Ok, it's been a while coming (there's a lot of activity in the market which means less time for writing blogs!) but now we're up to Step 2...
Once you know how you manage your current money AND you've worked out how to live on less than 90% of your income (For a reminder of Step 1 click here) it's time to pat yourself on the back and then take the next step forward.
The next step is to determine where investing for your future fits on your "Financial Passion Scale".
There's no use going into a lot of detail about what you might want and how you might get it unless you know your level of passion :
Passionate: You love the idea of learning how to trade shares yourself or you'd love to be a full time property investor, renovator or developer. You want to know everything you can in the relevant area and LOVE talking to like minded people and switched on professionals.
Vague Interest: You love your job and know you should invest for your future. You're happy to learn enough to invest in the right things to ensure a comfortable retirement but you certainly don't want to be thinking about it daily!
Totally Disinterested: You really dislike the idea of anything to do with money and you would love your nest egg to magically appear. You want someone else to take responsibility for making it all happen.
Where do you sit? The answer to this question is very important. It determines how you are likely to ACT when it comes to investing in your future. And if you know that then you can plan accordingly.
Let's put it into a diagram so it makes more sense. The diagram below allows you to see a visual representation of areas of your life in terms of:
Your Level of Passion vs. The Long Term Financial Benefit.
Take just a few moments to work out what fits into each quadrant for you own life.... and then place a few key financial items as well.
For example, where on the passion scale would you place the following consistently profitable items?
(These should be at the top of the "Financial Benefit" scale - they are generally profitable over the long term)
How about the following potentially profitable activities.
(They should be lower on the scale "Financial Benefit" scale as they are not always profitable over the long term)
Share Trading And how about these very unprofitable activities.
An expensive hobby - travelling, water skiing etc.
Expensive additions - smoking, recreational drugs
It could look something like this:
It's critical that you honestly place each item because it determines exactly what action you need to be taking to secure your financial future... and that it was I will cover in the next blog....
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