A Guide to Making the 9 Most Important Financial Decisions of Your Life
by Moshe A. Milevsky, Ph.D.
Today, making good financial choices is more important than ever before – and yet financial planning advice for individuals often comes across as an unrelated collection of confusing decisions, each with their own risks, costs and potential rewards.
For example, how do you know how to answer these questions for yourself: Should I buy a house now, or continue to rent? Should I buy this particular insurance policy, or forego the policy in favour of self-insuring? Should I invest my 401(k) in a stock fund, or am I better off in bonds? What career or job will give me the greatest financial security, and is my investment in education “worth it?” Can I afford to have a large family? And finally, can I ever afford to retire?
In contrast to this chaotic and volatile view of personal financial planning, in Your Money Milestones (FT Press, February 2010) author Moshe A. Milevsky, Ph.D argues that there are essentially nine unique financial decisions that everyone faces in their life – and these decisions should all be managed using the four basic principles of arithmetic.
These four principles are:
- Addition: Identify and sum the true value of your financial and human capital through your lifecycle
- Subtraction: Recognize and budget for the hidden liabilities in your future
- Division: Spend your total resources evenly over time
- Multiplication: Prepare for many alternative and unexpected universes
Each of these nine money milestones is explored in Your Money Milestones – and most chapters include a link to a calculator so readers can explore how to apply the wisdom and logic of this approach to personal financial planning to their own lives. Visit our free calculators page to explore the calculators in Your Money Milestones.
The bottom line is: If you can add, subtract, multiply and divide – and recognize these nine money milestones in your life – you can be assured financial success over the entire lifecycle.