If You Pay Attention Now, You Can Build A Better Future

Tennis great the late Arthur Ashe offers a suggestion: “Start where you are, use what you have, do what you can,”

Arthur did not mean it to be advice for financial planning, but rather for life. I think he would agree though, it is a good place to begin your financial planning exercise. Financial things are a limit in life and learning how to cope is a valuable tool.

Any time you can minimize the effect of limits, you should do so.

Start where you are.

It is, of course, impossible to start anywhere else. Except in your mind. People often start with their dream in mind.

Instead, begin with practical reality. Know what you spend now. Know your committments. Know what you want to achieve with the planning process.

Use what you have

Know your resources. Know your income and how much of it you bring home each pay period. People often plan for income they expect to receive in the future. Not entirely wrong, but learning to live inside what you have now, is a good habit. If income rises later, you will have choices. If you have already committed it, you will not. Having choices controls the future.

Do what you can

If you expect to build a masterful strategic plan and comprehensive cash flow control budgets on the first go round you will be disappointed.

  1. In the early going learn about your lifestyle. For this purpose, lifestyle is what you consume. From food, to gasoline, to new shoes. From golf balls to lottery tickets. At a minimum know how much you spend, on what, and why.
  2. Understand committments. Some relate to lifestyle. House and car. If you borrow money you will necessarily pay it back with interest. Those committments restrict how you can spend in future. Repaying debt that bought an asset that earns nothing is wasteful. Education loans are acceptable if they produce a marketable skill. Housing loans are useful to a point because they replace an otherwise certain payment – rent. Credit cards are acceptable if you pay them off. Credit cards are more difficult to deal with because you don’t always see the expenditure as being money.
  3. Understand that now you work for money and someday your money must work for you. Retirement is difficult without money. So is funding education for children. Children are a committment just like a car loan. Learn to save first and let lifestyle be the balancing amount.

Doing what you can does not mean you have a perfect budget or plan today. It should mean you know what such a plan will look like and you begin today to work towards that. You should not, must not, stop if things seem out of control now.

To begin.

  1. Be sure the lifestyle you are building or have built is in fact the one you want and can afford.
  2. Be sure necessary savings have been given a priority position in that. Otherwise your lifestyle will change in future.
  3. Understand the ebb and flow of those expenses. No month is exactly like another. Knowing your numbers matters, but knowing what they mean is crucial. Meaning guides behaviour.
  4. Learn to anticipate change. All planning is about anticipation of the future. Be sure you treat the future as a separate thing not just flow from where you are.
  5. Anticipation, action, measurement, and review of the outcomes builds the desirable future.

I help business owners, and professionals understand and manage risk and other financial issues. To help them achieve their goals, I use tax efficiencies and design advantages to acquire more efficient income and larger, more liquid estates.

Please be in touch if I can help you. don@moneyfyi.com 705-927-4770

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