Where And How To Begin Your Financial Investments?

As you work on your finances, you may still make mistakes with your money, and that's okay. Sometimes you might be unable to resist the urge to buy something that isn't in your immediate budget. And sometimes, you will feel like ripping your entire financial plan to bits because it just doesn't seem like fun.

However, as long as you keep your reasons WHY you want to be financially free in focus and make an effort to rebound quickly from your mistakes, you'll do just fine. It's all about assessing the mistakes you made, understanding why you made them and making a plan to avoid making them again. Then, you’ll need to take those lessons and apply them to your future success.

How To Make A Financial Investment?

Below, you’ll find ten steps to create a solid financial plan.

1. Write Down Your Financial Goals

Having financial goals is the foundation for your financial success. After all, you have to know what you want to accomplish in order to actually accomplish it. However, when it comes to setting goals, you want to make sure your goals are well defined and prioritized accordingly. It's great to have big, lofty goals! But be sure to break them down into smaller chunks. That way, you’re not overwhelmed trying to accomplish them, and you can easily measure your progress.

2. Start An Emergency Fund

It's also really important that one of your goals includes a plan to deal with emergencies. You want to make sure you are prepared to weather a storm. Otherwise, you'll just end up in debt again.

3. Pay Off Debt

When you create a financial plan, be sure it includes a plan to get out of debt. Sadly, you can't really kick-start your financial future if you're carrying a ton of debt. Between sky-high interest rates, large minimum monthly payments, and the damage lots of debt can do to your credit score, you're better off paying your debts first. Create a debt pay-off strategy and be patient but consistent when working toward becoming debt-free.

4. Create A Financial Plan To Invest

If you are serious about building wealth, then you're going to need to put your money to work for you. This is where investing comes in. However, before you put any of your hard-earned money into investments, it's important to have well-defined objectives. Think about what the investment is for when you'll need your money and what your risk tolerance is.

Investing is a long-term activity, so you have to commit to it if you really want to see your money grow. Well, that's what your savings accounts are for; to put aside your emergency savings and money for your short-term goals (i.e., the money you'll need in 5 years or less).

5. Get The Right Insurance

After working so hard to earn your money, the last thing you want is an unplanned occurrence to wipe you out. Insurance is essentially your backup plan that will protect your assets in the event a life circumstance happens that requires a large amount of money to resolve.

Your insurance coverage should include health, auto, disability, life, home or rental, and business. Basically, you want to protect anything of major importance that has a high value to ensure that you (and your loved ones) are protected financially. Having the right insurance can turn what could otherwise be a major disaster into a mere inconvenience.

6. Create A Plan For Retirement

In order to have the lifestyle you dream of in retirement, you need to plan adequately for it. You'll need to determine how much you are going to need to retire, of course taking inflation into consideration,  and how you plan to save and invest in advance for that period of your life.

While retirement might seem like a lifetime away, it's never too early to start! Planning for retirement is how to make a financial plan that will enable you to live life on your terms when the time comes!

7. Plan For Taxes

Taxes are annoying, but they're certainly not going away anytime soon. So make sure your long-term income projections include taxes. Not planning for taxes can impact your cash flow in a major way. In addition, you definitely want to look into tax savings investment options and stay up to speed on any relevant tax deductions you can apply to help you save money on tax payments. You can plan to sit with a tax accountant or financial planner to help ensure your plan for taxes is adequate. You should also check out our blog post on how to reduce your taxable income!

8. Create An Estate Plan

Estate planning is not something a lot of people like to think about, but it's essential! It allows you to determine exactly what happens to your assets after you are gone. It involves listing out all your assets, creating a will, and making it accessible to the people who need to have access to it. A financial planner or estate lawyer can help you set things up correctly.

9. Review Your Financial Plan Frequently

Once you have your financial plan outlined and churned along, it's important to review your plan frequently and make the necessary adjustments if your goals or the circumstances around your life change. For instance, maybe your insurance needs to change, your risk tolerance changes or you get married or have kids. At a minimum, you want to check in on your overall financial plan at least every six months.

When you check infrequently, it's easier for you to deal with unplanned life occurrences, bounce back from setbacks, and accomplish your financial goals. Think about what you do to maintain your personal health.

10. Stay The Course, Avoid Overspending And Learn From Your Mistakes

Your journey to financial independence won’t always be easy. There will be some tough days, weeks, and even months. Pursuing a goal of financial independence that's very much tied to delayed gratification is not always fun, but it’s completely doable. Have a solid plan for your finances, be disciplined, and avoid overspending. You’ll find out how great you’ll feel when you really make a concerted effort to stick to your budget.

Conclusion

It's also important to track your net worth over time to ensure you are in line with your long-term goals and financial objectives that you've set out to accomplish. Many people start out with a negative net worth as they start out working on improving their finances but given time and the continuing of practice good financial habits, this will change.

You may also like: Debt Funds - Everything You Must Know!

Top 3 Listed Government Investment Schemes In India

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised not to rely on the contents of the article as conclusive in nature and should research further or consult an expert in this regard.