If you are in favour of financial literacy, then the month of April may be the best time for you to learn and teach finance. Financially savvy people observe “National Financial Literacy Month” every year in April. The idea is to raise public awareness about the importance of financial literacy and good money management habits.
Defining financial independence is not easy. Different personal financial analysts view the Financial Independence Retire Early (FIRE) method differently, thus, leading to ambiguity in its definition. This explains why not many people can achieve financial freedom even after they have retired. Achieving financial success should be a goal set early in life to ensure that our needs and desires are taken care of even when we are not working.
“How to set yourself up for financial success?” is a question that is asked by many. However, there is no easy answer to this question despite the deluge of investments we have before us. One reason can be that we refrain from doing what we know we need to do. Changing your money behaviour through sheer determination is not enough; you must be willing to redefine your attitude towards money. Many ways can help you experience financial success, some of which include:
Write your own money script
If you do not leave your identity and reputation at the mercy of others, then why let others decide how well should you succeed? Your financial success should not be much different from your personal success, which means that you must work on your financial success similarly to how you approach your achievements in life. Write down in detail what affects your financial decisions, and the learnings you have had to date regarding your finances.
This will help you understand where you went wrong, and the decisions that continue to hurt your prospects of earning, saving and investing more for the future. Review your decisions every day so that you can manage your money better.
Carve your financial identity
You are known by what you say or do. Your views are synonymous with your mindset, thus, underlining a personal identity of your own. You must similarly work on your financial identity too by letting yourself be known by your financial decisions. Your peers may know you as a hustler who works on passive income sources with the same temerity as active income sources. Or you may be known for your creditworthiness. Your loved ones may define you as someone careful with money, a vigorous savings machine and a financially literate person who invests prudently.
Not all people are natural investors, which means that you may seek professional advice to learn more about investing behaviour, where to put your money, and how much to invest. Asset allocation is crucial as it underlines how much money you want to accumulate for what purposes along with your risk profile. Ultimately, your personality affects your ability to create wealth more than your strategy.
Motivate yourself to be financially free
It may not be easy to achieve what you had set out to do. To ensure that you reach the final point in the race towards financial independence, you must continue to motivate yourself to generate more finances regularly. Hold yourself accountable for every penny that you spend unnecessarily. Berate yourself for the unwarranted piling of debt.
Repent for not having invested enough in the bear market. Reward yourself for all the loans that you pay before time. Recompense yourself when your investments yield adequate returns. In the end, remember that investing leads to wealth creation only when your long-term outlook for the market is intact.
Do not fear loss
Do not be afraid to take bold decisions. Even your losses will teach you something about finance that you may not have been aware of. There may be unwanted triggers that may prompt you to spend money on things that you do not need. However, one loss must not deviate you from refocusing on your goals.
The desire to be financially independent must continue to motivate you. It does not matter if you are taking too much time. Remember, Warren Buffett earned his first $1 billion when he was 56 years old. A long-term perspective supported by a long-term strategy is a must to achieve what you had set out to.
Having the knack to save money is nothing short of a boon. There should be an inherent desire to learn how you can apply your knowledge of finances to your daily living. Check your net worth regularly to gauge how long it would take you to be free of your financial worries. Being financially healthy need not translate to huge corpus accumulation. Being able to afford what you want and spend time practising your hobbies without worrying about depleting finances is a sure-shot sign of being financially independent.