We often talk and dream about being financially free. However, without a clear, solid and fully documented action plan, no matter how important or ambitious your plans are, the chances of financial freedom are very low.
Without defining a clear road map, you will soon forget about your dreams of financial freedom and go back to the old lifestyle.
Why do you need an action plan?
Life has to continue even when we face tragic events. Therefore, it is vital to work for the present and formulate a plan for your future. A financial plan provides you with a solid working method that helps you organize your financial future. On the other hand, having a financial plan is a great way to feel independent and empowered especially when it comes to dealing with various unforeseen circumstances.
Goals, Objectives and Expectations
Determine exactly where you are going. Since goals are the main driving force behind your plans, you should include all your short term, midterm and long term goals which should be specific and realistic. The goals should be based on how much you expect to spend and when. This means that you will be financially free to do exactly what you want, when you want and with whom you want. Therefore, you need to determine where you want to be 5, 10 or 20 years from now. This may include answering big questions such as when you want to retire or stop working and where you will live after retirement. Visualize how you want life to be if you do everything right.
What will financial freedom Look Like?
There are very many definitions of financial freedom depending on your goals and objectives. For instance, you may want to work from home in order to dedicate more time to family, travel around the world or simply doing what you love without reporting to anyone. Once you know the lifestyle you want in future, you can start re-organizing your life right away in order to get it.
Define your path to financial freedom
You must structure your finances in order to achieve your vision. Financial freedom cannot be attained overnight. Therefore, you must devise a plan to help you get where you are going. However, once you have clearly defined what financial freedom means to you, the path is not all that treacherous. However, trudging along without knowing exactly what you are working for means you will lose focus and simply fall back into the same pothole. This may mean paying your debts or spending less and investing the surplus in order to get the returns you need finance to your goals. Note all obstacles to achieving your goals and develop strategies to overcome them and appropriate timelines to materialize your goals.
What stage in life are you in?
Your stage in life has a very big impact on your goals and expectations. For instance, if you are married or in a relationship, you must take your partner into consideration when setting your goals and maybe even involve them when making decisions in life which may include involving your kids in the plans. On the other hand, young people may have more plans and ambitions for major stages in life as compared to old or retired people.
Regardless of your age or stage in life, it is vital to have action plans because they serve as constant reminders that remind you of your goals, objectives and estimated deadlines. Moreover, it serves as a great tool for reviewing progress against your action plan.
I have written down my plans: Whats next?
Once you have made your plans, both short and some long term plans, it time to get started on your financial security. The next step is to work out what current your financial position.
Time to move on to step 2: Its time to work on your budget.