5 steps to financial freedom

5 steps to financial freedom

5 steps to financial freedom: The path to financial freedom lies not only through making millions, but also through competent and clear financial planning of your future. Many people know how multimillionaires eventually lose everything and vice versa financially savvy mid-level specialists can save up a very decent pension supplement.

What is important to do in order to ensure a stable financial “pillow” in the future?

Step 1 and step 2. An honest analysis of the current state and competent formulation of financial goals.

These two postulates are inseparable and go side by side precisely because one is impossible without the other. Having assessed your real opportunities and the level of income at the moment, you can calculate what percentage of income you can conveniently translate into savings or investments. This is exactly the difference between the amount of income and the amount of necessary monthly expenses.

If your income is less than expenses, then there are only two ways:

• Revise the item of expenses and cut down possible positions in order to increase the difference in accumulation up to 10%
• Start working on increasing income by considering sources of additional income or applying your talents in freelance

Further, you can ascribe your goals and approximate dates for their achievement.

Step 3. Making the money work for you.

Thanks to the ubiquitous inflation, it is strictly forbidden to keep money at home. This will lead to an empty race for a constantly leaving train. That is why when drawing up a financial plan it is very important to think about where and how your money will work for you.

In the figure below you can consider the main financial instruments for investment:

Now let's look at 3 investment portfolios:

Democratic portfolio

These are investments with minimal risks, but because of this, you can also earn very little. Enough of the capital to invest in bank deposits and bonds.

Mid-level portfolio

This is already a higher return on investment, but also emerging new risks. You can invest in real estate, land, structural product, bonds and precious metals.

Gatsby briefcase

This is a high level of income, requiring a certain financial literacy or at least basic knowledge about investing in Forex, PAMM account accounts. You will be satisfied with the financial result, but the risks must be adequately assessed.

IMPORTANT: when investing in bank deposits, it is important to remember the rule of currency diversification - that is, all your money must be stored in a different currency in order to cover the difference in currency fluctuations.

Step 4. Moderation and literacy now is the financial stability of the future.

Let's immediately, for example, if from now on you start to save 10,000 tenge for a deposit at a rate of 10% for 30 years, then after 30 years you will have 20,240,814 tenge in your account. Of course, there will be inflation and fluctuations in the interest rate, but nevertheless, 10,880,814 tenge will be the accumulated interest. Doesn't that matter?
It turns out for 30 years a small amount of deductions to your account, for retirement you will receive a very tangible increase.

Step 5. Insurance coverage of your goals.

There are a lot of insurance companies on the market with different conditions and attractive offers. And it’s not easy to choose what you can trust with your expensive finances. But at the same time you can’t rely on yourself all your life. A sickness or any other unforeseen situation can happen that can permanently knock you out of the saddle of financial stability. Therefore, it is very important to insure your disability and choose a trust insurance company, which will also help to accumulate funds for many years.

What conclusions can be drawn?

1. Compiling your most successful financial plan always begin with precise goals. Most millionaires had clear goals that motivated and disciplined them.

2. Always follow two paths of financial stability - grow professionally and increase revenues, as well as control your expenses. 62% of millionaires know how much and where they spend monthly finance.

3. Always work with your assets, analyze the market and situation, look for more favorable conditions for investments, but do not forget about protecting your money.

4. When the goals are already set, do not be afraid to look into the distant future and think over the way for 30 years in advance.

5. Always insure your life and your money. One day it will help you out a lot.

Managing your finances and competent planning for the future is not a luxury of financial top managers, but only knowledge of several important rules. It is from this that your new life and a completely different attitude to money will begin.