Infographic: How to Build Your Financial House

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Personal financial planning blueprint to help you organize, protect and plan your financial future. 

I had an interesting interaction a couple of weeks ago, with a very wise man who has been doing financial planning for many years. He works with both local and international clients. It was a 90 min packed conversation and each time I was awed by the amount of wisdom oozing out of him.So let me share a snip bit of that conversation in the form of this infographic. He said that building wealth is like building a house, there are some things that are absolutely necessary such as protection. Income protection in the form of life insurance, health insurance, and critical illness insurance, future wealth – retirement wealth planning and investing. Also, there is building wealth – over and above wealth accrued from basic paper assets and superannuation. The house held up assets – stocks, bonds, and other paper assets.

Financial Planning – Building A Financial House

Having financial protection provides a great sense of freedom and ensures that the financial house remains standing despite any shocks. Here is how:

 

Financial decisions are among the most important life-shaping decisions. They have lasting impressions that can shape an entire family for generations.

How to Get Started

Before you even think about building wealth, you need to build an emergency fund. You can best achieve this by investing in stocks and mutual funds as soon as possible to lay down the groundwork. From here, you can start looking to other forms of protection i.e. insurance.

Finding ways to set-up your financial foundation has always been on the biggest obstacles for many. Here are three strategies you can use to get you there:

  • Pay yourself first – get into the habit of setting aside funds before you start spending it. This way you will not be tempted to dig into the amount that would otherwise have been saved.
  • Secure spending leaks – identify and track your spending, and do away with unnecessary spending and any unaccounted for.  You can use a financial planning software to get you started. Most banks nowadays have apps that are quite useful.
  • Save all ‘extra’ cash – get all extra money that may come your way into your savings.

Where to Save Your Money

When you are ready to save your money, look for a place with the following things:

  • Profitability – Your money needs to earn you a profit not stagnate. Invest your money in a place where you can earn a good interest.
  • Security – the idea is to preserve your money hence safety.Capital preservations are about protecting your money from the risk of depreciation experience by inflation.
  • Accessibility – accessible but not too accessible. This way you won’t be tempted to dip into it but also have access in the event of anything.

Bottom Line

Building a financial house isn’t as technical as most people make it out to be. You just need a lot of patience and some discipline.

Meanwhile, You can click on the following links to read more about financial planning and achieving financial prosperity:


Disclosure: This information is provided to you as a resource for informational purposes only. It is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal. This information is not intended to, and should not, form a primary basis for any investment decision that you may make. Always consult your own legal, tax or investment advisor before making any investment/tax/estate/financial planning considerations or decisions.

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Irene Makanga
Irene has an MBA in Finance and is an avid businesswoman, passionate about financial literacy.

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