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stuck on success
How do you define personal success? I get asked this question a lot, and interestingly, the answer often involves the concept of financial freedom. When I delve a little deeper, financial freedom translates into a variety of dreams.
Why is financial freedom so attractive? Perhaps it’s because so many people are limited in their ability to turn dreams into reality because of their financial situation.
We all know people in jobs that no longer bring them joy, but they stay on because of the need to maintain a certain income level. How many business owners are treading water in stagnant markets because they are afraid to take steps to change the business until a certain level of profitability is reached? If only they were financially independent…
At what point is it okay to take the risk? how much is enough Do what you love and the money will follow you, isn’t that wise advice? While the reasons people avoid change are multifaceted, finances are often cited as the reason, so let’s explore this issue.
strategic financial planning
If your financial situation is keeping you from getting ahead, what would you do if you were in a better financial situation? Assuming you can answer that question with some clearly defined goals (and if you can’t come up with the first), financial planning helps you overcome fear and the unknown by identifying risks and evaluating options. Can help take steps towards doing so.
Let’s take a look at each step of the financial planning process:
setting goals
collecting all relevant data
Identifying barriers to achieving goals
setting a time frame for achieving goals
developing methods and procedures to help achieve those goals
Re-examining goals from time to time and revising them as circumstances change
setting goals
Although many people address financial issues such as children entering college, a family member passing away, or the time has come to sell a business, financial planning helps you anticipate the future by setting goals. is required to be installed. Without goals, you may not get very far in the financial planning process, and without a financial plan, you may be limited in achieving your goals.
collecting relevant data
Comprehensive financial planning requires that several important areas be evaluated at the same time. Looking at any sector in isolation will tell only a partial story, and the best options for any one issue are often missed. Standard areas are tax planning, investment management, cash management, budgeting, retirement planning, estate planning, and insurance. The analysis is adjusted according to specific needs and may also include education funding, charitable giving and trust management. The picture that emerges from looking at all the pieces together is the starting point for creating optimal financial strategies and making realistic, well-educated decisions.
Identifying barriers to achieving goals
People have very different attitudes towards money. Our attitudes about money are often influenced by the values that are formed over time from our families and to a lesser extent by how much we have. Our unconscious attitudes play a big role in achieving financial success.
One of the basic principles of financial and strategic planning67 is that we are in control of our positions. We can move on or continue doing what we’ve always done (often ignoring the whole situation). While this sounds simple enough, it is common to see people with goals who do nothing to reach them. If you struggle in this area, a financial coach can help you figure out the attitudes that may be holding you back.
setting deadlines for achieving goals
Effective goal setting requires setting target dates for each goal. Financial forecasting, which is described below, can help develop realistic timelines.
Develop methods and procedures to achieve goals
There are many methods and tools that are useful in helping you reach your goal. Some important concepts used in financial planning are: forecasting, budgeting, portfolio diversification, timing the market, and dollar cost averaging.
Forecasting – Forecasting revenue and expenses is a central part of any financial plan. For an individual that could be their salary and living expenses. A business forecast includes income and expense projections. If you are thinking of starting a new business or project, before you start looking for financial support, you must be sure that the idea will generate enough profits to make the venture viable. Financial forecasting is an important part of planning and controlling.
Budget – Where are you spending your money? If you can’t answer that question precisely, start by keeping track. When you know how much and where you’re spending today, you can start to see opportunities for improvement. Regular and sensible budgeting coupled with an ongoing process for comparing actual results to the plan can uncover areas where cost attention is needed or trouble in a particular product or service line. Establishing regular ‘budget reviews’ enables you to take corrective action before it becomes a crisis.
Portfolio Diversification – “Don’t put all your eggs in one basket.” When it comes to investing, if you put your money into different types of investments with varying return potential and risk levels, you may be able to offset potential losses in one type of investment with potential gains in another. Can be As a result, diversification often reduces overall risk exposure.
If you’re running a business, revenue diversification can be achieved with a portfolio of products and services, or by working with companies in different industries. A range of different revenue streams can offset risk and keep you afloat when an industry hits hard times, or a product becomes unpopular.
Market Timing – No one knows for sure in which direction tomorrow’s markets will move. Rather than trying to guess, “dollar-cost averaging” can help you invest regular amounts at regular intervals, often resulting in lower average costs. For the “dollar-cost averaging” strategy to work, you must be prepared to continue investing through potentially stressful periods of low markets.
Re-examine goals from time to time
Conditions regularly change over time. It’s important to stay on top of any assumptions that have changed since your last financial planning review.
If your definition of success includes the concept of financial freedom, don’t let your current financial situation turn you into a deer in the headlights! Define your goals, examine your vision, do your homework, and move forward with a well-thought-out plan. it’s your choice.
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