Everyone aspires to have financial freedom from an early age. However, few people work on it. The optimal time to start developing your financial independence is in your twenties. The majority of people lose control over their finances during this time because they spend money on impulsive purchases. It’s crucial to understand how to manage money well so that it can grow. Even though it may seem far off when you’re a student, it is possible to become financially independent while in your twenties. Let’s dig deep into it.
What is Financial freedom?
Financial freedom allows you to make decisions without being unduly concerned about how life choices may affect your finances. This is because you are financially ready for everything life throws at you. Gaining financial independence might undoubtedly include a long journey including ups and downs. Thus it’s better to start early. The 20s are the ideal period for learning about financial independence and taking action to safeguard one’s future. So how does any person become financially free? Regardless of your income or time availability, practice these basic steps to attain financial freedom.
Create financial targets
Financial concerns are no exception to the rule that any goal without a clear purpose is nothing more than wishful thinking. Savings are nothing more than postponed consumption, according to a common saying. As a result, if you are saving money today, you need to be very clear about why. Realistic goals will keep you on track and inspired throughout the process, so you must maintain them.
Create a budget that accounts for all the needs every month
Budgeting is a crucial, but often overlooked, component of healthy personal finance because if you continuously spend more than you make, you will never be financially successful. For instance, if you regularly purchase a 50 taka lunch before heading to your classes, you probably don’t think twice about it. However, that 50 taka grows to be roughly 1500 taka every month. You may put that 1500 taka into savings and cook lunch at home every afternoon rather than spending it on lunch.
Establish a reserve fund.
Students like us typically give less thought to saving money for emergencies. We don’t take uncertainty seriously, which leads to major issues. It’s important to build a reserve fund since it will protect you from harm and provide you the willpower to carry on with your normal life.
Get rid of debts
The majority of students are on loans because they don’t manage their money well. Stress and pressure are greatly increased by this. You should pay off whatever debts you have as quickly as possible. A lot of mental pressure and tiredness will be relieved by it.
Save 10% of your income
You first start working in your early 20s. Typically, you are paid entry-level wages. For the first time in your life, you start to feel financially independent, thus your aspirations are out of this world. The majority of us naturally gravitate toward buying goods and taking trips with our first few years’ earnings, yet our first duty should be to save 10% of our income. A portion of all you earn is yours to keep, quoted by George Samuel Clason in his book “The Richest Man in Babylon.”
Become an investor and grow your income
Making a budget that takes into account your income and living expenditures can help you determine how much money you can afford to invest before you start investing in your 20s. Time horizon, risk tolerance, and tax advantages are things to consider when starting to invest.
Stay consistent and Give back
Why do so many people still struggle with consistency? The reason is simple: On the surface, the concept of consistency appears simple and appealing. However, putting it into practice in your daily life proves to be a test of patience. Habits are formed through consistency. These habits shape the actions we take every day. And with that, giving back to society should be a responsibility in our minds whenever we are capable of doing so.
Financial freedom can help you regain control over your finances and, more significantly, your life. It’s about spending money on things you enjoy, staying within your means, and being a little frugal.
To read more blogs click here.
Writer,
Sheikh Prome Akther
Intern, Content Writing Department
YSSE