What Real Financial Planning Is About

Often people make the mistake that financial planning is only about life assurance. Indeed, life assurance is an essential component to ensure estate liquidity for one's family: that is, to pay any outstanding debts, capital gains tax and estate fees etc.

But financial planning runs far deeper than just estate liquidity.

Financial happiness is one of the most overlooked financial topics in the entire financial planning universe. We often focus on mortgages, retirement, credit cards, debt, career… but we miss the most important focus our money should have: allowing us to achieve our dreams. With proper financial planning dreams become achievable goals.

In the book The Millionaire Next Door (a study of how people become wealthy) the following was discovered: many people who live in expensive homes and drive luxury cars do not actually have much wealth. If you make good income each year and spend it, you are not getting wealthier. You are just living high. People with a great deal of wealth simply live differently; wealth is accumulated and not spent.

Although - it is essential to understand - not all financial paths lead to happiness. If you want to find happiness in your financial planning, you must have a plan:

1. Educate yourself.
2. Have a Will.
3. Budget.
4. Have a financial adviser carry out a financial needs analysis for you. Not a cigarette box calculation, but a very thorough investigation of your financial affairs. This should naturally include estate planning.
5. Reduce credit card debt.
6. Ensure that you have sufficient life assurance to support your family, whilst you accumulate wealth.
7. Ensure that you have sufficient money saved for emergencies in a money market account.
8. Fund your pension funds to the maximum.
9. Fund your retirement annuities to the maximum.
10. Own your own home.
11. Whatever is left over, invest!

"Hey. Don't ever let somebody tell you you can't do something. Not even me. All right? You got a dream? You gotta protect it. If people can't do somethin' themselves, they wanna tell you you can't do it. If you want somethin', go get it. Period." From one of my favorite movies Pursuit of Happiness starring Will Smith.

Financial and estate planning are vast subjects and we at Silke Financial Services will continue to bring you some new ideas about it in future Communiqués.

Silke Financial Services are skilled risk and investment strategy consultants that provide a unique service offering not available elsewhere in the marketplace.