Do you worry about your financial future? If you answered yes, perhaps it might be a bit comforting to know that you are not alone.
Unfortunately, worrying (even if many people do it endlessly) doesn’t improve your financial future. If you have reasons to be concerned about your prospects in terms of finances, the smartest thing you can do is to stop worrying and start planning.
Financial Planning: Simple Steps You Can Take
Instead of worrying, here are practical steps you can take to brighten your financial future:
- Don’t put all your eggs in one basket. That is true literally and applies to investments, too. Diversify your investment by putting some of your money in products that can be easily liquidated (or turned into cash).
- Put your money in what you understand. The more complex an investment is, the higher your chances of making mistakes. You need better investment education to make sound investment decisions. However, we can assist you in this regard if you are not interested in learning about investments but still want to make your money work for you.
- Avoid using credits to buy liabilities. Items that depreciate in value are liabilities and should only be purchased with cash. If you must borrow money for purchases, do so for assets, such as buying a home. On the other hand, furnishing the home using credit is not a sound financial decision.
- Leverage the power of compounding interest by putting aside some money on a regular basis. Direct your money into an investment or savings and discipline yourself to let it grow for a long period. You will enjoy greater compounding effects for a longer maturity period.
- Determine your net worth by adding up the value of all your assets and subtracting all your debts. That’s a simple way of defining a balance sheet. Prepare this on an annual basis and compare it with previous years to figure out whether you are on track with your financial goals.
- Plan to retire in comfort (if you are still working). If you do not have a goal for where you want to be during your retirement age, you might end up relying on your family or the government for your needs when you are old and can no longer actively work for money.
- Review and update your financial plans on a regular basis. Understand that nothing is set in stone, especially financial projections. Be flexible and open to learning new things, particularly if it will help you reach your financial goals more easily. You might need to adjust your plans or make newer (and better) choices when necessary. If this is something that may be too complex or time-consuming for you, consider hiring an expert financial planner to review and update your plans to keep you on track.
We understand where you are coming from if it seems like these suggestions or options are too complex. Many people do not have the financial knowledge to handle some of these “simple” steps listed above, and that’s perfectly fine. We are here to help.
Feel free to contact us if you will like to get assistance in your financial planning.