What are your goals for the future? Can you picture them? Now, how does your current financial planning help or hurt these goals?
If you think that your finances aren’t tied to the overall quality of your life, you’re wrong. It’s not that having a certain amount of money will make you more or less happy, but if you’re able to get to a point where you can experience true financial freedom, all areas of your life will improve.
So, how do you go about reaching financial freedom? The first step is in learning how to spend money wisely. Although developing a spending plan is simple, many people struggle to correctly budget and follow through with their financial goals.
Here are the six steps you need to take to master the art of spending money wisely.
1. Create a well-thought-out spending plan
What are you currently doing to make sure you have the right amount of money each month? Some people fly by the seat of their pants, not giving a thought as to how much cash they have coming in or out. By assessing your current needs and future goals, you can properly allocate money and eventually achieve financial freedom.
2. Determine how much you’ll pay yourself first
How much will you pay yourself first? That is, how much money do you automatically set aside in a 401(k), IRA or other form of retirement account? It’s crucial to establish this number before investing money in other ways, like through stocks or funds.
3. Find a financial partner you can turn to for advice
There’s something to be said for being independent, but unless you work in finance, working with a fiduciary or financial advisor is in your best interest. Find a reliable, successful person to help guide you on your path to spending money wisely.
4. Assess your portfolio and determine which investments no longer serve you
There’s no shame in reassessing your financial needs. What investments do you currently have? Are they helping or hurting you when it comes to paying the lowest amount of fees while receiving the highest possible returns?
5. Know your risk tolerance
You might be tempted to put your money into high-risk investments, but be honest with yourself. Depending on your current income, age and how many assets and dependents you have relying on your finances, your risk level will change.
6. Live abundantly by finding ways to donate money to causes you care about
As Tony often says, “The secret to living is giving.” When you get to a place where you’re comfortable with your spending plan, find places where you can give back. Even if it’s a small monthly donation, giving some of your finances back will ultimately make you happier.
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Tony Robbins is a #1 New York Times best-selling author, entrepreneur, and philanthropist. For more than 37 years, millions of people have enjoyed the warmth, humor and dynamic presentation of Mr. Robbins’ corporate and personal development events. As the nation’s #1 life and business strategist, he¹s called upon to consult and coach some of the world¹s finest athletes, entertainers, Fortune 500 CEOs, and even presidents of nations.