Earning Financial Freedom: One Spreadsheet at a Time
"Freedom is not worth having if it does not connote freedom to err." - Mahatma Gandhi
Freedom is not just about being able to do what one wants, but also about the ability to make mistakes and learn from them. It suggests that true freedom involves being able to take risks and explore new ideas without fear of punishment or repression.
Hey Lavneet, what's the deal? You're sounding mighty patriotic suddenly. Everything okay?
I'm ok, but the economy's not looking great. Brace yourself for some tough times ahead.
What difficult time you're talking about? The market's on fire!"
Sure, the market's up, but companies are cutting jobs, freezing hiring and inflation is killing us. It’s time to be prudent with finances.
What you mean by being prudent with finances? My friend, I’m talking of achieving financially freedom?
Umm, Ok. What does financial freedom mean?
Financial freedom means having enough money so that you don't have to worry about paying for the things you need or want. It means having enough money coming in from places like investments or renting out a property to cover all your expenses.
Financial freedom also means being able to make choices about how you spend your time, like being able to retire or do other things that you enjoy. A lot of people want to be financially free because it allows them to live a more independent and happy life.
I got it what Financial Freedom means, but how do I reach that state?
Alright, so you want to achieve financial freedom? The first step is to keep track of your spending. Write down every single expense and income.
"But wait, I'm no accountant. Recording expenses sounds like a hassle and how this will help me.?"
Ok, tell me have you ever withdrawn, let's say 5K at the start of the week and by the end of the week, you wonder where all the money went?
"Oh yeah, it's like cash just disappears from my wallet."
Exactly, that's why you need to record your income and expenses. You need to know where your money is coming in and going out. Trust me, small expenses add up to a big amount monthly. Also recording your expenses and income would help you in:
- understanding your spending habits and identify areas where you can cut back or save more. It also help to stay on top of bill payments, avoid overspending, and make sure you are saving enough for retirement or other long-term goals
- Creating a budget and stick to it, which can help you achieve your financial goals. Having a clear picture of your financial situation can also help you make more informed decisions about your money, such as when to invest or when to apply for a loan
- Applying for loan and tax purposes. By having a clear picture of your financial situation, you can make sure you are saving enough for retirement or other long-term goals. It also helps you to identify patterns in your spending that you may not have noticed before, which can help you prioritize your savings and investment goals
"I'm no accountant, so where do I start?"
Don't worry, it's simple. You can use a spreadsheet or Excel to record your expenses. There are plenty of templates available online. Or you can use apps on your phone or computer like Mint, YNAB, Moneydance, or Acemoney. They're all easy to use and set up. Just create categories for your expenses like rent, travel, groceries, etc. and the mode of payment like cash, credit card, or debit card.
This is so simple, I'll immediately start my first step to financial freedom journey.
So there you have it, folks. Achieving financial freedom doesn't have to be a daunting task.
Just remember, freedom is not just about being able to do what you want, but also about the ability to make mistakes and learn from them.
And in this case, the mistake is not keeping track of your expenses. So, go forth and conquer your finances with the help of a spreadsheet or one of the many apps available. And remember, it's not about being an accountant, it's about being financially free. Happy accounting!