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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