Savings and Budgeting

Financial Freedom: You can also be financially free!

by Khatapana

Dec 10, 2022 - 2 min read

Financial Freedom: You can also be financially free!

Financial freedom refers to the ability to live the lifestyle you want without being held back by financial constraints. It means having the financial resources and knowledge to make informed decisions about your money, and it means being able to support yourself and your loved ones without relying on others for financial assistance. Financial freedom is important because it can give you independence, security, and control over your financial future. To achieve financial freedom, it is important to set financial goals, create a budget, reduce debt, build an emergency fund, and invest for the future. By taking these steps and staying committed to your financial goals, you can achieve financial freedom and build a secure and financially independent future.

To be financially free, you can take the following steps: 

Set financial goals: 

The first step to financial well-being is to set goals for your finances. This can include short-term goals, such as saving for a down payment on a house, or long-term goals, such as preparing for retirement. Setting financial goals will give you a clear direction and motivation for managing your finances.

Create a budget: 

A budget is a crucial tool for achieving financial well-being. It helps you understand your income and expenses, and it allows you to track your progress towards your financial goals. By creating and sticking to a budget, you can make sure you are spending and saving your money in a way that aligns with your goals and values.

Reduce debt: 

High levels of debt can prevent you from achieving financial well-being. To reduce your debt, start by paying off your high-interest credit card balances, and consider consolidating your debt into a single low-interest loan. By reducing your debt, you can free up more of your income for savings and investments, and you can improve your credit score and financial health.

Build an emergency fund: 

Financial well-being means being prepared for unexpected expenses, such as a job loss or medical emergency. Start by setting aside a small amount of money each month in a savings account, and aim to build an emergency fund that covers at least three to six months of living expenses. This will give you a safety net and help you avoid going into debt in case of an emergency.

Invest for the future: 

Financial well-being also means being able to support yourself in the future, whether that means retiring early or pursuing your passions. To invest for the future, consider saving and investing in a retirement account, such as CIT or Provident Fund, and diversify your investments to balance risk and return. By investing for the future, you can build financial security and independence, and you can achieve your long-term financial goals. FYI, if you are a salaried person at a company that complies with mandatory contributions to the Social Security Fund, then you are already saving and investing a bit for your future i.e. retirement. Every month, 28.33% of your basic salary is deposited to your Social Security Fund Account where you contribute 10% towards your provident fund while your employer contributes 18.33% (10% towards provident fund and 8.33% towards gratuity). Do check this in hand (take home) salary calculator by Tax Talk to understand more about your salary structure in Nepal. 

Overall, achieving financial well-being takes time and effort, but by following these steps and staying committed to your goals, you can take control of your finances and build a secure and financially healthy future.

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