Many of us start off the new year striving to be better with our money – saving more and spending less all in the name of financial freedom. As we head into the new year, having resolutions are all well and good, but good intentions alone are not going to get you any closer to your goals.
You need a wealth strategy. I have 6 steps which will help you cement your plan to reach your financial goals, build your wealth portfolio and get you on the path to financial freedom.
- Now is the time to start!
This might sound obvious but there is no point putting it off – you can’t get your time back. When looking at investing and building your wealth portfolio the best results are built on giving the investment time to thrive.
- You need to know your numbers first
You need to be able to read your financial position and know exactly where you are starting from. This means knowing the good, the bad and the ugly. Take the time to go through your finances at a forensic level – without a complete personal accounting file you will not have all the information you need to make the right financial decisions.
- Mini goals maximise your chances of success
Everything has to be set on a goal, no matter what it is and what length of time it may require. By breaking down your goal into mini goals you can use your personal accounting file to reach each one. Ideally, you plan your mini goals out with a strategy per month till you reach your ultimate goal.
- Break your primary goal down into long term and short term;
- Then break down each of these goals into mini goals;
- Then build out a strategy to work towards each mini goal.
- Minimise your spending
As simple as this sounds, the quickest way to financial freedom is one where you don’t overspend along the way! Want to start off 2021 with real conviction? – Cut up your credit cards! We need to have a drive to pay off debt and changes you make to your spending habits will only serve to help you reach your goals sooner.
- Maximise your income
The best way to increase your income is to increase the number of income streams you have available to you. If Covid has taught us anything, it is gone are the days where you can simply rely on the income from your job. What happens when your active income is taken away? This is where your wealth portfolio comes into play. Your wealth portfolio generates passive income. This is the income that is working for you while you sleep. Passive income is not only the safety net should you lose your active income, but it sets you up to enjoy the finer things in life and become financially free.
- Grow the surplus
When it comes to investing and your wealth portfolio there are some tips I have for first time investors when it comes to growing your surplus:
- It pays to get professional advice, and i’m not talking about what the bank says you can and can’t do!
- Research, research, research!
- Capital growth is your number one priority in a wealth portfolio, and you make your money on the way in. By this I mean avoid premium overvalued purchase prices, and the sales pitch that focuses purely on “percentage return”. Finally, on any strong investment, be prepared to commit for the long term.