The 3 Pillars of Building a Strong Financial Plan

1. Plan for change

Your financial objectives are likely to shift as time passes. The individual you are today will differ from the person you become in 10, 20, or 30 years.

A robust financial strategy for the long haul anticipates and accommodates these inevitable transformations in aspirations, values, priorities, and circumstances. While the specifics of change may elude prediction, proactive planning can adapt to life's evolution.

Begin by saving more funds than you initially deem necessary during periods of surplus. When you discover surplus income, resist the temptation to splurge or upgrade your lifestyle. Instead, channel those funds into investments to foster wealth accumulation.

Steer clear of overly optimistic assumptions regarding future earnings and expenditures.

When faced with decisions, favour options that permit easy exits at minimal cost. This flexibility enables adjustments or redirections as circumstances demand. Approach choices cautiously if they entail irrevocable commitments (such as buying a home) that are challenging to reverse.

2. Frugality will only get you so far

Regardless of your aspirations, financial resources are essential for sustaining your desired lifestyle, both now and in the future. Moreover, the capacity to earn through work is finite, whether by personal choice or external circumstances. Thus, an alternative means of meeting financial needs becomes imperative.

Recognising the importance of saving and investing is indisputable. The challenge lies in determining the most effective approach.

While adopting a frugal lifestyle can lead to wealth accumulation, it's worth noting that reducing expenses can only go so far. Relying solely on saving overlooks the potential for asset creation and appreciation over time.

3. Develop an investment strategy

If you want to grow wealth you have to invest — and you have to do that wisely.

A sound investment strategy needs to consider the following

• What investment vehicles to use - an ISA, a pension, or an Investment Bond to name a few
• The right asset allocation based on your goals and your time horizons
• The expenses associated with your chosen investments and how that may impact your returns
• What diversification do you have across your portfolio or assets you invest into
• What are the tax implications of your choices
• Mistakes to avoid include speculating, market timing, and taking on too much (or the wrong type) of risk

This merely scratches the surface of comprehensive investment management. But in general, if you want to build an investment strategy that will help you grow wealth, you want to look for:

• Long-term time horizons: The longer your money can be invested, the better your odds of a successful outcome where you see growth of your assets.
• Risk-adjusted strategies: You want to take on enough risk to see a return, but not more than you can actually afford
• Globally diversified portfolios: Remember that there is a literal world of financial markets out there. Utilise them!

One final point to keep in mind: You're better off sticking with a decent strategy that works over time than constantly hopping from one thing to another in search of the best strategy ever.

Consistency is an underrated element on the road to building wealth.