Your Personal Financial Plan - You Won't Retire Without One
It's not sexy, I know, but having a personal financial plan is imperative if financial abundance is important to you. I've said it elsewhere on my site but I'll say it again:
If you fail to plan, you plan to fail
You really can't argue with that statement, can you? Without a personal plan, you're shooting darts in the dark, financially speaking.
Achieving financial abundance or financial freedom is actually a bit boring. Getting there isn't all flash like you see it portrayed in the movies. Unless you're set to inherit your fortune, it's going to take a slow, steady plan to get there.
Of course, once you create a financial plan, follow it through for a few years, and then begin to realize the fruits of the plan, there's absolutely nothing boring about the results. Just be sure you don't fall into the "get-rich-quick" crowd. Develop your personal financial plan and then just work it.
OK, so I've convinced you that's it's important to create a financial plan in order to achieve financial abundance. What should that personal financial plan include?
Personal Financial Plan
Retirement
The first thing your financial plan should show you is exactly how much money you must save in order to live the type of retirement you desire. Your financial planner should ask you how much money you'd like to live on each month after you've retired.
Once he or she knows this information, they must come back with a spreadsheet that shows you (based on how much you've already saved or haven't saved), how much you're going to have to save by your desired retirement age.
This number is your financial independence number. Once you know the lump sum required to retire on your terms, you'll then know how much you must save each month in order to meet the goal.
Key information, indeed! How many people do you know who know their personal Financial Independence Number? Is it any wonder 90% of the people out there reach retirement age completely and utterly broke?
Personal Financial Plan
Life Insurance
Yes, if you have a family, you must pay for life insurance. Don't be a wimp on this subject. When I was working as a financial planner, this was a major issue I had to educate my clients on.
To be direct, the husbands were the ones who normally needed a push here. Their wives usually understood that if one of them died prematurely, the surviving spouse and the kids were in for disaster without income replacement in place.
When you create a financial plan, you can't skip this part.
Income replacement is what life insurance is all about. If your family needs your income while you're alive, what in the world makes you think they won't need it if you're dead? I never could and still can't understand why some people don't grasp this concept.
Since term life insurance is cheaper per thousand than whole life or variable life insurance, term is the way to go here. Multiply your annual income by ten and you'll be pretty close to how much term insurance you need on yourself.
I don't care what it costs to place this life insurance on yourself and your spouse. Get rid of HBO if you must and do the right thing for your spouse and kids. No excuses on this one! Don't be a weeny here.
Personal Financial Plan
Debt Elimination
If your financial planner tries to create a financial plan for you without providing you a plan to eliminate your debt, run the other way.
Your future financial abundance depends on your ability to pay off your consumer debt and then your ability to stay out of debt. Don't fool yourself on this fact.
Personal Financial Plan
Budget
Your financial planner should spend some time going over your budget and then offer you some ideas and ways to adjust that budget in ways that can free up money that you can then contribute to your retirement, life insurance or debt elimination needs.
Click here for Part 2 of Your Personal
Financial Plan - You Won't Retire Without One
Return from Personal Financial Plan to
Achieving Life Abundance home page
|
