How to Prepare for Financial Success

Financial success is a relative term, in that it may mean different things to different people. For example, some people may feel that they must have a specified net worth in order to feel successful financially, while others may regard the ability to support a family as the true measure of economic success. Whatever your concept of financial success is, there are things you can do to lay a foundation for that success. Follow these guidelines for how to prepare for financial success.


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    Set goals. Before you can achieve financial success, you must have an idea of what financial success means to you, and that means setting goals.
    • Identify your short-term (within 1 year), mid-term (1 to 5 years) and long-term (5 or more years) goals. For example, your short-term goals may include things like a vacation or a new laptop, while mid-term goals may include a down payment for a home and long-term goals tend to encompass a retirement plan.
    • Determine how much money it will cost you to accomplish those goals, and in what time-frame you want to achieve them. Make sure your figures are as accurate as possible.
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    Communicate with your spouse or partner about your goals. This is especially important for planning financial success if you share your finances with someone else, as it is possible that you could be working against each other's goals without even being aware of it. Make sure you and your financial partner have the same ideas and are working towards the same goals for your financial future.
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    Assess your financial state.
    • Calculate your net worth so that you know where you are in reaching your goals. Add up all of your assets, including savings accounts, retirement funds, home equity, automobiles, stocks and bonds, furniture, property, jewelry and anything else you have of value. Next, add up all of your liabilities (outstanding debt). Subtract your debt from your assets to get your net worth value.
    • Draft a budget to track your monthly income and expenditures. Include all sources of income, as well as every single expense. This financial planning technique allows you to see exactly where your money is going each month, how much money you should have left over for savings and areas where you can cut back on spending in order to save more each month.
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    Decide how you will allocate your monthly income towards your goals. Once you have drafted a budget for financial planning, you should know exactly how much you have left each month after your expenses to put towards your goals. For example, your plan may include putting 10 percent of your monthly income into a 401K plan that will provide for retirement in 20 years, and setting aside $200 each month for a family vacation you want to go on next winter.
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    Establish a safety net so that your financial planning is not thrown off by unforeseen circumstances.
    • Set aside some money for emergencies. A good rule of thumb is to save 2 to 3 months of living expenses in a separate account.
    • Keep up-to-date health, home and/or rental, life and disability insurance plans in order to protect your financial future.
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    Invest money for long-term goals. Diversify your portfolio between stocks, bonds and cash-equivalents to lessen your investment risk. You may opt to hire a financial advisor to help you place your money in appropriate investment vehicles.


  • Use computerized spreadsheets and/or budgeting software to keep track of your financial planning.
  • To get the most accurate figures for your monthly budget, track your income and expenses over an extended period of time � a year, for example � then average out the monthly amounts. This is especially useful if you have an irregular income.
  • Automate your savings plan by setting up a monthly draft from your checking account to your savings account.


  • When planning financial success, your expenses should never outweigh your income. If you find that your monthly obligations exceed your income, you must find ways to cut your monthly expenditures and/or increase your income.

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Categories: Managing Your Money