This article article was published in the "New Rochelle Review" in the December 2005 issue.

“Life And Money”  TM –  Financial Planning Basics - Part 2

By Frank Sisco

Last month's column outlined six general principles of the financial planning process for you to follow whether you do your own planning or with the guidance of financial advisors. Of course, you need to adapt them to your own situation. The basics are:  1. Be personal and always mindful of your unique circumstances and feelings. 2. Stay in as much control as possible. 3.  Be conservative and protective. 4.  Strive for simplicity. 5.  Focus on making more money from your skills.  6.  Be frugal with money and time.  Details of these six are at www.LifeAndMoney.com.  Three more general principles follow:

7.  Prioritize - Because financial planning can become extensive in scope, and even overwhelming, you should first focus on the most important areas no matter how tough.  Examples follow:  If you are over 50 with less than $2 million liquid, you (and your spouse or partner) should get some long-term care insurance, well before trying to tweak your investment portfolio.  If you are not on target to retire by age 72, get help to find ways to increase earned income significantly, including changing a career or business.   If detailed plans are not in place to handle the possibility of death, disability or incompetence, get these done in the next two weeks and before you toy with tax strategies that might save you mere hundreds of dollars.

8.  Increase your value to others - Whether you are an employee or self-employed, your income represents compensation for the value that you provide.  Usually, the more value you provide the more the marketplace rewards you.  However, many people hang on too long to an outdated view of the monetary value of their own work.  Small businessmen in old-fashioned distributorship businesses with excessive margins, and not in tune with the efficiencies and lower prices of Internet commerce.  Or middle-level management white collar workers pushing pencils and figures around on pages to justify decisions for which they have little input.  Or factory workers toiling at repetitive tasks when robots do the same tasks 3,000 miles away at one-fifth the cost.  Get it straight.  In today's world, no one owes you a job or a business.  You've got to fight for it by being as forward-thinking and creative as possible. Reflect on what you can do to give more value in whatever you do.  The more you give the more you get.

9.  Leverage relationships and time - Before you consider acquiring properties or expanding a business by leveraging credit, consider leveraging people and time instead.  Leveraging credit can lead to excessive debt if the related venture does not produce ample cash to pay down the debt.  Furthermore, the leverage factor is finite. Leveraging people, with a much smaller amount of credit, can have a much bigger impact. Using a network of people (for customers, clients, advisors, associates) in your business can have an exponential effect.

About the author

Frank Sisco is a CPA and Personal Financial Specialist, and author of several articles about personal finance and issues of life and money.   His firm, Financial Management Corporation, is located in Harrison, NY.  Frank makes his home with his wife and daughter in New Rochelle, NY.  He can be reached at 914.381.3737 or by email at ideasmoney@aol.com, or visit his website at www.LifeAndMoney.com which contains this and prior articles.

Submitted 12/2/05, 11:05am