Did you know that building significant wealth and creating your ideal financial life is actually a science? This means that by following a specifically designed process, you can create your ideal financial life.
While most people have undoubtedly spent time dreaming of their “ideal” financial life, many don’t have or operate by a process to actually get there. Let’s change that today!
Below you will find an overview of the seven-step process I’ve been using with people for years to help them create their ideal financial life. Anyone can create the financial life they want, which means you can too.
Step 1 – Define your “ideal” financial life
What does ideal mean to you? When you think of how you want your financial life to operate, what comes to mind? Do you want to eat out without worry? Take large-scale family vacations each year? Live in a certain home or area? Contribute large amounts to certain causes or organizations?
What’s important to remember when you’re defining your ideal financial life is that you don’t hold back. We’ll get to the “how” of it later, now is the time for the “what.”
As you begin to get a good feel for your ideal financial life, you should see a theme, or one ultimate goal, or a target that stands out to you. I call this your “dominant financial aspiration” because it is the one thing you focus on more than any other.
Once you’ve identified this dominant financial aspiration, move on to step two.
Step 2 – Identify what needs to be true for you to achieve your dominant financial aspiration
List out everything (yes, everything) that will have to be true for you to achieve your dominant financial aspiration. If you believe you will need to earn a certain amount per year, put that down.
If you know you’ll need knowledge or skills that you don’t have now, add those to the list. Simply ask yourself what needs to be true or what needs to occur for you to achieve your target.
Step 3 – Identify current gaps
Next, identify the current gaps you have between where you are now and what needs to be true for you to reach your dominant financial aspiration. There are four areas we all have gaps in:
Knowledge or know-how
Area(s) lacking confidence
For the realities you listed in step two, what additional knowledge will you need? Are there skills you need to acquire to manifest these realities? When do you need increased confidence, and where might you lack drive or motivation to pursue your ideal life in tough times?
Step 4 – Identify and decide how to fill the gaps
We all have gaps in the areas listed above, which means we all must decide how to fill these gaps. There are two main strategies you can use to do so:
Learn or build yourself
Hire a coach or expert
When it comes to filling knowledge and skill gaps, it can often make sense to learn the knowledge or build the skills by yourself. If you’re lacking in confidence or in the proper motivation – or if the skills or knowledge would take too long or cost too much to obtain – you may want to look into hiring an expert or a coach to accelerate your path.
Regardless of which path you choose, you must take action toward filling the gaps that are keeping you from achieving your dominant financial aspiration.
Step 5 – Map out your plan
Once you’ve identified what needs to be true and the gaps you currently have (and how you will fill them), you can create your plan of how to achieve your dominant financial aspiration.
When it comes to planning your financial life, keep your plan simple so you can focus on action. How do you do that? Simply create a list of action items that move you toward your goal and prioritize that list.
My favorite strategy for planning is based from “The ONE Thing” by Gary Keller. In short, you continually ask, “What is the ONE thing I can do to ensure I reach my dominant financial aspiration?”
Start with your ultimate timeframe (“What is the ONE thing I can do to ensure I reach my dominant financial aspiration by X date?”) and work backward. (“What is the ONE thing I can do this year/this month/this week/today to ensure I am on track for reaching my dominant financial aspiration by X date?”)
As you compile your list of actions, prioritize them based on what needs doing first, what has the biggest impact, and what can be done quickly and easily to gain momentum.
Step 6 – Establish your review and accountability process
Once you have your plan in place, it’s time to follow it! To do so effectively, you will need a process to review where you are, the progress you’ve made, and your path to reaching your ideal financial life.
All of us go through periods of ups and downs in our motivation and having an accountability process or partner can help keep you on track. By staying accountable, you significantly increase the likelihood you’ll meet your goal.
Step 7 – Take action!
Now that you know your ultimate destination (your ideal financial life), what needs to be true for it to happen, what you need to make it happen, and the actions you will take to get there, you need to take action and make it happen!
With our financial life, there are three “levers” we can pull to move us forward:
1) How we make our money. Focus on increasing your value, finding additional streams of income, increasing your skills, and finding those who would benefit from your skills.
2) How we manage our money and risks. Properly manage your cash flow and budget, create free cash flow, have a reserve fund, and insure what needs to be insured.
3) Systematically save and multiply your money. Make sure you’re saving and investing your excess income to build your wealth over time.
Creating your ideal financial life is a science and a process, which means you can do it! Follow these seven steps and start building the financial life you want, regardless of where you are now.