Chapter 5
Laying Out Your Financial Plans
IN THIS CHAPTER
Knowing what you should do before investing
Understanding how your financial plan translates into your investing plan
Most folks love to pick an investment, put their money into it, and then enjoy seeing it increase in value. And though I try to simplify and clearly explain investing, it isn’t that easy. You can do your homework and make a good decision but then see your well-chosen investment fall in value and test your nerves and commitment.
But that’s putting the cart before the horse. Before you make any great, wealth-building investments, you should get your financial house in order. Understanding and implementing some simple personal financial management concepts can pay off big for you in the decades ahead.
In this chapter, I explain what financial housekeeping you should do before you invest, as well as how to translate your overall personal and financial plans into an investment plan.
First Priorities: Paying Off High-Cost Debt and Building a Safety Reserve
Plenty of younger adults have debts to pay and lack an emergency reserve of money for unexpected expenses. High-cost debts, such as on a credit card, can be a major impediment to investing, in particular, and accomplishing your future personal and financial ...
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