Money Recipe – What Do You Want To Cook?
To begin your money recipe, you need to ask yourself what you really want and determine whether you have what you need to create that in your life.
When I begin talking to people, I help them answer that first question: what do you really want?
This is a very important question and one of the hardest to understand and answer.
So, we need to spend some time here really discovering what sort of things that you want to do over the period of your life. Of course, those things will change from time to time.
What should your life menu look like at this stage?
For instance, there might be some things that you want to achieve in the next few years, or there could be things that you want to achieve in ten years time and beyond. Do you want to go to school, start a career, buy a new house, start a family, open a business, plan for retirement, or travel?
One of the key areas here in discovering goals-discovering the things that you want to achieve-is to think about, if you had all the money that you really needed and wanted, what would you do?
What things would you want to achieve and how would you go about your life, if you had that money right now?
Let's look at three specific stages in building your recipe.
The first stage is to determine your short-term goals.
This could encompass a wide variety of objectives, such as repaying debt, purchasing motor vehicles, buying a home, or starting up your pension plan. Think about what you want to accomplish in three years and how you can go about achieving those.
The second stage is to determine your three-to-ten-year goals.
This list may include some of the same items from your short-term goal list, but it might bring up all sorts of other things because you may have moved as a person into a different stage. Here is when you might be planning on having children or starting a business; you could still be repaying debt.
Because it's a different stage, you need to look at your recipe in a different way. You may choose other products to achieve this next set of goals.
The third stage is to determine your long-term goals. On this list would be your retirement goals. You would ask yourself, “What do I really think I'm going to do down the track when I ultimately retire at 65 or 70 or whenever that's going to be?”
We're all different there.
One of the most important ideas here is to treat this goal as if you are retiring today.
If you are retiring today and assuming that you've paid off debts and you'd invested wisely-you'd done all the things that you had planned to do through the stages of your life-how much money in today's terms will you need at this stage? Because we can't factor in an inflation rate for three years down the track, we can look only at today and assume an inflation rate.
So these are the three stages I look at when I want to see what a person wants to do.
Now we can talk about setting up a target because there's no way a person could ever hit a target, unless they aimed at it right at the beginning; correct? You also have to remember that targets can move, so you need to have the ability to change.
The first step is to assess what you've got and what your target is.
Take some time to clearly visualise what you want your life to be like. You really should be setting yourself up to win this race because although we're all in the same race, some of us are going to end up at the finish line a lot faster-and a lot wealthier.
Unfortunately, some of us are going to be struggling and huffing and puffing to get there. And the people who really struggle are the ones who have not set up properly; they are constantly zigging and zagging throughout their entire life because they are trying to set something up without following a proven plan.
If you follow a proven track plan just as you follow a proven recipe, your menu-your life menu-will turn out pretty well.
As for the menus themselves, how would you cook?
Would you bake or grill or fry? Would you serve raw food or natural food or fast foods? How does that relate to your everyday life? Since we all have very busy lives and we're at different ages and stages, we need to try to eat as best we can.
In my life, I sometimes have to eat on the run! So you might call my menu a raw diet-some fruit and vegetables, perhaps an apple or carrot sticks.
This relates to those of us who probably do things very quickly. We look at our finances too quickly and sometimes we might not make the right choices.
If you look at baking or grilling or frying, you may be involved in too many different things.
To make your recipes work, you need to spend time in all those different areas to make sure that your ultimate method of baking, grilling or frying works best.
It's the same with looking at things traditionally. In the past our mealtimes have been breakfast, lunch and dinner, but we now know that eating smaller meals on a regular basis is more important and better nutritionally.
In other words, on the financial side, make sure you've got the right information. Make sure you're looking at things on a regular basis.
Make sure your menu is really going to be useful to help you attain your goals.
That “smaller meal” analogy is truly practical because it enables you to put away a little at a time. Rather than putting away big chunks of money every single month, you could put away little amounts every week, or a little bit aside on a daily basis; this may be less scary for you.
For me – I enjoy the fun of planning.
Keep asking yourself these questions: “What do I want to achieve?” “What are the things I want to do?” “How am I going to do this?”
For example, when I'm having a dinner party and I'm cooking in the kitchen with my wife, we are always asking, “Well, what are we going to do?”
Planning is the fun part; it understands the person you are, the meal you want to prepare, the finance you want to have, the life you want to have.
This planning process can be broken down into three different systems-or three different tactics:
· Have the right vision.
· Have the right plan.
· Be consistent and persistent.
Quite naturally, you spend a lot of time on where you are now.
How important is it for you to know exactly where you are when you're starting to cook?
As I said before, having the right vision is often the hardest part for most people because we're so busy in our daily lives. We actually don't take the time to sit and wonder what things we want to do.
However, it's very important that you assume you've already got the money to do these things. It's a lot more fun too, because you can visualise so much easier if you think, “I've already got the money. I know I'm going to go and do this. I know I'm going to have a new car. I'm going to buy the house. I'm going to do the trip. I'm going to do all these different things.”
Having the vision is what gives you passion. This passion is what makes you want to get up in the morning and go after those things.
Disruptions and Interruptions
Certainly there will be disruptions or interruptions.
All of us are going to hit stumbling blocks and to create a plan without planning for the stumbling blocks is asking for disaster. Just as in cooking, you must try to avoid the interruptions to your finances.
For example, while cooking, I can shut off my phone or I can be sure I have all the ingredients to get started.
Disruptions or interruptions must be the exception, not the rule. The cooking analogy here is that you have to have the ingredients for your cake absolutely spot-on at the right temperature so that the end product is right. If you get distracted by a phone call and then return to your baking, chances are that the cake may not turn out right; you can blame that on the disruption.
So, you have to be able to handle financial disruptions or interruptions.
They will come up and you must be prepared. If you look at the financial situation throughout the world during the past two years, you know it hasn't been fantastic. Too many people, andersen replacement windows nj who lost money in their investments, simply didn't think they were going to have the disasters that occurred.
They were not prepared because (A) they didn't understand what they were getting into; (B) they didn't understand the product; and (C) they didn't think that they would be affected. Unfortunately, they didn't talk to someone who really knew what was happening with that product.
Also, they didn't have access to the information that financial advisers get – demographic information. This type of information will tell those advisers and thus their clients, exactly where they were positioned in the financial spectrum at that time.
Different Methods of Cooking
You know that each cook has a unique cooking style.
There are hundreds of different ways of cooking, as there are hundreds of different ways to get the things you want financially. I think it's important that we don't put everybody in a box and say one size fits all. One size does not fit all.
Likewise, one menu does not satisfy every cook.
One menu to one person could be absolutely outstanding, but to another it would not be something that person would ever do. Does that person have religious restrictions? Some religions forbid the eating of meat in general or pork specifically. Does that person have cultural preferences?
Some people eat more fish than beef. Does that person have food allergies? Some people are lactose intolerant or are allergic to peanuts.
That same principle holds true with finances. What is good for one might not be good for another. Some people might have ethical considerations; they wouldn't invest in a company that was environmentally or socially irresponsible.
Some people have different goals; they want to invest long-term for retirement or they need short-term growth to pay off debts. An investor in his 30s has different goals from an investor in her 60s.
The Nitty Gritty
All of this leads to the nitty gritty.
Discover your financial position now. Be honest with yourself. There's no point in trying to fool you.
2. Decide what you want and decide what you need. They are not always the same.
3. Determine your time frame. Be realistic.
Be disciplined. Stick to your goals.