How To Reach Your Financial Destination
Building wealth is a journey and like any journey the sooner you start the further you’ll go. Regardless of what you’re saving for, it’s imperative that you start as soon as possible. Many things can impact your wealth in your journey to your financial destination so it’s very important that you establish a financial plan prior to starting your journey towards your goals.
Your financial plan is key for you to be able to accurately gauge the effectiveness of your efforts to reach your goals. When creating your map for the journey ahead, remember it has to be a clear detailed plan that considers obligations to family life, honestly assets your ambitions, and considers your individual circumstances that can influence how aggressive you can be. Every success plan has key components that will manifest your goals if followed no matter what individual circumstances you have. These are the keys to successfully developing your map for your journey.
Increase Your Income
The first thing you can do you to reach your financial goals is to find a way to generate more income. This can be done by working more, earning more, or by finding a way to generate an additional means of income. Work extra hours if available, work for another company that pays you more, or create a new revenue stream by selling a product you have already or can manufacture yourself. Once you identify how the additional income will be generated, apply your additional earnings to the goal and nothing else. This way you can maintain your current lifestyle and begin to transition towards successfully completing your journey.
If you’re in school apply for an internship that gives you the need experience for negotiating a higher salary to kick start your savings into high gear. Volunteer at events that open up opportunities to learn more, network, or spark creative inspiration for new product or service you can sell that solves a problem. Another common and effective way to generate money is to look for items you own that are no longer being used and sell them.
Work hard at your current job and earn additional income from a pay raise, bonuses, and commissions. The main thing here is to perform at the highest level to ensure you get the maximum increase from your employer.
** If you are in a more immediate need to increase what you have, then it’s in your best interest to eliminate wasteful spending and count the recouped money for the time being as increase income while looking for additional ways to get more money into your home. Reaching your financial destination will require some sacrifices in the early stages.**
Save And Invest
Now that you have successfully completed the first step, you can now move to this next step and truly begin the journey. The fundamental rule to keep in mind is to save because it isn’t what you earn that makes your financial aspirations reality, it’s what you are able to keep for your income that creates the wealth that you seek. If you spend what you make, you end up with nothing to show for all your efforts. This why saving the additional income is so important to the first rule since you already spend the original revenue earned already.
An effective method for this is having the additional income separate from the already used income associated with your daily spending. Open a new account and have your paychecks divide the increased salary amount deposited here. If selling a product or service have all earnings deposited here to prevent you from accidentally spending it.
If your internship becomes a paying job, be sure to have the money earned setup to go into one of three designated places: primary living, savings, and flexible spending. The account that isn’t used for primary living expenses should not be touched for any other reason beyond what it is labeled. If savings and flexible spending are placed a separate account you can live and will learn to live within your means and prevent overspending and creating debt.
Invest in yourself by learning new skills that will increase your wealth by increasing your worth to a company. These new skills can become a revenue stream for you as well. You can monetize a new skill by being able to sell a service or create a new product. If you have a 401k plan to maximize your contributions to accelerate the growth of your nest egg and gain more insight into your companies stability. Invest in stocks and trades to position yourself for huge gains in savings from compound interest.
Eliminate Unnecessary Spending
By now if you have completed steps 1 and 2 you can shift your focus on saving money by elimination. Doing the steps in order makes eliminating wasteful spending much easier. When accustom to a lifestyle it can be very difficult to cut or break habits that cost you money. By allowing this part of the process to be third on the list most people are able to more easily let go of the unnecessary spending because the extra money is now available and removing things from your spending habits can be done gradually if there’s a reluctance to let go of certain comforts.
Depending on your ambition you can also decide to keep certain things if you still want to have the extras but keep in mind wasteful spending is like having a hole in the wall of your home. If you have a small hole that doesn’t let anything in and only a small about of heat and A/C escape its differs from having a hole the size of a basketball in your that exposes you to elements. No matter the size of the hole, they both cost you money so it needs to be addressed at some point.
If you are unsure of what a primary need is versus wasteful spending, ask yourself how your life would change if you went without it for 30-60 days. Example 30 days without cable is not the same as 30 days without running water in your home.
Remain Mindful of Your Money and Your Financial Destination
Keep your eye on your money. Like a report card, your bank statements will serve you as an aide to gauge how well doing in reaching your goal destination. If you don’t monitor the flow of your money you can’t determine where you are in your journey and like a ship with a compass you will move aimlessly into troubled waters, never reaching your destination or worst finding yourself in a location or situation you don’t want to be in.