Friday, April 16, 2010

5) Your Money and Your Life

Financial Planning: Managing your finances effectively to achieve what you want out of life.
            Unlike the other natural needs of humans (e.g. food, clothing, shelter), there’s money.

Money was invented by humans.  It is a totally abstract concept; you no longer traded grain for meat, you had easy-to-carry currency.  It ‘s a tool; but it is one of the most enigmatic and powerful tools, if not weapons, we have.  It scares people, it motivates people, it motivates people to ‘cut corners’, to do wrong, to harm others.  It is pervasive through modern times in almost every culture.

People will talk about the intimate details of their sexual escapades, drugs, and medical health sooner than their finances.

From an early age, we might be told not to discuss finances in  the polite company of others, or even in the family - or at the dinner table, or in school - or ever.  Even Bugs Bunny is caught spanking ‘Babyface Finster’ (Alias Ant Hill Harry, notorious bank-robber’) for ‘playing with the dirty money’’ (

It seems to be something we can never have enough of, and yet even 12-Step programs bestow the wisdom of ‘take what you need and leave the rest”.

What are our societal values?  Isn’t good health and good company enough?  Isn’t art, performing, and sports enough?  Isn’t ‘love all we need’?

But I wax poetic, philosophical, and I am guilty of ending my sentences with prepositions.  But I digress.  Therefore, from a more practical vantage, I must bestow the virtues of financial planning upon you, and profess and enumerate the many benefits of such:

·         A financial plan will help you make money

·         A financial plan will help you save money

·         A financial plan will help you spend money wisely

·         A financial plan will help you invest money wisely

·         A financial plan will help you count your money (I wear a crown when I’m in the ‘Counting House’)

·         A financial plan will help you understand money

·         A financial plan will help you become comfortable with money

·         A financial plan will help you monitor your money

·         A financial plan will help you manage money

·         A financial plan will show you where/what you can get with money

·         A financial plan will help you relieve stress

·         A financial plan will help you be relaxed

·         A financial plan will help make you happy and fulfilled

·         A financial plan might help you like money!

·         A financial plan will help you become prosperous (and may you ‘Live Long and Prosper’)

·         A financial plan will help you become wealthy& wise (wealth - that to which a person aspires e.g. health, satisfaction, long life, family, helping others, being a good citizen, being a good neighbor, being liked, being a good person).


Five Phases:

1.    Ascertain where you are

2.    Determine where you want to go

3.    Manage daily finances

4.    Ensure you can’t fall backward

5.    Move forward

The Six-Step Financial Planning Process (CFP Board of Standards website as of 6/2/08):

1.    Establishing and defining the relationship with the client

2.    Gathering client data

3.    Analyzing and evaluating the client's financial status

4.    Developing and presenting the financial planning recommendation(s)

5.    Implementing the financial planning recommendation(s) and

6.    Monitoring

Initial Consultation: Client Homework

1.    List of Goals (e.g. financial, career/business, personal)

2.    List of Assets (everything you own):

A.    Financial (e.g. bank accts, investments, retirement accts, etc.)

B.    Non-financial Assets (real estate, autos, businesses, jewelry, art, etc.)

C.   Insurances (asset-protection!  Health, disability, LTC, life, HO, auto, pro, etc.)

3.    List of Liabilities (everything you owe)

4.    Tax returns (recent; personal & business, if business owner)

5.    Summary of income/inflows (e.g. job/business, IRA, SS, investment, rent, trust)

6.    Budget (annual or monthly; including irregular expenditures such as X-mas/ Hanukkah & vacations)

7.    Legal Documents (e.g. will, living will/ health care proxy, durable power-of-attorney, trusts, divorce decrees)

8.    Credit Reports (i.e. 3 Bureaus: Equifax, Experian, TransUnion; Free 1x/yr:


No comments:

Post a Comment