Effective Household Finance Requires Strategies In Four Major Areas Of Priority.




The scope of household finance encompasses four broad "Areas Of Priority".

These "Areas Of Priority" make up the heart of family financial planning.

How well you understand and manage these core areas will determine the strength of your financial house.

Each "Area Of Priority" consists of multiple individual elements and/or needs.

In order to create a powerful and potent financial freedom plan... each of these needs must be understood, appreciated, evaluated, and addressed.

Creating a comprehensive and effective strategy to household finance requires that you fully evaluate each "Area of Priority" and then make decisions regarding every topic.



THE HEART OF EFFECTIVE HOUSEHOLD FINANCE


Priority 1: Protection Management - The foundation of your financial house

The Protection Management priority is the first and most urgent priority that must be addressed by your household finance strategy or plan.

The objective of Protection Management is... to help shield you and those you love from specific unexpected occurrences... that can seriously change or threaten your financial situation.

There are four elements or needs that make up the Protection Management priority.

The first and most important need is... Life Insurance protection.

If you have dependents who would suffer financially if you were to die... then you need to own a life insurance policy to protect them.

By far the most cost effective way to obtain "enough protection" for your loved ones is to own your own term life insurance policy.

It is crucial that you own your own policy.

Employer provided Group Life Insurance should not be your primary protection for your family. The only exception would be if you are not insurable.

So please... do yourself a favor... do not put this off.

The younger you are... the less it will cost. The healthier you are... the less it will cost.

Don't gamble with your insurability ... things can change quickly. Cover yourself now while you are still insurable. Lock-in protection for your family while you can.

Life insurance protection is a requirement for an effective household finance strategy or plan.



The second most important element or need of the Protection Management priority is... an Emergency Savings Account.

As you know... many things in life happen unexpectedly.

When they do... we are forced to have to deal with them. Normally that takes money.

An emergency fund is necessary so that... you will have the money you need... when life throws you a curve ball.

Without this "rainy day" fund you could be forced to pull out the credit card or go to the bank and borrow money in order to be able to address your current emergency.

In other words... you will be forced to create more debt.

Not good!

It is one thing to create debt of your own choosing. It is quite another to be forced to create debt.

Without an emergency fund... life will force you to create more debt.

You must establish an emergency savings account in order to stop this debt cycle.

An emergency savings account is a requirement for an effective household finance strategy or plan.



The third element or need of the Protection Management priority is... Legal Protection.

In today's world there are a number of unexpected legal situations that you may find yourself facing that could dramatically damage your financial security.

Lawsuits, accidents, contracts and agreements, and wills are just a few examples of the need for affordable access to legal advice and protection.

People today are more likely to need a lawyer in the coming year than they are to need a hospital.

This need becomes even greater as your net worth grows. The more you have... the more of a target you become.

In today's world... any comprehensive family financial plan needs to consider the issue of legal protection.

Legal Protection is a requirement for an effective household finance strategy or plan.



The fourth and final element or need of the Protection Management priority is... Long Term Care Insurance.

Too often people work all of their lives... raising the kids, getting out of debt, saving and investing for retirement... and about the time they get retired... one of them develops a health issue that requires continual and consistent medical care.

Care that most insurance policies do not cover or only cover on a very limited basis.

The cost of the needed care can quickly consume their entire retirement savings.

Soon they are broke and everything that they worked all of their lives for... is gone.

Unfortunately this sad and depressing scenario happens quite often in today's world.

Adding to the sadness of this situation is that in most cases this could have easily been prevented.

Long Term Care Insurance policies are designed to help prevent such situations.

A Long Term Care Insurance policy is... in reality... an asset protection policy.

Any comprehensive financial freedom plan worth it's salt will not overlook protecting your hard earned assets with a Long Term Care Insurance policy.

Make sure that long term health care is part of your comprehensive financial plan.



Priority 2: Debt Management

The Debt Management priority is the second most urgent priority that must be addressed by your household finance strategy or plan.

The objective of Debt Management is... to establish a game plan to become debt free as soon as possible.

Debt is such a detriment to building wealth and obtaining financial freedom.

Too often we just accept debt to be "a fact of life" and take on the attitude that there is little that we can do about it.

At times we might even convince ourselves that certain kinds of debt is good for us.

The truth is... none of that is true.

Debt does not have to be "a fact of life" for you.

The only good debt is... no debt.

It is imperative that you clearly understand the real total cost of your debt and how it impacts the prospect of your future.

Without absolute clarity and insight as to the overall burden that debt imposes on your future you will pay heavily.

But... it doesn't have to be that way.

Act now to educate yourself and establish a game plan to become debt free as soon as possible.

A Debt Elimination strategy is a requirement for an effective household finance strategy or plan.



Priority 3: Savings Management

The Savings Management priority is the third urgent priority that must be addressed by your household finance strategy or plan.

The objective of Savings Management is... first off... to define and understand the monetary challenges of retirement, college expenses, and other future goals and dreams.

And... then to establish savings strategies to secure success.

Let me ask you... do you know how much money will be required for you to be able to retire the way that you want to and when you want?

If you are like most... your answer would be... you don't know.

Incredibly... most people have no idea how much money it will take for them to be able to retire... in the manner they expect to and... at the time they expect to.

What do you suppose the chances are that you will have enough money at retirement ... if you never even know how much money it's going to take?

The same is true for saving for college for the kids or for saving for other goals and dreams.

Act now to define and address the monetary challenges of retirement, college expenses, and other goals and dreams.

Clarifying and quantifying these "savings needs" is a requirement for an effective household finance strategy or plan.



Priority 4: Income Management

The Income Management priority is the fourth urgent priority that must be addressed by your household finance strategy or plan.

The objective of Income Management is... for you to be in control of your money... rather than your money controlling you.

The focus of the Income Management priority is on cash flow management. In other words... the process of knowing where all of your money goes.

One of the common hallmarks of truly successful people is that they only spend money on purpose. They know where their money goes.



Do you know where all of your money goes?

Only when you are in total control will you be able to... fund shortfalls in your financial plan, reach your goals, and improve the quality of your life.

Cash flow management is a requirement for an effective household finance strategy or plan.



The scope of household finance encompasses four broad "areas of priority".

  • Protection Management
  • Debt Management
  • Savings Management
  • Income Management

How well you understand and manage these core areas will determine the strength of your financial house.

It will impact...

  • the amount of risk you are exposed to.
  • the degree to which you can take advantage of opportunity.
  • the success of any financial freedom plan that you may create.

"Because It Matters"... Jim

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