Are you an everyday person looking for a way to build wealth and achieve financial freedom? You’re not alone. Many people dream of becoming rich, but few understand the essential components of a financial strategy framework that can help them get there. In this article, we’ll explore these five key components and how you can use them to build your own financial success.
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Component 1: Purpose
Your purpose is the ‘why’ that anchors your specific goals to meaning. It’s the reason why you’ve been put on this planet and what provides meaning and fulfillment in your life. To define your purpose, ask yourself tough existential questions like:
  1. If every aspect of your life was already fulfilled, what would you devote your attention to beyond yourself?
  2. What cause or belief would you be willing to stand up for?
  3. If you had a covert mission in life, separate from your immediate circle of friends and family, what would it be?
  4. What ignites your passion? What fills you with a surge of energy and enthusiasm?
Consider these examples:
  • My purpose is to create a mindset of wealth in my family, through making better money-moves myself, in order to see them make better financial decisions in their lives.
  • My purpose is to bring hope to struggling entrepreneurs in the green-tech space, through careful investment of my time and resource, in order to advance the transition to renewable energy.
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Component 2: Goals
Goals are the specific events or outcomes you wish to achieve or expedite within a defined timeframe. Achieved goals are the markers that reflect the fulfilment of your purpose. Goals should be SMART: Specific, Measurable, Achievable, Relevant, and Time-bound.
Consider these examples:
  • My goal is to retire by age 55 because I want to show my family it is possible.
  • My goal is to start a business which replaces my ‘day job’ income by age 45, because to help others in this area, I need to first do it myself.
  • My goal is to buy a home by age 30, because I want to be debt free by age 55, because then I can invest more, because then my children will have a head start building wealth, because no one in my family has ever retired with ‘enough’.
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Component 3: Strategy
A financial strategy is a custom-built framework to achieve your goals that are aligned to your purpose. A strategy may be a methodology based on principles or ‘laws’ of money, which take into account things you can control, and things you can’t.
Consider these examples:
  • My strategy is called the ‘repay the mortgage until it’s gone’ approach. I will use 80% of every discretionary dollar I have to spend on extra mortgage repayments until the mortgage is repaid, so that I can achieve mortgage free status by age 55.
  • My strategy is called the ‘core-satellite’ approach. I will invest 70% in well-diversified managed funds and then invest 30% into three buckets (10% each) of individual shares, crypto, and property, so that I can achieve the average market return on 70% of my investments, with 30% of my investments being exposed to the chance of significant gains.
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Component 4: Tactics
In the hierarchy of investment decisions, tactics sit below goals and strategy. Tactics represent the specific ‘instruments’ used within your financial strategy. They include the activities and decisions that your strategy demands. Tactics are the procedures you adhere to, the tasks you accomplish, the tools you invest with, and the resources you exploit to implement your strategy.
Consider these examples:
  • Tactic: I will complete a budget and track my spending to ensure that 80% of my disposable income is being spent on extra mortgage payments. I will review this annually and be accountable to my partner or trusted friend.
  • Tactic: I will use an online investment platform like Hatch or Sharesies to invest in index funds. I will use the same platform to invest in a selection of companies that I believe will outperform the average during my investing timeframe.
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Component 5: Action
The quantifiable set of behaviours (like ‘how much to invest?’) consistent with your tactics. Actions are the specific execution or implementation of your tactics.
Consider these examples:
  • I will use a mortgage of 50% of the property value, or $xxxx, to purchase an investment property. I will sell this investment property to repay the debt and invest the gains in managed funds at the age of aged 60.

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If you want to know how to get rich, you need a financial strategy. Actions by themselves aren’t enough. Adopting the tactics you’ve read about – not enough either. When you get to a strategy, you’re now operating a framework that keeps you going, when you don’t feel like it. Clear goals help hit what you aim at, especially when you’re out of control. Like anything though, if you want to go deeper, you need to go deeper. Finding our purpose, or the reason why we have goals, can be the ultimate secret to riches, and happiness.

Ready to give your goals something to hang on to?

Book your own financial strategy session with me now.