At first glance, financial concepts and solutions may not be the most delightful subjects to know about. But with proper discipline and patience, you will be able to gain deeper understanding and appreciate its importance. Learning the basic financial ideas is the start of the growth of stable financial foundation.
Financial independence is a priority that every individual should aim for. You learn to take control of our future by learning how to:
• Earn money
• Save money
• Raise money
• Secure money
So why is there a need to create a strong financial base? For example, before you learn to drive, you need to understand a few traffic rules and regulations and some driving mastery for you to be able to get a license and be able to drive freely. Building a strong financial base will get you where you want to go on life. However, you will never reach a destination without a plan and that plan is something that has to be on your top priority list. So it is important to plan out and start now! No matter what
your age or your status in life, if you have not started the learning process about your finances, it is never too late to begin.
According to McKinzie Bean (2019) of MOM MAKE CENTS, this personal finance pyramid follows Maslow’s Hierarchy of Needs which highlights the fact that you need to satisfy your basic level needs before you move on a higher tier.
Moreover, she stated that in order for you to have a strong financial foundation, you need to be protected from all sorts of unexpected events that can affect our long-term financial goals. Without any financial protection, you put yourself in a situation with a lot of risks that could jeopardize all your plans. Everything could go south on you if any unexpected event occur.
Second, you need to have savings in order for you to build your wealth. In building your wealth it is important that you manage and pay off all your bad debts so that you can start accumulating savings from your earnings. Set aside at least 15 percent of the income you are receiving to grow your savings. As time passes by you can challenge yourself to increase the percentage of your savings each year.
Third, as you save, you can now be able to build and preserve wealth by creating an extension from your savings. On the third tier, you can be able to focus in making meaningful investments since you are now feeling more secured from any eventuality like medical issues. On this level, this is where you let your finances improve further perhaps buy car, create a business, or invest in real estate or invest in your kid’s college fund. You may also opt to concentrate on retirement planning at this level. And now that you have started accumulating more health, what’s next for you?
It is very important to preserve it. It is important that you prepare for any worst case scenarios that might happen. Thus, you need to have more protection from risks and other unexpected events.
A strong foundation means having a more stabilized and resilient finances that can withstand any money-related problems. Reconsidering and following these five building blocks of strong financial foundation will help you create and protect your financial future.
Joey Bajar was accidentally became an “Entrepreneur” and “Affiliate Marketer” at the same time due to a lot of research and by reading books and also by reading success stories of some well-known millionaires in online business industry. He is a web designer and SEO Specialist for over 10 years. Today, he is running his own online digital business.