Szókincs fejlesztés: How Financial Decisions Impact Long Term Welth
“Financial planning” has long been associated with long-term decision-making — things like building a nest egg, saving for retirement, and so on.
It’s for stuff you don’t have to worry about for years. Or at least, it seems like most people think this way. That might explain why so many people, especially in their 20s and 30s, think they have time to wait.
They’ll worry about their money later. Your 20s and 30s are when you’re supposed to be a little irresponsible with your money, right? You have time to get it together when you earn more money and are closer to retirement.
Then you’ll get serious about planning and figuring out what to do with this whole personal finance thing.
If you feel and act this way, it could be the biggest financial mistake you make.
Financial Planning Isn’t Just About Retirement Or Your Distant Future
Most people have it within their power to take some of their earnings, invest that money strategically over their working career, and end up with millions of dollars to their name by the time they’re in their 50s or 60s.
Yes, I said millions. Plural. That’s not a typo.
You probably have the power to do this yourself. It’s not necessarily easy, but it’s absolutely possible.
But you have to plan for that kind of success, and you have to start now. Financial planning isn’t just about retirement. It’s about learning how to use your money as a tool to live the life you want.
You need to start taking your life and the financial decisions you make seriously, because even the small or short-term stuff has a massive impact on how easy it’s going to be for you to create the long-term, big-picture life you want.
Something like financial freedom — or reaching the point where you’ve saved and invested enough to generate assets that you can use to pay for your lifestyle, rather than relying on a paycheck or other income stream — doesn’t happen by chance.
It’s something you deliberately work toward. And the sooner you start, the better.
Financial Freedom Is 100% Possible, But Working Toward It Starts With The Right Baby Steps
You’re handicapping yourself by making stupid short-term decisions that you could have done differently had you only done some planning first.
Bad short-term decisions can make it harder to achieve long-term success. Short-term decisions have a huge impact on your long-term finances.
But they can also be a serious source of distraction. You want to buy a home, start a business, get married — it’s a lot going on right now and you may feel like you should just wait until “things settle down.”
Most people charge headlong into these things without stopping for a minute to do some strategic planning. They wait until the dust settles — then they ask, “hey ,what’s the best way to clean up this financial mess I just made?”
You might be busy if you have a lot going on right now, but that’s exactly why you can call in someone to help you figure it out. A good, objective, independent financial advisor can help you make the right decisions for your short-term goals.
It’s the short term choices you make that will set you up for the long-term success you want.
Of course, there’s a flipside to that: make the wrong choices because you failed to create a financial plan to guide you, and you could dig yourself into a hole.
The Impact of Short-Term Choices on Long-Term Wealth
Let’s look at a tangible example to help make sense of all this.
The most common short-term decision I see people make a lot of financial mistakes around — or fail to do any financial planning for — is buying a house.
The funny thing is, that decision should be anything but short-term. Choosing the wrong path here can completely derail your financial life.
Think about it: you’re essentially saying, “Let me buy this $600,000 thing first, and then I’ll figure out what I should be doing with my money.”
How illogical is that? If you dive headlong into a purchase like that, you may not have much money left to worry about!
But this is exactly what people do. They rush to make short-term decisions, mistakenly believing they can “figure it out later.”
Don’t Just Hope It Will All Be Okay: Test-Drive Your Decisions Before You Make Them
Would you buy a car without test driving it? Nope.
So why would you commit to these financial decisions without testing them out to see if A. they even work and B. if they’re actually the choices you want to make, once you get a chance to see the potential consequences of making them?
You can “test drive” your financial decisions by using complex calculators that financial advisors use as part of their suite of tools and technology to help clients make better plans and decisions.
to associate with something – valamivel párhuzamba állítani
nest egg – dugi pénz
retirement – nyugdíj
irresponsible – felelőtlen
plural – többesszám
typo – betűzési hiba
financial planning – pénzügy tervezés
massive impact – komoly hatás
paycheck – fizetési csekk
deliberately – tudatosan
to handicap – hátrányos helyzetbe hoz
distraction – elterelés
to settle down – lenyugodni
charge headlong – fejest ugrani
independent financial advisor – független pénzügyi tanácsadó
to derail – kisiklik
to figure it out – kitalálni
consequence – következmény