| What do you need to have in order to put | | | | - Estate Planning |
| together a financial plan? Money, of course, | | | | |
| or access to it. And money, it seems, never | | | | - Retirement Planning |
| stays still. It either grows over time, or | | | | |
| shrinks away, but like water, it has to flow | | | | For most of my career as a financial advisor, |
| to stay healthy. So why doesn't your | | | | I was asking clients about their source of |
| financial advisor discuss the income and cash | | | | income. We would discuss how they could |
| flow side of planning with you? Might it be | | | | allocate that income to save more money, and |
| that they haven't been trained to? | | | | to minimize taxes, pay down debt, and |
| | | | accumulate an amount of money so that 'one |
| This might be one of the biggest AHAs I've | | | | day' they could 'retire' and live off this |
| ever had (at least as far as personal finance | | | | accumulated savings. |
| goes). I can hardly believe it even after | | | | |
| having a couple weeks to let it sink in. Here | | | | The problem is, this model means that you are |
| are some questions to ask yourself and your | | | | looking primarily at allocating the existing |
| advisor: | | | | resources. You focus on reducing expenses, |
| | | | such as spending, taxes, and interest rates |
| - What does it take to create personal | | | | on debt, while trying at the same time to put |
| savings? | | | | as much as possible aside and get a high |
| | | | return on that money so it can grow to large |
| - What does it take to have money to spend? | | | | amount. |
| | | | |
| - What does it take to qualify for and pay | | | | This conventional teaching is actually |
| for credit? | | | | contributing to the number-one stress people |
| | | | have: running out of money. |
| - When you are not working because you have | | | | |
| retired, or are unable or don't want to | | | | Why? Because for our whole lives we've have |
| anymore, what do you need to live? | | | | been looking forward to financial success by |
| | | | accumulating a nest egg of money, rather than |
| The answer to all of these, of course is | | | | looking at the real need which is to create |
| INCOME. You need income to live today and | | | | income to live the way we want. |
| throughout your life. When you're not working | | | | |
| you still need a source of income to pay your | | | | The missing component in financial planning |
| living expenses. | | | | is the creation of income, or cash flow, both |
| | | | today and in the future. How will you create |
| Now let's look at the components of personal | | | | the income you need now to live the way you |
| financial planning: | | | | want to, and how will you sustain an income |
| | | | when you are not 'working' at your job? |
| - Cash Management | | | | |
| | | | The answer is to consider a wide variety of |
| - Tax Planning | | | | cash-flow generating ideas. Consider it a |
| | | | brainstorming session, where the sky is the |
| - Risk Management and Insurance | | | | limit. It can be a business vehicle, an |
| | | | investment vehicle, or even a personal |
| - Credit Management | | | | passion that can make money at Christmas |
| | | | craft fairs. The goal can be small or large - |
| - Investment Planning | | | | just get the juices flowing! |
| | | | |