- October 17, 2019
- Posted by: Ethica Private Wealth
- Category: Blog, Helpful Hints
Goals are important in life in order to sustain progress with a purpose over the long term. They are more than a simple hope or desire. They are targeted destinations that you work towards in a strategic way. If you want to create wealth, having an action plan is important to make them become real.
Wealth creation goals need this especially. They require investment and effort over very long periods of time to become a reality.
It’s best to start by setting financial goals. Here are some good goals to make a priority.
Have a well-padded Emergency Fund
Most people think of an emergency fund as a short-term goal. While it is true that creating and filling the emergency fund is short-term, it holds a lot of long-term benefits and is an easy quick win to achieve.
A well-stocked emergency fund will:
- Take away the worries of not having a financial buffer when your financial situation changes.
- Soften the blow of large, unexpected expense.
- Introduce you to achieving your goals.
- Act as a halfway point for funding between your income and investment accounts in order to not disturb your long term wealth creation investments.
- Provide peace of mind during stock market fluctuations knowing that your survival isn’t reliant on your investments.
When you consider all of these factors, it’s clear that this should be your primary goal to start with.
Get Completely Out of Debt
Anyone can do this, regardless of income or portfolio. To get the most out of your investment strategy, it’s basically a requirement.
Just for a moment, we will ignore the differences between good debt and bad debt. Eventually, all debt needs to be paid off. That includes mortgages and student loans.
There are plenty of articles about debt that go more in-depth on debt, but here are a few reasons to free yourself:
- Have full control over your income and where it goes.
- Have more money to save and invest.
- Free your mind of the worry of debt.
- Remove the conditions from your income.
- Make it easier to quit or retire from jobs that you don’t like.
This is probably the second most important goal to have as you can’t begin to build wealth without having full control of where your money goes.
Plan For Early Retirement
Even if you love what you do as a career, planning for early retirement is a highly rated goal to have.
Retirement planning is important because:
- Reaching your retirement goals will take longer than you think. By planning to retire at 50, if you hit a few bumps along the way, you’ll have enough time to retire by 65 thanks to planning ahead.
- Health issues could cause early retirement. Early retirement planning will make sure that you’re ready for anything.
- Semi-retirement could be on the cards if you want to scale back but not retire completely.
- It’s better to be able to retire early and not want to than to need to retire early and not be able to.
- Planning to retire early will load up your retirement portfolio early and allow more growth later.
Create Multiple Income Sources
Securing multiple income sources not only acts as income insurance, but also as an additional investment funnel.
There are a few more reasons:
- Extra cash flow can be funnelled to investments and retirement funds, allowing you to semi-retire at an early age.
- Start a small business without the risk of quitting your job by starting a side business based on your hobbies.
- Help to pay off your debts and implement your financial planning strategy sooner.
This can also open you up to more wealth creation strategies that you may not have been able to do before.
Have Insurance to Cover Contingencies
A lot of people don’t have enough insurance, while some people have too much coverage. Finding a balance is important to have a safety net while not throwing money away.
Some ways to find that balance include:
- Term life insurance is often cheaper so you can buy as much as you need, just make sure that you don’t buy too much that you’re worth more dead than alive, after all, you can’t take it with you.
- Being a safe driver doesn’t really seem to connect to wealth creation but when it comes to car insurance, it pays to have a clean record. It makes no sense to pay more for the potential that you are going to crash again.
- Thinks about offsetting a high premium with your padded emergency fund for lower health insurance costs. Especially if you rarely use it.
Live on Less than You Earn
This is perhaps the most obvious and basic concept of saving money but is still worth mentioning.
By living on less than you earn, you will always have plenty of income to put towards investments, retirement, debt, emergency funds, and so much more.
In addition to living on less than you earn, you should always be looking to increase how much you earn while maintaining your cost of living. This will give your wealth creation strategy a boost and only benefit your life.
Do Work That You Love
The purpose of many of these goals is to clear the obstacles from your life to be able to do what you want in your life. Clearing your debt, having multiple income streams, and preparing for early retirement opens the door for you to do what you love.
If you’re already doing what you love, more power to you, most people aren’t though. True freedom is being able to leave a higher paying job to do something you love for less money and not worry.
That’s only possible though if you have nothing holding you back financially.
Leave Your Finances in Order
Regardless of how you lived our life, one of your life goals should be to leave your loved ones better off as a result of your life. Thinking about who depends on your financial resources and taking measures to adequately take care of them is important. Not leaving them in a financial mess is just as important a consideration as leaving them with everything.
Some tips for proper estate planning include:
- Have adequate life insurance.
- Make sure you are clear of debt.
- Make the financial implications of your death clear to everyone involved.
- Set a good example to your loved ones of good financial and investment management. This will benefit them more than anything you could leave them in a Will.
Reaching a point of financial freedom doesn’t happen by accident. It comes from careful and responsible planning and goal-setting. Once you’ve established a wealth creation plan with a wealth management specialist, working towards those goals becomes a natural part of life.
If you’d like to find out more about wealth creation, wealth management and investment strategies, our team at Ethica Private Wealth Specialists may be able to help you achieve your financial goals with a 2 Hour Free Consultation.
This information has been provided as general advice. We have not considered your financial circumstances, needs or objectives. You should consider the appropriateness of the advice. You should obtain and consider the relevant Product Disclosure Statement (PDS) and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.
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