Life is not static. Just like the earth revolves around the sun, so is life. Once upon a time, you were born, but that was not the end. Days and years went by, and today, you may have grown into an adult or will grow into an adult one day. It is true that as your life revolves and evolves, the time will come when you have to make specific major decisions, like marriage, parenthood, higher education, traveling abroad, and buying assets, among others. Nonetheless, these decisions must be well-thought-through and planned financially because almost all of them will require a financial commitment to be accomplished. In this article, I will elaborate on key ways to prepare financially for these non-emergency decisions, which can be frustrating when not planned adequately.
1. Set specific financial goals
The success of every endeavor depends on setting specific goals, which are usually broken down into objectives. That directs your focus and tells you what to do every step of the way. However, these goals must be SMART (specific, measurable, achievable, realistic, and time-bound). For instance, if you intend to purchase an asset, like a car, you must be specific about the type, brand, when, and estimated cost it takes to get that done. But these must be factual. This will help you take the right steps towards meeting the specific goal or goals. Let me also emphasize that these goals have to be written down and not only conceived in the mind.
2. Save Consistently
After setting those goals, the next important step is the financial commitment it takes to obtain them. Consistent saving can be a good starting point for achieving one’s goals. This can mean opening a dedicated savings account for each goal to prevent mixing funds for everyday expenses and long-term goals. It is also helpful if you can automate your savings to ensure regular contributions without fail. Also, bear in mind that savings must not be regularly withdrawn to cater for everyday expenses that come your way. You must be very disciplined and determined in allowing the money to accumulate so you can use it for the intended purpose.
3. Invest Wisely
It is also financially wise to invest for long-term goals. Taking the right investment can bring good returns, which can be used to achieve your goals. Investment can be ideal for people who do not have the discipline to save because one usually does not have the chance to redraw the money until the investment has matured. Besides, investment brings more returns than saving because of the high risk involved. But the thing is, you have to consult a financial advisor to optimize your strategies and minimize risk. Read more about investment here.
4. Insurance to cover uncertainties
Another important but indirect way to achieve your goals is to take insurance. The insurance industry has seen a couple of transformations, and policies are more beneficial. Now, some policies cover things like higher education and marriage, among others. Again, buying policies such as health, life, and property insurance may not contribute directly to your goals but can protect you against unexpected expenses. The last thing I want to highlight is that parenthood and asset acquisition significantly increase financial risks, so insurance coverage will safeguard your savings.
These and many other ways are the simple ways you can plan financially for the major life events in your life. But remember, the earlier you start practicing these, the better it becomes for you.
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