It can be a complicated old world out there, when it comes to achieving financial success. It means different things to different people and there are infinite ways to get there.
It’s hard to know where to begin and it can be difficult to see what you’re aiming for. It can be like to starting to climb a mountain shrouded in cloud, where you can’t see the top and you have no map to guide you there.
Then you come across false summits. Just as you get one aspect of your finances sorted, something else comes along. It’s a never-ending journey of bumps and obstacles, where you need to keep learning, adjusting your path and making decisions.
So let’s take a step back and look at this from a distance to gain some perspective. Let me introduce the five building blocks that make up the GroWiser ‘SPEND’ programme for financial success.
Savour Your Spending
A good starting point for financial success is to build appreciation for what you already have. There are only two things of any real value that you can spend – your money and your time. Recognising the joy in how you choose to spend these two finite resources can build positivity and gratitude.
Practical steps here might include taking a good look at your monthly spending patterns. What would you list as absolute essentials, what might you describe as leisure spending and how much do you allocate for luxuries, if anything?
It’s surprising how much collective money is wasted across society, on stuff we don’t need or value. Carrying out this exercise yourself, or with your partner, can be the first step in identifying opportunities for building wealth.
You can read more about how to Savour Your Spending here.
Protect Your Family
Chances are you’re not too keen on thinking about illness, redundancy or death. Not many folk are. But taking the time to think about how you and your family might respond to these events can help bring about financial peace of mind.
Life insurance, health insurance, wills and powers of attorney can all sound really boring and complicated. But imagine the relief for you and those you love if you’re prepared for the unexpected. The last thing you need when dealing with these major blows, is to be worried about money.
A more positive aspect of this building block might be to consider gifting and the planning of legacies. A lot of financial wellbeing can be gained from supporting others, such as family members and favourite charities. And it’s best to do this while we’re alive to see the joy it brings, rather than leaving it until we’re gone.
You can even choose your own definition of ‘family’ here. Some people think of close friends, colleagues and charitable organisations as family. All can be positively impacted as part of your own journey towards financial success. Read more about how to Protect Your Family here.
Eliminate Your Debt
Most people like the idea of becoming debt-free at some point. That’s not to say that debt is always bad. But it’s important to have a clear map of what’s good debt and what’s bad debt.
Taking time to identify your interest rates, repayment terms and outstanding balances won’t take too long. An exercise like this can help you pull together a plan to prioritise how and when to repay what you owe. That might include credit cards, loans, mortgages, student debt and others.
If you have a mortgage, when does it end? For many people, it runs right up to planned retirement age, but how would it feel to repay it faster? A plan that fits into your wider life aspirations can free you up to pursue other opportunities in life.
Sometimes, there can be advantages in ‘cautiously embracing’ debt. This could be to help invest in new knowledge and skills, a business or in ‘real assets’ such as property. Ultimately, the best way to eliminate your debt will be different for everyone, so it’s worth taking time to consider this properly.
Nurture Your Wealth
It’s important to remember that ‘net worth’ does not equal ‘self worth’ but nevertheless, it’s useful to do the calculation every so often. If you ever want to experience financial independence you must work out how much money you need to last the rest of your life.
It’s tricky, of course, because we don’t know how long we’ll live. But there are ‘rules of thumb’ that give us something reasonable to work towards. In addition, most people have not really thought, in detail, about how life might look in the future. Working with a financial coach or life planner can really help you to visualise and cost out your future lifestyle.
From there, learn how to make use of tax allowances, maximise free money from pension schemes and learn how to invest. One phrase I come across every so often is “Poor people save, rich people invest”. There’s some truth in that.
You can read more about how to Nurture Your Wealth here.
Design Your Future
A goal without a plan is just a wish. But it’s a starting point and you must give yourself permission to dream about your ideal, but realistic, future.
In fact, this building block goes beyond financial goals. This is an opportunity to examine your values and purpose in life. The Japanese concept of Ikigai is about finding happiness in life and a reason for being. This is an exercise that can really help you to identify the right goals for you. There’s little point in creating super financial solutions for the wrong life goals!
Take time to gather the thoughts and aspirations you’d love to come true in the future. Write them down, or even better, draw them out in a picture. It really doesn’t matter how good or bad an artist you are.
With this 5th building block, you’re on your way to creating a longer term financial life plan – a roadmap for financial success. Get the ‘financial plumbing’ right, and you can create bold, exciting and ambitious plans. Your future self will be eternally grateful. You can read more about how to Design Your Future here.
There’s a bit of work involved in all of this, but it’s fun and the result is transformative. The sooner you begin, the sooner you will feel the confidence and security of financial success.
It’s as much about the journey as it is the destination. Don’t feel as though you need to do it alone. The concept of financial coaching is to empower you to lead the way, with support, encouragement and accountability to keep you motivated.
Why not book in for a free initial chat to find out more about how this could work for you? Or for weekly thoughts and articles about money and lifestyle, subscribe to my newsletter.