What Are the Natural Stages in Personal Finance For Creating Financial Freedom?
There are typically 6 stages in the development of any endeavour. Successful businesses follow this - and they can easily be converted into personal finance terms. In fact running your personal finances like a mini business will ensure your way to creating lasting financial freedom.Related Item:
By Ann Marosy
The stages consist of: Beginning your endeavour
Correction of any teething problems
Establishing a strong foundation to build upon
Reviewing and revising your performance to date
Exercising restraint during your first boost of expansion
Managing your long-term success
Converted to Personal Finance terms, this includes:
Stage 1 - Planning and establishing goals, budgets, and 'knowing your finances'.Stage 2 - Identifying your problem areas (for example, spending patterns) and making corrections to your behavioural patterns.Stage 3 - Start a savings and investments and debt-free programStage 4 - Reviewing your performance to date, but still keep economising.Stage 5 - Reinvest all surplus money back into your investments to create assets that will eventually create your financial freedom.Stage 6 - Ensuring that you don't go back into any unnecessary debt, and not fall back into bad patterns. Success is now yours to have and to hold!
This is not a new idea - it's been around for centuries, and even more recently, researchers have found other ways to apply these techniques. For example, Dr John Gray said when studying the behavioural patterns of couples, he noticed the same stages of developing a successful relationship, which he later wrote about in his book, "Mars and Venus on a Date".
It has also been proven that if you rush through or skip a stage, you are doomed to failure or at least have to return back to the start again. If your finances never get off the ground, so to speak, then you have to go back to the first 3 stages to lay the right foundations to ensure lasting wealth and financial freedom.
There are many more guidelines, strategies and rules, but this describes the basic stages to follow.
Copyright © Ann M Marosy 2008. Ann Marosy is an accountant, consultant, and former university lecturer. She was formally the Financial Controller of the Fortune 500 Company, Jardine Matheson, and Finalist of SA Executive Woman of the Year.
Ann is the author and creator of 'The Money Program: How to Manage the 6 Stages of Wealth'.
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