If these uncertain times have taught us anything about money, it’s two things: You never know how much you might need in the worst case scenario, like losing your job, and it’s never too early to start focusing on building. of his wealth. The latter may be a means of addressing the former.
As a financial advisor to many who have reaped the benefits of starting to manage their wealth sooner rather than later, let me let you in on a secret. Wealth management isn’t just about smartly managing the wealth you’ve created, that’s just the second part, the first is wealth creation.
There is a popular misconception that wealth and financial planning are only for the rich; it’s not. The truth is that it is a path for anyone who actively aspires to build and earn wealth.
Wealth management involves several stages of planning that span a person’s life; it is not a quick shortcut to earn money. It is a way to generate and secure more wealth through financial planning practices and habits that one must follow.
There are some basic stages of financial planning that apply to everyone. If you’re wondering how to start planning your finances to ensure bigger savings and smarter investments, here are some basics to keep in mind.
The first step towards wealth management begins with self-awareness
Self-awareness is about understanding your own needs, lifestyle, risk habits, and everything else that makes you who you are. Don’t lie to yourself or hesitate to admit expenses you think you’re better off without.
It is vital to correctly identify your financial objectives
Any goal expressed or based on money is a financial goal, no matter how big or small. These can be more specific, such as owning a car, buying a house, traveling the world, undertaking philanthropic activities, or even starting a new hobby that requires an initial investment, such as photography.
Wealth management and financial planning help create a steady stream of income
Keep in mind that financial planning isn’t just about you; it is also about your family and future generations. Making a change in some budgeting and spending habits can go a long way toward building wealth.
Identify your needs and spend only what you need
Find out what expenses can be reduced. That money can be put to better use, to help you make more money.
Automate your savings when you receive your salary
Some banks offer automatic transfers that allow you to transfer a portion of your salary to savings as soon as you receive it.
Try to force yourself to start saving
Save at least 20 percent of your income and use it to buy insurance or make investments.
Control your spending habits
Cut back on unnecessary luxuries and cut down on your credit card use.
You need a strategy that involves concrete ways to manage personal finances to achieve your financial goals.
Generate as much guaranteed income as possible
At the same time, use equities judiciously to combat external factors such as inflation and rising cost of living.
Understand the different financial solutions available and identify what you need
Insurance is more important than you think and can make a difference, especially during health crises, in estate planning and offer asset protection during calamities and accidents.
Get regular checkups
A financial strategy needs to be updated from time to time, so reviewing your financial plans regularly is imperative.
plan your succession
Effective wealth management isn’t just about planning your finances over your lifetime; it also involves planning your succession, such as creating a sustainable retirement, children’s education, or significant predictable spending and estate planning.
The ultimate goal of any financial plan is to be financially independent. Some people are forced to retire due to illness or accident. You have to prepare for involuntary retirement, keeping in mind that it can happen unexpectedly.
Start creating savings goals
They allow you to be more focused when it comes to saving money.
Financial planning gives you some peace of mind about the future. It helps you retire comfortably after years of work and gives you financial independence from the start. It even opens the door to early retirement.
Tremendous progress is being made in digitizing wealth management, from coverage of protection planning and retirement planning to wealth building in general. One simply needs to start.
No matter how much (or how little) wealth you have, make a plan to protect, grow and ensure that the wealth you accumulate can generate a steady stream of income for your future and future generations as well.
Dr. Sanjay Tolani is CEO and Managing Director of the multi-family advisory firm Goodwill World.