TOUGH LESSONS
The biggest mistake that I have made along My Road To Financial Freedom was to jump in head first buying a bunch of Investment properties without first having my Foundations in place.
In the end I haven’t totally regretted it, because I wouldn’t have learnt the lessons that I have if I didn’t make the choices that I did! In saying that, as I have also found… a cheaper and less stressful way to learn, is to leverage from the experience of those that have been there before us, and my goal is to help as many people as possible through my experiences and hopefully they will find an easier path on their road financial freedom!!
BUILD YOUR FOUNDATIONS
So after the first two steps of My Stepping Stones Of Wealth system…
Step 1. Know Your Numbers
Step 2. Create A Money Management system
Step 3. Is to Build Your Foundations
Essentially your Financial Foundations are broken up into 5 sections
- Cash Management Plan
- Financial Plan
- Estate Plan
- Debt Reduction Plan
- Contingency Reserves
CASH MANAGEMENT PLAN
We covered our Cash Management Plan in Stepping stones Of Wealth – Part 1 and Stepping Stones Of Wealth – Part 2.
You must know your numbers of what is coming into you bank account and what is going out.. where can you save and where can you cut back. Also you must have a Money Management system in place that covers all aspects of your finances that is simple, flexible and doesn’t leave you overwhelmed!
YOUR FINANCIAL PLAN
Your financial plan is all about setting your goals and targets and deciding where you want to end up!
If you don’t know where you want to go how are you going to get there!
I will cover goal setting further in a later post, but first I want you to find a quiet spot with some paper and a pen and first work out where you want to be financially in 5 years time. Right down in 3 sections what you want to “be”, “do” and “have” in your life in 5 years. Remember to Dream Big and always start with the end in mind!!
Then do this same process working back to 3 year goals, then 1 year, quarterly and then what you want to achieve this week… what are the daily and weekly actions that you need to do NOW that will help you to reach your long term targets! Remember it is the small daily and weekly actions that will create momentum and lead to success!
ESTATE PLAN
It can be a scary thought, but if you have a family and Children, they need to be taken care of.
Have a visit with an accountant or a financial expert and get you wills up to date as well as your insurances such as life, trauma and income protection.
Once these are taken care of you can concentrate your efforts on creating wealth for yourself and your family.
Just remember to review it every couple of years so it is all up to date.
DEBT REDUCTION PLAN
If you have any bad debt such as credit card or personal or car loan debt, to be truly financially free, this must be eliminated! Once your Money Management System is in place, you can then use those extra funds that you find to tackle this debt.
The easiest way is to start with the smallest debt first. Pay the minimum on any other debt (and don’t rack up any more in the meantime) and once you knock over the smallest debt, then take that extra money and put it onto the next smallest. Rinse and repeat! Eventually you will be debt free and have all that extra money to invest with!
CONTINGENCY RESERVES
A massive and painful lesson I have learnt is that CASHFLOW IS KING and you must always have contingency reserves in place!
You never know when life will rear it’s ugly side and when you will need cash in a hurry and also when an amazing opportunity might show up as well!
Whether it is cash in the bank, a line of credit or a credit card used for emergencies, to be truly free and to take the pressure off yourself you need these contingency funds in place!
In my opinion you need at least 2 to 6 months worth of funds available to you at short notice and I believe there is nothing like money in the bank!
IN SUMMARY
So start building your foundations. To build anything you need a solid base that will stand the test of time and you will certainly find that is the case on Your Road To Financial Freedom!
If you have any questions or comments feel free to leave them below I will be happy to help!
And always remember Dream It.. Believe It.. Then Achieve It!!!
