Transcript Get Now - HTOWN Millionaires

Strategic Finance
F O R INDIVIDUA L S A ND FA MI L I ES
Legal Disclaimer
This material is presented for educational use only. Information contained herein
does not constitute specific financial advice concerning particular investments,
investment products, services, etc. It should not be construed as being advisory in
nature, except to the extent it addresses general personal financial management
concepts and provides recipients with a conceptual framework for creating individual
financial strategies and plans.
Application and use of this material is not warranted to achieve any specific financial
result. Use is as-is, at the risk of the reader. All recipients are encouraged to seek
further advice from licensed, certified financial advisors for specific investments.
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Key Learning Points (Take Aways)
• Definition of Strategic Personal Finance
• Terminology
• Methodologies
• Strategic Personal Finance Tools
• Implementing Strategic Personal Finance
• Additional Resources
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Personal Strategic Finance
• What is Personal Strategic Finance?
• How does “Personal Strategic Finance” differ from “Personal
Finance”?
• What are the elements of Personal Strategic Finance?
• What is the benefit of Personal Strategic Finance?
• How to develop a Personal Strategic Financial Plan? (!!!)
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What is Personal Strategic Finance?
• Personal Strategic Finance is the long-term view of money
management and wealth creation. It is the financial component of
managing your life strategically.
• Most people don’t have strategic plans for their life which is why life
often turns out differently than they “planned”
• A strategic life plan is not a definitive, day-by-day guide to life but a
general overview outlining expectations, values, and purpose or
mission
• A life-long financial plan is an essential tool for financial success.
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Personal Strategic Finance versus
Personal Finance
Personal Strategic Finance
Personal Finance
Focuses on long-term value
Focuses on short-term cash flow
Deals with risks and opportunities
Deals with immediate needs
Addresses high-level issues
Addresses daily issues
Is flexible and adaptive due to its long-term
nature, lower risk due to ability to react to
changes
Is more rigid, thus increasing risk
Change is often demanded due to inherent
volatility but actions often dictated by
situations
Proactive
Often Reactive
Should drive/”control” short-term actions
“Should” be in-line with strategies
Driven by mission and purpose
Driven by situational ethics
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Benefits of Strategic Personal Finance
• Provides a tool for managing personal finances over the long-term
• Provides a control mechanism for evaluating future decisions
• Develops specific, measureable , time-bound goals
• Provides a set of working assumptions that are used to adjust
expectations when assumptions and conditions change
• Offers tool to identify potential risks and develop mitigation
strategies and actions
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Elements of Personal Strategic Finance
• Income and Spending
• Saving and Investing
• Risk Management
• Contingency
• Estate and Inheritance
• Taxes (Short-term/Long-term )
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How to Develop a Strategic Personal
Finance Plan
1. Evaluate Your Present Financial Situation
2. Determine Your Future Financial Objectives
3. Develop Strategies for Future Financial Actions
4. Prioritize Strategic Financial Plans and Actions
5. Identify and Organize Resources
6. Develop a Monitoring and Evaluation Plan
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Evaluate Your Present Financial Situation
• Assets and Liabilities
• Income
• Credit Worthiness
• Insurance
• Future Obligations/Needs (Education/Retirement/etc)
• Taxes
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Determine Your Future Financial Needs
• Children’s Education
• Retirement
• Vacation/Travel
• Vacation Home
• Inheritance
• Philanthropy
• Other
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Develop Strategies for Future Actions
• Income Growth/Diversification
• Spending Controls
• Saving
• Investing
• Contingency Planning
• Risk Management
• Taxation
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Income Growth/Diversification
• Get a second job
• Start a side-line business
• On-line
• Brick-and-mortar
• Virtual
• Ask for a raise
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Spending Controls
• Establish a budget
• Live below your means
• Prioritize spending
• Minimize non-critical spending
• Don’t carry debit or credit cards
• Reduce/eliminate debt
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Saving
• Save First
• Develop savings plan
• Make savings hands-off except in critical emergency
• Watch your savings grow (have a savings mentality)
• Have several savings account
• Long-term savings (hands off)
• Short-term savings
• Christmas Club/Vacation Account/Rainy day fund
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Investing
• Invest only after reaching a minimal amount of savings
• Be conservative until a significant balance (over $50,000)
• Don’t self-manage investments
• Use mutual funds
• Don’t include 401K as part of investment portfolio
• If credit available, consider passive or active real estate
• Avoid complex/risky ventures (within your tolerance level)
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Contingency Planning
• Contingency planning is emergency planning
• What are some contingencies?
