By financen | May 4, 2008 - 2:52 am - Posted in Personal Finance

If you think that in order to be financial successful, it has something to do with money, stocks, bonds, asset allocation and retirement plans, then it is not always right. Of course, these do matter in the long run, but let’s not confuse financial tools with the basic fundamentals. Everything lies on the preparation, planning, and the relationship that money has on the other aspects of life.

  • Five basic financial fundamentals:

1) Set your financial goals: How do you want to be after let’s say 5 years or 10 years? You need to create action plans right from today in order to be able to achieve your goals and financial success. Just a simple calculation, if you want to save $1 million in fifty years, you need to invest $140 each month at 8 % return. What do you think?

2) Interactive communication: Get your family and friends involved. If one member of your family is spending more than what you are saving, it is having a negative effect on your total finance. If another member is spending as much as you are saving, the net progress is zero. To achieve your financial goals, everyone in the family needs to work together. You all can take different paths but your goals or the destination should be the same.

3) Commitment or motivation: If you are trying to do something, make sure that you know your plan of actions. Your chances to achieve your goals will be better if they are personal. If that means that you have to take baby steps, do it and reward yourself frequently.

4) Planning for the unexpected: Unexpected things can happen anytime and your financial road map or budget can get affected because of this unincidental event. Incorporate the unexpected expenses into your plan. You never know when a situation can turn bad but if it does, then you should have ways to come out of it.

Don’t stay far away from your personal happiness: Set your goals and when you finally achieve it, you have every reason to be happy. But there is no reason you can’t enjoy the road to get there too.

5) Action plan: Getting financial success is not a very tough job. Once you have your strategies and commitment in place, you can use your financial tools, such as investing and asset allocation to achieve your success.

This entry was posted on Sunday, May 4th, 2008 at 2:52 am and is filed under Personal Finance. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

1 Comment

  1. May 8, 2008 @ 8:44 am

    Very interesting and helpful post…. 🙂

    Posted by Anirudh