Renae Jayeola is a Wealth Coach specializing in helping women achieve financial and personal mastery. View profile
The finance industry often operates under a shroud of mystery. You don’t get a lot of information about how wealth gets made when it comes to planning your finances. I want to lift the veil and share my easy 8-step method for creating a solid financial and wealth-building plan.
If you’ve ever wanted clarity and direction that helps guide you in accomplishing your money goals, then you’re reading the right article. Some of the educators in the industry just give high-level teachings without actionable steps.
My goal? To get you closer to that vision you have in your head of what you want your life to be, without having to worry about money. This is the inside scoop that only the people who know, know but I think it’s only right that you know too.
Step 1. Write down your goals.
When writing your goals, make sure they’re action-based instead of results-based. For example, “I’ll buy a home in two years with $10,000 saved for a down payment” versus “I want to buy a house.” Your goals could be anything, from a luxury holiday to early retirement. But make them as specific as possible, and with a timeline so you can track your progress towards achieving them.
Step 2. Release Money Blocks and Upgrade Your Money Mindset.
“Money Blocks” are the emotional and psychological elements that prevent you from achieving and maintaining wealth.
They can show up in 2 ways:
1. As you’re working towards a financial goal, it sabotages you along the way so you never reach it.
2. They pop up after you’ve achieved this financial goal, sabotage your success and essentially take it all away.
These money blocks primarily exist in our mind. And our mind is a powerful tool for attaining and maintaining financial success. The ways to work through them vary depending upon the person. The key part is having an awareness of how they show up in your life, then finding the RIGHT mindset techniques to remove them.
Step 3. Build up emergency and sinking funds.
Emergency and sinking funds give a safety net between you and life’s unknowns. An emergency fund is saving for unplanned expenses, e.g. a job loss, or broken laptop. A sinking fund is an account for upcoming expenses like car repairs or planning a wedding, etc. Sinking funds can act as another layer of protection to your emergency fund when you build both into your financial planning.
Step 4. Debt Pay-off (if applicable).
Good debt generates income and increases your net worth. E.g, a mortgage on a rental property, using ‘leverage’ to buy stocks or trade currencies, and so on. But bad debt limits you from being able to achieve your financial goals. This is debt on credit cards, student loans, etc. If you have any bad debt, create a plan to pay it off quickly. If possible, make extra payments above the minimum required payment to accelerate becoming debt-free.
Step 5. Start investing for the long term
The most powerful tool for your income to build wealth is compound interest. With the power of compounding interest, your money can grow exponentially over the years. The earlier you start investing, the greater effect this compounding will have on your sense of security and your financial freedom. This could be investing in real estate, the stock market, and in business. Now this invested money will be paying you year after year in the future.
Step 6. Reduce your taxes
There are lots of legal ways to save on your taxes and build wealth faster. The tax-efficient investments should be specific to your circumstances. Some of these examples include: ISAs, as investors don’t have to pay any personal income tax or capital gains tax on any income or profits. Personal pensions can also be a great way to minimize income tax, capital gains tax and inheritance tax. You can also do a lot of write-offs on taxes if you have your own business.
Step 7. Get the right type of protection in place
There are a set of must-have documents that protect you, what you have, and those who depend on you financially: wills, living trusts, enduring powers of attorney, living wills and insurances. Think about estate planning on how you’ll transition your wealth to your family when you’re no longer here. When the time comes, how would you like your money and property distributed? Remember to talk to the trustees or the people that you’re naming in your estate documents.
Step 8. Review your plan frequently and stay the course.
To get the most out of this plan, you have to stick to it! Figure out what motivates you and use that to help you keep the momentum up day after day. Sometimes life circumstances change, or goals and timelines may change. Adjust accordingly and reflect on whatever lessons you learned so you can make smart decisions going forward.
How can a financial professional help?
What does all this insider information tell us? Well, it means that trying to achieve financial freedom and create generational wealth is a lot more complicated than most will make it out to be. It’s really hard to navigate without help. I’m not saying it’s impossible. People do it, but the road is a lot longer than it has to be.
Getting help from a financial professional can help you meet your unique financial needs and goals. The professional has experience looking at the terrain, understanding what it takes to be able to achieve success.
Financial Advisor vs Financial Planner vs Financial Coach?
A Financial Advisor is a professional who helps manage your money. Financial Advisor is a general term that might include stockbrokers, insurance agents, money managers, estate planners, bankers and much more.
The financial planner is one type of financial advisor who helps individuals create a program to meet short and long-term goals. The planner might have a specialty in investments, taxes, retirement and or estate planning.
A financial coach helps clients understand financial literacy and create new money habits and behaviors, so they have the tools and strengths to manage, save and grow their money successfully. The coach might specialize in mindset, cash-flow, investing and much more.
Short Article Review
- Why is a financial plan important: It gives you peace of mind, allows you to afford the things that you want, and helps you achieve your long-term life and financial goals.
- Winning mindset: Where success is 20% Strategy and 80% Psychology. Ensure how sound the psychology you operate with is to increase your certainty for success.
- Action Items: Have a plan for your money. Consider planning for things such as emergencies, retirement, investment portfolio, insurance, estate planning, tax, etc.
- Plan Type: Are you planning for just yourself? Partner? Dependents? Knowing what type of plan you’re creating makes it easier to build all these different aspects in.
- Take action: Now that you know how to create a solid financial plan, there’s just one thing left for you to do: take action. Get to it, and soon you’ll be financially free!
The content in this article is for informational purposes only and is not intended as legal, tax, investment, financial or other advice. Always seek the advice of a licensed professional regarding any financial questions you may have.
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