Being financially independent means not worrying as much about the repercussions of your choices on your finances. That's because you can weather any economic storm. After all, you don't owe anyone money, have some saved up, and are putting money away for the future.

In other words, you are no longer a slave to your financial situation. We'd rather use "financial peace" because it implies more independence. You won't have to stress over whether or not you'll be able to afford necessities like a new water heater or groceries for a family of three after losing your job.

Choose the amount of financial independence that best suits your needs and preferences. There are fundamental actions you must take to achieve financial freedom. These measures may include actions as well as tactical and strategic choices. More progress means more quickly reaching your goal of financial independence.

1. Pen Down Your Goals

Can you explain your urgent need for cash? It could be to pay off student debt, launch a business, fund a family vacation, pay for a wedding, save for retirement, etc. You should achieve these goals as soon as you are financially stable enough to do so.

Therefore, money is just a tool for getting what you want. But unless you put your plans on paper, your funds will be aimless, and you won't know how to put them to good use. Now would be a good time to sit down with a piece of paper and list the five most important things you want to do in the following 1, 4, 8, and 20 years.

Keep in mind the SMART goal-setting framework as you write the goals. To be SMART, your objectives must be clear, concise, attainable, realistic, and time-bound. For instance, a retirement savings target of Rs. 10 crores by 2050 is a SMART goal since it is concrete, attainable, relevant, and time-bound.

2. Make A Rainy-Day Fund

You should have a fully funded emergency fund if financial independence is your objective. It's a safety net against the costs of auto repairs, broken appliances, and medical deductibles that we all have to deal with at some point. Once you've paid off your debt, consider building up an emergency fund large enough to last three to six months.

Having emergency funds set aside is a crucial aspect of any sound financial strategy, as they allow you to rest easy in the face of uncertainty. You will have more financial freedom after your savings account is fully funded. You won't feel bad about treating yourself to a few extra dollars' worth of clothes or a cappuccino at your favourite cafe.

3. Track Your Spending

Keeping track of your expenditures is a crucial next step to financial independence. Using a notebook or an Excel spreadsheet are just two examples of the various options available. The ETMONEY app also features a handy and efficient money tracker option that you can use to keep tabs on your spending. The app will automatically record all your outlays and classify them as transportation, retail, food, or entertainment.

Keeping track of your spending forces you to take responsibility for your finances, a crucial step toward financial independence. It also brings to light the many pointless purchases you make on the spur of the moment. An impulse purchase is the epitome of a lack of self-control and can seriously hamper your efforts to reach financial independence.

As a result, keeping close tabs on your spending is crucial if you want to avoid getting out of hand.

4. Save up for the Big Stuff

Since you won't incur any debt, you'll need a strategy for saving up for non-urgent, large expenditures. Take summer break as an illustration. It's easy! Please make a separate monthly budget line for your trip and divide the entire cost of your getaway by the number of months you have to save up for it. You're not living in debt anymore, meaning you can enjoy your vacation instead of having a credit card bill follow you home.

You can start saving and investing with enough emergency funds and a strategy for paying for major expenditures.

5. Spend Less

A penny saved is a penny earned. However, you can't exchange Rs. 1 in savings for Rs. 1 in income. You can multiply your initial investment of Rs. 1 by working smarter.

Cutting costs does not have to mean giving up your current standard of living for a Spartan one. Smart spending, which may be accomplished in numerous novel ways, is the key to achieving financial independence. One typical strategy is to master tasty home cooking to reduce costly restaurant visits. You are avoiding credit card late penalties by setting up automatic payments.

Putting off the purchase of a non-essential good or service by only a few days can significantly impact your spending habits and help you get closer to your goal of financial independence.