Financial Strategy – Are you including these 7 ideas in your Financial Plan?

If you are following the traditional rules for financial success, you may have turned your financial decisions over to a Financial Planner or Investment Broker. Are you including these 7 considerations in your financial planning process?

• Tightly control income and expenses– I know this wasn’t something you wanted to hear, but it is the only way to measure your progress. There are great, inexpensive options for software programs that will take much of the “pain” of this process away. These programs also have the added benefit of easily providing information for tax filing, in addition to giving you greater visibility of your spending habits.
  
  The key is to perform this tracking as it occurs, so it becomes routine. This gives you maximum benefit in terms of easily finding your financial information when you need it, and for providing timely input for changes in your financial strategy.
• Picking investments– An important factor to keep in mind as you invest your money is that you make your money on an asset when you buy it; NOT when you sell it… Spend a lot of time up-front analyzing the investment and ensuring that there is profit built into it if you sold it right after you bought it.
  
  And by the way, your personal assets are also investments. Don’t get emotional about your assets; even your home. Be prepared to change your asset mix as needed to maximize your total asset portfolio.
• Multiple Streams of Income– You need to have more than one source of income to support your family. Especially in these chaotic times, you can more easily adapt to the changes around you by ensuring that you don’t have all your eggs in one basket. And, to ensure that your family continues to be provided for even if you can’t work, some of your income needs to continue even if you are not actively involved with the income source. (This is referred to as Passive Income.)
  
  The best type of income is provided by sources that you are passionate about; so passionate that you would do them for free.
• Educational funding– It is more important to focus on needed training and education for yourself, before you concentrate on higher education for your children. I like to use the airplane analogy – If an air-mask drops from the ceiling of the airplane, you are encouraged to place the mask over your own nose and mouth before helping children who are accompanying you. If you have already achieved financial freedom or have already implemented multiple streams of revenue that will get you to a secure retirement, paying for a child’s college education may be a logical next goal. However, it may not be safe to assume that your children will be a good retirement plan.
  
  For the most part, people invest tens of thousands of dollars in higher education so that they can prepare themselves for a career they enjoy that pays them enough money to be financially secure. The truth is, however, that even after that investment of time and money, people are NOT always finding themselves in careers they love; nor are they financially secure. A college degree is not a requirement for creating financial freedom.
• Essential first Steps for starting a new business– If you start a new business, your first steps should be obtaining legal and accounting support. It’s always tragic to see new business owners lose their business simply because they didn’t properly understand the legal and tax implications of their business and financial decisions before they made them.
  
  It’s always much easier and cheaper for your lawyer and accountant to get you started with setting up your books and legal documents correctly than it is to clean them up later.
• Partnering with Others– Be careful who you partner with; either in personal or business ventures. A bad business relationship can be extremely expensive to sever and may take years to recover from the financial impact.
  
  And don’t ignore the impact, both emotionally and contractually, of a bad personal relationship.
• Fees for Financial Advice – Don’t assume that because you are not writing a check to someone who is monitoring all or part of your assets; that you are not paying for those services in some way…
  
  It’s usually better to pay a flat fee for financial advice than a fee based on activity. This avoids the possibility of conflict of interest. All investments include costs for the person “representing” you: Fully understand all the costs for your investments, and shop around…


Bottom Line? – You are the author of your Financial Strategy and are always designing your financial future.

Want to know more?  I would like to invite you to claim your FREE Instant Access to my introductory program on “Financial Strategy Basics“.



Tags: Financial Management