THE GOAL OF PERSONAL FINANCIAL PLANNING
TO HELP ACCUMULATE MORE MONEY TO SPEND FOR WHATEVER YOUR PRIORITIES MIGHT BE:
- Early Retirement
- College Education
- Major Purchases
- Increased living standard
STEP ONE: LOOK FOR WAYS TO INCREASE YOUR INCOME
- Invest in education, training, and personal development to increase your earning power.
- Consider alternatives that may increase returns on invested assets.
STEP TWO: LOOK FOR WAYS TO DECREASE OUTGO
- Reduce discretionary spending.
- Restructure debt to lower interest rates.
- Adopt methods to reduce taxes.
- Adopt methods to reduce insurance costs.
STEP THREE: PROTECT AGAINST CATASTROPHIC LOSS
- Insure your income against loss due to death or disability.
- Insure your property against loss due to fire, theft,storms, or accidents.
- Insure against liability losses due to negligence or error.
STEP FOUR: PLAN AHEAD FOR MAJOR PURCHASES
- Borrow only to purchase items of lasting value such as a home, auto, or college education.
- Save up and pay cash for general living expenses, such as vacations, clothing, gifts and entertainment.
STEP FIVE: ESTABLISH A DISCIPLINED PROGRAM TO PRUDENTLY INVEST YOUR REMAINING SURPLUS
- Establish both short term savings and long-term investments.
- Diversify and properly allocate according to your risk propensity.
Disclaimer: While these steps alone cannot guarantee financial success, they may be helpful in developing a sound financial strategy.