Financial independence is a state of industrial existence where a person reaches a level where they have enough income to cover the rest of their living expenses without having to rely on formal employment or others. One could argue that this is the existential financial nirvana that every person with financial responsibility strives to achieve. The path to this nirvana is through smart financial planning.

Smart financial planning is a strategic process in which individuals set, plan, manage and monitor their long-term and short-term financial goals. Financial planning covers every aspect of a person’s financial life, including savings, investments, spending, loans and insurance. Done ‘smartly’, this process can lead to financial freedom.

The ultimate goal of financial planning is to create a balanced plan that can guide us through every stage of life, protecting and growing wealth to ensure we meet all our financial needs and goals. Here are the key steps to smart financial planning:

1. Set clear financial goals: The first step in smart financial planning is to set clear, measurable and specific financial goals that are achievable. Whether it’s saving for retirement, buying a home or paying off student loans, having a defined objective in mind is essential. Having clarity about what you want to achieve financially gives you a sense of direction and purpose for your financial strategy.

2. Establish a budget: After setting goals, the next important step is to establish a budget. A well-structured budget should factor in your income, essential expenses like food and utilities, discretionary expenses like entertainment, and savings and investments toward your financial goals. Strict adherence to a budget is the roadmap to disciplined and prudent spending.

3. Build an emergency fund: Life is full of uncertainty, and financial uncertainty can easily derail your financial track. That’s why it’s important to establish an emergency fund as a safety net for unexpected expenses. Ideally, your emergency fund should be able to cover three to six months of living expenses.

4. Diversify your investments: Diversification is a method of balancing risk and reward by spreading your funds across different financial investments like stocks, bonds and real estate. The key to financial freedom is not just saving your money but investing it wisely and growing it.

5. Manage Debt: Debt can quickly become a barrier to your financial freedom if not managed wisely. Smart financial planning involves strategic actions to reduce and eliminate debt. This could mean prioritizing high-interest debt, paying extra or consolidating debt.

6. Review and adjust your plan regularly: Financial planning is not a ‘one time’ activity. It is a continuous process that requires regular review and adjustment. As life changes, so do your financial goals and circumstances. Regular reviews ensure that your plan remains relevant and aligned with your current goals and circumstances.

7. Get professional advice: Although it is possible to do your financial planning independently, it can be beneficial to seek the advice of a certified financial planner. These professionals have the knowledge and experience to help you structure your plan efficiently and navigate complex financial situations.

In conclusion, smart financial planning is the main path to financial freedom. It’s about making your money work for you instead of making it work for you. It requires discipline, patience, regular monitoring, and even overhauling when conditions change. Remember, the journey to financial freedom is a marathon, not a sprint. Every small step adds up, and over time, you’ll enjoy the fruits of your financial discipline. You will have the financial power to make choices without being restricted by financial obligations. This is truly the beauty and reward of financial freedom.