The "How To" Formula For The Financial Management Process
By Chuck Davis, CLU, ChFC
What is the financial management process? What are the 5 essential elements?
Is it really important to solve this formula? This paper will answer all of that and much more. Building your financial structure is very similar, in logic, to building a house. There are definite steps to take or the house won’t be in proper working condition. Example: Try building your house without electrical wiring. You may end up with a usable house, but without electricity. Of course, we lived like that before the advent of electricity. Financial management is similar.
Element One - Investments
You won’t have a portfolio without something in it – cash, stocks, bonds, properties – something. Now the questions - what is the proper asset allocation, how much to concentrate in each asset?
Element Two – Protection
Should we protect our money, income, life, lifestyle and assets? Of course. It takes proper analysis and then proper planning. Is bankruptcy really a financial plan? Do we really need asset protection in place in our lives?
Element Three - Taxes
This is the largest predator our assets will ever be subjected to. We need to address taxation with all the planning techniques available and allowed within tax code.
Element Four – Retirement
Hopefully, you will arrive at retirement age whether you plan for it or not. Retirement will be better with proper planning. This is where we create the concept – work is optional, leisure time is affordable. There are so many options, yet there is no real substitute for a guaranteed cash flow. Which of the various options are you using?
Element Five – Estate Planning
What if you don’t wake up tomorrow? What happens to your family? What happens to your business? What happens to your life projects? One day we won’t be here but our life’s assets will. What happens to these assets? Do they go to family, charity, IRS? Today we can choose what happens. We must document and plan deliberately for the financial management process to work to its fullest potential.
Is it really important to solve this formula? This paper will answer all of that and much more. Building your financial structure is very similar, in logic, to building a house. There are definite steps to take or the house won’t be in proper working condition. Example: Try building your house without electrical wiring. You may end up with a usable house, but without electricity. Of course, we lived like that before the advent of electricity. Financial management is similar.
Element One - Investments
You won’t have a portfolio without something in it – cash, stocks, bonds, properties – something. Now the questions - what is the proper asset allocation, how much to concentrate in each asset?
Element Two – Protection
Should we protect our money, income, life, lifestyle and assets? Of course. It takes proper analysis and then proper planning. Is bankruptcy really a financial plan? Do we really need asset protection in place in our lives?
Element Three - Taxes
This is the largest predator our assets will ever be subjected to. We need to address taxation with all the planning techniques available and allowed within tax code.
Element Four – Retirement
Hopefully, you will arrive at retirement age whether you plan for it or not. Retirement will be better with proper planning. This is where we create the concept – work is optional, leisure time is affordable. There are so many options, yet there is no real substitute for a guaranteed cash flow. Which of the various options are you using?
Element Five – Estate Planning
What if you don’t wake up tomorrow? What happens to your family? What happens to your business? What happens to your life projects? One day we won’t be here but our life’s assets will. What happens to these assets? Do they go to family, charity, IRS? Today we can choose what happens. We must document and plan deliberately for the financial management process to work to its fullest potential.
Chuck Davis, CLU, ChFC, is the Managing Principal of Main Street Financial, Inc. Our mission is to assist businesses with building financial sustainable financial security. Our process provides guidance, advice, and solutions for the private business owner and individuals.
chuckbpw@gmail.com, www.mainstreetfinancialinc.com, 843.830.0555
chuckbpw@gmail.com, www.mainstreetfinancialinc.com, 843.830.0555
