Every aspect of success, whether personal, societal or business, is hinged on finance. Building success is feasible only when the reality of financial availability is ensured. Anyone who seeks to be successful, at least monetarily, must first and foremost set our a long-term financial plan.
There are several steps that you can take to build a successful and stable financial situation.
The first of these steps is acceptance of responsibility. To be successful financially you need to ensure that you’re in control of your financial situation and matters, both current and future. Every decision and choice you make, whether financial or otherwise, has the potential of making an impact. It’s therefore important to be responsible on matters pertaining to your financial status.
You can only be able to understand your financial obligations if you’re involved right from the beginning. Because we cannot be everything, it’s acceptable to request help, professional or not, to assist in effective management of your financial issues, but you must always remain the fulcrum around which your financial matters revolve.
When you borrow money for instance, or get involved in some form of financial commitment, it’s important that you understand your rights and obligations and ensure that you respect your obligations to that debt. This means you must repay that loan on time and in full including interest that may accrue.
To achieve financial success it’s important to maintain good credit rating. Credit is important in building financial success. Any partial, late or missed payments could injure your credit rating and make it impossible to access credit in the future.
The second step in building financial success is planning. You cannot manage your finances effectively if you don’t know the amount of money you have and do not have a plan to spend, invest, and save it.
To effectively plan your finances, you need to set clear financial goals, both short and long term, but they should be goals that are understandable, feasible, and implementable.
There are three specific keys useful in setting up financial goals:
• Clarity and Specification – goals must define what you’re trying to achieve and when.
• Realism – goals should be achievable but not too achievable. They must be reflective of the reality of the financial situation.
• Record Keeping – Keep records of your goals to enable you to note milestones being achieved. Reflecting on your progress through kept records helps with accuracy and motivation.
Once you’ve set your goals, it’s easier to map out how you’ll achieve them. Ensure that goals are thorough to prepare you for changes that may come up.
The third step is understanding your income including a clear knowledge of what taxes you are required to pay. Poor knowledge of your income and taxes could result in costly financial implications.
The fourth step is opening a checking account. Apart from being secure, they enable you to track you’re spending. Before you open the account, do research and get a suitable bank with accounts that address your needs.
The fifth step is saving and investment. Opening a savings account helps you to financially take care of eventualities that come in life. Investments put your money to work for you, enabling you build financial success. Different investment options bring you different rates of return; you should understand these options and the risks involved in it.
Your number six step is the budget. You must create a budget so that you monitor your finances; how much money you have, your spending trail and how much remains, if any. Monitoring a budget regularly isn’t easy but it’s the only way in which you can ensure financial discipline.
When drawing up a budget, you must determine your income and your expenses. You must also ensure regular reviews of your budget to plug in any gaps that may arise out of unexpected changes.
Number seven involves careful borrowing. It’s almost impossible to grow financially without opting for a loan at some point. But you must borrow smart, ensuring that you borrow in order to grow financially and that interest rates are manageable. You should also ensure that the repayment regime fits within your budget.
The eighth step is to understand your tax liabilities. Managing your taxes has a strong implication on your financial success. Poor management of taxes can have serious consequences that could badly impact your finances.
You should engage services of a professional; a CPA, to help you do proper calculation of your taxes so that you avoid risks such as penalties that could have negative impacts on your financial success.
Financial success does not simply mean having a lot of money. Financial success is measured by the prudent manner in which you manage the money you do have.