What if I wanted to build a house. Build it, not just contract the work to others. How many tools would I need?
Answer: Dumb question!
All the tools in the world would not help me build a house. I don’t know how to do it. I am building illiterate.
I can know all about tools and materials and still be lost. It is like Richard Feynman has explained, knowing the name of something is not the same as knowing something.
To know is to be able to use.
If your financial literacy is limited to knowing about the tools, you will be lost. Knowing how to apply the tools is where their value lives.
Money tools can be best seen in the context of financial planning. Being highly skilled or knowing everything about power tools is good, but it gets me no closer to being able to build a house.
It’s the same with life insurance investment plans, disability insurance, mortgages, credit cards, car lease, student loans, and employer group insurance or pension plans.
Once you know how to use the tools you can do a better job of selecting them, knowing when they matter, understand the difference between value and price, and knowing when not to use them.
In an ideal state, you could explain them to someone else. A spouse, a child even,
Like building, financial planning involves four parts.
What do you want the house to be? A small bungalow on a small lot or a vast country home on 50 acres. Knowing what you are trying build will develop information about possibilities and limits. The terrain and geology of the site, the floor plan, the exterior elevations, the time to construct, the services required like hydro, water, and sewage treatment, permits required, the price, resolving conflicting ideas with others who will live there, the decorating and landscaping. Starting with no vision will involve looping back to fix obvious but overlooked things. That adds to cost and the time to complete
Vision is the first step in financial planning. What are you trying to accomplish in your life? When do you need it? What is the price? Who else is involved? What career paths are available to you? What do you value most? What aspects are open to tradeoff and negotiation?
There are many questions you can ask yourself that will make the plan specific.
All of them start with “W”
By the time you think about the vision and the strategic questions, you will find four things:
I don’t know how so my best choice is know who.
I help people understand and manage risk and other financial issues. To help them achieve and exceed their goals, I use tax efficiencies and design advantages. The result: more security, more efficient income, larger and more liquid estates.
Please be in touch if I can help you. firstname.lastname@example.org 705-927-4770