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How To Achieve
Financial Freedom
Financial Freedom
Tips
Even if you have determined a set of
financial plans for yourself, be they
market investment, real estate, or
retirement, you must seek to coordinate
these plans to maximize your returns.
To help you achieve this, we outline the
crucial 7 steps to financial planning
that will allow you to reach your goals,
within the time that you require, with
tax benefits, and with minimal risk:
1) Emergency Cash Reserves. Always set
aside 3- 6 months of your salary in an
account from which you can withdraw
money at short notice without incurring
any penalty. For any short term
unexpected expenditures, try to avoid
using credit cards and use this cash
instead.
2) Risk Management. Insurance is the
surest form of risk management. So,
insure your car, home, and other
significant assets. You may also
consider life insurance to help
compensate for lost income and repay
debts in case of death. While finalizing
your insurance option, always choose the
insurance type that suits your
requirements, and work out the necessary
amount of coverage which is affordable
for you.
3) Estate Plan. The basic features of a
personal estate plan are a will, and a
durable power of attorney as provision
for your financial and medical care. In
case of larger estates, you may require,
in addition, a living trust, marital
trusts, and charitable trusts. These
will ensure that your assets are
maintained and passed on to your future
generations.
4) Goal Setting. This is the
coordinating framework for your
financial plan. Whenever you receive an
investment offer, always refer it to
your overall financial goals. Ask
yourself whether it is conducive or
productive for, and suits, your goals.
This commitment to your goals will help
you remain focused in the long run.
5) Investments. You need to have an
asset allocation plan customized to meet
your goals and to keep the element of
risk within limits you find acceptable.
Without this, your investments will be
subject merely to the vagaries of the
economy instead of being directed by
your requirements.
6) Retirement Planning. The income for
supplementing your social security will
derive from defined contribution plans
and benefit plans. During your working
life, try to make as much yearly
contributions to these set plans as
possible. These funds grow fast as a
result of tax deferral, and since they
are sourced right from your paycheck,
are relatively painless.
7) Tax Planning. This means taking
advantage of all the possible tax
deductions and tax deferred plans that
you are permitted by law, as well as
using tax credits wherever you are
eligible. A good tax plan may save you
thousands of dollars in taxes.
If you feel that you can’t handle all
this on your own, seek the services of a
fee-only financial advisor or a
financial coach to devise a
comprehensive plan according to what
your assets and your needs.
Remember: Your financial security
depends on the proper coordination of
these separate wealth building steps.
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