be achieved only after step by step progress. Hence you should know and make it a habit in daily life on what you need, what you may want, what you aspire and what you may fore see. This is what will give lasting financial freedom. Creating a sustainable approach is always good. Think about the present and then think about the future too.

No excuses, please

There are never excuses. In case you are wanting to buy on luxury or take certain risks, there are never excuses. You should think and take a decision. These missteps may also lead to bad results. Hence know what luxury or risks is required and what are unnecessary. It is fine to make mistakes once a while but not excuses. Never!

Create a log

Know what regular expenditures vs. a monthly one time expenditures are. Know how much emergency fund is required and how much for long term saving. Find out on different saving options and understand what is best for you. What one may follow may not suit you depending on lifestyle, short term and long term goals, situations, and salary figures. Hence it is always good to do research and work on the number of skills!

Learn on country specific saving behavior

In India, most of us save through emergency fund which is easily diluted required cases immediately. Then mostly it is through bonds, shares, mutual funds, deposits, real estate and gold. Know what is best for which lifestyle people, read on savings behavior of same income group like you, and personalize it to your specific case and requirements along with goals. This is what will tell you which is best way for you.

All you require to do is work on financial foundation and skills. It can get you started. Then know what money means to you, what is needed, what is good to have and what you aspire.

Answering these specific questions in life will help you prioritize your needs and savings. Because all that needs for financial literacy and attaining financial freedom is clever actions but not excuses.

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