Hey Millennials - Investing isn’t Enough: 6 Things You Need to do to Grow Your Wealth

By Gabriel Anderson, a Certified Financial Planner and founder of Crafted Wealth Management

Let’s take a break from talking about investments. Yeah, yeah. This is article is in a journal about Sustainable Investing, but what is it you’re really after? What’s the reason you’re investing in the first place? Have you thought about where you’d like to end up? How will you know that you accomplished what you’ve set out to accomplish if you haven’t defined your goal? Investments are an important tool but they become more powerful when you view them as a part of your larger financial life strategy.

What I’m talking about is the process of Financial Life Planning and that’s what I do. I help people use money as a tool to accomplish their goals and live their ideal life. It’s what I call becoming a Financial Badass and it all starts with just six basic steps.

These six steps give you a framework to define your values and goals, and then uses those as a basis for your financial decisions. These steps provide a process that you can follow without fail, and help you provide the WHY behind your financial decisions. The WHY is your motivation and knowing that is empowering. Becoming a financial badass is a process of enlightenment and it’s a process where a little knowledge can go a LONG way.

Step #1 – Define Your Vision, Values, and Goals - What do you want to accomplish with your time on this earth? Going through this process may be the start of something bigger. It will take you down the path of breaking down your life and defining what you need to do to get you where you want to go. All you need to do is take the time to be present for yourself and answer these questions...see them in blog post (link below)

Step #2 – Are You a Saver or a Spender?  It’s no secret but savers are going to have a gigantic leg up throughout life. They have the funds set aside to execute on opportunities as they present themselves. Or, have reserves available if they happen to lose their source of income. If that happens, the savers won’t need to rely on debt to support their lifestyle until they find another job. Don’t worry! If you’re a spender, all hope is not lost! As long as you realize you are a “spender”, you can take the steps ahead of time to ‘trick’ yourself. To do this, you need to automate a percentage of your paycheck into savings and investments and “theoretically” forget about it. Then you have the other percentage of your paycheck to live your life in whatever way you choose. Just remember to pay yourself first! The percentage you set aside is there for Future You!

Step #3 – The Details - So where do you stand right now? Most of us aren’t starting from Zero. Some of us may be starting this process with debt and some of us may be starting out with assets. Either way, we need to find out where you are now to see what you need to do to get you where you want to be. This statement of your personal financial position is called your Net Worth. What we are going to build to calculate this is called a Balance Sheet.

Step #4 – Your Budget - What’s a budget? A budget is a tool you can use to tell your money where you want it to go instead of leaving yourself wondering where it went at the end of every month. The first part of the budgeting process is about awareness. It’s about figuring out what you’re currently doing with your income. The next step is taking that awareness and making changes with that new knowledge. Setting spending goals for each category will start to free up income. Should you spend less so that you can save and invest more? Can you actually afford to increase your lifestyle? Let’s find out...

Step #5 – Emergency Fund/Cash Reserves. The what, why, and how - So what do you do if you lose your job, have an unexpected medical situation, or you have a friend or family member that needs a boost? Financial life planning is also about preparing yourself for the unexpected.There are two ways to look at this...

Step #6 – Paying Off Debts - Debt sucks. Straight up. It’s an expense that you incurred in the past that you told your future self you’d deal with as you earn more income. Trouble is, you probably didn’t realize how suffocating that concept was until you got into it. Fear not! You can get rid of it. Now that you know where your money is going from doing your budget in step #4, you have an idea of how much extra income you can put toward saving, investing, and paying off debts.

Read more on each Step in his full blog post at- http://www.greenmoneyjournal.com/february-2017/investing-isnt-enough-6-things-you-need-to-do-to-grow-your-wealth

Putting it All Together

Work through these steps one-by-one, remember this is a process and in life things are constantly changing. These processes work whether you’re in debt or you already have a few million dollars of savings and investments under your belt. The contents of this article and the understanding of them will give you a HUGE leg up when it comes to your personal finances. Mastering them and using them to move forward in life is what being a Financial Badass is all about! Get to it!