How To Achieve Financial Independence? - The First Step

My friend Manish works in an IT company in a senior position. He is about fifty now and has been working for the past twenty-five years. He earns a good salary. On the face of it, this looks to be a dream life. The other day he came to me for guidance. He was in a mess. He has two children who are yet to complete education and settle. He has a home loan to pay off with hefty EMI. He is not going to receive any pension. And he has lived life so lavishly that he hasn’t saved much for the old days.

I was not surprised. I know many who have not yet thought about post-retirement life. They suddenly wake up when retirement is on the horizon or when they are laid off from the job. They are not aware of how to manage finances and retire happily. They go under depression and do not know what to do. This is a sad story.

In my previous article, I had emphasized the importance of achieving financial independence and why it should be your must-have life goal. Financial independence empowers you to live life without worrying about your expenses. Financial independence is about complete freedom. Freedom to live your life on your terms. Once you have attained this objective, you need not work for money.

Everyone aspires to enjoy life and fulfill dreams. However, like Manish, many could not achieve this. They keep working throughout life. And still, could never save enough money for the old days. They become dependent on their children for the rest of life. This is apathy. Sheer tragedy. Do you want to live such a life? A life that is dependent on someone? I am sure no one. So, let us embark on this journey of achieving financial independence. Let us educate ourselves and be aware of how to achieve this.

Becoming financially independent is nothing to do with your present salary or earning potential. I know friends who are financially well-off with a monthly salary of Rs. 20,000/- and others who are unable to manage their finances even with Rs. 3 Lakhs. It is not about how much you earn, it is all about how you manage your finances. It is not about where you have started, it is all about where have you reached.

To achieve financial independence you need not be a financial expert. It is pure common sense. Anyone can achieve this. What you need is a bit of awareness and guidance. And then afterward, it is similar to inculcating a good habit. The first step is the most crucial one. It is to change your mindset completely and align your psychology in tune with the best practices of behavioural finance. The success will solely depend on how you behave while dealing with your finances. Achieving financial independence is 90% behavioural finance and only 10% execution. We will subsequently discuss this aspect in detail.

As a parent, if you think you have not yet achieved financial independence, don’t press the panic button. It is absolutely fine. At least you have realized your mistake. This realization itself is the dawn of awakening. It is still never too late. Just start, and you will reach your destination. It is always good to learn from your own mistakes, be aware and get educated.

However, you must ensure that your children do not repeat these mistakes. Make sure that they understand the importance of being financially independent and follow these steps. Believe me, if you do this much, you would have left a rich legacy for your dear children to enjoy for the rest of their life.