A Solid Seven Tips to a Successful Financial Independence Plan
Time is money”, is the general belief in the professional world. This attitude does not allow space for leisure time. However, financial freedom has changed this concept of work by enabling a person to enjoy leisure without hampering his steady income in any manner.
Even if you have determined a set of financial plans for yourself, be it market investment, real estate, or retirement, you must seek to follow these plans to maximize your returns.
To help you achieve this, here are some 7 steps to financial planning that will help you to reach your goals, within the time that you require, with tax benefits, and with minimal risk:
1. Emergency Cash Saving.
Always save 3- 6 months of your salary in an account from which you can withdraw money at short notice without suffering any penalty. For any unexpected expenditures, try to avoid using credit cards and use this reserved cash instead.
2. Risk Management.
Insurance is the surest form of risk management. So, insure your car, home, and other important properties. You may also consider life insurance to help compensate for lost income and also pay back debts in case of death. While concluding on your insurance option, always choose the insurance type that suits your requirements, and work out the necessary amount of coverage which is affordable for you don’t over stretch yourself.
3. Estate Plan.
The basic features of a personal estate plan are a will, and a durable power of attorney as provision for your financial and medical care. In case of larger estates, you may require, in addition, a living trust, marital trusts, and charitable trusts. These will ensure that your assets/properties are maintained and passed on to your next generations.
4. Goal Setting
This is the coordinating framework for your financial plan. Whenever you receive an investment offer, always refer it to your overall financial goals. Ask yourself whether it is conducive or productive for, and suits, your goals. This commitment to your goals will help you remain focused in the long run.
You need to have an asset allocation plan that is customized to meet your goals and to keep the element of risk within limits you find acceptable. Without this, your investments will be subject merely to the vagaries of the economy instead of being directed by your requirements.
6. Retirement Policy.
The income for supplementing your social security will derive from defined contribution plans and benefit plans. During your working life, try to make as much yearly contributions to these set plans as possible. These funds grow fast as a result of tax deferral, and since they are sourced right from your pay check, are relatively painless.
7. Tax Planning.
This means taking lead of all the tax deductions and tax deferred plans that you are permitted by law, as well as using tax credits wherever you are eligible. A good tax plan may perhaps save you thousands of cash in taxes.
If you feel that you can’t handle all this on your own, seek the services of a fee-only financial advisor or a financial coach to devise a comprehensive plan according to what your assets and your needs.
Your financial security depends on the proper coordination of these separate wealth building steps. Nothing more.
About the Author
I start writing article some few months ago for fun, writing article on any intrested topics because i like sharing ideas.