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Your Money Milestones:
Analyzing the Nine Most Important Financial Decisions in Your Life
FT Press Author Moshe Milevsky Introduces the
Principle of Arithmetic Financial Planning in New Book
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These are difficult economic times, many people have lost their financial savings, their jobs or businesses. Money is more important than ever before, and yet…
Financial planning for individuals often comes across as an unrelated collection of confusing decisions, each with their own risks, costs and potential rewards. For example: Should I buy a house now? Should I buy this particular insurance policy? Should I invest my 401(k) in a stock fund? What career and job will give me the greatest financial security? Can I afford to have a large family? Can I afford to retire, ever? Etc. The dilemmas are never-ending, regret is frequent and we continue to be bombarded with contradictory suggestions. In other words, most individuals play the game of life without a strategic financial plan. It is no surprise then that so many people regret the decisions they have made in the last few years.
In contrast to this chaotic and volatile view of personal financial planning, Professor Milevsky argues that there are basically 9 unique financial decisions that everyone faces in their life, AND they should all be managed and connected to each other using the four basic principles of arithmetic. If you can add, subtract, multiply and divide – and recognize these 9 money milestones in your life – you can be assured financial success over the entire lifecycle.
Moshe A. Milevsky, Ph.D, is a noted professor, consultant and leading wealth management and retirement expert, and author of the new book, Your Money Milestones, A Guide To Making The 9 Most Important Financial Decisions of Your Life (FT Press, ISBN 13: 9780137029105, February 2010) – which illustrates how basic arithmetic principles (featured in every chapter of the book) can be applied to manage the most important financial decisions people face over their entire financial lifecycles. These four principles are:
- Addition: Identify the true value all of your financial and human capital resources--Your human capital is your most valuable asset for most of your working life. It represents the discounted value of your future wages. As you progress through the human life cycle, you convert hidden human capital into visible financial capital by saving and investing in all forms of capital.
- Subtraction: Recognize and budget for the hidden liabilities in your future--A truly healthy and realistic holistic balance sheet will account for the hidden liabilities on your personal balance sheet. Many of the money milestones you might pass through in life can add to the hidden liabilities side of your personal balance sheet-notably marriage, children and especially your retirement income needs
- Division: Spend your total resources evenly over time--When you recognize and account for the value of all assets on your personal balance sheet, devise a strategic consumption (or spending) plan that spreads and spends your total (human and financial) resources over your entire life cycle.
- Multiplication: Prepare for many alternative and unexpected universes-- Recognize that there are many different future paths of your evolving human life cycle. At each instant in time there are an infinite number of money paths and states of nature over which you futures can develop. Insurance against the catastrophic ones. Self-insure the rest.
“I think that my four guiding principles should help individuals connect the dots and recognize that many dispersed financial decisions in their lives are connected. My goal is not to provide detailed solutions, but a guide,” states Milevsky.
In Your Money Milestones: A Guide To Making The 9 Most Important Financial Decisions of Your Life, Milevsky helps you identify the true value all of your resources; budget for hidden liabilities in your future; plan to spend your total resources smoothly over time; and prepare for unexpected events that could upend even the most careful planning. You’ll discover why children are short-term investment liabilities but may be long-term pension assets, why winning the lottery may increase your chances of going bankrupt, and why giving up control of your retirement nest egg might actually make you happier.
- Please click here to check out the book online
- Please click here to listen to a podcast of Moshe Milevsky
- Please click here to access the calculators featured in the book
