The first step in creating a plan to achieve financial security is the most overlooked. It’s not insurance, saving or investing. The first step is taking the time to craft a plan. While each person’s situation is different, there is a safe way to work your way towards financial security and independence. There are a few steps:
- Get insured
- Get liquid
- Get rid of debt
- Get into the market
- Get rid of your mortgage
- Get ready to give
When you work your way from step number one through to the final stage of financial security you are gradually managing risk, becoming liquid and creating and protecting wealth.
A financial security plan involves planning for both the wealth accumulation and distribution phases of your life. During the wealth accumulation phase you pay down debt and invest your money to increase your net worth. The steps listed above will help you plan the wealth accumulation phase of your life.
The steps listed above will not only help you craft a plan that will increase your net worth, but will also put wealth accumulation in the context of risk management. With proper insurance coverage and a liquidity fund you will be prepared to handle the unexpected events that can come your way when you least expect them.
My first post elaborating this plan will be out tomorrow and will be titled: “Insurance – net sexy, but necessary”.
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Nice writing. You are on my RSS reader now so I can read more from you down the road.
Allen Taylor