Understand the key steps in setting up your financial plan

If you are considering making a financial plan, what are the first things you should do? ABC10’s Alex Bell spoke with a financial expert.

SACRAMENTO, Calif. – We can’t predict what the economy will look like in the coming months, but we can prepare for it. ABC10’s To the Point host Alex Bell sat down with financial expert Shayne Corriea to discuss the key steps to getting your financial plan in place.

Q&A with Shayne Corriea

Alex Bell: Shayne, so good to see you again. Thank you very much for being here.

Alex Bell: First question, what are the steps to creating a solid financial plan?

Shayne Corriea: Four steps. The first step is to examine our relationship with money. Everything about our past dictates the decisions we make in the future, right? So budgeting savings, like what was our growing relationship with money? At the same time, you identify your objectives in this first phase.

The second step is risk management.

The third stage is the accumulation of wealth.

The fourth is to build that legacy. What is the distribution of all this wealth?

Alex Bell: So let’s see how your relationship with money plays into your financial planning. What does that mean?

Shayne Corriea: If you think about it, how you grew up, a lot of people — especially in the Latino community — everyone I’ve spoken to talks about how they haven’t had those conversations with their family. They didn’t talk about money in their household. So maybe some of those habits, financial habits didn’t translate into adulthood, did they? So how you have that relationship with money dictates how you’re going to spend it or save it, how opposed you are to debt, (and) things of that nature.

Alex Bell: I want to talk about risk management because is disability part of risk management planning?

Shayne Corriea: Yeah, absolutely. The most important part, in my opinion. So, for example, what is your number one asset? If I asked you, what is your main asset?

Alex Bell: I would say my house. That would be so I say the most important.

Shayne Corriea: Most people do, the most important asset you have is you. Your ability to take home a salary. So, for example, if you are injured or sick, how can you ensure that your money is still getting through the door so that you can pay your expenses? It’s a disability insurance review, isn’t it? How can we make sure that no matter what my paycheck comes through the door? So a little advice, if everyone’s listening, take a look at your pay stub. Look on your pay stub and see if there is a position, LTD, long term disability. Most employers will pay some sort of disability benefit. But usually it’s only 60% of your income. I can live on 60% of my income. And if that position says your employer is paying for that benefit, then you’re taxed. So imagine if you are injured or disabled and you are bringing in less than 60%, more like 40% of your income, how do you pay your bills? And that affects your whole financial plan, right? So that’s something that’s really important in risk management.

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