How to plan your financial freedom, in 5 proven steps
and achieve more of what matters to you
What does financial freedom mean to you?
Why would you want to learn to plan it for yourself?
What is Financial Freedom?
What is financial freedom, and why is it important to you?
These are important questions if you want to plan your own path towards it.
So, I urge you to set aside some ‘quiet’ time to consider it carefully.
Jot down your thoughts now, on what financial freedom means to you, and if you need some inspiration, here’s what others have told me:
Financial freedom is about being able to:
- Travel more with friends, family, or alone!
- Provide great experiences for yourself or your children
- Choose to work less or do something completely different.
- Write a book.
- Start a business.
- Stop worrying about the mortgage and other big bills.
- Buy a first (or bigger) home.
Your situation, values and attitudes to money are unique to you. And while your definition of financial freedom might have elements in common to other people, the whole picture will be unique to you.
I’d certainly love to hear your thoughts on this, if you’re happy to share them, in the comments below.
Why learn to plan financial freedom for yourself?
Why would you want to plan your own finances?
Isn’t that a job for a financial planner or adviser?
Well, there are three big reasons to take control of this planning yourself.
First, because when you develop your own Plan, you’ll understand it much better – and take ownership of it.
Second, it’s entirely possible that you could save hundreds or thousands of pounds, on financial advice (if you need it) if you start your Plan yourself… and if you learn how to find high-quality advice, at a fair price you could save thousands more.
Third, we all need to know how to make smarter financial decisions for ourselves, right?
The good news is that these skills are easier to acquire than most people think.
The challenge is learning how!
They don’t teach you this stuff at school, and if you look at any of the turgid textbooks on tax, pensions or investments you risk putting yourself off this subject altogether.
Studying those books is hard, boring work… I know, I’ve done it.
Some of those books are more than 800 pages long, and unlike my books, they don’t contain cartoons or jokes either!
So, imagine how you’d feel if you’d managed to grind your way through a dozen or so of those books, only to discover you needed to read another set of books, to understand where the first set was wrong!
Am I having a laugh?
While this truth is undoubtedly funny (in a peculiar sense), I’m not joking – and I really don’t want you to waste your time and money on all those books.
I’ve done all the hard research for you, and packaged the essential ideas into Plain English Insights, right here.
So, if you want to get to grips with financial life planning, you’re in the right place; and yes, you will have some fun learning it here too.
I don’t do ‘dry and boring’!
Shouldn’t you just talk to a financial adviser?
Well, I’d certainly encourage you to do so, if or when you realise that you might need some financial products.
However, as any good financial planner will tell you…
Financial products are the last thing you need,
to map out your financial life Plan.
I don’t sell Financial Products, by the way. So, you can relax about that. This site is about education, pure and simple.
Everyone needs to learn the basics about money because, sadly, not everyone will tell you the truth or the whole truth about it.
If you only take one thing from this Insight, remember this:
For most people, good quality advice
at a fair price is difficult to find.
This is the truth and is the same the world over, for one reason:
Many regulated financial advisers charge fees as a percentage of your funds under their advice. And this incentivises them to focus on their wealthiest clients.
You can learn more about that here if it interests you but it’s not rocket science.
If your fee structure gave you ongoing advice fees that were ten times higher for advising someone with £500,000 vs someone with £50,000, where would you spend your time?
The good news is that you don’t need to worry if you’re not (yet) wealthy. You can still get the highest quality ideas right here.
If you are wealthy, and already have an adviser, you might want to stick around anyway because the ideas you find here might help you work out if the advice you’re getting is worth what you’re paying for it!
Charges for financial advice can range from a few hundred to well over ten thousand pounds a year. Which means there’s often some money to be saved.
You also need to be aware that the quality of advice you get is not always in proportion to its price!
So you need to be on your guard, and for that, you just need some basic knowledge.
Should you take financial advice from family or friends?
I understand why a lot of people lean on family and friends for advice.
First, it’s (normally) FREE and those people (normally) have your best interests at heart.
The questions you need to ask are whether:
- They’re best qualified to help you?
