How to Stay Motivated on Your Financial Journey

How to Stay Motivated on Your Financial Journey

Judith retired in her mid-50s from a career in the banking sector of the UK. She entirely relies on the income generated from rental properties and a dividend income stream from a portfolio that she amassed during her financial journey over the years of her career.

Until and unless you come into sudden wealth like an ancestral inheritance, winnings collected from lotteries, the financial journey is likely to remain lengthy, tiresome, mundane and in the manner the wealth acquired may vary. Not only how the wealth was acquired will take twists and turns, but it will come as an emotional roller coaster ride. It is instead of much pertinence to stay positively motivated on throughout the journey.

After landing on the job you wanted, now comes the time of planning your financial future in the long run.

The planning for financial independence is a lifelong process that largely depends on your requirements, Values, and personalised goals. Meticulous and proper planning guides the individual through the four primary “life cycle phases” which are the Accumulation phase, Pre-Retirement phase, Retirement phase, and Legacy phase. Formulating a well-thought plan is somewhat like putting together the different pieces of a Jigsaw puzzle, making them all fit together correctly.

Time to Optimise your Financial Planning

Optimised Financial Planning includes incorporation of different components:

  • Financial Goal Setting defines your financial and personal goals that help in setting a discourse for your financial journey
  • Cash Flow Analysis, either from your regular income or external sources like short term loans from company, helps in creating the personal budget
  • Retirement Savings Planning takes into account whether you are on track or not to retire at the preferred  age by making a strategy tailored to your situation
  • Retirement Income Planning assists in creating plans that draw income from the assets in retirement
  • Prudent Asset Allocation determines the appropriate investment allocation which is based on the risk tolerance, objectives, etc.
  • Goal Funding invests money to achieve the desired personal goals
  • While moving forward in life, matters like children’s education come into the picture. Determining a well-thought strategy is required to secure the child’s future by investing in the education
  • Insurance is needed to decide the amount and type of policy for the personal situation
  • Plans are to be developed to handle the potential cost of long term care
  • To discuss the current estate, including several already existing estate planning methods and strategies are the need for Estate Review

What Do You need to Do?

To remain motivated throughout the financial journey requires the realisation of the following things:

  • Purpose of Investment
  • Creation of short term Goals...Prepare a list of your personal financial goals. In this uncertain journey, your patience will be tested prolifically. One must set realistic short-term ‘stretch’ goals to monitor the progress regularly. When you periodically watch your progress, there is very less chance that you fall into any financial distress
  • Keep the Head high: It is nearly impossible for any financial plan to be perfect. The road of the financial journey is quite a bumpy one.
  • Try developing 2-3 deliverables for each goal that guarantees a reward to self (i.e. Reward yourself on reaching 50% of the savings goal and such others
  • Specify the nature of awards, i.e. treating yourself at your favourite restaurant after achieving the set target and enjoy the guilt-free reward
  • Curate a progress chart that remains visible as a reminder of where you are in the pursuit of your set goals and how far you are required to go to get to the next awaiting reward

Let’s Take Our Discussion Further

Focusing only on the short-term goals will not bring the fruitful and desired results. It is imperative to invest your resources in ‘big, audacious’ long-term goals. For many people, buying their first home comes under the umbrella of ‘big, audacious’ long term goals. Unlike all the expenses incurred in the hitherto life, a mortgage obligation is likely to be the first experience wherein complete repayment would take decades. To remain motivated during your financial journey with this ‘monkey on the back’ will require some abdominal endurance. During this, you will also learn that a home is a liability as opposed to the conventional narrative that it is an asset.

Homes are unlikely to generate any income. Instead, a large sum of money will be used to maintain the property. After eliminating the mortgage by cost-cutting and other methods, you will suddenly have decent free cash flow, which can be used to acquire revenue generating assets, which will keep you motivated in the journey.

You must invest in Equities to generate a meaningful level of dividend income.

High yield investing can result in increased income, but the yield comes with additional and higher risks.

Now Comes to the Conclusion

It is safe to say that it is sufficiently challenging to remain motivated over the long-term during your financial journey while investing in equities to attain financial freedom. Full or partial permanent impairment to the capital invested in is the last thing one would need.

To diversify the equity Investment portfolio, consider the investment properties as part of the overall income producing investment portfolio. Many make considerable investments in residential, commercial, or industrial properties. Using the revenue generated through rent and personal free cash flow to the full repayment of the mortgages on the rental properties will bring financial freedom and will help you stay motivated throughout the journey.

Investments should be made in to avail private mortgages as they facilitate as borrowers bear the fee, terms are no longer than one year, and the final decision is to be made by the private mortgage investor only. Thus, these actions and investments ensure greater financial freedom for self.

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