As we grow older the complexities of life definitely increase and with every step that we take into the future, life seems to become more complicated than it ever was.
Each responsibility brings with it a certain amount of stress, whether you are responsible for the work that you do at the office, for a child, for your parents or even for yourself.
Dealing with the many aspects of life can take its toll and we haven’t even added to this list the pressure of being in a tough financial situation.
If you were to think of life problems to be a sundae, financial pressures can be thought of as the cherry on its top. The size and taste of this cherry depends on your competency to handle such matters and the efforts that you take to juggle the different needs of those that depend on you and that of your own self.
Following are certain thoughts that can make you tackle the situation differently:
Go Big First
When we look to solve any problem we tend to begin with the small elements that we can change to systematically repaint the bigger picture. But when talking about financial affairs it is best to begin with the broadest concepts. You must first think about the things that you value the most such as security, safety etc.
Among your other priorities can be family, health, stability and financial security. Without figuring out the big picture items and basics, you may be laying down an unstable foundation for your future financial structure. Following are certain basics that you must understand
- How much do you earn?
- How much do you spend?
- How much debt do you owe?
Once you have assigned numbers to these questions, you can think about establishing safety in the form of a liquid emergency fund, debt reduction, insurance and the important documents such as power of attorney, Will, health care directive etc.
It is highly unlikely that every decision that you take turns out to be perfect, you must have the intention of making a meaningful move in the right direction.
If you are confused about where to begin or how to go about, you must consult an expert whom you can trust that they will act in your best interests. This will lift off the pressure of making wrong decisions or doing nothing at all.
Act on your Goals
The easier part is coming up with a plan and the difficult part is implementing the plan. To implement your plan you may have to save more money for retirement and delay those expenses which are not necessary as of now.
You should set aside money for future important expenses such as buying a new car, going on a vacation, prefunding your child’s college and repaying loans. But you may have to translate thoughts into actions to make something happen.
You must automate your plans to make sure that things happen exactly as you plan them. You can set up automatic payments through your bank or payroll and compulsorily automate your savings. At some point you have to stop thinking and start acting on your plan. If you have to take many efforts to make the payments it is quite likely that you may not make the payments at all.
Check The Progress You Make
Evaluating your progress is an important part of the plan. You should be able to analyse whether your important goals are being met and that your financial strategy is paying off.
Your asset allocation must be effectively diversified. Your investment choices should be aligned with your objectives and must match your risk tolerance and time horizon. With the help of your planner you can put in place sensible guidelines as to where you should invest your money.
Staying Ahead of Life Transitions
The most challenging parts of our life are those in which we transition from one phase into another. Some transitions are wonderful such as marriage, the birth of a child or retirement. These transitions bring a lot of happiness but still they present many financial challenges.
There are other transitions which may not feel so good such as divorce, death, disability etc. You must prepare for these life transitions as well and ensure that they do not place a tremendous strain on your finances. For instance, you should write a Will using a Will template to ensure that your loved ones get what they rightfully deserve after you’ve passed away.