- Their experience is relevant to you right now?
Investments that worked well for them, ‘in their day’ are not guaranteed to work well for you, from this point in time. Most markets move in cycles, so you need to learn how to ‘assess’ any idea that anyone (including friends and family) put to you before you jump into it.
This is another skill you can learn here, and you’ll be amazed at how easy it is to learn. So, please stay tuned.
OK, but what about the 5 step process?
Oh, sorry, I almost forgot 🙂
We’ll come to that in a moment, but first some important notes:
- This outline of my core planning process is ideal for anyone (age 20 to 55, who has money to save or invest) to start planning their financial future.
- The process is aligned to that used by all good, qualified advisers. So, if you follow this approach and subsequently decide you want to take advice from a regulated adviser, you’ll know that you’re on the right tracks.
- However, if you’re currently struggling to pay your day to day bills or falling behind with debt repayments (or think you might do so soon) you should first talk to someone at ‘Step Change’ or ‘National Debt Helpline’ for help.
- There are ways to deal with problem debts, and taking guidance on your options is the best first step for getting your financial life back onto solid ground.
- Also, if you need more income but you’ve not yet checked if you’re getting all your state benefits, check your entitlements at Entitled
- And, if you have financial dependents but don’t have proper levels of life or ill health insurance in place, you need to close that gap in your plan. Talk to a specialist protection adviser, right away.
Look at the image below of all the financial challenges you might face throughout life.
If your white box money challenges are all under control, and you have enough cash at the bank for your short term needs, then you’re ready to explore longer-term plans for your money.
So, let’s start thinking about those longer-term plans now, here are my five steps.
Step 1. Develop your Ideas
Develop your ideas on what you want for your life.
What do you want to have, become and do for yourself and others you care about?
These are the ideas that will inspire you to take action, and they’re about much more than the money. Some of these things may cost little or nothing at all but will become the most important things in your life.
Take your time (perhaps over several sessions) to carefully consider what really matters to you.
And map out your ideas on one sheet of paper, like this.
In this step, you’ll focus on your goals (from Step 1) that have a financial cost attached.
You’ll check what you need to do, if anything, to get on track to achieve them.
Now, these reality checks do require some number crunching, and I know that’s not everyone’s favourite hobby, so I’ve developed an easy way to do this.
What’s more, I can show you how your goals might cost you a LOT less than many of those ‘experts’ will tell you!
We can’t cover the details here, but if you sign up to the newsletter, I’ll let you know as soon as that expanded lesson is ready.
Step 3: Adjust your Plan
This step is about making sure that your Plan fits with your financial realities.
You might not need this step if you found (in Step 2) that you’re on track with everything, but most people need to adjust some aspect of their plan at this stage.
We’ll explore the various things you can do, to get your plan on track (without giving up on your dreams) in a future Insight.
Step 4: Stress-test your plan
In this step, you’ll consider the impact of unexpected and unpleasant events like a long spell of bad health (or worse) or a steep rise in interest rates or a stock market crash.
And you might need to adjust your plan further depending on what you find here.
Step 5: Execute your plan
This is where you change what you’re doing, and set up any savings or investment products, that you need, so you can relax about your money and get on with your life.
And that’s it, that’s financial life planning in 5 IRATE® steps.
You might say,
there’s no need to get angry about money,
as long as you ‘get’ IRATE®!
Next steps – learn more
I’m sure you can now see the value of making your own financial life plans.
Hopefully, you’re starting to get an idea of how reasonably easy it could be to do.
That said, there is a bit more to learn if you want to map out your financial freedom plan in full – and be able to check your numbers, in the easy way I mentioned.
So, stay tuned for updates on when those (and many more) Insights become available.
Thanks for dropping in,
For more ideas to achieve more in your life and make more of your money, sign up to my newsletter
As a thank you, I’ll send you my ‘5 Steps for planning your Financial Freedom’ and the first chapter of my book, ‘Who misleads you about money?’Also, for more frequent ideas – and more interaction – you can join my Facebook group here
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