No matter how successful you are, odds are you could be making more of an effort to secure your financial freedom.
Money matters are often one of the areas where we carry the most stress in our lives, and they are one of the main sources of arguments for couples. This kind of stress can have a big impact on our happiness and our health.
If you’re ready to make 2020 the year you take control of your financial future, it’s time to start creating your financial blueprint.
What is personal financial planning?
A financial plan is the result of examining your goals and helping you prioritise, save and invest for them.
An effective financial plan will account for achieving goals that are more short-term, such as buying a new home or starting a business, as well as the long-term goal of retirement.
The first step in creating your financial future is to clearly set out the financial goals that you want to achieve.
Life and business strategist Tony Robbins suggests writing down your goals for your financial future, and how much money it will take to reach them. “For most people, that number usually feels large,” says Tony. But it’s important to be honest and ambitious with your financial plans.
Now refine your list of goals until you have a few specific aims that you want to focus on.
Briefly sketch out how much of your monthly income goes towards essentials (rent, food, transport, etc) and non-essentials. If you’re not totally sure where you’re spending money, print out a few months of bank statements and highlight anything that isn’t an essential. This will give you a good idea of where you’re spending your money and why.
Once you’ve got a clear list of what you spend money on every month, add up the cost of your essentials and multiply that number by 12. Now you have your magic number—this is how much you have to earn in a year (after taxes) to be at a basic level of financial security!
Now that you know where you are and where you want to be, it’s time to make your plan.
Your plan needs to cover two components:
It’s a lot easier to put money away for something you really want and have decided to prioritise than for some indistinct future. Be as clear as possible—use visualisation techniques to create a vivid picture of what achieving your goals will look like. This will help you stick to your plan.
It’s also important not to take on too many financial goals at once, otherwise you might find yourself stretched too thin.
If you’re just making enough to cover bills, the idea of saving can seem unfeasible. But experts agree that paying yourself first (ie, putting funds into your personal savings every month) is a key part of starting your journey to financial security.
If you can afford to, put aside 10% of your income every month. If that’s not feasible, start with a smaller amount and work your way up. If you can automate it, even better—that way you won’t even notice it’s gone!
Tony Robbins says that effective personal financial planning relies on “embracing an abundance mindset.”
Align your passion and drive with your goals and you will be able to plan for a future that you love!
These fundamental principles of personal financial planning will help you make the most of your savings at every stage of your life.
Simply speaking, don’t lose money! Structure your portfolio so that your initial investment is protected at all costs.
“Asymmetrical risk reward means that you take the least amount of risk possible for the highest level of upside,” explains Tony. A diversified portfolio is the key to asymmetric risks.
Taxes is one of the major areas where financially savvy investors have the edge over the regular folk. Learn your way around taxes and your rewards will increase.
“Effective diversification not only reduces some of your financial risk, but it also offers you the opportunity to maximise your returns,” says Tony. Diversify your portfolio and you will be well on your way to financial success!
Get clarity on your goals and create a plan for how to achieve them at Unleash the Power Within.
Over the course of 4 days, Tony Robbins guides UPW attendees through conquering fear, getting clear on their goals, overcoming their limiting beliefs and harnessing the energy for a vital and fulfilling life.
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