Being a salaried person can be a peaceful thing, at least from the financial stability perspective, since the monthly income is fixed. Many of employees even though dislike their profile or job stay on for the sake of financial stability. In case of borrowings too, banks favour the employed because of their fixed earning capacity. However, when it comes to wealth creation why do salaried individuals fall short in their pursuit of financial independence? Salaried individuals actually have their income fixed, hence, can plan their expenses and savings to perfection. But, there are certain gaps which remain unfilled in their long journey. Let us understand these unfilled gaps and ways to regaining the pursuit to financial independence.
Medical Insurance: Individuals with dependents cannot attain financial independence if they do not involve their dependents in their financial planning. The medical costs in the world are rising at exponential rates along with the list of diseases. With the complex lifestyle, polluted environment and unhealthy eating habits all of us are vulnerable to some or the other health disorders. Hence, a health insurance which can cover not only you but most importantly your dependents are necessary. Choosing any medical insurance can be fatal, therefore understanding terms such as critical illness, maternity benefits, surgeries, post operation expenses etc., is must. Apart from medical insurance for self as well dependent a term insurance is equally important for all earning members of the family.
Availing too many debts: Debt for a salaried person is a piece of cake, because banks are making fund readily available on your doorstep. While taking debt for buying an asset may be fruitful, but availing loan for luxuries or unnecessary purchases can be fatal. Having large corpus of loan can make the borrower pay for longer amount of time, thus hampering his/her savings quantum. The golden rule for financial independence is increase your savings each year and reduce your debt at the same time. In case of floating interest rate loans, the rate of interest could damage your objective even further, as any increase will also directly increase the tenure of your loan.
Therefore, having a strict control on your debt and constantly raising your savings quantum is must to achieve financial independence. Any return on investment will not outgrow the amount of money invested, hence savings should be steadily increased over your earning years.
Inflation affecting returns on your investment: Controlling your expenses and increasing your savings is not enough if you want to be financially independent. An inevitable thing called inflation keeps on raising the prices of essential goods and services, and thus your expenses. If you compare your monthly grocery bill for the past few years you will clearly see an up trend in your expenses. Keeping a lid or controlling the prices of the essential commodities is out of our hands. However, earning a better …….
