Sunday, July 31, 2005

The conventional idea

The first step of conventional financial planning is inevitably setting such financial goals like sending children to college, buying a new car, saving for a down payment on a house, going on vacation, paying off high interest credit card debt, or planning for retirement etc.

We disagree with this process. The fundamental flaw of such financial planning process lies in the assumption of the need to set a limit to what one can earn. Yes, by setting GOALs in terms of expenses we assume such expenses are worth to be goals that we should spend our life's on. In our mind we set a limit on our earnings capability so that such expenses now are financial goals.

So instead of drafting a financial plan that makes us rich and makes every big ticket item so affordable, we draft a plan that makes every big expense a goal. We live a life of the middle class struggling to pay for our insurance, our children's college expenses, a slightly bigger car, home loan, credit card debts, etc.

Your financial advisors tell you that base on your current income, this is what you can get for the rest of your life. And you accept that.

The ultimate financial goal is to be rich enough that such expenses like children's college education are like buying a movie ticket. You don't set a financial goal to buy movie tickets. Do you?

Part 1 : The conventional idea
Part 2 : The breakaway wisdom: income and assets
Part 3 : Building assets(i)
Part 4 : Assets(i) planning
Part 5 : Further exploration on the principle

Quick takes
1. The principle in a nutshell
2. Definition of assets(i)
3. Classes of assets(i)


annasalvator said...

Well, that is a very good idea. It helps us to think first before we have a steps. Thanks for implementing this. best savings account

CT said...

So how can I address you? "saving accounts"? Please advise, otherwise I may have to take down your comment as spam.