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Money Grows Tree

Tuesday 11 November 2014

Need for vision in financial planning

Many people in life have been constrained from reaching their financial goals because they ‘walk’ and ‘work’ without vision. Now, doing anything without vision is like walking in blindness. In our series this week on Old Mutual’s financial education, we discuss how to create a clear financial vision.
Many savings plans fail because their goals are too vague.
The Secret of the Leopard is very simple: learn from the leopard and have a very clear idea of what you are saving for. Saving isn’t easy.
You need a vision – something really inspiring to keep you on track when times are tough. If you have a powerful visual image, this will help you to “stick to the plan”, and achieve your goals with the same determination of the leopard.
Remember the leopard always aims at things it knows it can achieve. When it is young, it first learns to stalk easy targets, like weak or young buck. As it grows up and becomes more experienced, the targets change to more challenging ones, such as bigger animals!
The Secret of the Leopard gives you powerful tools to set you on the path to becoming wealthy. This section helps you explore your vision in detail. What does your vision look like? What will it feel like? Can you imagine it so well that you can smell it, hear it or even taste it?
Explore why you want to achieve your goal – is it really what you want? The important thing is that you must truly believe you can reach your vision. Choosing a vision you would like, but don’t believe that you can really reach, will not motivate or inspire you. Realistic goals will encourage you and keep you on track.
What is my vision for the future?
Brezhnev now has three specific goals he wants – and believes he can achieve. He knows from the Secret of the Leopard that the goals must be concrete, and by imagining and visualising them, saving for them will become easier. But his goals are still not complete; they are all short-lived.
He might be able to achieve his dream of “having more fun” for now, but how are these goals going to fit with his vision of becoming more wealthy? Having medium and longer-term goals are vital for creating long-term wealth. Your savings plan should have all three types of goals – short, medium and long-term goals that inspire you.
To increase the success of achieving your goals, find someone who can help remind you to keep track of your goals. Research shows that if you have support for your goals, you are much more likely to achieve them. Telling someone increases your commitment and excitement. Ask someone you can trust who can remind you of your goals occasionally.
Once you have your short, medium and long-term goals that you want to save for, you must break them down in more detail. You need to decide what it will take to reach each one.
Ask yourself these questions for each of your goals.
*Can you describe each goal in detail?
*By when do you want each one?
*How much do you need to save for each one?
*What do you need to do to achieve this?
*Who will help support you and remind you of your goals?
How do I develop a financial plan to realise my life visions?
Now that you can see your future, you need to develop a plan that will help you reach your goals.
The Secret of the Elephant will help you to challenge your current spending and budgeting patterns, and is an important step in putting your future plan into action. But before you “budget” for your future, here is a wonderful way to achieve your goals. Do each of these steps and you will be on your way to reaching your dreams.
Step 1 – Know your goals
What are your goals for the short, medium and long term?
Write down one big reason for wanting each goal – why do you really want it? Imagine your goals in all their glory. What do they look n like? Think of colours, sounds, and the feelings that they bring.
Step 2 – Research your goal
Ask yourself – what must I do to achieve this? Collect information about them – where and how can you achieve your goal? What are the extra costs attached to achieving it?
For example, a new car will need to be licensed, insured and maintained; a TV requires a licence. Where can you fi nd the best value for money? Shop around! Who can help you make your decision about your goals – a bank adviser, a broker, an elder, a mentor? Do you need to qualify/apply to achieve your goals? If so, what do you need to do to apply/qualify?
Step 3 – Reality check your goals
How achievable are your goals, given your current earnings, education level or home circumstances? What would you need to do to make your goals realistic – earn more, get a tertiary education, win the lottery?
Are your goals really the things you want to achieve? Do you believe you can achieve them?
Step 4 – Prioritise your goals
Can you save for all your goals at once? Which ones will you start with?
Remember medium and long-term goals take longer to save for. Are they included as a priority?
Step 5 – Plan your savings for your goals
Budget for them now. What are you prepared to sacrifice now, for your future? Fewer cell phone calls? Less spending on clothing? Fewer take-aways?
How can you increase your earnings to help you save for your goals? Working overtime? Taking a second job? Studying and working towards a promotion? Who can you choose to support you and occasionally remind you of your goals?

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