Financial planning strategies in the 21st Century need strategies of the new era, strategies for the info-tech era that can bring multiple streams of growing prosperity. Money is to buy whatever you want such as houses, cars, travel, etc. Surplus to share with the people you care most about. Below given are some financial planning strategies for the 21st Century.
1. Understand the Value of Money
Learn how to value each and every Rupee that flows into your life because you can achieve financial freedom on just a Rupee a Day. When you think about it, financial freedom all starts with a single Rupee. You see, wealthy people do not think a Rupee "is just a Rupee." They imagine it is a seed, a money seed that has the power to grow into a huge money tree, giving off fruit to accomplish every one of their dreams and they are absolutely right.
Remember, money that is compounding never sleeps. 24 hours a day, 365 days a year it keeps on growing. You have got to figure out a way to get money working for you rather than you working for money. For that you do not have to be a financial genius or you do not have to own a big company. You can do it from your kitchen table using the money that you are now foolishly throwing away. If you just re-divert a few of your ill-spent rupees and direct them to some well-timed investments, you can achieve financial success.
The most important thing is every day you wait, every hour you delay, is like burning up your financial future so, do it now. Yes, it will take sacrifice. It means deferring satisfaction for a while to allow your money tree to grow. When you prematurely pick the fruit from your money tree, you stunt it is growth and this can considerably slow down the time for you to enjoy a fully matured, fruit bearing money tree.
2. Control It
Most people have only one main source of income - their job. This income flows into the bathtub of their life and flows out through the drains at the bottom. Most of the people spend everything that they earn; they never retain any money in savings. They spend it all. Obviously, the only way to have an overflowing prosperity in your life is to plug up those holes and to turn on more regulators to have multiple streams of income.
Cash flow management is the key to financial planning. You have not only got to get the cash to flow into your bathtub. You have to manage the leaks so that there is money left over at the end of the month with this profit you buy stuff - assets. You may also buy things by going into debt. The intention of the money game is to accumulate enough assets so that eventually the income from your personal assets will support you instead of your personal skills.
3. Save it
The third step is to save money. Wealthy people love to save money. Do you know to buy things at wholesale price? Wealthy people never like to pay retail for anything. Anyone can save money by buying at a discount... but do they save the money that they save? That's the hard part. When you save money by altering your buying habits, take the money out of your purse or wallet and get it out of your spending grasp. Put it into a savings jar, and frequently deposit this money into your savings account. That is when you have truly saved it. Would you like to know how to cut your living expenses by 30% in 30 seconds? You would? Well, take out your credit cards, keep one away for emergencies, and cut up the rest. Statistics have proven that this simple work out will automatically and almost effortlessly cut your living expenses by an average of 30% over the next 12 months.
4. Invest it
With the money you are saving plus the 10% of the money you pay yourself off the top, you must learn how to invest your money at billionaire rates. Anyone can park their money at 3% the trick is to get it to grow at 10 to 20%. There are many traditional investments that are perfect to park your money. At the low end of the interest scale are bank savings accounts and fixed deposits. Then, you have government treasuries and bonds. Up the ladder are corporate bonds, stock market and some of the most popular investments these days such as Mutual Funds or Investment Linked Funds.
You must have money in all of these areas. Imagine a series of buckets where money is drawn off from your bathtub. The first bucket must be your emergency bucket. Let your 10% flow there first until you have at least six months worth of living expenses saved. You would be surprised how many people in this country is only one pay-cheque away from bankruptcy. Do not let that be you. This money must be in the safest place, a bank account at the highest interest rate you can find where you can access to your money within days. Once this first bucket is filled up, the stream of 10% will overflow into one of three additional buckets named, conservative investments, moderately risky investments and very risky investments. If you are older, you must have more of your money in the conservative bucket. The younger you are the more risk you can undertake.
The best way to invest for average people is in Mutual Funds or Investment Linked Funds. A mutual fund is a collection of individual shares purchased by a major company and managed by professionals. You have to give them a small amount of money, they add it to that of thousands of other investors and they watch over it for you.
5. Shield It
Making money is a set of skills. Keeping it is another. As you work toward your financial goals, you need to learn how to protect the wealth you are creating. The worst mistake one can make today is leaving large amounts of personal assets insecured. Get a liability insurance, get a health and life insurance you do not want to spend all your hard-earned money on medical fees.