In today's world, financial security and stability are paramount. And while the notion of these or even the path to it may seem daunting and overwhelming, it is important to remember that when it comes to financial independence - every small step matters.
Ultimately, it boils down to the kind of financial habits you cultivate, how early you start and how consistently you keep at it.
Here are some of the smaller and easier, yet impactful steps that can help one to optimise their financial journey:
Build a foundation (goal-setting) - Whether it's funding your higher education, building a retirement fund or even something as seemingly indefinite as wanting to take one vacation abroad a year; goals allow you to allocate resources effectively and keep you motivated to continue saving and investing your money.
Budget for expenses (managing) - It is essential to adopt effective budgeting and expense management strategies. Creating a budget can help you understand your income and expenses, enabling you to identify areas where you can reduce spending and redirect those funds toward savings and investments. Tracking expenses, avoiding unnecessary debt, and making conscious spending choices are all crucial steps in building your financial freedom.
Start building an emergency fund (adapting) - Life is unpredictable, and financial planning should account for unforeseen circumstances. Building an emergency fund can help to cover unexpected expenses which is crucial for financial stability. A savings fund acts as a safety net, allowing you to handle emergencies without derailing your long-term financial goals.
Start investing early (compounding) - Investing is your trusty sidekick - it’ll ensure that your money works as hard as you do. By saving consistently and investing wisely, you can benefit from compounding returns over time. Even small amounts invested regularly can grow into substantial sums due to the compounding effect, where interest is earned on both the initial principal and the accumulated interest. The earlier you start investing, the longer your investment has to compound, leading to significant financial rewards in the future.
Grow with technology (automating) - Online banking services, mobile payment apps, investment platforms, and budgeting apps have made it increasingly convenient and easier to effectively manage finances - ruling out the tediousness that is usually associated with financial prudence. With the digitization of the ecosystem, there is now a fintech solution for almost every financial hesitancy one may face today - empowering even beginners to streamline their money matters and make more informed decisions.
Understand risk & reward (balancing) - To diligently save money, which is an important aspect of building wealth, investing those savings wisely is equally crucial. In order to do this, understanding one's risk appetite and time horizon is also essential in determining the appropriate investment strategy, which in turn will help you accumulate wealth.
Learn about finance (educating) - Often we shy away from and fear the things we do not understand enough. A large aspect of financial freedom and financial success comes from actively and continually seeking (credible) information about personal finance, investment strategies, and economic trends so as to equip oneself with the necessary knowledge and skills to make informed decisions.
The key aspect to remember is that every financial journey is unique, because every individual’s desires, circumstances and motivations are unique. So what goals you wish to achieve, how much risk you’re willing to take or what medium you want to seek financial education through are choices that are unique to you. But the fundamentals of financial stability remain consistent, and no matter the journey - starting early, and taking small steps consistently always helps.
Satyajeet Kunjeer, Founder and CEO, Deciml