Nuggets of wisdom: Few proverbs to bring you closer to financial independence

If books could teach financial freedom, then none would have complained of financial instability. Being completely free of debt is possible only when you know how to manage your finances better. While you may resort to myriad ways to strengthen your financial condition, you may seek inspiration from simple words and phrases that will enhance your general understanding of finances.

Words can inspire and influence you if used rightly. That is why you will find some of the most intelligent minds posting cryptic messages containing hints of reality. An acute shortage of funds can spell doom, so it is not unusual if your financial advisor or peers ask you to take charge of your finances early in life.

Turn to old books and you will find nuggets of wisdom aplenty in their pages. You will be surprised at the proliferation of financial wisdom in some of them. Adages and proverbs tell you how money is the most real thing you must focus on. Some of the most discussed proverbs that the wise men shared to stress the importance of financial freedom are:

“If you’re saving, you’re succeeding”, by Steve Burkholder

Simple as it may sound, there is no bigger truth than why saving is the first step to working on your finances. You cannot dream of financial independence unless you have saved enough from your earnings. To invest money, you must save enough. Saving is the first step to necessary financial planning. The idea of saving money may be laughable at first, though it is still worth the effort. 

You start with a penny or more, which gradually swells to a sizeable sum. You can then set aside some of it in your emergency fund while allocating the rest to your choice of investments. Once you realize that you have saved enough money in your bank account, you will garner the much-needed confidence to accumulate more and invest further, thus, resulting in an enviable corpus for the future.

“The philosophy of the rich and the poor is this: the rich invest their money and spend what is left. The poor spend their money and invest what is left”, by Robert Kiyosaki

We have always been engineered to think

Step 1: Earnings – Expenses = Savings

Step 2: Savings – Emergency Fund = Investment

However, the rich and intelligent think otherwise. They decide on their savings and investment allocation before proceeding to spend on themselves. The rich look at money not only as an asset but also as a vehicle to create further assets. This is why they first focus on their savings and investments before deciding on their expenses. This habit not only forces regular investments but also refrains from spending on unnecessary items while showing reluctance to rely on credit.

“Investing is not nearly as difficult as it looks. Successful investing involves doing a few things right and avoiding serious mistakes”, by John Bogle

This adage comes from one of the most successful investors whose name is synonymous with the likes of his contemporaries like Warren Buffett, Howard Hughes, Mark Cuban, and more. Going by the words of this legendary investor, investing is not difficult if done rightly. You must first seek necessary information about various investment options in sync with your risk appetite while emphasizing your financial goals. Once you are aware of how to invest and how much to invest, you will able to ride over common mistakes that many new-age investors make while deciding where to put their money for a secure future.

“Don’t look for the needle in the haystack. Just buy the haystack”, by John Bogle

You are new to investing and are blissfully unaware of which stocks to invest in or the kinds of mutual funds that would help you attain financial goals in the long run. Instead of rushing to and fro for information on stock investing or seeking professional financial advice, you may as well invest in index funds. As evident from its name, an index fund is a basket of stocks or bonds designed to mimic the composition and performance of a financial market. 

Putting money in an index fund allows your investments to be spread over all the stocks of companies listed in the index. This way, your money grows when the market assumes a bull run. You need not invest in a lump sum; rather allocate your index fund investments through systematic investment plans (SIPs), thus, allowing you to leverage from frequent market downturns while also lending you the benefit of the compounding effect when invested for a prolonged tenure.

“Many people take no care of their money till they come nearly to the end of it, and others do just the same with their time”, says Johann Wolfgang von Goethe.

How many of us start planning for retirement early in life? Old age is a bitter truth that we all tend to ignore. However, you can enjoy the golden years of your life with sweet, ripe memories only when you have enough money to take care of your needs. What is life if spent depending on others for food, shelter, and help?

Retirement planning should be the end goal for everyone. You must first decide on how you define financial independence. Then, check if your current list of assets fits into your retirement. Then, evaluate how much money you would need to maintain your post-retirement expenses. You can start by assessing the value of money at an average inflation rate of 6-7 per cent to check how much money would be enough to continue paying for your health insurance premiums, lifestyle needs, and other essential expenses.

The secret to an ideal retirement plan is to establish a budget beforehand that includes details of your earnings, savings, investments, and expenses (both necessary and unnecessary). It’s okay if you do not earn enough early in life. Just refrain from splurging your money unwarrantedly and stick to your investments. A disciplined approach towards money will ensure a comfortable post-retirement life.

The importance of money cannot be stressed enough. He who has it will always find ways that secure happiness; he who does not have it will continue to remain bitter. Having enough money in savings definitely accounts for general happiness.

“Whoever says that money cannot buy happiness” must try living without it for some years before trying to sound philosophical at the cost of gullible minds who fall prey to such nonsensical comments.