4. Spending Plan.

This area is where the wealthy really start to separate themselves from the general public. They have a clearly defined spending plan. They are disciplined and focused in where they spend their money. Just because they can afford an item doesn’t mean they buy it. While they may have big homes and expensive cars those items are low in priority to most truly wealthy individuals. Go online and find a photo of Warren Buffett’s home and you will see a conservative home which he has lived in for many years. He, and those like him, would rather spend available cash on another great investment.

It is important to understand the three different types of capital when developing your spending plan. They are Operating Capital, Investment Capital, and Risk Capital. The foregoing types of capital are also listed in the order of their importance.

Types of capital is an important distinction but to adequately cover the subject could take an entire book we will just mention them here and you can do some research so as to gain a complete understanding.

5. Investment Plan.

Most Americans spend more time planning their next vacation than they spend planning their financial future. Of course that includes investments.

Do you have any sort of investment plan? Do you have an investment advisor? Do you understand risk and know what your risk tolerance is? What return do you hope to receive, and where can that return be found with an acceptable risk? These are questions you need to answer in developing your investment plan, but if you do so with solid research and clear thinking you will be able do develop a investment plan which will give you passive income your entire life. That passive income is one of the purposes of a great investment plan. Passive income continues to pay you while you relax in your favorite vacation place.

The media, and others, have, for years, successfully dumbed down the American public into believing they have limited investment opportunities. Many people believe they are limited to bank cd’s and mutual funds when in fact there are many high grade, high return investments available to them. Do your homework and know that there are many tremendous investment opportunities available to you.

6. Minimize Taxes.

Make certain you have an exceptional tax advisor who can reduce your tax liability to the lowest legal amount. A few dollars spent getting the best tax advice will pay for itself many times over. Even if you are a tax professional it would be wise to have another trusted tax expert review your returns to insure you have maximized your filing returns.

If you as an individual are receiving a tax refund each year you should modify your withholdings. Allowing the government to hold your money for an entire year is a poor choice in savings. They pay you no interest and by changing withholding you can increase your monthly cash flow for whatever purpose you need.

Page 2 of 3 :: First | Last :: Prev | 1 2 3 | Next