Here are 5 essential goals to be reviewed and monitored constantly!

goal no.1 Budget

A budget is the heart throb of a financial wellbeing and I used to say it is akin to the GPS. Give a right input and you are assured of a precise track. It is the forerunner to planned living and achieving a successful status in society. Remember to follow performance vis-a-vis the budget and update your performance so that changes will be protected.

The desired steps in a nutshell to fashion a budget will include:

  • 1 Streamline your sources of income and the net “take home income “ after taxes.
  • 2 Enlist the fixed and varied expenses including unforeseen demands.
  • 3 Take note of the surplus in the budget.
  • 4 Provide enough to provide for retirement needs.
  • 5 Take care of investments in property, education and similar emergent needs.
  • 6 Take care of insurance, education for kids and health care.
  • 7 A standby reserve of at least enough for six months expenses.

goal no.2 Plan and Manage Debts

Usually, mortgage, car loans and other installment debts follow a pattern and only subject to foreclosures if there is continued indiscipline;

But, credit cards are a menace unless regularly serviced with payments on due dates. Safeguard against delayed or minimal payments to avoid hidden costs and unnecessary penalties. If the credit card debt load is very high, it may also be a very good idea availing a lower rate ‘home equity line of credit’ This is a very good option for home owners to consolidate high interest rate debts into a lower rate pay off option.

goal no.3 Estate Planning

Many people think this is only for the senior citizens or the rich. This is for everyone!! For the safety of the wealth now and when planning named beneficiaries , steps should be taken to ensure a will, revocable or irrevocable trusts, protection of health care decisions and appointing a reliable POA (power of attorney) to transact and manage financial assets.

Follow effective tax efficient plans advised by a reliable advisor without any conflicts of interest. Plan enough liquid assets to satisfy estate taxes. For a more detailed discussion on Estate Planning watch.

Click Here - All about Estate Planning & Estate Taxes

goal no.4 Optimizing Investment Portfolio

Planning and managing your investments is a dynamic process. Even if you had a plan in place, you need to continuously monitor your assets.

The desired steps in a nutshell to fashion a budget will include:

  • 1 Be realistic in investment goals.
  • 2 Remember Asset Allocation is the key to investment success. Look upon the assets as one big portfolio and not resort to ‘Mental Accounting’. One must understand here that the invested assets for the portfolios rely solely on the only source of funds and that is yours.
  • 3 Adopt timely diversification for profit and correcting any imbalance. A thumb rule guide is – not more than 5 to7% of your overall assets in a single stock or bond.
  • 4 Plan tax efficient investment with professional advice for retirement and other need. Don’t delay setting up your retirement plan.
Click Here - Is the amount you invest in tax-deferred plans sufficient for your retirement?Click Here - Disciplined way to Diversify your retirement portfolio

goal no.5 Plan For Unique Circumstances

Prepare for unexpected circumstances with adequate life insurance cover updated annually- enough to cover expenses for your near and dear ones and for the high net- worth, sufficient to pay off estate taxes; Have in place adequate health insurance. HSA is a bonus from IRS – a source to save pretax and available for qualified medical needs;

Have in place a Disability cover, either through employment or personally; Do not forget Home Owner’s policy both pre and post mortgage; Back up important documents and protect them in safe custody in bank safe deposits or other reliable storage centers.

It is never too late to follow the goals with diligence and promotion. Along with your adoption of the standards, inculcate the practice of disciplined financial management amongst the next generation – your kids who will be ultimate beneficiaries of your treasured trust.

Now let’s delve into Financial Literacy for Kids

The writer, Leelaa Rao, CFA , is a Senior professional portfolio manager and has been practicing for over 18 years in New York, Florida, Georgia and Illinois apart from international financial market experience in the UK and Switzerland. The views represented by the writer are basic introductory briefs on financial management.

For more informative discussions please visit Financial Literacy for kids.

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