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Wealth Health

Wealth Health #6: The Financial Journey

OK, we’ve done enough analysing in recent blog posts that you should now have an adult, realistic view of your current financial state. You will have also recognised your financial personality and should be well resourced to start your future financial journey.

Any planning exercise must begin with the setting of goals. Aspirational, inspirational, real goals.

What do you want money for?

Have you seriously thought of what it would mean to be truly rich?

Maybe it’s time to revisit the Wheel Of Life. Consider what having wealth would mean in each of those areas of your life: relationships, health, career, recreation, family, spirituality etc.

It is often said that if you wish to be a millionaire, then you should start by acting like one. That can be easier said than done, but look at those areas of your life again. Consider how you might start to create those improvements now.

In Tim Hales’ Smarter Investing he borrows from Maslow’s famous Hierarchy of Needs to present a pyramid model for setting financial goals. Start with the bottom foundations made of current needs: earnings, savings and debt repayments.

On the next level up the pyramid we have your retirement plans. On the third level are the solid future goals around things, experiences, college, weddings etc.

At the top level we find the long-term goals, such as legacies which are further in our future. It should be clear that the upper levels stretching into the future need good solid foundations beneath them.

Try to identify the big milestones in your own financial future: childcare, house, big trips, weddings, parental care, retirement. Trying to choose a date or age in your future where these might occur.

In these days of financial constraints, one of the most worrying aspect of many people’s financial planning is how to manage changes to their pension facilities.

“The question isn’t at what age I want to retire, it’s what income.” – George Foreman

Retirement planning may not be an end goal as such, but it surely ranks high in the important stops along your financial journey. We are destined to live longer than our parents did. We must plan for that.

On average, men live for 17 years after retirement, while women live for 20 years.

During the 1960s, spending focused on leisure, houses, travel and transport.

Since the 1970s, spending has focused on health care and domestic help.

This is a huge area to consider when we will look at it in some detail next time.

Let’s be prepared – or, as Warren Buffett puts it, “Someone’s sitting in the shade today because someone planted a tree a long time ago.”

 

 

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