Sort out all your finances in eight steps
Sorting out your finances really doesn't need to be difficult. In fact you can learn everything you need to know by the end of this blog post.
Scott Adams' famously (in the US) devised a nine-point plan for sorting out your money (he of the Dilbert cartoon fame pictured). In his 'Unified Theory of Everything Financial', a play on Einstein's Unified Theory of Everything, he uses just 129 words to say everything that needs to be said. It was originally published in 'Dilbert and the Way of the Weasels' in 2002 but you can read the nine-point plan on this Marketwatch blog.
For us Brits, it needs a tweak and it becomes an eight-point plan...
Step 1. Make a will (A guide to will writing - 10 tips for a perfect will)
Step 2. Pay off your credit cards (Guides and tips for clearing card debt)
Step 3. Get term life insurance if you have a family to support (Calculate the life insurance you need - Get a quote)
Step 4. Fund your company pension to the maximum (A guide to company pensions)
Step 5. Buy a house if you want to live in a house and can afford it (Mortgage/house-buying guides - Compare mortgage deals)
Step 6. Put six months worth of outgoings in a tax-free Isa savings account. You can put up to £3,000 into an account each year. (See the web's best savings tables)
Step 7. Take whatever money is left over and invest 70% in a stock index tracking fund and 30% in a bond fund through any discount broker/fund supermarket and never touch it until retirement
Step 8. If any of this confuses you, or you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio
There you have it. I'm sure your family and friends who share a phobia of finance would be grateful to receive the Unified Theory of Everything Financial' so please pass it on.
