Life Planning Coaching Financial Planning

Clarifying Your Financial Priorities

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Money, which is a component of the financial area of life, is important; it allows us to meet the needs and wants we have in other areas of life. 

Instead of money ruling us, we can rule and manage it. We have the capacity to use it well. It takes some training, which is available, but you have to seek it out, take the time and make the effort to learn.

Defining Financial Success

Few of us have or will ever reach our full potential in terms of wealth. If this were not true, most of the world’s wealth would not be concentrated in an extremely small part of the population. 

I have come to define financial success as the ability to live your life without outside help: working when you choose, only if and when you desire. That is true freedom, because you are in control of your time. 

How to Achieve Financial Freedom

First, you must educate yourself on how money grows, and clarify your financial goals.

Then, spend less than you earn, and invest the remainder at a reasonably good interest rate. Sound simple? It is, but it can be difficult, especially without help.

Financial advisors, investment clubs and accountability partners can make a big difference. Connect with people who have your best interests at heart, and whose values align with yours.

Money can be viewed as an idea. The hard-earned cash you have in your hand right now is not real; it is not really worth anything without the faith we all have in our economic system.

Supply and demand of goods are a big part of the process. The system counts on consumer spending to keep it going. 

  • You must walk away from some items you want but do not need
  • To do this, it helps to have a budget and a good understanding of your long-term goals, dreams and desires
  • To develop such an understanding, you often need help from an unbiased professional or trusted friend 

The Basic Elements of a Financial Plan

Having a financial plan, regardless of how simple, is a good first step toward achieving your financial goals. It should include:

  1. A budget
  2. An understanding of your cash flow
  3. Savings
  4. Investments
  5. Insurance
  6. Education
  7. Retirement
  8. Estate Planning

Barrier to Financial Success: Mindset

Your money mindset is set in childhood and is the result of conditioning:  

  • What did you see and experience where you lived, worked and played?
  • If you were around people who spent everything they made, overspending may be a challenge for you.
  • If you were around people serious about planning and investing, you may be disciplined and have a long-term perspective. 

Unfortunately, financial literacy and good stewardship of money are not the norm. Many Americans retire with very little resources.

Start Where You Are

Start by assessing your money mindset and developing a financial plan. 

Anyone can learn to manage money well, but it takes thoughtful planning and continuous review. The work begins with reading financial information widely and often. 

Understanding Cash Flow

How much money is coming in and what are you doing with it? The 55/25/20 rule can help you manage cash flow:

  1. Spend 55% or less on essentials
  2. Spend 25% or more on savings, investments, paying off debt and charitable giving
  3. Spend 20% or less on things you want, but do not necessarily need

In addition to this rule, it can help to partner with a fiduciary financial advisor to develop a comprehensive financial plan. The process will help you clarify your life and financial goals, and detail the steps needed to achieve financial success. 

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This content is developed from sources believed to share accurate information, and provided by Kelly Financial Planning. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and materials provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.