Personal Finance Basics by Dilbert cartoonist Scott Adams

For anyone who is starting afresh or seeking simple Personal finance advise, this is the best advice you can find and is provided by the cartoonist Scott Adams of Dilbert fame. Here it is in its own simple format given below.

Scott’s Version:

  • Make a will.
  • Pay off your credit card balance.
  • Get term life insurance if you have a family to support.
  • Fund your company 401K to the maximum.
  • Fund your IRA to the maximum.
  • Buy a house if you want to live in a house and can afford it.
  • Put six months’ expenses in a money market account.
  • Take whatever is left over and invest it 70 percent in a stock index fund and 30 percent in a bond fund through any discount brokerage company and never touch it until retirement
  • If any of this confuses you, or you have something special going on (retirement, college planning, tax issue), hire a fee-based financial planner, not one who charges you a percentage of your portfolio.

Though Scott Adams Personal finance basics is best, it is aimed for US folks. We, Indians, have our own products, problems etc. so we have to modify this to suit us just like we remake movies in different languages as per the regional culture. Now lets see FIdesiRE’s slightly modified slightly complex version of the same personal finance advice for Desi seekers.

FIdesiRE’s version

  • Make a will, open joint accounts with right of survivorship and keep your beneficiaries up to date on all your financial products
  • Pay off your credit card balance before the due date and use credit card offers/points to your advantage.
  • Get term life insurance if you have a family to support. Never buy endowment, pension and child policies.
  • Fund your company PPF/EPF to the maximum. When switching employer, don’t withdraw the PF money, instead transfer it to the new employer PF account.
  • Put six months’ expenses in a Fixed Deposit or Short term debt Mutual fund.
  • Identify financial goals and project your numbers. FIdesiRE’s financial goal planner may help.
  • Fund your goals like Retirement, Home, Children’s education and marriage as per the plan and re-balance the fund towards debt (to reduce risk) when you are nearing the goal time period.
  • If any of this confuses you, or you have something special going on (retirement, college planning, tax issue), hire a fee-based financial planner, not one who charges you a percentage of your portfolio.

How do you like my personal finance advice? how many of these you are already doing and what is it that you have been postponing?

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