Your financial future is incredibly important. If there is anything we have learned from the recent financial crisis, it is that we can only count on ourselves to make sure our financial future is secure. However, we have come from a situation where everything has been great for many, many years, to one where everything got destroyed. This means that the majority of us simply have no idea of how to secure our own financial future.
Hopefully, the following 7 tips will help you to make sure you and your family are safe.
1. Involve Your Family
If you have a family, your financial goals should be joint goals. This means that you need to speak to each other about your goals and expectations. You need to know what each of you expects in terms of lifestyle both now and in the future, and which things you may be willing to give up or not. It is about making sure you have clarity about what money is coming in and where it is going, how much you need in order to live a comfortable lifestyle, and how much you need in order to be able to continue to enjoy that lifestyle in later years.
2. Understand Your Current Situation
You cannot decide where you want to go if you have no awareness of where you are. You need to measure what sort of wealth you have at present. Hence, write a list of all your current assets (things that you own) and all your current liabilities (things that you owe). You need to subtract your liabilities from your assets in order to figure out what your net worth is.
Unfortunately, most people are shocked when they do this and find that their liabilities far surpass their assets. However, this can then give you a great idea of where you need to go. You need to review your net worth regularly as well, to see if you are making any progress. It is possible that your net worth is starting to decline, which you must be aware of as this will make it far harder to reach your goals.
3. Know Where Your Money Is Going
You also have to have a clear picture of where all your money is going. You must track your cash flow, which will give you both confidence and control over your finances. If you do want to change anything financially in your life, having a good picture of your current cash flow will make that much easier.
4. Have a Self-Directed IRA
By this point, your finances should be in order and it is time for you to actually start building your savings. One great way to do that is by having a self-directed IRA. With these packages, you are in control of where your investments go, allowing you to have a very diverse portfolio. Consider things like real estate, precious metals, stocks and various other assets that can all go into your retirement plan.
5. Change Your Spending
Now that you have a good picture of your cash flow, look at it in greater detail. Do you really need to spend that amount on those things? Are you actually living beyond your means? You have to make sure that your expenses are adjusted in such a way that you do not get into debt and so that you are actually able to save up for your future.
6. Set Goals
Only at this point are you actually in a position to set goals. You have to set these in order to make anything happen. It is generally best to create 5-, 10- and even 20-year plans, up to your retirement, so you have a much better idea of what needs to happen in order for you to reach your goals. Remember that action plans are always fluid: As you reach one goal, you can adjust the next one.
7. Create a Strategy
You now have all the tools needed to create a strategy. This is where you develop your action plan that will demonstrate how you reach the goals that you have set. Of course, this means you need to learn how to spend less than what comes in, and you may also want to make investments with your savings so that your value increases more quickly. Do be aware, however, that investments can be risky as well. Your strategy should be clear. Make exact notes of what you want to achieve. For instance, don’t have a goal of “saving up,” but instead have a goal of “saving up a certain amount.”
How many of these ways are you currently implementing in order to protect your financial future?