Guiding Money Principles
1. The purpose of financial planning and the need to hire good counsel.
Get good counsel. Any enterprise is built by wise planning, becomes strong through common sense, and profits wonderfully by keeping abreast of the facts.
Pay attention to your financial condition. It is good to periodically review your financial condition and set new goals.
2. Cash Flow and general principles of Financial Planning:
Have positive cash flow margin. Cash flow allows you to give, pay taxes, repay debt, spend for current living expenses and set aside for future needs. Spend less than you earn. Positive cash flow margin enables you to accumulate for future needs. Do you show a propensity to accumulate?
Although there are many kinds of debt, it is better to be debt free. Borrowing always presumes on the future. Never co-sign as their debt is your debt.
If and when you borrow, always have a plan to repay it.
3. Insurance Planning:
If you are not willing or capable of taking risk it is prudent to transfer risk to another.
You need to be able to provide for your family even after your death.
4. Investment Planning:
Diversify your investments.
Avoid high leverage.
5. Income Tax Planning:
Taxes are a part of life. Be diversified “legislatively” with regards to your investment accounts; tax-free, tax-deferred, tax-favored, and taxable. Rules will change and we want to be flexible.
6. Retirement Planning:
This may be more accurately referred to as Financial Independence or having enough to support your lifestyle without having to use your labor. You cannot count on being physically or mentally capable of working your entire life. Be careful with your attitude if and when financial independence is obtained. However, what you do not consume or give away during your lifetime should be adequate to take care of your family, loved one, or others you designate.
7. Estate Planning:
You need to plan for your estate before the government does it for you. Everyone will die; yet very few plan on “dying so soon.”
8. Give early, give often. Give while you know to what or to whom you are giving. Be charitably inclined. Practice charity whenever possible.
JFG Guiding Principles in short:
Retain good counsel
Stay abreast of your financial situation
Spend less than your earn
Debt can be dangerous
Save and invest for the future
Plan for the worst, live for the best
Diversify your investments and take prudent risks
Live your legacy
Be charitably minded; it’s healthy
Give early, give often