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5 Ds for sufficient funds to live the life you want

Wealth

5 Ds for sufficient funds to live the life you want

In recent years, the rising cost of living has emerged as a significant stressor.

Peak psychology bodies say that financial worries stemming from rising costs of everyday essentials have surpassed other stressors, even global uncertainty and health crises. This is not only affecting our health but also how we go about achieving a fulfilling life.

Understanding how your financial health links to your overall wellbeing is vital. Smart money management and following the ‘5 Ds’ can help us lead the life we want, ensuring we cover our basic needs while still chasing our dreams.

Financial wellbeing will look different for everyone, but essentially it’s having sufficient funds for your chosen lifestyle at a given point in time. Sufficient for you is about defining what your ideal life looks like, then creating and implementing a plan to make it happen. Let’s take a look at the five important steps on the road to sufficient funds:

Define – Define what a fulfilling and successful life looks like to you. The more you align your money decisions to this definition, the more clarity you’ll gain, the more confidence and momentum you’ll build and, ultimately, the happier and more fulfilled you’ll be. This is about setting the right mindset and mapping out your definition of ‘sufficient funds’.

Money is a repeat offender in creating limiting beliefs. It causes us to worry at the outset that we can’t achieve goals or won’t ever be able to afford something.

So, park your worries about debts and savings and give yourself time to focus on your dreams. Sit down and map out your goals and be as specific as possible. Once you’ve defined sufficient and you’re clear on why you’re doing this, you can then make your money work for you.

Declutter – It’s time to Marie Kondo your money. You need a fail-safe system to remove money waste from your life, so you can smash out smarter money decisions, including automating these so you have less decisions to make.

Most of our inability to take action is due to being disorganised, unintentionally allowing things to get in the way right when we’re ready to leap. Review your bank accounts and plug any leaks, such as excess credit card charges and old subscriptions. Aim at reducing costs across providers including utilities, bank fees and health insurance.

Two crucial aspects here are reducing debts and creating a spending plan on cruise control: know where your money comes in and automate bank accounts to distribute funds aligned to your definition of sufficient funds. Even if you feel your current savings/spending system is working, realigning this to your definition of sufficient, removing any excess, will provide ultimate financial clarity.

Develop – This is where you develop your growth strategy. True happiness and fulfillment comes from progress and growth. After decluttering, you’re on cruise control with your spending plan and clear on how much should be left over. You now move from simply counting your chips to strategically building ‘mad stacks’ that link directly to the goals and values you defined earlier.

Whichever investment options you choose, it’s important that you align these to your definition of sufficient. You’re going to need to do your research, weighing up which options are right for you, or rely on a financial adviser here.

Defend – Life can at times be completely unpredictable and totally unplannable. Once you’ve built your mad stacks, you’re going to want to shield yourself and your family from inevitable bumps in the road.

This includes using your safety buffer and protecting yourself against the unplannable with insurance.

Over the years, I’ve seen endless numbers of clients facing unforeseen difficulties: a serious medical diagnosis, tragic loss of a partner, being laid off or a relationship breakdown.

No one anticipated these events. They had to change their plans, rethink goals and adjust timelines. None of this means your definition of ‘sufficient’ needs to change, but your plan for achieving it may need some tweaks.

Deliver – This is where you need to stay on track and stay motivated. It’s about commitment: staying true to your values, keeping motivated and regularly tweaking your definition of what sufficient funds means to you.

– An edited extract from financial advisor James Millard’s new book, Insufficient Funds

Disclaimer: The information in these articles is of a general nature only and does not constitute personal financial or product advice. Any opinions or views expressed are those of the authors and do not represent those of this publication, or people, institutions or organisations they may be associated with in a professional or personal capacity unless explicitly stated.

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