With all that is happening around the world now, our lives have gone for a complete toss. Some have lost their jobs and lives in this deadly pandemic. And the worst is that, the world economy is at a staggering point and it is in its lowest lows for the first time in decades. In retrospect, little did we think that 2020 would change us and straighten our vision for the better? Right?
I’m thinking you’re all on the same page as me because I am going to tell you my exact strategy to achieve financial freedom irrespective of day and age.
Let’s dive straight in!
(i) Setting up an emergency fund
Most definitely, this has to be in the top of the list, because, I personally understood the benefits of having an emergency fund today. If you’re wondering what an emergency fund is, then don’t worry, I got you covered. An emergency fund is a fund that is created by you and the rule is to have 6 months’ worth of your expenses in it.This money is not a liquefied fund just to use it up in times of party or vacations. The point of an EF is that, the money saved here, should be used up IF AND ONLY IF there is a terrible situation (e.g. job layoffs) that is upfront of you. This money should be kept undisturbed nonetheless.
If you want me to make it much easier for you to comprehend. I will put it this way. For example, if you’re living alone or with your family and your monthly expense (FIXED) is 10,000 INR, then ideally your EF should have 60000 (INR) which is good enough to comfort you for 6 months. You get it right? It’s no rocket science at all. Try this simple habit and trust me, it takes away enormous pressure off your shoulders even if an unlikely situation comes through.
(ii) Deleting unnecessary subscriptions on OTT
With the increase in amount of mobile users, we have almost exponentially decreased the rate at which we used to watch TV. It’s like gone are the days phrase now. With the advent of Internet, there came a series of OTTs such as Amazon Prime, Netflix, Hotstar etc…. These OTTs or streaming services as they are called, cash out a huge hole in our pocket especially if you have signed up for multiple streaming devices. Take example for Netflix, they have a specific range of costs varying up to the number of devices and the quality of the video.
The key point is to identify the most watched platform by you and your loved ones. If you’re having kids, make sure that the platform you’re subscribed to should cater to the needs of people of varying age. Post discussion, make sure that you keep the ones that are necessary to you and unsubscribe from rarely used OTTs. This in turn makes a huge difference to your savings.
(iii) Budgeting is the key!
Yes, you read that right! Budgeting can never make you go wrong. As the saying goes, “ Budgeting isn’t about limiting yourself-it’s about making the things that excite you possible “
I have heard my peers and my friends tell me that they aren’t able to save money or the fact that they go broke at the end of every month. Well my first obvious question to them is “Are you having a monthly budget? “You know, a budget is sort of a roadmap for the entire month or for the whole year. Unless and until, you don’t know, where your money is going, you will remain broke! Well let me tell you one thing…Forget about everything that happened till yesterday, what I want you to do now, is to take a pen and paper and write down your fixed income (Grocery, rent, water, electricity etc.) and your miscellaneous expense (expenses that happen as and when). Keep it simple and don’t think too much, just write down whatever comes to your mind and make sure you have the amount untouched. Stick your monthly budget on the place you work or your home office, so that you’re made much aware as to what is needed for the month. This habit is something I incorporated ever since I got my first paycheck and I owe it completely to my mum for encouraging me to stick by this.
(iv) No lifestyle Jumps!
This step is something which was taught to me early on by my Dad and I still remember him telling us to be frugal and be appreciative of what we have. Being frugal doesn’t mean “being stingy”, it simply means that you are willing to live within your means and that you strive to have NO LIFESTYLE JUMPS. Now, tell me if you’re in this situation…let’s say your first job paid you 30K INR per month and you led a normal middle class lifestyle, wherein you’ve been maintaining a financial discipline and sticking thick and thin through your budget so that one day, you can have everything that you ever imagined. 2 years later to be exact, you got your promotion or a new job and your salary augmented to 65K INR (per month). This double raise instilled a thought in you that it’s time to eat at those lavish restaurants and bistros and to take that international vacation by maxing out your credit card. A year later of frenzy experiences, you’re stuck with lakhs of debt (that you’ve probably even lost count off). This is what happens to us when opt in to change our routines according to the size of our paycheck.
Don’t get me wrong here...I am not telling you to not to go on lavish vacations and just to save like a machine. I am one of those people who loves to travel and eat….but what I follow is, I set up a separate account and take money off my salary and into my savings account just specifically for this trip. This in turn saves me from too much hassle and off stress.
(v) Buy what you need and not what you want!
Now, I am not categorizing any pointers mentioned here as “highly important” or “least important." As you can see very well, each and every point mentioned here has its own importance. So,make sure that you follow everything that’s given here.
Back to what I was saying……There are major differences between needs and desire. Needs are something which are undoubtedly essential to you and it’s something you can’t live without (e.g.food, water, medicines etc.) and desires are something which stems apart from our needs. The one piece of advice I can give you on this and something which I do is unsubscribing from all the shopping platforms (I mean by mails),so that I don’t get bombarded by their sale reminders to shop within a particular time.Instead,what I do is, I create a list of what I need to buy (essentials and non-essentials) and I make use of the sale time to buy stuff only what’s in that list.Because,at the end of the day, it’s something that I need and want (Get it??)
Guys,It’s alright to feel lost and broke now…..Once you get back up, try to implement these steps and then watch your life change!!