Financial Planning: A Minimalistic Guide

By BankBazaar | April 5, 2017

Financial Planning: A Minimalistic Guide

‘Minimalism is not subtraction for the sake of subtraction. Minimalism is subtraction for the sake of focus.’

Minimalism has become the new way of life for many. Most people who like to live a minimalistic life prefer to do so due to its simplicity. If you are looking to add a minimalistic perspective towards your financial life, you’ve come to the right place. We have simple financial planning tips that will work like magic. These tips may be minimalistic as well, but are definitely effective.

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There are two important points for financial planning. The first one is to build wealth and the second one is to have enough for your post-retirement life too. Yup, it’s that simple. So, let’s throw some light onto these points.

  1. Build Wealth: Building wealth can be surprisingly simple. All you have to do is spend a lot less than what you earn and invest wisely. Easier said than done though.
  2. Save Enough For Retirement: This doesn’t have to be the arduous task it is made out to be. While it certainly requires a lot of discipline on your part, all you need to do is spend less than your investment returns and continue to invest your savings wisely.

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It really is that simple, just as long as you can stick to your guns. We’re pretty sure you’re asking yourself ‘’Hmm, if it’s so simple, how come very few people succeed in achieving financial success?’’ Keep reading to find out!

If achieving financial security is that easy, how come most people don’t succeed?

There are an infinite number of reasons why people don’t succeed even though they know what to do. Here are a few of the most common reasons:

  1. Procrastination: The best way to get something done is to start immediately. However, most people lack the initiative to even begin.

Most people tend to wait till tomorrow to actually start saving. Unfortunately for them, tomorrow never comes, eventually leading to a life of financial regret.

Everybody dreams of financial success, but not everyone strives to achieve it. One needs to understand that financial security cannot happen without a lot of discipline and planning unless you win the lottery or something similar. Regardless of how much you crave for it, you have to put in a sustained effort to attain financial freedom.

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  1. Short-term goals: Most people are content with setting short-term financial goals, but seem to be display aversive traits when it comes to long-term goals. Unfortunately, that tends to take a toll on their overall financial health.

Saving may seem like a sacrifice to some since they have to curtail a lot of their expenses, but at the end of the day it’s for your own benefit. You have to consider the bigger picture and look at least 20-30 years into the future to realise the seriousness of saving money.

When you set long-term goals, you will realise that putting money aside for your future is the best thing that can possibly do. After all, it’s always preferable to put aside present satisfaction to secure future financial security.

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  1. No goals: One of the biggest tragedies of life is not having any goals to aspire to rather than not actually reaching any goals you set for yourself. Without a definite goal in mind, the whole point of financial planning goes out the window.

Most people tend to think that retirement just way too far down the road to worry about it in the present. However, like we mentioned previously, tomorrow never comes for such people, unless you happen to be a certain movie spy.

People with this mindset tend to keep on spending until they run out of funds, which results in them taking credit from as many avenues as they possibly can. If you are one of those people who are usually broke by the end of the month, you need to start rethinking and revaluating your financial plans.

The fact of the matter is, your daily spending habits will have a huge effect on your financial future. Sadly, most people fail to take this connection seriously.

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  1. Not investing wisely: A wise man once said ‘never depend on a single income. Invest to create a second income source’. We’re not sure who said that, but it certainly sounds like great advice to us.

Unfortunately, most of us aren’t wise enough to follow this piece of advice. Sure, we aren’t all blessed with outstanding financial skills, while some of us may be complete novices to the world of finance, but it shouldn’t keep us from trying to chalk out a plan for the future.

In such cases, seeking the help of a financial advisor could make all the difference. A financial advisor will help you identify the most profitable ways to invest your money. Even if you are averse to seeking professional financial help for some reason, you can always reach out to your family and friends for advice.

In any case, you must remember to diversify your portfolio when investing. But, why is diversification so important? Well, let’s say you invested all your money in the stocks of one single company, but the company suddenly happens to shuts down. You could find yourself staring at a substantial financial loss.

However, if you had invested small amounts in stocks of different companies as well as Mutual Funds or a Fixed Deposit, your risk is spread out over many assets, meaning you have something to fall back on even if one of your assets goes awry.

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  1. Lack of discipline: When it comes to your finances, discipline is the distance between your dreams and reality. The truly successful people are the ones who realise the importance of discipline, while the ones who can’t seem to bridge the gap between their goals and their current situation are the ones who perennially lack a modicum of discipline.

One has practise discipline with every financial decision they take in order to be financially successful. Always remember that the more disciplined you become, the easier life gets. You might start learning about managing and planning your finances early on in life, but until you actually start implementing your knowledge and discipline towards attaining your goals, it really isn’t of much use.

Additional Reading: Are You A Disciplined Investor?

There you have it. It really is quite simple as long as you focus on your goals and put your mind to it. In fact, most of the pointers listed above are nothing by mere mental blocks. You have to realise and accept that you can’t let these mental blocks be in control of you and your life.

Once you learn to convert these mental blocks into building blocks, you’ll find yourself on the road to financial success and security sooner than you could have imagined.

Now that you know exactly what you need to do when it comes to building wealth as well as investing your money, you can safely go ahead and check your investment options.

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