- Rules for the Affluent Coach, By Thom Park, Ph.D.
1. Always carry enough cash and/or liquidity or collateralized marginability on relatively fixed value assets to always be able to live as you wish without selling an asset for money. BE LIQUID, always, always, always. You should only have to get rich once. Non-liquidity can precipitate insolvency, read bankruptcy. Never let this happen.
2. Calculate a current budget including monthly amortized annual expenses so you know what enough liquidity is. Have a budget and live within it.
3. Control expenses, both fixed and variable, living defensively; any future investments must be prudent and no frivolous living, staying with in such means. Honor that budget.
4. Attempt to save, in some form a third of your gross cash flow monthly from all sources, i.e.- W2 income, non W2, schedule B, C, D, E 4562, knowing a third will go to taxes, so try to live on one third of income. SAVE. This rule varies, young to old.
5. Invest a third of your gross cash flow in some manner, either short or long, evaluating quarterly the progress of said investments, some of which may be cash equivalents.
6. Evaluate quarterly your balance sheet, (Net Worth at a Glance) knowing your assets to liabilities ratio, your gross debt, and your growth of net worth. Track quarterly asset growth for performance and estate tax consequences.
7. Grow net worth annually at prescribed target rates, seeking to hit annual thresholds of growth of net worth toward independence from vocationally required income. Work for the love of the task, not the money.
8. Inventory assets for fire, theft, and estate purposes. Stay current on the numbers.
9. Insure you, your spouse, career, home, car, business, liability, special assets, and estate as part of a defensive financial plan. Don't allow the random disaster for a lack of insurance coverage.
10. Develop succession plans for wealth, business, assets that dovetails with your will, estate, gifting, and benevolence plans. Factor in a qualified distribution plan with an estate plan and insurance. Don't leave it all to the marketplace and the government after spending a lifetime to accrue. Leave it optimally lo whom you wish.
11. Preserve estate from federal and state estate taxes through A-B funded trusts, a proper estate plan, and joint survivor life insurance plan in ILIT with a wealth recreation concept.
12. Construct overall asset allocation plan to grow gross assets at an acceptable risk adjusted rate of accrual. Don't be too bold or conservative. Model your investments.
13. Oversee qualified insurance plans toward independence and/or retirement targets using monetization and accrual rate targets. Don't have over-funded qualified plans.
14. Target life end net/gross worth goals, objectives for the remainder, with distribution rate estimates to achieve. Spend it or gift it, or the government is the beneficiary. Leave it to your church or designated charity or more.