December 6, 2023

Critical Questions to Answer On the Road to Financial Freedom

Imagine yourself having a vast above ground swimming pool in your backyard. Unfortunately, you can’t enjoy the comforting luxury of swimming in the pool because it is empty. You figure out that to fill it up, you need a garden hose, and it’s up to you to choose a big or a small one. You do a calculation and figure out how long it’ll take to fill the pool all the way up.
Unfortunately, there are minor leaks in the pool, and if they get out of hand, you’ll neither fill up the pool nor enjoy swimming. You soon realize that even with constant attention, you can never completely stop the pool from leaking.
The swimming pool represents the ultimate financial freedom you desire, while the hose is your stream of income. The leaks are your expenses, and if they get out of hand, you may never fill up the pool.
Ask yourself these questions:
1. How much water is enough to fill your pool?
2. Will you use a big or small hose or several of them at once to fill the pool?
3. How much time will it take you to fill the pool?
4. How will you keep the leaks under control?
5. What control measures do you have to ensure the hose remains connected to the source of water?
The same goes for your financial goals. You need to develop a habit of questioning yourself for clarity and a better understanding of your financial journey.
Here’s what to ask yourself as you chart your path to the best financial life.
1. What do you want your money to do for you?
Many people fail to ask themselves this crucial question. The problem is that our lives tend to be crowded by many obligations that leave no room to think about money goals seriously. For a precise answer to this question, consider what concerns you most about your life.
For example, it could be that an unexpected life transition scares the life out of you. Divorce, job loss, disability, or the death of a spouse could limit your ability to leave a legacy that helps your family. These are pertinent issues to help you plan your financial course.
2. In what areas of your finances do you have control, and where do you feel insecure?
It’s crucial to acknowledge what you know and accept that you don’t know everything. For example, you may have knowledge in budgeting but little or no investing management expertise.
Knowing your strengths is part of your superpower. Your weaknesses hinder you from achieving your potential and are the areas that you have the power to improve.
Having a deep understanding of your financial strengths and weaknesses puts you in a better position to map out your financial freedom path.
3. Do you have a realistic savings plan for retirement?
Consider the pace at which you’re saving for retirement, as well as how much you save monthly.
So to figure this out, ask yourself:
a) What is your current income?
b) How many more years do you have before you retire?
c) How many people will you be caring for in retirement?
d) How long do you expect the retirement savings to last?
e) What rate of return do I need to reach my goals?
But this is only part of the equation. You also need to factor in these things which are not included in that calculation:
• Will my savings fund my future lifestyle activities; such as travel?
• Have I calculated inflation?
• Unexpected events such as job loss, disability, loss of my spouse
These are crucial questions to help you decide how much to put aside towards creating a secure and bountiful retirement life.
4. What ideas did you pick about money growing up, and how does it affect you today?
The attitudes and beliefs you hold about money today directly correlate to what you learned in your formative years. Critically analyse them and determine what needs to change.
Basic and limiting beliefs could be hindering you from achieving financial freedom. Keep in mind that your skillset is as essential as your mind-set towards attaining financial freedom.
5. What can you do to not fall back into old habits that impede your financial freedom?
Identify which habits have led you to your current financial situation. Could it be overspending? Not scrutinizing the details of each financial decision, ignoring the fine print.
Plan to avoid falling back into the ones that are detrimental to your financial success. Recognize which messages to keep, the ones that serve you, and the ones to let go and be deliberate about being accountable.
Creating and sustaining new and healthy habits and attitudes towards money can be challenging. You must develop a strong desire, purpose, and accountability to stay on course with your financial goals.
It will also be easier to remove the blind spots while asking the right questions to enhance your purpose and behaviours. In so doing, you’ll have a much better chance of attaining financial freedom.

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