Financial planning at its smallest denominator is essentially what you'd like to have and how you plan to get it. That may be oversimplifying things just a bit, but sometimes when you look at things stripped away of all of their jargon, it's a lot easier to understand it. So, in order to begin planning your financial future, make a list of everything you'd like to have. Whether it's the freedom to take a vacation whenever the fancy strikes you or the ability to retire without having to worry about eating out of garbage cans, write it down.
Now, let's work on how you plan to get there. If you've already got a great job, you're well on your way. It's easy to think that making X amount of dollars per year is going to make you rich, but when the realities of life start to creep in, it's all too easy to become uncertain. There are going to be unexpected expenses for the rest of your life from orthodontia to cars that break down. There are going to be hurdles that will trip you up on your way to financial success.
You've got to accept this fact and realize that your job on its own, unless it is incredibly lucrative, is not going to be enough to secure your financial future. Your 401K cannot bear the burden of your future by itself. It's going to need a little help. Somewhere along the line, you're going to have to take risks and start investing. This can be pretty scary at first. All of us are familiar with the horror stories of people who took a gamble and lost everything.
However, this doesn't have to be your story. If you want to start planning for your future, you're going to have to take some risks. It's being able to tell which risks are the ones worth taking and the ways that you finance these risks that make the difference. Many people are under the impression that in order to invest in something, they've got to have money put aside. In most cases, this means waiting until you're well established to start making plans for your future. This is all well and good, but chances are, by the time you're there, you're not going to have much time left before you retirement.
Before waiting until you have a lot of money put aside, it's a good idea to consider leveraging debt to start generating income right now. You'll have a lot more time to start putting money away if you start now rather than waiting to get flush years down the road. If you're already at the point where retirement is looming, debt leverage may be your first alternative.
By using smart debt management practices, you can leverage it to start making money. Whether it's investing in stocks that you couldn't afford on your own, or taking a chance on a new company, debt is a very powerful tool
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Originally posted 2008-11-29 21:31:58. Republished by Blog Post Promoter
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You’re right about the fact that your salary alone is not going to cut it. Passive income is the way to go and that’s the plan I have for my own future of financial independence.
I also had a chuckle at the car breakdowns since I had to do repairs back in September. It turns out I have now sold the car and it feels great – no more uncertainty.
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