What does a Financial Strategy Look Like?

financial strategy look likeFrom kindergarten through high school, everyone gets asked what they want to be when they grow up. Our family and community focuses on what jobs or careers we will have over our lifetime.  Does anyone ever ask us, "And what will you do with the money you earn?"

Unless we seek it out, or are in the extremely unusual position of having someone knowledgeable who takes time to teach us, most of us receive little financial education.

So, how can we feel confident to manage our financial life?

Well, we weren't born knowing how to add and mulitply, someone taught us and we learned. The same is true for our financial education. We need knowledge in order to make decisions in our own best interest.

With financial knowledge you can position yourself to increase your financial security and stability, access your money (and credit) without penalty, and choose how you will finance both planned and unplanned event.

Any financial plan based on a hoped-for return in the stock market (or any market, for that matter) is not a plan, it's a wish. An effective lifetime financial strategy will work in strong and weak economic times and allow us to mount an effective response to changing and challenging life events.

No single product is a financial panacea. You have the power and ability to look at your life, evaluate your needs and level of risk tolerance. It is also important to identify the core elements that comprise a lifelong financial strategy.

It's not that hard or tricky, really. And once we identify what we are looking for in a financial strategy, we can then deliberately seek out financial products for their strengths while understanding and working within their limitations.

So characteristics would we look for as part of a financial plan?  Well, it all boils down to some common sense elements:

  • Security and stability
  • Growth
  • Access to our money without penalty
  • Reduced fees, service charges and loan interest paid to others
  • Tax-favored environment

These core elements of a lifetime financial plan are listed in Table 11 (excerpted from "Financial Independence in the 21st Century").




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