Financial success isn’t easy to attain and requires adherence to certain fundamental principles and financial discipline.
The procedure for attaining financial success is a continuous one and involves setting goals and working to achieve them while making corrections and alterations as we move forward.
Various perceptions about financial success point to the development of special and customised financial plans for every organisation and individual. But everyone wants to get sufficient funds and have more options in life. This guide will discuss the eight basic steps that are crucial to financial planning and will help you become financially disciplined and achieve financial success.
Establish a lifetime goal plan
Goal setting is a powerful method of considering your ideal future and for motivating yourself to turn your vision of an ideal life into reality. It’s an integral step in attaining success, particularly financial success. This requires the identification of what customized achieve and in what time period. Think of where you want to be in two, five, ten or twenty years from now. Identify what you would like to achieve and be clear about your personal targets. Take note of your goals: if you would like to finance your children’s tertiary education, buy a new home, go for a vacation each year or plan for retirement.
The next step is to decide on a time period within which you would like to attain these goals. It’s essential that you be specific and set a definite date. If done correctly, your goals will vary from short, medium to long term. Visualise what you’ll be thinking and feeling when that date arrives and you’ve successfully achieved your objective.
Finally, identify the quantum of funds you require for all your goals and then set a entire figure accordingly. This should be done bearing in mind the increasing inflation levels. In addition, you have to chalk out a strategy (or strategies) that summarize where you are currently and where you want to attain.
Spend less than you make
Excessive spending is a significant reason people face financial difficulties. So it’s extremely important that you implement a system which entails identifying your sources of income in addition to the expenses. This step also involves an investigation of all of your expenses and identification of the expenses which may be reduced or done away with totally to boost your overall savings level.
Nobody can achieve financial success by spending more than what they make. Savings play an significant role in assisting you to achieve your financial targets. So, your goal should be to maximize savings. An analysis of your expenditures will reveal that a tiny price cutting on various fronts could lead to big savings.
Your Biggest Asset, Don’t Risk It
There’s an old expression in the life insurance business that life insurance isn’t bought, it is sold. Unsurprisingly, it is not until you sit facing a professional adviser that you start to appreciate what you and your family stand to lose if the unthinkable happens.
Personal life insurance policies are compared to an umbrella salesman who’s always prepared to offer you an umbrella before it begins raining. Therefore it is advised that this significant area of your financial affairs is addressed early and completely.
Reduce that’Bad Debt’, decrease that’Great Debt’ and handle ‘Smart Debt’
‘Bad’ debt is borrowing money, typically at high rates of interest, to purchase something destined to go down in value. Usually this debt provides no tax benefit.
Using’simple finance’ or a credit card to purchase a wide screen TV is a good example of’bad debt’. Paying well over 10% interest on a personal loan from the bank to get a second hand car is just another example of terrible debt. In both these situations, you are not actually buying an advantage as both the TV and the car will be worth much less than they originally price long before the loan is paid out.
The features of’bad’ debt are high interest, no tax benefits and the purchase price of something place to go down in value over time. Borrowing money to cover vacation is possibly much worse than bad debt since you’re left with nothing except a couple of happy snaps to show for it.
For the majority of us,’good’ debt is your outstanding mortgage on the home we live in. Whilst the interest repayments aren’t tax deductible, your house will at least increase in value in the long run. Additionally, you get somewhere to live without paying rent. The features of’good debt’ are a very low rate of interest and the capacity for the asset to increase in value, these benefits can be maintained.
Where there is a will, there is a way
Making financial and legal agreements concerning the transfer of your personal assets to selected beneficiaries can be difficult and emotional. An integral part of the financial planning process is ensuring that the resources that are gathered during a person’s life are disposed of in accordance with their wishes upon death.
An integral part of the financial planning process is ensuring that the assets that are gathered during a person’s life are disposed of in accordance with their wishes upon death.