What Is Personal Financial Planning?

Video Transcript

"Personal financial planning is just what the name implies. It is financial planning for an individual or a couple or a family as opposed to the kind of financial planning that we use in corporations. Most corporations have a controller. Their job is to keep it in the black. In fact I have one as a client and he does a very, very good job for his corporation. His personal situation is in shambles and you say well why would that be? He has got all these skills sets, he can keep it in the black he knows exactly how to spend the corporation's money, how to keep a tight budget and all the rest of these things, that's right. And why is his personal life in shambles because his emotions are involved. There is nothing more emotional than money just about and so when he gets home he needs somebody and I think everybody needs somebody looking over their shoulder to be accountable to and because we are so secretive by in large about our finances and people say how you doing, well just fine, oh balderdash. You know people put on the dog and they go out and they go out and they spend money that they don't have buying things that frankly they don't need when the day is done and so the difficult part of personal financial planning is that it is personal, very very person with lots of emotion involved. I recommend that you find somebody that is a disinterested but caring third party to sit down and say look this is what you need to do and then get some books and work on your brain to get the mindset that you need to do the financial planning. There is two components here- it is knowing the tools that you need to have to get the job done and there is lots of outstanding financial tools and products that people don't know about because they are only listening to just the insurance agent or just the securities guy or just their banker or just the attorney and they don't know all that stuff and so you have to find these things out from somebody who is either a general practitioner like myself or just go around and interview all these people and then try to put it together on your own. Once you understand the tools that are available, what's in the tool box then you have to develop the skill set to take those tools. There is eleven different wealth building strategies that we talk to people about. You notice that I've got them listed here but there is no names on this sheet just the features and benefits of what they do and so people look at that and I say now take a look at these and take some time and study this and see which ones seem to make sense to you in terms of the features and the benefits and somebody says well am I supposed to take one of the eleven answers and my answer is no it usually is going to take three or four of the eleven to get your job done. This is where the painter's palate comes in and then after they pick I will show them what the names are and we have got mutual funds, IRA, Roth IRA, 401k annuity, life insurance, equity index life, your home equity, social security, pension, 412 I plan, bank, CD, or money market and all these different things have different features a and benefits but I just want people to understand what the features and benefits are before they are colored by their preconceived idea of what that thing is. I have people call me and say how are IRA's doing this year? Well that tells me that person doesn't understand that an IRA is not an investment or it is not a savings program, it is a box of rules that the internal revenue service put out so that people could defer taxes on some money but where does the money go inside that IRA or that 401k is it going into money market? Is it a self directed IRA that is going into real estate or a business? That's really what they're asking and so we are desperately in need of a financial education for people so we can understand what the tools are but then also know how to use the tools."