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