Your personal wealth helps define the boundaries of your life possibilities. Protecting and growing your wealth is essential. You must be deliberate and thoughtful in determining relevant goals and objectives to enhance your financial well-being and reduce risk. While it is often more fun to consider how best to grow wealth, you must also give equal time and thought to how to best protect your wealth and thus safeguard your family. Example areas might include the development of contingency plans, the purchase of insurance, or the implementation of improved safety practices.
Examples:
• Wealth: Use half of the annual bonus to accelerate mortgage reduction.
• Risk: Obtain and mount fire extinguishers in the kitchen, garage, and shop.
In addition to growing personal wealth, you must also determine and write down the numbers describing the financial prosperity you’d like to achieve by the end of the year. Targets might include income, cash flow, savings (or assets), debt reduction, and net worth.
Example:
• Reduce short-term consumer debt to zero.
• Convert our IRA to a Roth IRA.