If you already have a well-funded emergency fund and your short-term goals have been funded, you might funnel all of the ten percent into a retirement plan. Of course if you set aside 10% in your retirement plan, you’ll be contributing pre-tax which works out to be more than 10% after-tax.
The second column is entitled, “Who Can Help?” List people you already know who have skills to help you start or complete the wealth building activities. These people already know you and are very willing to give advice. If these people are unable to help, they may be referral resources for someone else who could help you achieve your goals and accelerate your wealth. Examples of people you already know can be your family (Mom, Dad, sisters, brother-in-law), friends (college, parents of your children’s friends, health club), neighbors or people from work. Go through your address book for additional people who can help.
Some planners suggest even more than five to eight times your annual income as the level of coverage you should carry. My suggestion is that you get your financial house in order, which means getting your net worth and cash flow examples together, and go talk to a good insurance agent about your needs.
The FCF can be used for several purposes, including paying a dividend, buying back stock, lowering debt, or saving for future acquisitions. Without FCF, a company will find it hard to grow its business without issuing new debt or diluting the stock. Except for start up corporations that will often show negative cash flow in their beginning years, free cash flow is a good indicator of a company’s ability to both maintain and increase its operations.
DOUBLE-ENTRY ACCOUNTING: An accounting system used to keep track of business activities. Double-Entry accounting maintains the balance Sheet: Assets = Liabilities + Owner’s Equity. When dollars are recorded in one account, they must be accounted for in another account in such a way that the activity is well documented and the balance Sheet stays in balance.
CHART OF ACCOUNTS: A complete listing of every account in your accounting system. Every transaction in your business needs to be recorded, so that you can keep track of things. Think of the chart of accounts as the peg board on which you hang the business activities.
Use online tools like financial planning tools to create a workable plan. Regulate the extent of student loan availed. Take on part-time work to help meet expenses and make small and steady investments.