Tired of the same old serving of financial stress and overwhelm? Why not rustle up a new recipe for financial success following these simple steps.
Decide what’s on your personal menu
Personal finance is just that, personal to you. And no one recipe is going to suit everyone.
Before starting out take some time to think about what you really want from this meal.
What do you ultimately want it to look like – your big juicy vision.
What are the goals you want to achieve as you prepare, assemble and ultimately serve it.
Consider the time frames that you want for this meal to come together, when are the various goals that create this juicy vision achieved?
Accumulate your ingredients
Whenever I decide to bake, I find a bunch of items which are past their use by date. As you can probably read between the lines I don’t cook often, but if you have not been a regular baker of your personal finances you are likely to find these types of items.
A big one to “throw out” is consumer debt. If used in our recipe it is bound to ruin the outcome. Before starting the assembly start the process of eliminating this from your kitchen.
Another place you will find some of these “bin-able” ingredients is in your spending. Look for subscriptions you don’t use, utility bills and insurances that can be reduced and anything else that you aren’t getting the most value from.
For a wealthy and a HEALTHY life cut the sugar and fat out. Take a hard look at your finances and cashflows to identify those sweet indulgent extravagances that may have caused a temporary high but lost their lustre quickly. They will detract from the goodness of your meal if they aren’t items that you find to be of lasting value, which let’s be honest, a lot of our mindless spending tends not to be.
Finally, before cooking the meal be sure to stock the pantry with those “emergency” items we sometimes have to use. This would be the emergency fund you can draw on when stocks are running low and the pantry needs some support.
Your pantry ensures that you can continue to cook your meal even when facing some challenging times.
Don’t forget to add the yeast
There is nothing worse than a flat, over runny meal. Especially when you have done everything else right in the preparation.
The yeast to your finances is investing. Investing is the rising-agent that “invigorates” your financial meal by getting your finances working for you.
Your investments will be peppered across your financial meal to meet your goals. Your pension is an investment for the long term, your other regular investments are there to meet your other medium term to long term goals and your savings, while not an investment, are there to meet your short term goals and for your emergency fund.
The magic behind investing is that it keeps your money working twenty four hours a day slowly but steadily building up to your goals.
The secret to this meal is that it’s preparation and cooking time is a marathon and not a sprint. Rushing through any aspect of what is required to complete the meal could result in unpleasant set-backs.
For example, trying a “get rich quick” investment strategy means putting the success of your ultimate meal at undue risk.
Be careful to add a wide range of ingredients
Variety is the spice of life and that is equally true in your financial meal and especially the investing aspect.
When it comes to your financial meal you want diversification, not having all your eggs in one basket, and that means investing in different types of assets and not being reliant on any one source of income.
The world moves in cycles and what seems stable and secure or even extremely lucrative at one point in time is bound to be on the other side of things at another point.
Hedge your bets in this meal and make sure you have a wide spread of ingredients that no single one can overpower the meal and make it inedible.
Taste your recipe regularly to make sure it still works
Like all things in life our meal is going to taste so much better and much more suitable if we pay attention to it.
We need to not only check the meal is coming along as planned but also that it is still suitable for achieving our goals.
Just like no one will care us much as we do about getting our meal right, no one is going to take care of our money as well as we can. That’s not to say a master chef, such as someone who specialises in financial advice, can’t help us along the way but it does mean we have to be actively involved and understand what the master chef is adding (and taking away in fees) from our meal.
Protect your meal from hungry predators
You know how it feels when you have slaved away in the kitchen all morning, left the cake out to cool before icing it, and some scavenging family member has gotten their grubby paws and hungry teeth into it?
This is not how you want your dream meal to end up.
This means taking out the necessary insurance to make sure you are protected from this eventuality.
These insurances come in many flavours and it is best to choose those that suit your meal and your pocket; Income Protection, Health and Disability Cover, Asset protection, life insurance and such.
In this case, just like you may consult your fishmonger for the best seasoning for your meal, it helps to consult an expert and make sure the insurance you obtain appropriately meets your requirements at an affordable cost.
And there you have it.
In a nutshell, the financial meal preparation is simple, it may not be 100% easy, but it isn’t meant to be an overnight success and you have time to perfect your skill. Just like those cooking Master Chef’s, becoming a financial Master Chef requires dedication, focus and time but what can be more motivating than being able to create your Financial Freedom meal!