Having a Plan And Sticking To It!
Things usually go right when we follow a recipe. Things quickly turn into a disaster when we improvise or add in things that don’t belong. Let’s add a little more of this and let’s forget this…unless its bacon which makes everything better. 2020 has been a year with lots of distractions with many reasons to add a little more of this and forget about that.
With the New Year coming It’s a good time to review the basics of a sound financial plan and see how we did this year. We call these basics the Five Fundamentals of Fiscal Fitness. They are so basic that most people completely ignore them.
Things usually go right when we follow a recipe. Things quickly turn into a disaster when we improvise or add in things that don’t belong. Let’s add a little more of this and let’s forget this…unless it’s bacon, which makes everything better. 2020 has been a year with lots of distractions with many reasons to add a little more of this and forget about that.
With the New Year coming It’s a good time to review the basics of a sound financial plan and see how we did this year. We call these basics the Five Fundamentals of Fiscal Fitness. They are so basic that most people completely ignore them.
1. Pay yourself first (Harvest & plant your crops)
—a. Save at least 10% of your annual income
—b. Review your risks and portfolio
—c. Rebalance taxable & tax-deferred savings toward less risky assets
2. Have sufficient liquidity (Move crops to the pantry)
—a. Should have 50% of annual spending in cash reserve
—b. Layout an annual spending plan / 5-year spending plan
—c. Don’t forget about #1
3. No consumer debt (Empty pantry & no money for new crops)
—a. Learn the difference between good and bad debt
—b. Take advantage of low interest rates
—c. Don’t forget #1 & #2
4. Own the right size home (Barn)
—a. For most, their home is the most significant financial investment
—b. Is it time to trade up or down
—c. Don’t forget #1, #2 & #3
5. Invest in yourself (The farmer)
—a. Human capital is our biggest & most valuable asset
—b. Improve skills, education, personal growth – have a 1-year vision & 5-year vision ——–of your unique future
—c. And don’t forget about your health or #1, #2, #3 & #4 won’t be so important
