Being financially independent at the right age is very crucial these days. Being financially independent doesn’t necessarily mean only being able to cover essential needs like rent, food, utilities and other daily needs.
Saving money, protecting it from wasteful spending can make you financially independent. Here are a few tips to achieve financial Independence at the right age.
1. Keep a track on your spending
It might be hard to keep your daily purchases in your head or on a piece of paper. But, it is extremely important to keep a track on the daily spending. Nowadays, there are a lot of apps available that can help you keep a track on your expenses.
2. Come up with a realistic budget
Make a realistic budget that fits your lifestyle. Doing so is not about cutting back on spending: if you are accustomed to having coffee every morning, cutting it out from the budget won't work. Instead, try to plan ahead what you are going to spend your money on.
3. Create an emergency fund
Creating an emergency fund will help you deal with unforeseen circumstances without borrowing money with interest or selling your things to get out of the situation urgently. Putting aside 1 USD a day will give 30 USD more to your account at the end of the month.
4. Pay your bills on time
Tracking your monthly bills is actually a part of your budgeting plan. Paying your bills on time is an easy way to manage your spending and avoid fees.
5. Get rid of unnecessary recurring charges
If you have ever signed up for a free trial to a streaming service, you might have recurring charges you have forgotten about. Check your credit card statements and ensure you don't pay for something you can live without. Unsubscribe and put that money aside for your emergency fund!
6. Pay cash for expensive things (most of them)
Loans help you with major life purchases like a house or a car. For other big purchases, say a 65" TV, cash is often the best way to go as it saves you the monthly interest payment you would otherwise have to pay.
7. Use credit cards wisely
Most credit cards nowadays come with a free annual fee, and promotional offers could sometimes be beneficial. However, be sure your repayments are on time, keep your credit card limit for tight situations, and repay purchases within a month to avoid additional fees.
8. Start saving for retirement
Regardless of your age, start saving for old age-the younger you are, the more you will get. Set up a separate fund or term deposit to ensure you don't access the funds for purposes other than savings.
(With input from IANS)