Centuries back, there lived a king named Polonius and his beloved son Laeters. As the years passed, Laeters had to leave for Paris for his higher education. The king gave his son blessings and offered him golden parting advice. He said to his son lovingly, “Neither be a borrower nor a lender”.
This golden conversation appeared in the famous drama named Hamlet written by William Shakespeare. Years back Shakespeare gave us financial advice which is still relevant.
“Neither be a borrower nor a lender”
Yes. It is not a good idea to borrow money from anybody, even from friends. You may lose their friendship when you ask for your money back. In other words, you should be financially free and independent to “provide” them without putting yourself in financial trouble.
What is financial freedom?
There may be situations in your life where you need to take a long vacation as a relief from your stressed work life or you need to change your job. In all these situations, you need a passive income source to generate money for you.
Financial freedom arises when you are getting passive income from your various investments to maintain your daily expenses.
How to achieve financial freedom?
How can a person achieve financial freedom? What are the various steps to achieve financial freedom?
Step 1- Gain financial knowledge
The first step to achieving financial freedom is to gain financial knowledge. You have to study money, how to compound it and how you can make it work for you.
To get that knowledge, you can consume free financial content online or read books or you can get help from financial experts. To start learning is the key to earning.
Step 2- Plan your budget
It is not about how much you earn, but it is about how much you spend. Think that you are filling a bucket with water for the whole day, but it has a hole in the bottom. The reason you feel financial insecurity is not that your income is too small, but it is that your outgo is too big without you even knowing it.
For being financially independent, you need to watch your expenses. You need to set a monthly budget as per your income and avoid spending over the budget. Remember, money saved is money earned.
Step 3- Create an alternate income source
The third step is to create strategies for additional income. If you have only one income source, it would be difficult for you to achieve financial independence. Everyone has this option.
You can do some side hustle which can bring extra pennies to your home. It can be anything like conducting online tuition, selling stuff that you can make, trading in the stock market and the list is limited only by your imagination. However, it would be difficult to meet a financially free person with a single income source.
Step 4- Invest for your goals
The reason behind most people being “stuck” in life is that they actually don’t know how to work systematically for their dreams. Everybody will be having some short term dreams (buying a car or constructing a house) as well as long term dreams (child’s education or early retirement).
Only a dream with a deadline can be called a GOAL. First you have to decide WHAT you want and WHEN you want. Then only you can start to invest for that goal. This direction is crucial for the success of your financial life.
You need to identify suitable financial instruments like mutual funds, bonds, fixed deposits or gold for achieving your goals and you should start to invest in them through a systematic way.
Step 5- Start your journey towards financial freedom
Being financially independent means you are having sufficient passive income, savings or investments to live a comfortable and happy life. Then you don’t have to give your time in exchange for money.
Everyone deserves to lead a peaceful life without worrying about money. So you have to start with a financial blueprint and create your future.
So the steps are easier said than done while the actual path can be quite a trek. Tracks leading to financial freedom are meant for marathon runners, not for sprinters. It needs consistent will, clear-cut goals, trust in the process to accept that delayed success and finally reaching that cross-over point where your passive gains pay off your bills while you are napping in your penthouse!
“Neither be a borrower, nor be a lender, be a provider”
