Financial Freedom Is Merely Organized Common Sense
Financial planning means to allocate money you own and will earn in the future to lifestyle in the present, to lifestyle in the future, to obligations from the past and to obligations for taxes and other government programs.
If people allocate well, it all balances and life is good.
Even small errors have large consequences.
Which of the four allocations has greatest priority?
The government and past obligations, debt, are usually near the top. Each will remind you if you make too small an effort. So, in the short run allocating to the present lifestyle and future lifestyle is all you can really choose.
Do you spend first and save the rest, or do you save first and spend what remains? Future self will like save first better, but it hurts.
Our intuitive idea is saving pays off in the future and spending pays off now. Not such an easy choice when you look at it like that.
Investments grow if they are done well, and shrink, or remain flat if done poorly. Investing will be with you forever, so learn about it. The first thing to learn is that it is not a trivial chore. Be a little humble. Seek help.
It can stop. Fortunately tools exist to make that loss recoverable. Insure your life and ability to earn. Sickness and accident are more common than people believe. No plan is complete without assessing this need.
In the longer run both debt and taxes are manageable. They don’t go away but some effort finds techniques that reduce their impact. Explore possibilities. Learn the choices for debt. The best – negotiate.
Tax savings are limited but a little effort has effect. Divide, deduct, defer are the keys. Again seek help. No one figures out a tax plan on their own.
No one gets it right at first look. Even if they did, things change. Accept ongoing responsibility for the fit of your plan to the real world. Think the 3Rs. Record, review, and revise.
They are thoughtful, disciplined and persistent. Be sure to build those parts into your plan
Don Shaughnessy arranges life insurance for people who understand the value of a life insured estate. He can be reached at The Protectors Group, a large insurance, employee benefits, and investment agency in Peterborough, Ontario. In previous careers, he has been a partner in a large international public accounting firm, CEO of a software start-up, a partner in an energy management system importer, and briefly in the restaurant business.
Please be in touch if I can help you. don@moneyfyi.com 866-285-7772