Financial Trap or Financial Freedom
As you start shaping your financial lifestyle with desired wants, habits and luxury you generally tend to get into some sort of responsibility which may be a financial trap or financial freedom. But what matters is that which category do you belong – Financial Trap or Financial Freedom?
Let me explain with few examples
- You want to buy a costly smartphone hence you swipe the card, buy the phone, covert the due into EMI and start repaying month on month – what does this mean – without knowingly you entered into a financially commitment.
- You want to buy fruits and veggies and walk-in to a big supermarket and say honestly will you come out only with veggies and fruits?
- You take your family outing to malls and cinema theatres, have you made a NOTE of those expenditure every time?
As such you can list hundreds of example where you spend money without applying consciousness.
So how do we get rid of this trap? By not buying anything? Compromising on every purchase? By not taking family outside? Absolutely the answer is NO.
By applying some of the very basic fundamentals one can easily set the financial trap free without compromising on spending’s.
When you want to buy a smartphone, the best alternative method is to open a monthly savings account, start depositing some money month on month, create a corpus & at the end of six months or twelve months, you can buy your desired product without any debt.
When you want to buy veggies, fruits or monthly provisions – make a list, go to the respective vendor / shop / supermarket and buy only based on the list prepared at home and not by the eyes.
Keep a track on your daily expenditure (Please read my article on expenditure management, to understand better about it) so that you avoid buying unnecessary things.
There is a formula in financial industry & request you to carefully look at it and select the one which suits you best
- Income – expenses = Savings (OR)
- Income – savings = Expenses
Which is your formula in your financial planning?
Everyone wants to follow the second principle but mostly choose to live with the first one hence people easily get into the financial trap.
So to conclude, plan your savings in such a way that you have financial freedom.
Manoj Kumar Alapati
Fellow – III Life, AMFI, AFP