“So be sure when you step, Step with care and great tact.
And remember that life’s A Great Balancing Act.
“Everything changes, nothing stands still,” according to Heraclitus. And for some people, at times life can be like living near a glacier. In winter everything is stable, but the outdoors are most inhospitable. Summer brings flowers, love and floods. Spring and fall can be the best times of all, but then everyone knows that change is going to come. Everyone also knows that adjustments will need to be made, but no one knows how extreme those adjustments might need to be. When change reaches the level of shock or results in a newly disconnected living situation, it can be as if one were caught on an ice flow. Immediate choices must be made for the next step toward solid ground.
First inventory must be taken. For a newly financially independent person, time and money are the resources that must be allotted for the journey. How long will current financial resources last at the current rate of consumption and how much time does that allow to reach terra firma? What can be carried and what must be left behind?
There are only so many hours in a day and the physical/biological vehicle cannot function properly without regular rest. Rest is a priority expenditure of time, and must be strictly budgeted. But unlike money, time comes in limited quantities that cannot be adjusted; only wasted. No matter how much or how little time or money is available, most immediate risks must first be addressed. Many things in life come in multiples, but each person is allotted only one life. That life is physical and psychological first, and a malady of either may lead to loss of value of the one irreplaceable commodity. Society demands we participate in care through monetary payments, and those should be entered as a top priority expense on a Cash Flow Statement.
Well the first days are the hardest days, don’t you worry any more,
‘Cause when life looks like Easy Street, there is danger at your door.
The Grateful Dead
A change of employment, new employment or new business may be the most practical and immediate way to affect the left-hand, income side of the Personal Cash Flow Statement. So the questions must be asked, what is the market value of hours available for work that one can be handled competently? Will pursuing that course lead to continued opportunity, or is it just comfortable for now?
The employment market, along with every other market, can be accessed through the Internet:
• LinkedIn points users toward potential careers, and links candidates with recruiters, but will cost an extra $33 monthly for full information flow.
• Indeed helps with advancing careers, but also offers part-time and temporary employment, and caters to students.
• UpWork connects employers to freelancers with specialized skills like software development, data science, and engineering, but also with workers for their design and creative talents.
Moderation of expenses change the right-hand, expense side the Cash Flow Statement and will have the most immediate impact. A review of withdrawals and charges for the previous month, with multicolored pens, if necessary, can add spendable income to the next month, catch fraudulent charges, and detail overcharges and fees. A review will also reveal expenditures that can be eliminated in the future. With income certain, and expenses evaluated, a budget is nearly established.
When crossing an ice-flow, balance is of most importance, especially at first, in order to test each footfall, before shifting bodyweight to the forward foot. Balance requires that the pack, load, cargo, sled, trailer or household be arranged for the changes to come. An evaluation of the worth of an occupation and its potential for increased income must consider the talents, skills, experience and education of the individual. Improvement may demand an investment of time and money in further employment training or career education. But often the best education comes on the job, so an immediate choice of employment can also follow a career track. Just as in real estate, a person’s market value rises with upgrades.
An appointment with a Certified Financial Planner (CFP) can be like a visit from Marie Kondo for a household’s finances. Such an experienced financial professional may accomplish in a few hours what could take a lifetime for a financial novice. A contract for a Personal Financial Plan comes with a due date, acts as a deadline for adjustment and, sets a marker in time for financial progress.
On the liability side of the personal worth balance sheet are any potential problems with the plan and how to address each of them. This process can help in the choice of, and method of access to the job market. Anyone who has experienced transition knows average activities of daily living take longer, and planning ahead becomes a necessity. Also, any long-term physical or psychological changes must be considered before testing the next footfall on the road to stability and prosperity.
Debt, or at least the ability to incur debt if necessary, is an essential financial tool because the economy runs on debt. When a merchant takes payment by credit card, the issuing financial institution charges the merchant a fee. That fee, along with the zillions of other charges each day, has opened new avenues for growth in high interest rate lending for credit card issuers like banks.
But some debt improves a financial situation by opening opportunities for increased income or appreciation of assets—the left side of the Balance Sheet. That is good debt, or productive debt, according to an expert on entrepreneurship, and in many ways starting a new life is like starting a new business. Bad debt is “reductive debt.” It decreases cash flow and does not improve income or asset values.
Just as on an ice flow, where survival is first a matter of attention to the immediate situation, attention to a new living and financial situation must be prioritized by importance and immediacy. Once immediate needs are met and cash flow has been stabilized, it will be time to begin that higher, drier ground with firmer footing.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions of Spire Wealth Management, LLC, Spire Securities LLC or its affiliates. Investing involves risk, including the loss of principal. Past performance may not be indicative of future results.
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