WHAT IS A FINANCIAL ROADMAP
What is the first step in creating a financial plan?
Assessing your income, expenses, and financial goals.
What is one of the easiest ways to start saving money today?
Automating savings transfers from checking to savings accounts.
Why is having health insurance important?
It helps cover medical expenses and prevents financial strain from unexpected health issues.
What is the main reason people work beyond earning money?
To achieve personal fulfillment, security, and financial freedom.
What does it mean to “pay yourself first”?
Automatically setting aside savings before spending on anything else.
What is the primary goal of investing?
To grow wealth over time legally with the least amount of physical labor.
Why is long-term care planning important?
To avoid financial and emotional stress as one ages and/or develops health-related needs.
What happens if you die without a will?
Your assets are distributed according to state intestacy laws.
What is discretionary income, and why is it important?
It’s the money left after essential expenses, used for savings or personal spending.
How can meal prepping save you money?
Reduces food waste and prevents impulse dining out.
What is the difference between collision and comprehensive auto insurance?
Collision covers damage from accidents; comprehensive covers theft, weather damage, and other non-collision events.
What is the benefit of setting short-term financial goals?
They provide motivation and help build momentum toward long-term success.
What is the benefit of contributing to a 401(k)?
Tax advantages and potential employer matching contributions.
What is the difference between active and passive investing?
Active investing involves frequent trading; passive investing follows a long-term strategy, like index funds.
What is one alternative to traditional long-term care insurance?
Hybrid insurance policies that combine life insurance with long-term care benefits.
What is the purpose of a power of attorney?
It grants someone authority to make financial or legal decisions on your behalf.
What can you do about interest rates?
Shop, research, negotiate.
What is delayed gratification?
A way to avoid impulse buying; waiting 30 days before making a non-essential purchase, making a list to prioritize spending on non-essentials, checking in with accountability partners or groups, revisit your goals, purchase non-essentials as a reward for achieving a financial goal.
Why is it important to have an emergency fund?
To cover unexpected expenses like job loss, medical emergencies, or home repairs.
Why is financial independence important?
It allows you to make life choices without being constrained by money.
What is a Roth IRA conversion?
Moving funds from a Traditional IRA to a Roth IRA, paying taxes now for tax-free withdrawals later.
What is an ETF?
An Exchange-Traded Fund, which pools money from investors to buy a diversified mix of assets.
What is the difference between Medicare and Medicaid?
Medicare is a federal program that provides health insurance typically for people 65 and older based on age and disability status and Medicaid is a joint federal and state program providing care for low-income individuals who meet eligibility requirements. Both being provided at the discretion of the government and available funding.
What is a beneficiary designation?
Naming a person or entity to receive assets like life insurance or retirement funds.
How does tracking expenses help improve financial health?
It helps identify spending habits and areas where you can cut costs.
What is a high-yield savings account?
A savings account that offers a higher interest rate than traditional accounts.
How does your credit score affect your insurance rates?
A higher credit score can lower insurance premiums, as it signals financial responsibility.
What is the importance of diversifying income streams?
It reduces financial risk and increases overall financial security.
How have those perceived as lower income earners become millionaires?
1. Consistently investing small amounts of money over time in retirement plans and/or the market at an early age 2. Keeping expenses to a minimum until accumulated wealth (delayed gratification) 3. Spending most of their money on appreciating assets vs depreciating assets (things that increase in value, i.e. homes vs things that decrease in value, i.e. cars).
Why is risk tolerance important when investing?
It determines the types of investments suitable for your financial goals and comfort level.
How does long-term care insurance differ from health insurance?
Long-term care insurance covers age or disability related extended care needs with each policy varying in benefits based on premium and type of plan, while health insurance covers medical treatments in a broader sense based on plans purchased and provided.
What is the main benefit of setting up a trust?
Avoiding probate and ensuring assets are managed according to your wishes while keeping financial affairs private as wills and probate are public documents and occurrences.
What is a financial safety net, and what should it include?
A combination of savings, insurance, and income streams to cover unexpected expenses.
What is the envelope budgeting system?
A cash-based budgeting method where money is divided into envelopes for specific expenses.
What is the difference between Homeowners Insurance and Property Mortgage Insurance (PMI)?
Homeowners insurance protects your home and belongings, while PMI protects your lender.
What is one common financial obstacle to achieving dreams, and how can you overcome it?
Debt; by creating a payoff plan and budgeting wisely.
Why is it important to plan for inflation when saving for retirement?
Inflation reduces purchasing power over time, requiring larger savings to maintain the same lifestyle.
What is one key factor in determining a stock’s value?
Earnings per share (EPS), which measures company profitability.
What is one proactive step to prepare for long-term care?
Discussing preferences with family and setting up advance directives.
What is the role of an executor in estate planning?
Managing and distributing your estate after death, according to your will.