What is a Personal Plan:
What always amazed me when I was a public CPA is that many of my clients would spend over 300 hours a year and many thousands of dollars watching sporting events or if she was a woman watching soaps, fashion shows, and cooking shows, but they would spend less than 5 hours a year on investing, managing, or planning their personal affairs.
Most people and businesses fail to achieve their desired results because they haven’t planned or set achievable goals for themselves. The plan or goals just need to be what you want to achieve in life. When I graduated from the University of Washington (U of W) I had a hundred dollars in my pocket and had just been drafted. This was 1970 and the Vietnam war was being fought. I took a physical that resulted in a 4F designation and I didn’t go into military service. This gave me time to determine what I wanted in life. I decided on the following:
- Drive no further than 15 minutes to work.
- Save 15% of what I earn and invest it each year (I had this money automatically put in a Savings Account – I paid myself first).
- Start my own business.
- Get married and have a family.
- A secure retirement.
- Retire mid 50’s.
Whatever plan you decide on it should be fairly simple and not include more than 10 items. If you are married it is important that both spouses buy into the plan or it will just lead to frustration and bad feelings if it isn’t followed by both parties.
In fact, the best time to set up a personal plan is before you marry to make certain that both of you have similar ideas on how you plan to live. You also need to make sure your plan is reasonable with the type of jobs or business activities you plan to pursue.
It should be your plan and not some dream or someone else’s plan. Each year you should set some goals and monitor how your plan is developing. Also as the years go by and things happen in your life you may need to change your plans and goals.
The most important thing is to keep moving forward toward your plan’s goals. For instance, if you have a medical problem or some other situation you may not be able to save what you want and invest it for a few years, but you need to get back on plan as soon as possible. You can get some additional tips and information on the associated finance website under the planning menu or in the news sections of this website.
Unfortunately for most people the schools they attended did little if any counseling or guidance on selecting a vocation and training you for a specific job. Also little or no thought was given to what a job would pay. Many people just float from one job to another with no overall plan to get the training or schooling they need to obtain a job that will support them in a lifestyle that they want to live. See associated career website for some ideas.
In my own situation I started my Certified public accountant (CPA) business while my wife was working as a school teacher. This afforded us the luxury of having one salary that supported us while I built my business. Once my business started to grow my wife went back to school to get her counselor credentials and this resulted in both of us making much more money than we would have otherwise.
It is very important to have a good retirement plan and invest beyond the retirement plans, see investing plan. In my CPA practice I had some very high earners that never saved a dime and spent everything they earned, seeing how to become a millionaire. This is why I always tried to save 15% of what I earned. I bought a house as soon as I could. Your house is one of the best investments that you will ever make; I also paid it off as fast as I could. For instance, if you have a 30 year mortgage and make one half of your payment monthly on the 1st and 15th of the month, and your lender applies these payments when paid; your mortgage will be paid off in about 25 years instead of 30 years. You will save 5 years of payment. For more information on financial tips go to the associated finance website or the news and video feeds menus on this website.
Reduce your Cost of Purchases:
You need to maximize your purchasing power by choosing where you buy personal items such as clothes, groceries, cars, insurance and other items. Many people could reduce their expenditures by at least 5% to 15% by changing your personal consumption purchases. For instance, I recently saw a list of items at one of the local grocery stores comparing prices:
- Store 1 $100
- Store 2 $126
- Store 3 $166
By shopping at store 1 you saved 40% over store 3 and 20% at store 2. If you shopped specials at all three stores you could have saved even more. These 3 stores were within a mile of each other. Over a year you could save over 50% by shopping specials, make certain that you have a freezer so you can buy sales in quantity, but many people just shop at the most expensive store and don’t buy specials. You need to comparison shop on all major purchases with your cell phone. Also if you buy another car consider buying a car coming off a two-year lease you avoid the depreciation hit of a new car.
Pay off your bank cards each month. Most banks will charge you 18% to 27% on bank card debt. Get a cashback card and charge everything you can because you will get 1% to 3% back on all purchases. If you can’t pay everything off get a credit card from a credit union, they usually only charge about half the interest rate that banks do on credit cards.
People Near Retirement or Retired That Need Additional Income:
The best plan is to try to find a part-time job before or after retirement that will give you the money you need to live on. If possible try to keep working until your 70 this will maximize your social security payments. Also look at various plans that the government has to help pay for costs – Medicare, reduction of property taxes on your home, and pharmacy plan reductions. A Reverse Mortgage can save a lot of cash outflow, but be careful some reverse mortgages are very bad traps. You can also find additional ideas at Youtube.com, but you need to be careful there are a lot of scam artists out there to see part-time jobs and for the more adventurous easy online businesses.