In a previous writing, we discussed how to prepare to achieve your goals. Remember, personal financial planning is not about perfection. However, it is thinking and organizing in advance. Furthermore, if you have a plan for prosperity, then you have hope for the future. We discussed five recommendations to develop a plan. Then we offered the following general advice on seven financial planning subject areas.
Manage cash flow.
Cash flow management involves budgeting, planning for emergencies, and saving money.
Improve net worth.
Net worth is a measurement of personal wealth at a specific moment in time. Net worth can increase, remain unchanged, or decrease.
Pay income taxes.
Every year, residents of the United States pay a portion of income to the federal and state government to fund infrastructure for quality of life.
Risk involves the possibility of a financial loss. A financial loss can occur from a reduction in the value of an asset an individual possesses, or a reduction in the value of something an individual expects to receive in the future.
Investing is making money work for you. Essentially, money can produce interest, dividends, and capital gains.
Retire financially independent and socially secure.
In the 21st Century, we no longer expect employers to reward us at 65 with a gold watch, guaranteed pension, and health insurance for life.
Prepare your estate for transfer.
Your “last will and testament” is a legal document you create to direct the management of your estate and provide for the care of your minor children when you die. If you die “intestate,” without a will, then your state decides how to distribute your property and care for your kids.
QUESTION: When was the last time you reviewed your financial plan?
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Chris Bryant is an American financial advisor.