Strategize Your Way to Financial Freedom In 2015
Quote of the Week: “Your own resolution to succeed is more important than any other”~ Abraham Lincoln
As we set our resolutions for the coming year, preparation is essential. Our success rate will be determined by the practicality of our financial master plan. This will influence how we get, budget and invest our money over time, taking into consideration the various obstacles, risks and future life events. The deliberate application of time tested principles in our financial strategy enables us to focus on our goals in a world of competing needs for our money.
Keep in mind the following key principles to guide you:-
Assess Your Financial Status
This will help you get a true picture of your actual financial standing. One's personal financial situation can be assessed by compiling simplified versions of financial balance sheets, which lists the values of personal assets (e.g. car, house, clothes, stocks, bank account) and liabilities (e.g. credit card debt, bank loan, mortgage), and results in either a positive or negative net worth. A personal income statement lists personal income and expenses resulting in a surplus or deficit.
Although financial goals depend on an individual’s needs and unique circumstances, the important thing is to take into consideration all the necessary aspects of your life then make deliberate choices. Start by outlining your statement of purpose which includes your main objectives, your current position and where you want to be in a given period of time. Since non-specific goals do not demand a commitment on your part, ensure that your goals have a shilling value and time frame.
Clear cut goals ignite hope, establish direction and fix focus. It is also important that you write them on paper and not just bear them in mind, this gives them proper reference and greater credibility.
Strategies should be built to be executed
Execution of one's personal financial plan often requires discipline and perseverance. The process of defining and designing the strategy cannot be seen as distinct from creating the plan to execute it. It is one thing to plan to save Kshs.100,000 by the end of the year and another to actually open a unit trust Money Market Fund account and start saving. Getting help from investment advisers and planners will make the execution stage much easier as you get practical advice.
Measure Your Progress
As time passes, one's personal financial plan must be monitored for possible adjustments. Naturally your needs, circumstances and desires will change. Your financial goals should therefore be periodically re-assessed to reflect these changes. However, always remember not to change your destination of becoming financially secure, only the direction to get there.
Irrespective of how much money you earn, you may think it is impossible to plan and execute your strategy because of the cost of living and other reasons. Truly, saving may not be easy due to the inevitable competition between saving and current needs hence many people restrict themselves by trying to solve only the immediate problems. However, it is easier to plan and save than live in increasingly difficult financial circumstances which are inevitable if you don't.