Many financial problems occur in each of our lives. How we face these problems can determine the quality of our lives and the lives of our loved ones.
Some of the financial issues which each person can expect to face during his or her lifetime are:
A. Cash management: More than just keeping a balanced check book, cash management includes preparing (and following) a budget, using credit wisely and keeping the income tax burden to the lowest possible.
B. Risk management: There is risk of loss of both life and property. Life insurance
can be used to protect a family against the risk of premature death. Disability insurance can protect against the loss of a person's ability to earn a living. Property and casualty insurance can protect our worldly goods against accidents and such perils as fire, flood, earthquake and theft.
C. Accumulation goals: We all need to save money for some reason. Education for
our children is one very common goal. Buying a home and building an investment portfolio for retirement are two other typical accumulation goals.
D. Financial independence: It is important to take steps now to insure that the
golden years are, indeed, golden.
E. Estate planning: Recognizing that death is inevitable, we all need to an estate plan
for the ultimate transfer of our assets to our heirs.
Solving the problems in a complex world
Solving these problems in today's world is not easy. Three basic steps are involved.
The first step is to recognize that in our complex, ever changing world, expect that help is required. There is a need to assemble what can be called the financial planning team
. Trained professionals such as your attorney, CPA, life insurance agent, securities
broker and financial planner are generally members of this team.
With the help of your team, the second step can be taken: The development of a systematic, integrated plan for dealing with each of these issues. This is called developing a financial plan.
The third step is finding the money to fund your financial plan. You can choose to ignore these problems until it is too late. Or, you can begin the process to develop a financial plan. The most important step is the first one.