How to Build Financial Freedom: A Step-by-Step Wealth Capture System - 2

In the previous section, we saw the importance of achieving financial independence. Your financial planning should be an important part of your goal of achieving financial independence. Ask yourself how many more years you can work. This depends on the wishes of the individual. Not only that, but it also depends on the field of work.

Early retirement…!

For example, those in the sports industry may not be able to shine beyond the age of 30. In the media industry, you may not get opportunities as you get older. You may be subject to dismissal in private companies. On the contrary, if you work in a good private company or if you are looking for government jobs, you have the opportunity to stay in the job until the retirement age of 58, 60 years.

People who are in such a secure job also want to retire early. Depending on the stress at work, preferences, and family situation, they plan to retire early. It is also very important to achieve financial independence quickly to retire quickly.

How much corpus fund is needed?

Now let's see how much corpus fund is needed to achieve our financial independence. First, we need to calculate how much money we need to run our family every month. When calculating that amount, we also need to take our debts into account. For example, Kumar needs Rs. 40,000 per month to run his family. He is paying Rs. 30,000 per month on the loan. Now Kumar's monthly requirement is Rs. 70,000.

If he has Rs. 1.5 crore now, if he gets an annual income of 9%, he will get Rs. 1,12,500 per month. Kumar can easily take Rs. 70,000 from this and meet the needs of his family. He should let the remaining income of Rs. 42,400 grow in it. Only then will he be able to cope with the increase in family expenses in the coming years.

I am going to retire in 10 years. You may ask how much budget I will need. According to the current calculation, Rs. If you need Rs 1.50 crore and the inflation rate is 5%, then in ten years you will need Rs 2.44 crore. Finding the right ways to accumulate this savings and investing it is the way to achieve financial independence.

It is difficult to run a family. You are asking yourself how can I accumulate savings. The proverb that comes to mind here is that if it is in a pot, it will come in your pocket. You are talking about the Akshaya Patra that never decreases, and now you are asking why you are coming to the pot story after talking about it last week. To create an Akshaya Patra that gives wealth that never decreases, you must first create wealth in the pot.

Your active income is the capital to create passive income. Passive income is an Akshaya Patra, and active income is the wealth that is added to the pot. First, we should explore the activities that increase active income and save as much money as we can. We can increase our income in four ways. Let's look at it in detail now:

 

1. Invest in yourself:

In your job, complete your work with those below you and take on the work of your manager. Only then will your skills be appreciated by your company. Spend time and money on developing the skills needed for your job. If you think that studying or certification in new technology will help you get promoted, then take that step. Do things that will deeply instill the impression that you are important in your office.

When you love your work, you are likely to get more respect in your office and get promoted. This promotion is also likely to get more pay.

So, explore all the opportunities to increase your skills and improve yourself. In some offices, there may be no growth beyond a certain level. If you continue to stay in that job, you are likely to stagnate. In that situation, it is also wise to switch to a new job that pays more and helps you grow.

2. Additional Income:

Find opportunities to generate additional income along with your daily work activities and create ways to earn money through them. Teachers can earn extra income by taking tuitions from students near their homes. Housewives can earn income by doing something online while staying at home. You can also increase your income by doing part-time jobs. You can increase your income in ways that you can, such as writing stories and articles for magazines and earning extra income, running a YouTube channel, and undertaking part-time small business activities.

There are many opportunities for one to increase their income, such as setting up a garden in an empty space in your family, renting out that space, etc.

You should explore various income-generating opportunities near you, find the ones that suit you, and take steps to increase your income.

3. Avoid unnecessary expenses

In English, they say, "Money Saved is Money Earned." Identify unnecessary expenses and take steps to avoid them completely. When you budget and calculate each expense, you can easily identify unnecessary expenses. They say that the "Tip of the Iceberg" is the reason why the Titanic sank. There is a huge iceberg under the sea. Only its small tip is visible. The ship hit the rock because it did not know what was in front of it and thought it was a small rock, causing the Titanic disaster.

Similarly, no matter how much you earn, if you spend it without planning properly, you will run out of money without saving anything. Most people do not have any investment due to the desire to buy everything they see, buying unnecessary things and getting caught in a debt trap.

If you spend your income on unnecessary things, even a small expense, it will turn into a big flood. Also, avoid things that are bad for your health and save money through it.

4. Proper financial management:

Learn about the benefits offered by your office and take full advantage of them. Apart from paying extra tax on your income (old tax system vs new tax system), you can also save money through proper financial planning. You can save money by traveling with friends instead of going to the office by car, by traveling by government buses and metro rail, or by share auto. Create opportunities to increase your income by using all legal opportunities. Avoiding or reducing tax through tax planning is fair, while hiding the tax due is illegal.

In this section, we have seen how to increase income in various ways. This shows that active income is the key to achieving the unbreakable character of financial freedom.