The Three Legs To The Stool Of Financial Freedom

One of your major responsibilities to yourself and the people who depend on you is to build a financial fortress around yourself overtime. Your job is to create an estate within which you can be safe from the financial insecurities experienced by most people. To achieve this goal, you need to maintain the correct proportions of your finances in each of these three: savings, insurance and investment.

1. Savings: Your first financial goal is to save enough money so that, if you lost your source of income for up to six months, you would have enough put aside to carry you over. The very act of saving this amount and putting it into a high yielding savings account or money market account will give you a tremendous sense of confidence and inner peace.
2. Insurance: You must insure adequately to provide against any emergency that you cannot pay for out of your bank account. Carry sufficient health insurance to provide for yourself and others in any medical emergency. Insure your car for liability and collision. Insure your life so that if something unfortunate happens to you, the people who are counting on you will be provided for. The deepest need or carving of human nature is the desire for security, and without adequate insurance, you are taking risks that you simply cannot afford.
3. Investment: Your ultimate financial goal should be to accumulate capital until your investments are paying you more than you can earn on your job.
The simplest and most effective of all financial strategies is for you to save and invest your money throughout your working lifetime until your investments are paying you more than you earn at your job. At this point you can begin to phase out your regular job and spend your time managing your assets.

This seems like a very simple lifetime planning strategy, but it is remarkable how few people end up at the age of sixty-five with very little put aside. Don’t let this happen to you.