Showing posts from August, 2015

Twelve Steps of Financial Planning

I am not a financial advisor. This is based on my own experience. These steps are not right for everyone’s situation, but should be viewed as guidelines. I recognize that for some people these steps will be easily achievable, and others will struggle with Step 1. The point of this is to make financial planning a conscious part of your life, and to take things one step at a time.

Step 1. Live within your means. Create a budget, and track expenses. If you are spending more than you make, you either must increase your income with a different or additional job, or reduce your expenses. This is not optional: the consequence of not doing this is eventually bankruptcy.

Step 2. If you have children or other people who are financially dependent on you, get a “term” life insurance policy. These are fairly inexpensive, and may be available as a benefit through your employer. “Whole life insurance” (which is basically an investment) is generally not a good idea (poor returns compared to index fun…