Basically, planning of any type requires you to think at a higher level. However before this process begins, it is crucial to approach this with an open mind. Having an open mind does not equate to committing or buying in “initially”, it is simply another method of looking at the picture as a whole. The higher level that I am referring to is expanding your mind to envision what the outcome will be. Financial planning is a state of mind.
There is a saying, “If you always do what you think and have thought, you will always get what you have got”, or “if you do the same thing over and over, and expect different results you will go insane”. These sayings are my inspiration to think outside the box in order to challenge myself to think on a higher level.
Speaking of thinking on a higher level, I would like to mention one of my favorite speakers, Kevin Trudeau. Kevin has made me realize that “I don’t know what I don’t know, and I’m interested in learning more”. He teaches about the “teach ability index” which is based on my previous statement.
There are two parts to this which are first “Are you teachable”, and then next is “Are you willing to make a change”? In order to appreciate these statements, I had to really let these two questions sink in a while before I could move on.
This is where planning comes in since it requires you to want something more than what you currently have. You could just wander around for the rest of your life with no sense of direction and just hope for the best. Sadly this is what the vast majority do and only a few strive for more.
A key element of personal financial planning is “time” which is one of the most precious things known to mankind. Managing time can be a tremendous asset. Let’s face it, they are not making any more of it and once it is gone it is gone for good.
Actually, the most important part of making a plan is living within your means and this is usually a deterrent for most people when it comes to planning. For most, their financial life is one big ponzi scheme; take the new money and pay the old investors. Unfortunately we know how most ponzi schemes end, just ask Bernie Madoff.
So while you have the cash flow, you don’t want to envision this coming to an end. This is again where this is most useful and let’s take this a little further. I mean really “what’s in it for me”! The reality is that effective financial plans will help you find MORE TIME, MORE MONEY, and ultimately put you on a path to greater inner peace.
Realistically, there are two places you can end up. One is landing in retirement because of either voluntary reasons or due to other circumstances such as age or health. Retirement is a fancy word for “you no longer have a paycheck”. Next is not guaranteed but, by choice you can DECIDE to end up with Financial Freedom. Financial freedom happens when you have enough income coming in from other sources giving you the choice to no longer “have” to work.
However, you may choose to work because you want to, it might be a passion or maybe you may like your business. You may leave your career or sell your business and work part time doing something you love as a way to spend time, but not because you have to pay the electric bill.
Remember that this is now a choice. If some of these options sound realistic and you feel open enough to chart your course to financial freedom, you have to start with financial freedom planning. Financial freedom planning begins with looking at the facts, gathering data and writing it all down.
This includes income, expenses, assets, etc. Next you must visit your goals, dreams, and desires. You will want to review old goals and set new ones. With goals it is good to put them into categories small, medium, and large. Once you do this, the rest is easy! It is just a matter of plugging it all into the plan and closing the gaps. Gaps include such as debt reduction, estate planning, and investments of all kinds, insurance, taxes, and inflation mangement.
This is what personal financial planning is all about but all of this is worthless unless you are willing to chart a path. My challenge to you is to think at a higher level and expand your mind by thinking about what the outcome will be when you have achieved Financial Freedom.