Lesson 1 - Financial Planning - Part 6

Planning and Goals

Debt Planning

In our lives today, Debt is all around us, from credit cards to store credit to opening a tab.  Our car loan, house loan and many other ways of borrowing money allow us to even out our lifelong consumption.  However it be, we must plan for repaying this debt at a later time.  We must look to manage debt carefully and bear in mind that we must not have too much debt.  Interest rates will vary based mostly on our ability to repay our debts, using debts with low interest is always more beneficial than one’s with higher interest rates.  Why pay more for the same thing?

Investment Planning

The portion of our income that isn’t set aside for something should be put into savings.  Many people will invest this savings in the hope of getting more money in the future.  With so many ways to invest, we must look at different risk factors to help us determine the best investment for our Goals.  We also invest the savings so that we can help offset Inflation.  Leaving 100 dollars in your sofa today will still be 100 dollars in the future, but how much we can Purchase with that 100 dollars will certainly change.  In most cases we will be able to purchase less, a loss of Purchasing Power.

Insurance Planning

Do you know when you’ll get into an accident? Or when you will have a serious illness?  If you do, then maybe this website won’t help you very much, but for the majority of us, these events are always unknown.  We must always protect ourselves from financial loss of the unknown and unseen.  Throughout the Life-Cycle, our Insurance needs will differ as we switch Cycles.  As a “Young Adult” we usually are more concerned about our ability to work.  Disability insurance will be a major topic for this life cycle.  But as we advance in life and accumulate a house or car, we will have different insurance needs.  We will get into the details of Insurance in a latter lesson.