Building arks before the rain – Part two

In my last blog post, I talked about the risks we face in our financial lives. Managing financial risks starts with identifying them, determining what could go wrong and how bad things could get.  Only then we can construct a risk management plan to protect against potentially catastrophic events.

The theory, known as “lifecycle finance,” explains how individuals and families can maximize their standard of living by making smart financial decisions during the various phases of their lives. The central concept is the distinction between two types of wealth, human capital, and financial capital.

Our last discussion focused on human capital, our future earning potential. This week concentrates on financial capital, the amount of net assets, after paying off debts, we have already accumulated and are available to support us in the future. Read more

Building arks before the rain – Part one

We face risks in every area of our lives, and the realm of personal finance is no exception. Successfully managing financial risk is key to achieving a comfortable and secure lifestyle. At its core, managing financial risks starts with identifying them, determining what could go wrong and how bad it could get. Only then can we construct a risk management plan to protect against potentially catastrophic events. Sensible people learn to take calculated risks that propel them toward their most important life goals and protect against those whose consequences are too great to bear. Read more

Paying for college? What’s your plan?

Helping your children pay for college is one of the biggest and most important challenges that you will face. Currently, a four-year education (tuition, fees, room and board, supplies and personal expenses) can range from almost $100,000 at a public college to over $230,000 at some of the most expensive private institutions such as Boston University and The University of Chicago. With expenses expected to continue to rise at the current rate of 5% per year, the costs could skyrocket to $150,000 for a public college and over $360,000 for a private institution for a student matriculating in 2019. Making matters worse, planning for college gets more complicated each year because of the ever-changing rules, regulations and tax laws. Feeling overwhelmed and confused, many parents fail to develop an effective plan, leading to burdensome debt affecting both parents and students for years to come. Read more