Part one of the how-to series.
So, you read about it in social and hear about it from friends but you are still not sure where to start. You may not know the right tools used for it, so you just shelve off the thought till time is due. Well, the interesting news is that you are probably overdue, in planning and implementing that is. And since it’s never too late, let me give you a few pointers.
Generally, financial planning depends on three key legs:
Saving (building), investing (growing), and retiring (relaxing). Learn it or memorize it; any sound Personal Finance plan depends on these three pillars. If this helps, think of it as a solidly built tripod; the stronger and leaner, the better the outcome. Note that saving and retiring are more directly related since retirement requires an early start. So let’s get started:
Step I - Create a table with the following items in two separate columns:
Any income stream that will continue throughout your life (retirement benefits, property rental, bonds, dividends). Divide that figure by 12.
Estimate of the amount of money you need after exiting the job market and/or ending your career on a monthly basis.
Other needs and wants on a monthly basis (travel, medical, other).
Step 2 - Multiply your expenses by 12. Deduct that number from the monthly income figure.
If the result is positive, then you are in a relatively safe zone. If not -which is mostly the case, due to inflation and unexpected life events- then please think it over thoroughly. Do not wait till it’s too late.
Stay tuned for the next episode!