Are you on track to achieve financial freedom once you retire? If your answer is no, it’s time to start looking at setting up your financial plan before it’s too late. Although a lot of factors often come about during the period of your late 20’s and early 40’s that are put first: like purchasing a car, buying a house and starting a family, saving for the future may be one of the last things on your mind. It’s important to work towards attaining the goal of financial security but also to not deprive yourself of interests and enjoying life.
Here are 8 simple steps you can exercise to achieve financial security before your 40’s
1. FIND BALANCE
Living a successful, happy life is about finding a balance between time with family and friends – and between work and leisure. Striking a proper balance between your life today and your future is also important. Financially, we have to make decisions on what we spend today and as opposed to what we will be spending in the future, and so finding the correct balance is an important first step toward achieving financial security.
2. LOOK AT YOURSELF AS A FINANCIAL ASSET
For the most part, your current and/or future career are the most important factors in achieving financial independence and security. Investing in yourself will pay off in the future so increase your value through hard work, continual upgrading of skills and knowledge, and by making smart career choices. Making efforts to improve your career can have a far bigger impact on your financial security than trying to save more.
3. BECOME A PLANNER
Successful people are goal oriented – they set goals and develop a plan to achieve them. Setting up a timetable and even the process of writing down some goals will help you to achieve them. Being goal-oriented and following a plan means taking control of your life. This is an important step toward improving your financial independence and security.
4. SET SHORT-TERM GOALS TO ACHIEVE LONG-TERM ONES
Planning far into the future will always be a daunting task, especially for young and new investors, and with the uncertainty of trends a lot can change between the present and 30 years from now. Here you can lay out and set a series of short-term goals that are both measurable and precise.
As you achieve your short-term goals, set new ones. The constant setting and achieving short-term goals will ensure that you reach your longer-term goals. For example if your goal is to be worth a million in the bank by age 50, you need to first reach smaller goals like having 10,000, 50,000 and 500,000 as you progress.
5. MODEST LIFESTYLE COSTS
For the first couple of years of working you may realize you have excess cash flow and that it is easy to make more money that you need. It’s not wrong to indulge in a luxurious lifestyle for yourself, but remember that the best move you can put your money in is toward reducing debt or adding to savings. Your salary would likely increase as you advance in your career and attain greater responsibility, but you should cut the cost of your lifestyle if it lags your income growth, so your excess cash can be put toward financial goals.
You won’t have to cut back to accumulate money if you don’t feel entitled to a standard of living that exceeds what you can afford, but by keeping it below what you earn.
6. TAKE TIME TO BECOME FINANCIALLY LITERATE
Making money is one thing, but investing in it and making it grow is another. Financial management and investing are lifelong endeavors. Taking the time and effort to become knowledgeable in the areas of personal finance and investing will pay off throughout your life and will help you with decisions that are important to achieving your financial goals.
7. SEIZE OPPORTUNITIES AND TAKE CALCULATED RISKS
Taking calculated risks when you are young can be a prudent decision in the long run. You might make mistakes along the way, but remember that you often learn more from your mistakes than from your successes. Also, when you are young, you can recover faster from financial mistakes.
Examples of calculated risk may include:
Moving to a new city with more job opportunities
Going back to school for additional training
Taking a new job at a different company for less pay but more upside potential
Starting a new company or working for a small startup
Investing in high risk/high return stocks
8. INVEST THE MONEY YOU BORROW – NOT TO FINANCE A LIFESTYLE
Deciding to apply for loans or borrow money should come from a place of building wealth and not to support a lifestyle you feel entitled to. Using credit for this with its added interest expense will only increase the cost of the lifestyle and leave nothing left to invest with. Always calculate loans where your gain will outrun your borrowing costs.
This might mean investing in the literal sense (stocks, bonds, real estate, etc.), or it might mean investing in yourself – for your education, to start a business, for health expenses or to buy a house. In these cases, borrowing can provide the leverage you need to reach your financial goals faster.
Megaworld Prime RFO’s property specialists are here to assist and prepare you for the best property investment options you need to help you grow your retirement money and make most of your ventures into condo investment. Talk to us today!