Financial independence is the awareness in a person regarding the purchases he makes and the list of priorities he has to take care while purchasing an item.
Proper planning is needed to have financial independence, this will further make the person aware where he have to spend his money and how much changes he have to bring in himself to improve his spending patterns.
There are certain principles which a person should follow to plan his financial independence
Identify and set goals and objectives of your life: Identifying goals of life will help the person in setting some strategies and plans to achieve those goals. The strategies will be based on the social and economic factors of life, and hence, certain level of balance in the life will be maintained.
Search out alternatives to maximize income: On the basis of financial condition, a person can increase his income by searching the other alternatives of income.
Try to have economical lifestyle: Looking at the rising prices of items a common person want to have and his financial condition, it is advisable to attain economical lifestyle. The lifestyle he has should emphasize on needs first and luxury later.
Spend rationally: A person should always maintain a habit of spending money rationally. This means, the person should always control his spending power and make less spending then what he earns.
Do investment: It very necessary for a person to invest his money. This will not only increase his money with time, but also make him tension free for the future. Looking at the risk free nature, it is good to invest in insurance schemes and various national money saving schemes.
Take a gap of 10-15 years to maintain your lifestyle: To have financial independence in your life, it is suggested that the person should maintain his lifestyle after a gap of 10 to 15 years. This means, within duration of 10-15 years he can set all the financial expenditure according to income or salary he earns, and after setting the expenditure he would plan to bring other luxuries in life.
Change your lifestyle: Bring in some changes in your lifestyle to save money for future. The changes may include finding a better job with good salary, a low cost house to stay, less usage of automobiles to save money spend on petrol and diesel, making purchase of those items which are really needed, adapting strategic purchasing behavior etc.
Plan when to take break from your working life: On the basis of financial independence, a person can plan when he can take break from his working life.
This means, he can visualize what's the correct time for him, after setting all his expenditure, to enjoy the money he have. Plan to retire early. By maintaining a regular saving plan, a person can plan how and when he can retire from his job and enjoy his money. The early retirement definitely depends on the financial independence that person will have after taking off.
The main requisite to retire early is the budget of the retiree which is needed to manage and save properly.
Use your money efficiently: Take wise decision to know how to spend you is efficiently. Efficient use of money means getting more from the money you earn. Search for the schemes and products which give right value for your money.
Use money as you want: Use your money as you want and don't allow money to dominate you. Spend money economically to spare your money for the needy time.
Putting $1500 per month for saving for at least 15 years, with increasing the saving amount by 5% each month, will save around $500,000. The saving will include all the factors like adjustment for inflation etc. It is suggested to new beginners while investing their money in a tax deferred savings schemes like 401K and in mutual funds. For better financial independence, reduce your spending household chores and take wise financial decisions.