realistic financial planningFinancial freedom – that’s what everyone aims to attain at some point in life. We all dream of “getting there” financially, to live the rest of our life without financial fear or worry, a life where we don’t merely work to pay the bills and not have enough left over, but actually want our hard work to pay off in the sense that we can meet all our debts, have enough in savings or investments to secure us during our golden years and then still have some more available to spend, to take pleasure in and enjoy life with.

Is financial freedom a reachable dream? It is quite reachable, but it takes some specific goal setting and realistic financial planning.

These key points, adapted from Robert Kiyosaki’s Rich Dad Poor Dad, can help you align your money goals in the direction where you are able to secure your financial future easily.

Budgeting is basic

A budget can provide a solid structure for all of your financial activities. It will help you monitor income and expenses for a specific period, so you can see how much money is coming in, how much is available to use, where you’re overspending and where you can make cutbacks. It gives you a concrete plan to prioritize where your money should go and to live within its limitations.

Manage spending

About one in five Canadians acknowledge that it’s their bad spending habits that have brought about their financial hardships. You can make enough money, even more than enough money, and you can have the most sophisticated budget in the world, but if you don’t break off little every day spending habits that allow money to leak out of your wallet, you’ll never be able to straighten out your financial situation.

If you get in the habit of tracking your expenses and consistently keep to your budget, you will learn to recognize these bad spending patterns. To undo them, start forming new habits that can help you manage your money properly — try looking for ways to increase your income, educate yourself to manage your expenses carefully, start a plan to pay off your debts and learn saving habits.

Learn to save

If spending money is very easy for you to do, then you’ll have to reverse that and make saving money second nature to you instead. Saving habits won’t form overnight, so be patient and stay committed. A good budget will incorporate a savings plan — save for an emergency fund, save for retirement, save for college tuition, etc. One of the best ways to save money is to put it away in a separate account so that, one, it’s out of your reach and you can’t spend it easily, and two, you can see how your money is growing. Once the amount reaches a certain level you’re comfortable with, learn ways to invest it so that it can keep growing.

Get rid of debt

Planning for your financial future includes examining your debt status. If you have a debt problem, bring it under control right away. Ignoring it will only compound the debt – and the stress you’ll be feeling. Don’t hesitate to get professional assistance from accredited credit counselors who can work with your creditors and make arrangements to pay smaller monthly payments. You may feel overwhelmed and helpless, but you’ll find that you actually have many options available to help control the bleeding, including filing for a consumer proposal or declaring bankruptcy. Set up a meeting with an accredited trustee to discuss your financial circumstances and find out what debt relief option is the right choice for you.

Debt can deprive you not only of financial security, but of your dreams, hopes and goals in life, so make it a life goal to live debt free.

Gain financial knowledge

As Benjamin Franklin says, “An investment in knowledge pays the best interest.” You don’t necessarily have to be academically educated on finance, just do the necessary research and planning to help you make well-informed money and investment decisions and to keep you up to date on current financial matters.

These five key steps will guide you to set a realistic financial plan that’s devoid of guesswork, misinformation and wishful thinking. Once you have a solid financial plan to measure by you can become singularly focused on how you can make your money work for you so you won’t have the pressures of making a living hanging over your head and you can finally be financially free to do what you really want in life.