Achieving financial success is a dream for many. It doesn’t have to be. You can turn your dream into a reality. So what if you built your castle in the air? All you now need is to put a foundation beneath it. My seven step plan to achieve financial success will show you exactly how to do that.
Without any further ado, here are my seven steps.
- Create a list of all your finances
- Write your goals
- Set priorities
- Assign deadlines
- Build a game plan
- Execute the game plan
- Track progress and make adjustments
Mayur’s stern warning: It’s important you do these steps in the order listed. Building a game plan without knowing your priorities could be very bad. You might achieve success, just not the kind you desire.
Create a list of all your finances.
The first step of any significant change is awareness – self knowledge.
I personally have not experienced this but I’ve heard that when people go to AA meetings, the first thing they have to do is acknowledge the problem. In order to go from destination A to B, you need to know what destination A is. In financial speak, you need to know where you stand financially. You need to know what your monthly income is, how much are you spending, what are you spending it on, how much and what kind of debt you have, the value of your retirement accounts and other assets you own.
What you need to do is build a list of your finances. The list of finances can be divided into 5 areas:
- Monthly Income
- Monthly Expenses
- Any and all Debt
- Value of Retirement Account(s)
- Liquid Assets
Once you do this, you are ready to move to step 2.
Write your goals
It is now time to set goals in the 5 areas mentioned above. You can come up with the exact numbers for each area. But basically you want areas 1, 4 and 5 to increase in value areas 2 and 3 to decrease in value as time passes.
The goal writing process should be as follows:
- Write your goal (WHAT do you want) down on a piece of paper. The more detailed it is, the better. Hand-write your goal rather than type it on a computer. It creates a positive psychological effect on your brain.
- Write down your WHY for each of your goals. After you write your why, ask yourself the following questions:
- Does this reason energize me?
- Am I thoroughly excited about my goal and my reason to pursue the goal?
- What happens if I cannot achieve my goal?
- Continue this process for all 5 areas of finances mentioned above.
Next, you need to set priorities. This depends on where you currently are financially. If your monthly expenses are exceeding your income, your priorities will probably be different than someone who is able to meet their monthly expenses but are not saving for retirement.
Establishing priorities gives you focus. Warren Buffett is famous for this 2-list priority method. Here’s how that works.
- Make a list of all your goals, everything you want to achieve.
- Now make a second list of only three things from your first list. Pick the three most important things you want.
- Now, throw away the first list. The second list is what you need to focus on.
That my friend, is your priority list.
Your goals are now aligned with your priorities. That’s progress. But, when you do you want to accomplish these goals? Write a due date next to each goal. Make sure its a realistic goal. If you’re currently making minimum wage, owe $10,000 in credit card debt, and your goal is having a net worth of $1,000,000 in one year, that’s not realistic. A 3-5 year time frame might be more realistic.
Your goals should stretch you out of your comfort zone. But, don’t stretch them so much where it discourages you. Be realistic when setting deadlines.
Build a game plan
Now that you have a goal and a deadline by which you want to accomplish it, it is time to create a game plan. Game planning is the most complex of all seven steps. If you are not comfortable creating a game plan by yourself, please seek counsel of a financial advisor. However, if you think you can come up with your own game plan, that’s great.
Game plan is a guiding map that will keep you on the path. Without a game plan, most goals fall by the wayside and never get accomplished. Your game plan should include the following:
- Detailed steps of what you need to do to achieve the goal.
- Write down any obstacles you might encounter in the process.
- Figure out how you plan to overcome the obstacles.
In the process of developing the game plan, you might sometimes find that either your goal is unrealistic or the deadline you set for it is unrealistic. In this event, you might want to change one of the two and develop the game plan accordingly.
There is also no cookie-cutter game plan for financial achievement. Everybody’s financial situation is different. Everybody’s goals are different. This should reflect into your game plan. Game plan should also be flexible enough so that when situation changes, you can modify your plan accordingly.
If a goal seems overwhelming, create interim milestones for that goal. So, with the accomplishment of each milestone you are getting closer to attaining the goal. Sometimes it helps to break the goal down to yearly, monthly, weekly and daily activities.
Mayur’s suggestion: It would be wise to show your goals and your game plan to someone who has already accomplished what you are trying to accomplish. This way, if there are any corrections they can help you make your plan better and stronger.
Execute the game plan
Taking action is what makes all plans successful. The greatest plan without action becomes a worthless plan. But, a good plan becomes great when it is accompanied with consistent action. It is important to follow the game plan that you have set for yourself. Without executing your plan, it just remains that … a plan. Action is what turns plans into reality.
Track progress and make adjustments
It is important to track your progress on a regular basis. Checking your progress on your goals every 90 days will help you see if you are on track or not. If you are not, tweak your game plan. Assess your goal, set new deadlines, modify plan if necessary and keep on marching.
Monitoring progress daily, weekly or even monthly is not advisable because it does not give you enough data to analyze the actions. Hence I strongly recommended that you check your progress every 90 days.
That’s it! These are the seven steps you need to follow to achieve financial success.
Mayur’s suggestion: When you achieve one goal, replace it with something new. This way you are always in the process of improving your finances and achieving all your goals.