• Loss of employment
• Loss of housing (fire/flood/etc)
• Loss of key assets (car/cash/etc)
• Health issues
• Contingency Strategies
• SIP = Savings/Insurance/Prevention
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Risk Management
• Types of Risk
• Natural disasters (weather, etc.)
• Life-style risks
• Drinking/Drugs
• Sexual Behaviors
• Gambling
• Financial Risks
• Excessive debt
• Over-spending
• Lack of control
• Business Risks
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Taxation
• Goal is tax minimization, not tax avoidance
• Get advice from tax professionals
• Stringently follow IRS rules and regulations
• File timely, accurate returns
• If non-compliant, get in compliance
• Don’t try to game the system
• As wealth grows, evaluate more complex tax strategies
• Tax shelters, deferred income, entrepreneurship
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Prioritize Strategic Financial Plans and Actions
1. What is your risk tolerance?
2. What is the current economic situation?
3. How long is your investment horizon?
4. How much liquidity do you require?
5. Where are you in your Financial Life Plan?
6. How effective will you be in implementing your plan?
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Identify and Organize Resources
• What resources do you need?
• Bank Statements
• Investment Reports
• Debt Agreements/Mortgage Deeds/Amortization Schedules/Contracts
• Financial Statements for any businesses owned
• Tax Returns
• Insurance Documents
• Asset Appraisals
• Will
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Monitoring and Evaluation Plan
• Primary tool used to monitor your Financial Life Plan
• Indicators (monthly or quarterly)
• Net Wealth (Most critical indicator)
• Net Cash Flow
• Income and Expense
• Debt to Wealth ratio
• Asset to Wealth ratio
• Daily Cash Flow
• Debt Reduction Goals
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Outline of Financial Plan
• Biographical Data
• Financial Condition
• Assets/Liabilities
• Income and Cash Flow
• Credit Availability/Condition
• Future Needs
• Goals and Objectives
• Projected Financial Statements
• Contingencies
• Risk Management
• Monitoring and Evaluation Plan
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Additional Resources
• Suggested Reading
• Blogs and Web Sites
• Houston Area Certified Financial Planners
• Educational Programs in Houston
• What HTOWN Millionaires Offers
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Important Financial Terms
• See Hand Out
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Key Financial Methodologies/Tools
• Discounted Cash Flow
• Financial Ratios
• Depreciation
• Risk Analysis
• Amortization
• SWOT Analysis
• Budgeting
• Strategic Planning
• Forecasting
• Economic Analysis
• Planning
• Statistical Analysis
• Financial Analysis
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About
• HTOWN Millionaires™ is a service of AEQQUUS Resources. Its focus
is men between 18 and 30 who are in school or working. Our
approach is to use a 12 step methodology in assisting our members in
developing a mature, financial focus for their future.
• AEQQUUS Resources is a consulting and services company focusing
on finance and accounting, information technology, and marketing.
We serve both individuals and companies.
• Thomas Hill, owner of AEQQUUS, has 30 years’ managerial
experience in the oil & gas and international development industries.
Past clients and employers include major oil & gas operators and
contractors, international aid donors, NGOs, government agencies
and Fortune 500 corporations.
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Closing
• Thank You
• You are the avante garde of a new direction for Houston
• Our mission is to help all Houstonians create wealth
• Read the 12 Steps to Financial Success
• Read “The Four Principles”
• Create a Millionaire Mentality
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