Personal Finance
da Smita Verma
1. 1 - Perform Needs Analysis
1.1. Create list of short term goals
1.1.1. Emergency Fund
1.1.2. Vacation Fund
1.1.3. Other Large Purchases
1.2. Long Term Goals
1.2.1. Retirement
1.2.2. College Savings
2. 4 - Credit
2.1. Own your home but first understand difference between affordability and borrow-ability
2.2. Have a charge card, something you pay the balance in full every month. Let the budget rule the card not the card mess up your budget.
3. Life Insurance purchased by you. If you can afford it, don't count on employer's insurance only. Buy TERM only, a term of 20 or 30 years.
4. 5 - Housing
4.1. Again, own your home.
4.2. Pay off early if you can. Add what you can to payments.
5. Umbrella insurance, if you own business or have assets greater than 100K.
6. You don't need a castle, just enough space to live comfortable. Stay between 2 to 3 times your annual salary.
7. 7 - Insurance
7.1. Life Insurance by Employer
7.2. Medical Insurance
7.3. Disability Insurance (if your job doesn't provide one, get some)
8. The rich are rich not because they make a lot of money, but because they save a lot of money.
9. Miscellaneous
9.1. Money by itself is useless. What having money does is take away $ worries and allow you to focus energy in other things.
9.2. Hobbies and Leisure. Once all important items are addressed, enjoy your money responsibly.
10. 2 - Monthly/Daily Expenses
10.1. A budget is a way to tell the money how it will be spent. If you don't have a budget, "money" is doing this on its own.
10.2. STOP BUYING STUFF and enjoy what you have at home. Shopping is not a hobby, it's a chore.
10.3. Managing one's personal finance doesn't just mean paying your bills.
11. 3 - Savings
11.1. Retirement - Make it automatic. Understand taxes on tax deferred and tax free accounts.
11.1.1. Start with the end in mind. How much would you need monthly once retired?
11.2. College Savings
11.3. Savings not in patrimony - This should be another account where you save for big items. Vacations, gadgets, Iphones, etc
12. 6 - Car
12.1. Buy used cars ONLY, if you absolutely need it.
12.2. Use a company provided car and SAVE your money.
12.3. If your city allows it, use public transportation.
13. 8 - Estate Planning
13.1. Create a Living Will
13.1.1. Children
13.1.2. Spouse
13.1.3. Parents
13.1.4. Siblings
13.1.5. Legacy
13.1.6. Business Partners
13.1.7. Special People
13.2. Create a Health Care Proxy
13.2.1. Designates a person to make medical decisions for you if you are unable to do so.