Personal Financial Strategy - Tony King

Welcome to personal financial strategy the podcast a podcast wholly devoted to you and your money bringing expertise to bear on how you earn, invest and spend your hard earned cash.

Today we will be covering the baseline:

what is a personal financial strategy? and why do I need one? let's get to defining a personal financial strategy.

First of all,..it’s a mouthful,...isn’t it,... PERSONAL FINANCIAL STRATEGY  is a system. 

One that is organizes everything you own everything you owe and all of your transactions/spending.

Then tracks these things overtime, giving the strategist the ability to measure progress and velocity toward a desired financial lifestyle.

A strategy is different than a “plan” in that a strategy can contain many “plans” all of them designed to achieve an overall aim or outcome.

Why does anyone need a PFS?

Check this out:

A Federal Reserve survey reported in 2019 (remember 2019 the year of abundance) almost 40% of American adults wouldn't be able to cover a $400 emergency with cash, savings or credit card charge they could quickly pay off.

Could this possibly be true?

Honestly I doubt the accuracy of this report but let's just say it's directionally accurate.

So let's double the figure from $400 to $800 and say that 40% of Americans could not cover a $800 emergency with their saved cash or even a credit card that they could pay off quickly.

If this is true friends … There are a lot of people in this country with a weak personal financial strategy.

Quick Story: During the last 30 days , at the king household;   our pool pump went out and we sprung a leak in the roof  …  together those two very unexpected expenses totaled about $2300.

Fortunately we have a personal financial strategy that includes an emergency fund and we were able to easily cover that sudden expense. 

However the statistic from the Federal Reserve Indicates that a fair amount of people have less than $400 in cash available to address even the slightest curveball life will throw at you.

And it's no wonder really

personal finances have never been so complicated so average Joe here likely has

• some assets 
• some investments
• A few some credit cards
• multiple bank accounts
• a truckload of bills
• A couple of loans 
• a big fat mortgage

How the heck are you supposed to keep track of it all?

It might surprise you to know that in today's modern banking world it's quite possible to do it yourself.

All you need to do is keep listening to this podcast we will give you brick by brick the material needed to build your own personal financial strategy.

So let’s take a look at what we would call a sound PFS.

There are two foundational components to a great FS:

Cash Flow Map & Plan

Investment Plan

The cash flow Map has a few components , which we will go into in detail in the next episode. 

However, for now let's agree that a cash flow plan is what is happening with your cash now, today, 

but because cash is not static ...it is always on the move,.. Let’s look at how it flows on a monthly basis in five categories:

1. Your combined monthly income from all sources
2. Your monthly total of recurring bills.
3. Monthly,.. What is the average of your out of pocket spending.
4. What cash set asides do you contribute to every month (smallish funds for events like auto maintenance, emergencies etc.)
5. what investments do you fund on a monthly basis.

While the cash flow mapping plan is all about today,... the investment plan is all about tomorrow or the future.

A solid Investment Plan has one aim,..and that is:

To fund your lifestyle 100% at some point in the future    ….  we call it “Choice Age”

Choice Age should not be confused with retirement age.

In fact,..  it is a concept altogether different and one we suggest in place of the traditional idea of retirement age.

Choice age is a date in the future when money will no longer limit your ability to live the lifestyle of your choice. It quite literally means the day you start “Livin the Dream”.

How much money “Livin the Dream” requires depends on the definition of your dream life. Which of course is an individual thing.

That number should account for traditional events,.. The most common consideration is: “You stop working,.. What effect does this have on your lifestyle?” 

Of course making a “Livin the Dream” investment plan requires some amount of forecasting and few people have the resources to to get an accurate gaze into the financial crystal ball.

This is what we do for people at PFS we will help you set up a complete Personal Financial Strategy. One that at a minimum delivers.

 

A Cash Flow Map & Plan

An Investment Strategy - 

Keep in mind,.. We are all about building your financial engine, i.e. calculating real life numbers that you can invest on a month to month basis. 

We do not give investment advice; or sell investments ..  We believe you should be in the driver seat for any investment you make.

Once you make an investment then we can handle the forecasting (always based on historical assumptions).

We are all about getting you the information & knowledge you need so that you can get your finances under control.

I know there are some of you listening who are saying to themselves “I would rather brush my hair with a trout” than spend my time organizing and forecasting my financial future.

It's a valid point …. But this is really important now and I have a sense,.. the importance of this,.. Is growing. 

Remember my fellow Strategists,... if you are serious about getting your personal finances under control then investing and spending money wisely this is the podcast for you, listen to our next episode where we will teach everyone how to make a CF Map and a CF Plan.

Thanks for listening and if you want to skip ahead please visit PFS.com and schedule a phone call with us or jump into one of our live webinars.

Until next time,...