Budgeting | If you track it, you can control it.
Tracking every inflow and outflow is very important, as it is the foundation for everything related to your personal finances. Controlling your spending and not having your spending control you is of crucial importance.
Debt | Some debt is okay, but less debt is better.
Debt can be good and bad. Credit card debt is bad. Auto and student loans are okay in moderation. Mortgage debt is good if used in moderation and managed appropriately.
Taxes | Consider taxes in view of your entire financial situation.
Being aware of taxes and their impact on your overall financial situation is important. Tax benefits/drawbacks can be a reason, but should not be the only reason, to take action. Remember this old adage: “don’t let the tax tail wag the dog”.
Life Insurance | Keep insurance and investments separate.
Life insurance and investments should almost never be combined, like in complicated cash value type policies. Term insurance is inexpensive, easy-to-understand and simply the best choice for most people.
Disability Insurance | Disability insurance is crucial.
Long term disability insurance is a must, as it replaces a portion of your income if you become disabled and are no longer able to work.
Property & Casualty Insurance | Insure against catastrophic losses only.
Property and casualty insurance is most appropriate for guarding against catastrophic losses, not nickel-and-dime claims. High deductibles and adequate emergency reserves are often the best way to go.
Estate Planning | We all die, so be smart and plan for it.
Estate planning is not about you, it’s about your loved ones. Help them out by planning ahead. At a minimum, proper estate planning includes having proper beneficiary designations, a will or trust, a financial power of attorney, a health care power of attorney, a living will / health care directive.
Retirement Planning | Save early and often.
The power of compound interest is an amazing thing, so save early and let your money work for you. And remember, the next best thing to starting early is starting now.
Education Planning | Save for college, but save more for retirement.
Saving for a child’s college education is important, but should not outweigh a parent’s need to save for retirement. This rule of air travel applies: “place the oxygen mask on yourself before assisting others”.
Investments | Buy, hold, rebalance and repeat.
First, create a proper investment mix based on your financial situation. Then, buy and hold a broad range of low-cost investments, being aware of tax impacts. Investment location (holding investments in the right accounts) may be as important as investment allocation. Remain invested for the long-term, through the ups and downs. Finally, review your investments at least annually and make adjustments as needed.