Financial Planning Archives - Page 6 of 8

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Financial Planning, Retirement Planning, Work and Career

What is a 401 (k)? What is it Not? Getting Down to the Basics

401k

Your 401(k) can be your vehicle to millionaire status! It promises a lot, doesn’t it? The popular message is that if you begin contributing to your individual account while in your 20s and continue doing so until traditional retirement age, you would become a millionaire and multi-millionaire. The Financial Samurai created a chart illustrating how much you can potentially save in your lifetime. How do you like the numbers?

401k Retirement Savings Potential If You Max It Out

Yet, navigating the 401(k) process can be complex. Anyone telling you the 401(k) plan is the easiest way to save for retirement still has lots of homework to do. While your employer takes care of some things for you once you opt in, you still need to do a lot on your part to truly maximize the plan’s benefits. If you are willing to put in the time, the work is manageable. You also have access to a lot of free resources and support (such as your HR/employer, your investment brokerage, personal finance books and Online publications).

For many people, having access to a 401(k) plan through an employer might be their first exposure to investing. How can you make such major, long-term decisions when you don’t have much of a clue what the plan is or what choices you have?

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Financial Planning, Money Psychology, Personal Finance

Don’t Like Budgeting? You Can Still Take Control of Your Finances

Budgeting is just one way of managing your money. My husband and I don’t do budgeting. In this post I shared other strategies and tools we use.

What comes to mind when you think of budgeting? If you think it’s tedious, stressful, or restrictive, then you’re not alone!

budgeting strategies to managing personal finances

Many people claim budgeting is good for your financial health. Much has been written on this topic, from why you need a budget to creating a budget to managing a budget. For a short while, I truly believed having a budget was the way to become wealthy. But my husband and I passed on it after we had a long discussion on the topic. That was in year 2010.

Six years later, my husband and I decided to give budgeting a try. Many personal finance bloggers were doing this. They must knew something, right? We wanted to see what expenses we could cut. The lower our expenses are, the earlier we can retire. We tried for three months. Our consensus? The process was painful, tedious and mentally difficult. It was not about the math. The formulas were simple and the spreadsheet took care of the calculations. It was not about our different views on money. We generally agree on how to manage our household finances. It was not a lack of patience. My husband tracks our portfolio performance almost on a daily basis, and this involves lots of number tracking and focus. So what did it come down to? We lacked commitment. We didn’t see the benefits.

Were we doomed? Continue Reading

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Financial Journey, Financial Planning, Investment, Money Psychology, Retirement Planning

Rule of 72: Harnessing the Cumulative Power of Compound Growth

Readers, does hearing about the prospect of doubling your money get you excited? Wondering what’s the best way to start saving for retirement? Would you be more likely to do financial planning if you have access to simple and efficient tools? Do compound interest formulas intimidate you? Don’t know how to use a financial calculator or don’t carry one in your purse? If you responded “yes” to any of the questions above, the Rule of 72 can be your friend.

Mathematical formulas don’t excite me. I skip over them in my readings. While I enjoy thinking about retirement, I am not interested in running the numbers. Even retirement calculators ask for numbers! My husband told me about the concept of compounding shortly after we met, but I had a hard time grasping how the numbers could work in my favor. Or was that a form of mental resistance?

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Financial Journey, Financial Planning, Investment, Money Psychology, Retirement Planning

Rule of 72: How My Husband Convinced Me to Save for Retirement

My husband and I have been saving 50 to 70% of our net income. I wrote about our story in a previous post. This radical approach on savings was not something we always saw eye to eye. I resisted. He kept giving me high-fives. Despite my resistance, we managed to achieve those high percentages. I was mad that his logic to spend less was always so convincing. I thought I was frugal. He took frugality to an extreme. Much of the frictions through the first half of our marriage revolved around this difference. Then my husband introduced me to the Rule of 72. He converted me to become a radical saver just like that!

rule of 72 save for retirement

When I Was in College

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Asset Protection, Financial Planning, Work and Career

Life Insurance: The Process, Considerations and Why We Will Continue to Keep Our Policies Even Once We Reach Financial Independence

In a previous post where I wrote about Wealth Preservation: Strategies to Protect What We Have Built and Lessons Learned, I focused on implementing investment strategies to safeguard our portfolio while still allowing our assets to grow steadily. In this post, I discuss another way to protect our assets, which is having a life insurance policy. Both my husband and I each have our own policy. In the event that if one of us would to die, during the mourning period we would want the other person not have to worry about selling off some of our investments to pay for expenses. We hope the family members who survived [either one of] us would at least stay financially strong even when their emotions are not. Once we achieve our financial independence (FI) number we will continue to keep our life insurance policies. Technically, by definition, being FI means we would have all the financial resources we’d need to live comfortably for many years to come. However, we always prefer having an extra layer of protection and security, for ourselves and for our loved ones. And having a life insurance policy gives us peace of mind.

life insurance asset protection employee benefits

My Life Insurance Policy

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