In our previous chapters, we have covered maximising income, growing wealth and achieving financial goals. While all these elements are subjective, there is a common goal: attaining financial independence. You would have imagined the moment when you receive your first salary or any stable income, your first step of being independent. That very thought gives you a sense of joy and dreams to look forward to. However, one of our primary sources of income may not last our entire lifetimes, in most cases. The ultimate goal of financial planning and wealth creation is not making astronomical amounts of money; it is to sustain financial independence throughout one’s life while maintaining the standard of living. The following broad aspects must be a part of your financial planning towards the ultimate goal.
Preparing For Our Ultimate Goal- Financial Independence
As elaborated earlier, income from employment and profession will cease post-retirement. Earnings from your investments should substitute that to help you enjoy the latter part of your life.
Investments may carry virtually no risk to very high risk. While risk-taking ability is an individualistic concept, you should balance your investments in high risks with risk-free assets.
The amount of tax savings in a year may not seem relatively high. But you end having saved a considerable amount of money in the long run. That savings can be reinvested to create further returns too.
Planning for the Family’s Future
Family structures can vastly vary for individuals, For example, the number of dependents, number of earning members in the family, members requiring special needs, etc. You need to plan for situations where you will no longer be around to provide for your family. Therefore, you must consider taking insurance, preparing a will and leaving a solid financial base for your near and dear ones to maintain the standard of living in your absence.
In the end, financial literacy at a young age will give you the confidence to step into the world of wealth creation. That will help you achieve your ultimate goal of financial independence.