Wealth is vital for one’s survival. Some live off a very limited amount of wealth whereas some manage to accumulate a gigantic sum. Those who fall in the latter are often called high net worth individuals though there are country-specific standards that determine the same.
For these individuals, financial planning is extremely important; not that it is not for those with less net worth but the sheer volume of assets at the disposal of these individuals requires more meticulous and rigorous planning.
You can watch interviews of several of these High Net Worth Individuals which offer you a glimpse into financial planning. Even if you don’t want to watch them, I have a few of those tips mentioned in today’s article. While there are loads of things high net worth individuals should do, I have kept them to 4 here. So, here we go.
- Have a plan
As they say, the journey of a thousand miles begins with a step. This adage has ubiquitous implications because one needs to have a start to reach a destination. Wishful thinking, thus, does not take you anywhere. A customized plan must include all details about your assets, liabilities, investments, and business plans for the future.
Having such a plan will provide you with a heightened sense of security ultimately helping you to make effectively manage debt, profit, and retirement. Considering the diverse nature of your financial life, you should hire a capable and credible financial consultant who would do the job for you.
- Always think about your retirement
We have a conventional understanding of retirement: that is a phase that comes when we reach a certain age. Well, entrepreneurs do not perceive retirement as such. They evaluate the necessity of retirement based on factors in addition to age such as wealth, future commitments, family planning, sources of income, etc. So, it does not matter whether they retire in their late 20s or early 70s.
Retirement is an active choice. That being said, retirement means that you won’t be active in business and this means you will have to ensure that money keeps coming in that provides you with much-needed financial stability. List down your expenses, consider the kind of post-retirement lifestyle you would assume, know your income sources, estimate the amount of expenditure in toto, and then make a plan of action accordingly.
- Teach your kids to look after themselves
Yes, you have worked hard to be where you are. Throughout your journey, you must have had made countless sacrifices to ensure your survival. If you have dependents, then you would have gone the extra mile to provide for them. Often, self-made millionaires try to protect their dependents, especially children, from the experiences they went through.
While the concern is understandable, this approach will do more harm than good. Once you retire, you will not be able to take care of your children the way you used to. Even if you don’t retire, you cannot let your children be overly sheltered. Letting them be will only exacerbate your financial responsibilities.
- Decide the succession plans
You will have to determine the succession plans the moment the thought of retiring even comes to your mind. By that time, you would have most likely reached a point to be able to ascertain how you would want your wealth to be distributed among your heirs. It is important, however, that you sit down with your children or potential successors to your business to discuss with them the future.
Making a decision unilaterally can result in disputes in the future and can immensely disrupt the peace you had been so wanting to enjoy post-retirement. You should try to limit your obligations as much as you can so that you don’t have to undertake unnecessary financial liabilities. Hence, decide who gets what way before your retirement happens.
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