5 Steps to Financial Freedom and How to Get There
As entrepreneurs and online marketers, one common goal that many of us share is to simply become financially independent. The dream of working for yourself is quite an accomplishment, but being financially set for the rest of your life is another. Through the power of the internet and affiliate marketing, this opportunity is now more attainable than ever before — however, it’s not just about how much money you make, it’s also how you are spending and saving it.
Before we jump into the five steps to personal financial planning, I want you to first think about where you are in life (financially), and where you want to be 10, 20 and even 30 years down the road. Now I want you to also think about how you are going to get there. It’s easy to say “I’m going to make $100k a year, and in ten years I’ll be a millionaire” — but that simply isn’t the case for multiple reasons. The first being you will have a lot of living/business costs, and there is simply no way to know what your life will be like a few months, let alone a few years from now!
With all of that being said, let’s break down the five steps to gaining control over your personal financial plan.
Before dreaming about your retirement years and having millions of dollars in cash in hand, you will first need to assess where you currently are in life, along with your financial situation. Such analysis should include your savings, debt, incoming/outgoing funds each month and any larger future costs you may be planning on over the next few years (new car, home, college).
By knowing when, where and how much money you have coming in and out, you will be able to better plan for your future.
Goal setting is all about knowing where you want to be and how you are going to get there. However, having a goal to have millions of dollars by the time you retire, simply isn’t realistic. In fact, one of the most effective ways to find success with hitting your goals is to start off by thinking small.
Don’t always look at the big picture – , you need to have a short-term and long-term plan. These short-term goals can be on a yearly or 5-year basis, while ultimately leading up to your retirement years. There is no set schedule for your goal setting, just make sure they are realistic and broken down enough so they aren’t just a grandiose dream you are wishing on!
Creating a Plan
Without a plan in place, a goal is nothing more than a wish. Now that we covered some of the key elements of goal setting, we need to come up with a solid plan for how you can increase your wealth year over year.
During the planning process, you should create an action plan on how and when you are going to put your money to work. A good example of this would be if you wanted to save $50 a week from your paycheck. This might not seem like a lot, but it adds up to an extra $2,500+ per year in savings. Part of this goal is to then put that money to work, so it is growing and making your money over the next several years.
Creating a plan for your personal wealth is much more detailed than just saving money, it’s also about cutting costs and having total management over where all of your money it. This doesn’t mean you need to personally be managing it, but you should know what your personal net worth is at any given time and where all of your assets are.
Even with all of the most meticulous planning possible, there is still no telling what might happen in the future. Everything from unexpected disasters, economic changes, health issues and everything in between — they can all be a huge factor into the eventual path your financial planning and success.
With this in mind, it’s always a good idea to consider your options with a financial advisor. Most people know about the stock market and 401ks, but at the end of the day, the help of a real professional can really make big changes in where your net worth might be 10-20 years down the road. A good example of this would be Peter Briger, who is a self-made billionaire, who clearly knows what to do when it comes to wealth management . Having previously spent 15 years at Goldman, he now oversees Fortress’ hybrid hedge fund. As all of this goes to show, Briger is a perfect example of a finance professional who could give you a head start in the world of investments — while also having a respectable net worth in the process.
Monitoring Your Wealth
The last step in the process is to continually monitor and adjust your financial planning with time. For most people, the financial plan they setup on day one won’t be the same formula they are following ten years down the road. As our lives and the economy change, so do the focuses of where our time, money and interest go.
Due to all of these ongoing changes, it’s always important to make sure you have some money saved up on the site. This should be additional funds outside of what you may already have inside a 401k — so you can gain access to it without being penalized. Most financial advisors are paid a commission, simply for managing your account. Should you ever have questions about how your money is performing or if any changes should be made, don’t fret the idea of giving them a call and getting their expertise.
How to Anyone Can Find Financial Success
At the end of the day, we all want to be rich — however, the word “rich” means something different to everyone. The person with the most money in the world might be the “richest”, but without their health, none of that money really matters. It doesn’t matter if you are making $10 a day or $10,000 a day, you are responsible for your own success and failure in life. With so many opportunities now at hand, there are really no reasons for you to not be enjoying life at it’s fullest.
At the same time, management over your personal wealth and finances is always going to be important — and a huge underlying factor to how you can enjoy life even further. Save what you can, cut back wherever possible and don’t have too much fun in the process. Just take a look at these NBA players who lost it all!
For a full summary of everything mentioned above, check out the infographic below.
Wait... before you leave, consider these top resources: