Financial plans are plans made towards achieving a specific financial goal or goals. This requires regular updating or review to ensure that it is working as planed or needs an adjustment for effective realisation.
This week in our series of Old Mutual money management lesson, we bring to you why you need to review and update your financial plan and vision for effective actualisation of long terms goals.
The Secret of the Leopard shows how important a visual image of your dreams is. If you regularly refer to your carefully thought-out vision, it will help inspire and motivate you to stick to your savings goals.
As you start achieving some of your goals, you will need to review and update your vision. Details of your goals might change over time with escalating costs. You might develop new goals to match your new earning potential.
New circumstances in your life might also make you change your goals. A new baby might change your priorities from saving for a fancy car to saving for an educational fund. Reviewing and updating your “Vision Map” regularly will set you on the path to better long-term wealth creation.
Many people who have achieved their goals such as “buying a new computer”, “buying new shoes”, “buying a house”, “retiring with enough money to live well” or “sending a child to a good school” will tell you that visualising their goal really helps them achieve it.
The support of friends and family plays a vital role in keeping the vision alive. Your vision is wonderful. Why not think of it every day? The more often you think of it, the more inspired you will be to achieve it.
Keeping your vision alive
REFER to your vision regularly – keep it in a visible place.
RESEARCH your vision regularly – find the best value-for-money-and-energy.
REVIEW your vision regularly – update it to reflect new or more refined goals.
What life stages milestones should I prepare for?
At different points in your life, you are faced with new financial decisions and obligations. You need to plan your life in anticipation of those life stages. This means that, should you wish to get married around the age of 30 years, you may need to save enough money to have a wedding, buy a family home and start a family by this time.
Therefore, you have to start planning and setting money aside for this life stage while you are single. Most of us do not know when is the best time to start planning for different life stages. Take this quiz to get an idea of when you should start.
Quiz: By when do you want to achieve the following?
1. Paying off a house completely! IDEAL: in less than 20 years, and before you are 55 years of age.
2. Start saving toward retirement! IDEAL: by 25 years of age.
3. Having an amount equal to four times your annual salary saved safely for retirement! IDEAL: by 40 years of age.
4. Having an amount equal to six times your annual salary saved safely for retirement! IDEAL: by 50 years of age.
5. Having an amount equal to, or more than, ten times your annual salary saved safely for retirement! IDEAL: by retirement, i.e. 60/65 years of age.
6. Have a separate Emergency Fund equal to six times your monthly salary! IDEAL: by 35 years of age.
7. Being Debt-free? IDEAL: as early as possible but certainly by 55 years of age.
Modestus Anaesoronye
