Get Rich Slowly: My Ten Steps- Step 1
Everywhere you look there are people that are willing to sell you their Get Rich Quick secrets. The truth is though, that these schemes rarely work. Most people who get rich accumulate their wealth slowly.
Lots of people confronted with this truth shrug, place the planning of their finances into their mental "too hard" pile and continue with their daily lives; not getting rich either quickly or slowly.
By working your way through the following ten steps which I will publish over the next few weeks you will be able to get a clearer picture of where you would like to be, and perhaps more importantly, where you are now, financially. Very few people ever get rich by accident. As an accountant I see rich people and poor people, often the only difference between them is that one group plans and sets themselves steps to achieve their goals whilst the other blindly continues through life without consciously thinking about their future finances. Whilst my hubs are in no way a substitute for professional advice they are designed to make you stop and think about your finances.
Step 1: Planning
You wouldn't book a holiday without a plan, and that represents only a short period of your life. Nonetheless many people are prepared to continue throughout their lives without any significant plan of how they intend to achieve their financial goals.
Of course, particularly in early adulthood, plans require flexibility, but just because you may not know your ultimate life goals does not mean that you are unable to make any plans at all.
Examples of objectives at different stages of life might include:
Earning or saving enough money to complete education.
Saving enough money to pay the deposit on an investment property
Setting up a fund for your children's education
Ensuring that your pension funds are sufficient to fund your retirement.
Having established what your objectives are you can then plan a way to meet them. For example, for someone seeking to save a deposit for an investment property they would need to establish a time frame for completing the objective, work out how much could be saved each month, consider whether this would mean cutting back elsewhere in their budget, and set up the actions i.e automatic bank transfers that would help this to happen.
An Example of a financial plan
1. Your objectives
What are your long and short term goals?
How might your goals change in the future
How much money will you need to achieve your goals?
2. Your budget
Go through all of your finances working out what you spend and what you have left over. If there is too little to achieve your objectives look for ways to either decrease your expenses or increase your income. Be realistic and allow for unexpected expenses
3. Where you are now
Go through all of your assets and debts and make a list of where you are now. Deduct all of your debts from your assets to work out your current financial position.
Having completed this step you should understand both where you are at the moment- your current financial position and be able to compare it with where you want to be in the future. The next 9 steps are about helping you to get there.
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