Financial planning is a serious undertaking and must be approached as such. It requires effort, concentration, understanding and knowledge of your choices. It is not something that can be done at the spur of the moment or without careful and deliberate care. Here is a glimpse of the process with some tips on how to proceed.
I hosted a webinar on How to be Your Own Financial Planner for the East Brunswick Public Library. There is a handout that is a thorough checklist of my 13-step process. I’ll email it to anyone sending a request to me at [email protected]. Just put 13-Step Process as the subject and no messages, please.
The 13 steps are:
- Purpose of Planning
- Short-Term Goals
- Long-Term Goals
- Risk Profile
- How Much You Spend
- Cash Flow
- Net Worth
- Asset Allocation
- Rainy-Day Funds
- Number Crunching
- Whether Goals are Attainable
- Commit Your Plan to Writing
- Plans are Road Maps
While I discussed each step, I also came up with some added quotes that I included on the slides, and these are:
- "Reading maketh a full man; conference a ready man; and writing an exact man." - Francis Bacon
- "When you are ready to retire and not able to, whose fault would it be?" - Ed Mendlowitz
- "Nothing in the future is guaranteed…but the potential for achieving your goals is increased if your goals are prepared for." - Ed Mendlowitz
- "Never go out of your depth in business, for the best swimmer may be seized with a cramp." - Benjamin Franklin
- "Annual income twenty pounds, annual expenditure nineteen six, result happiness." - Charles Dickens
- "Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." - Charles Dickens
- "You spend cash, not asset values." - Ed Mendlowitz
- "Growing net worth makes you feel happy, but if it does not add to your cash flow. Without cash to pay your bills, the happiness will soon dissipate." - Ed Mendlowitz
- "If you don’t know where you are going, you’ll end up someplace else." - Yogi Berra
- "A journey of a thousand miles starts with a single step." - Lao Tzu
- "Nothing new happens if you do not start." - Ed Mendlowitz
The webinar ended with the following that tied everything together. You will not succeed with your financial planning unless you start.
- Starting means determining the #1 purpose of planning, followed by identifying your #2 short-term goals and #3 long-term goals. You then need, #4 some understanding of risk and how you feel about it and will handle risk.
- Mechanically, you need to know #5 how much you spend now and expect to spend at later periods in your life, your #6 cash flow, and #7 your net worth, including how to reduce any debt you presently owe.
- Next is setting up your investment strategy and an applicable and comfortable #8 asset allocation and #9 rainy-day funds reserve, #10 working out the numbers to see if what you want is doable and #11 whether your goals are attainable.
- Then you need to #12 commit your plan to writing and use that as #13 a road map to follow what you told yourself you would do and also need to do.
Comment: My Memoirs as a CPA book has been published and is available in Kindle and print editions at Amazon. Buy it, read it and enjoy it!
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