How to Build Wealth AND Enjoy Life - Part 2
Ready to delve further into how to build wealth while enjoying your life? In this blog, we highlight the drawbacks of relying on a single savings account for various financial goals, stressing the need to create separate accounts to ensure clarity and prevent unintended setbacks. Additionally, we explore the significance of understanding one's money personality and fostering a clear vision to navigate the financial journey with purpose. Join us as we uncover essential strategies for financial success.
The Importance of Goal-Oriented Accounts in Financial Planning
When it comes to managing money, many people fall into the trap of having a single savings account for all their financial goals. Having one savings account might seem convenient initially, but it often leads to unintended consequences.
Imagine having $50,000 in a single account earmarked for various goals like a holiday, a car upgrade, or children's education. When faced with a choice, such as purchasing a $20,000 car or a $50,000 car, the decision-making becomes challenging. Similarly, overspending on one goal, like a holiday, may jeopardise other goals.
The key to achieving financial goals lies in creating separate accounts for each objective. This ensures a clear understanding of the cost, timeframe, and priority of each goal. Without this clarity, you may find yourself getting back from the car dealership or holiday destination with a whole lot less money than you need for your other goals - but it’s fine, you can just borrow some money or put it on the credit card… Right? No.
Before you create your separate goal accounts, it is vital to work out what your goals are, what they are going to cost, and when you want to have them. If you don't have clarity around that, you will stumble along without purpose and it will be hard to achieve anything.
Getting Past Your Money Personality
Understanding your money personality is the key to success with this because changing your approach to money isn't as simple as saying, "Just do it." We often grapple with our ingrained money personalities. If the thought of spending money makes your stomach turn or you can’t imagine sticking to a budget because you are a reckless spender, mere encouragement won't suffice.
It's about having a vision, a clear understanding of what you want, and visualising the impact. This clarity acts as a guiding force, keeping you on the right path.
To compare it to something outside of money, if you were going on holiday and you wanted to lose some weight before the trip and you can picture yourself on that beach by a certain date, at a certain weight, there is a much higher chance of actually working towards that.
A clear vision makes for a smooth financial journey.
In the next blog, we are stepping into the world of credit card rewards – where "free" isn't always what it seems. Keep an eye out.