The bridge of well-being

The bridge of  well-being is a framework that we can all use for personal financial well-being.

The framework gives us a sense of control over our lives and having a sense of control has been shown to be highly satisfying and increases our happiness.

Pillar 1: Define and understand your values and goals

Goal means something definite that you want to achieve. It is not vague.

Values on the other hand are what you think is the way to live your life. Being spiritual or religious is a value. Meditating or saying prayers is a goal that fulfills that value. Being thrifty is a value. Buying things which are value for money is consistent with that value. I hope you now get it.

It is important to sort your goals into:

  • Short term, immediate goals- makes your life pleasurable and satisfying right now
  • Medium term goals- relating to the forseeable future
  • Long term goals- relating to when you want to retire and how your lifestyle will be then

Do not think of the past. Think about what makes you excited, what you want out of life, how you actually want to spend your time. What changes you need to make? Are you willing to make those changes? How much money is enough in retirement? Sometimes it is not possible to achieve all that you have in your list. You then need to prioritize about what you really want and what you are willing to forego.

Pillar 2: Apply your resources to achieve your goals

  • What is your income?
  • What is your expenditure?
  • Do you have a budget?
  • What are your savings each month-is it too little, okay, or too much?
  • What is your future income and future expenditure?
  • What are your assets?
  • What are your liabilities?
  • How can you save more, earn more, spend less and increase your assets and decrease your liabilities?

These are the questions you should ask and see whether your resources match your goals or whether you are going to increase your resources or give up some of your goals

Pillar 3: Developing your investment strategy

The major asset classes  and their real( after inflation) returns in the long run are-

  • Cash- 0-1%
  • Bonds-1-3%
  • Property-3-5%
  • Shares-5-8%

To be a successful investor you should understand four Golden Principles:

  1. Quality- good quality investment
  2. Value- bought at a reasonable price
  3. Diversity- reasonably diversified( not all eggs in one basket)
  4. Time- be patient

Look at the above framework and see whether you can form your own personal financial framework: your bridge to wellbeing.

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