Tuesday, October 9, 2012

Financial Planning



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By Terry Orr

Of all the important skill sets to have – this is one that I yet to master – one that should have been mastered long before completing high school – and should be required for all kids going to school.  We all need to understand the importance of financial planning – for our immediate, mid and long-term.

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“If you can, you will quickly find that the greatest rate of return you will earn is on your own personal spending. Being a smart shopper is the first step to getting rich.” - Mark Cuban
Ric Edelman
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Ric Edelman is the chairman and CEO of Edelman Financial Services, LLC -  the author of several personal finance books and the host of a syndicated weekly personal finance talk radio show called The Ric Edelman Show.  Ric is extremely popular here in the nation’s capital and most medium to large companies sponsor him to help their employees financial planning.  A very good friend of mine has read all of his books and took to heart the advice Ric provided – would have been helpful if I had followed in my friends footsteps.  The first book of Ric’s I read was “The New Rules of Money” - 88 Strategies for Financial Success Today; and the next two I plan on getting are – “The Lies About Money” and “Rescue Your Money”.

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“Only buy something that you’d be perfectly happy to hold if the market shut down for ten years.” - Warren Buffett

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A very good friend of mine told me - that early in his Air Force career, he got some excellent advice on financial management.  With each promotion and or pay raise – put half of that into your long term savings; but half of the remaining into your short term savings and the remainder for you. Now that is pretty simple and straight forward and makes a lot of sense.

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“Experience taught me a few things.  One is to listen to your gut, no matter how good something sounds on paper.  The second is that you’re generally better off sticking with what you know.  And the third is that sometimes your best investments are the ones you don’t make.”  Donald Trump

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One of our daughter’s parents came up with a smart financial plan for their children by establishing CDs and savings accounts for things like – their education; autos and insurance; and the like.  So when they were ready to purchase their car, then withdrew the funds from their CD and made monthly car payments into the auto CD.

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Long before laptop, tablets, smartphones were everywhere – many of us used the back of a napkin to do our planning.  This process helped us understand the concept and identify key factors which were later typed and distributed.

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So here is my advice - do your research, gather your ideas, sketch out rough plan on what you are hoping to achieve.  Then find yourself a good professional financial adviser.  Develop your plan, begin executing it and make sure you review and update you plan frequently and the situation warrants. Good luck.

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References and Links:

"The mint makes it first, it is up to you to make it last." - Evan Esar


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