1. Be well-informed: The first step to financial independence is the ability to make informed decisions. A robust financial plan requires that you understand the basics of investing. While finance and investments can be complex, there are scores of free resources — blogs, articles, videos, and books — that simplify the basics of investing. Take the first step and leverage this repository and enhance your understanding of the basics of investing.

  2. Determine your financial baseline: To plan your journey, you must know where you are starting from. Take stock of your cash flows – see what your monthly inflows and outflows are. Inflows could be your income from salary, interest income from investments, and income from other sources. Then, scrutinize your spends, your outflows, into non-discretionary and discretionary expenses. The non-discretionary expenses could include house rent, school fees, spend on groceries, etc., while discretionary expenses would be the money spent on leisure and luxuries. This will help you figure how much money you have available to invest and where you can trim certain expenses to boost your savings. This becomes a starting point to create a monthly budget.

  3. Make a robust financial plan: Now that you know how much you want and can invest, it is important to determine “why” you are investing and subsequently, where you should invest. Your ‘why’ will drive your financial plan. Sit back and think about your goals and dreams. What is it that you want to achieve one year from now, five years from now, and maybe even in 10 years? Your goals could range from going on a vacation to Europe next year, to buying a house in seven years or even saving for retirement.

  4. Save and invest: Saving and investing money go hand in hand. It must begin early in life and ideally reflect your unique risk-return appetite. Your financial plan or your investment portfolio is much like an offspring – you need to nurture it, give it time, be patient with it, and allow it to evolve with time and circumstance. A well thought-out financial plan will help you navigate the personal and financial tumult that life will throw your way.

  5. Manage your debt: Debt can be a useful tool, but it can also be a burden. It is important to manage your debt effectively. Start by understanding the different types of debt and their interest rates. Prioritize paying off high-interest debt first. If you have multiple debts, consider consolidating them into a single loan with a lower interest rate.