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7 Tips to Secure a Successful Path to Your Financial Freedom
by Lyn Bell
While financial freedom means different things to different people you will find the heart of each answer will be the same: financial freedom gives you choices to live the lifestyle you desire. Generally this will mean having security for yourself and your family. Other words that come to mind when thinking specifically of �financial freedom� are: peace of mind, no money worries.
The following tips are some of the ways that will help you achieve your financial freedom - your choice of lifestyle.
1) Set up an Emergency Cash Reserve Account. Put aside an amount of your income into a specific account, building this up until you have three to six months. This account needs to in a call account where you can withdraw money at short notice without incurring any penalty. The reserve account is for unexpected and emergency expenditures.
2) Pay Yourself first. Always put aside some of your income for your future. Pay yourself before you pay your bills and other expenses. While many advocate 10% of income as being the sort of sum to aim for any regular amount is better than none.
3) Setting Goals. This is the coordinating structure for your financial plan. Whenever you consider an investment offer, always refer it to your overall financial goals. Ask yourself whether it fits with your goals. Committing to your goals will help you remain focused.
4) Risk Management. Not many of us would be able to replace our house without the assistance of insurance and is therefore important to insure your home and major assets. At the very least debt should be covered through life insurance. There are many other types of insurance that help in different situations. You can insure your income (or your ability to earn), insure against traumas, insure for health issues and so many others. It is best to see an adviser to get the insurance type that suits your requirements and the necessary amount of coverage which is affordable for you.
5) Erase Debt. There is both good debt and bad debt. Borrowing for things that appreciate in value or will generate income is good debt. It is used to increase your wealth. Bad debt is used to borrow for things that depreciate in value. Whatever debt you have your aim should be to erase debt altogether to give you the best chance of peace of mind and security.
6) Estate Planning. At the very least you need to have a will in place to give the best opportunity of your estate being divided as you wish. Another basic of a personal estate plan is an enduring power of attorney to provide for your financial and medical care if you are unable to through mental incapacity. Other things to consider are living trust and family trusts. All of these will ensure that your assets are maintained and passed on to your future generations.
7) Investment and Retirement Planning. You need to have your investments allocated and customized to meet your goals, your level of acceptable risk and your time frame. Without an asset allocation plan your investments will be subject purely to the impulses of the economy instead of being directed by your requirements.
If you find that you need help with this, seek the services of a fee-only financial advisor such as a CERTIFIED FINANCIAL PLANNER CM or a financial coach to devise a comprehensive plan according to your assets and your needs. Your path to financial freedom and your financial security depends on the correct coordination of these separate wealth building steps.