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Basic Financial Planning Part 1

Updated: Jun 13

Episode 3: As a Certified Financial Planner, Jeb Jarrell is going to provide a 2-part series on basic personal finance and financial planning. This discussion will outline the elements of a personal financial plan, relevant to any young professional. Let’s join Jeb to learn more.

Creating an investment strategy is actually Step 3, but it’s the one everyone seems to think of first. It should all begin with a serious effort aimed at goal setting. This includes the short, medium and long-term goals for you and your family’s future. Managing your cash flow also comes before investing. That would include an emergency fund to enable you to weather a storm, should it arise.

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Maximizing Cash Flow

Take time to organize your debt management, including student loans. Evaluate your mortgage and the interest rates. Credit card debt is a significant factor. You need to have a plan to get rid of this high-interest debt. If you have an auto loan, how quickly can you pay it off?

It’s possible to use debt as a tool. You may need to consult a professional to help you evaluate this, but cash flow maximization is a key foundation of personal finance.

You can optimize your student loans. There are both federal and private student loans. If the interest rates are relatively high, consider refinancing them to get a lower interest rate and possibly a lower monthly payment. However, you could continue paying the current amount, even though your loan is lower, to accelerate the payoff.

An emergency fund is critical. There are expenses that creep up and are outside of your control. These could include a furnace replacement, a significant plumber’s bill, automobile issues, etc. An emergency fund account creates options and time. It can also help you to avoid putting the expense on your credit card.

Types of Insurance You Should Have

Let’s begin with life insurance. If you have a young family, you can easily ensure they can handle debts and other obligations (i.e. college for your children), should something happen to you. Term life insurance is a good option. The younger you are when you buy your policy, the lower the rates typically are.

Disability insurance is the second type of coverage. There are group policies and individual policies. You may have group coverage through your workplace. These policies are fairly inexpensive. Certain professionals should also consider an individual disability insurance policy. They can cover a wider array of disabilities and often pay you more. If a future episode, we’ll discuss what’s called an “own-occupation policy.”

Health insurance is the third type of insurance coverage. Most of you will probably get this through work.

Let’s also consider home and auto insurance. Remember to “bid this out” on an annual basis. The market changes and there may be ways to significantly reduce your monthly premiums, for the same basic coverages. Most people simply renew these policies.

Your automobile insurance should also be increased beyond your state’s minimum coverage. In Kentucky, that’s only $25,000. You should consider increasing this to $100,000.

There’s also a policy commonly referred to as an umbrella policy. It’s liability insurance to protect you, beyond the policy limits of your home and automobile policies. It’s fairly inexpensive and provides another level of security.

Estate Planning

You’re not too young to begin considering this issue, especially if you have a spouse and family. You need to have a Will to enable you to direct the distribution of your assets, even if they are limited. You should appoint a guardian, on paper, should something happen to both you and your spouse. Be sure you discuss this with the person you’d like to appoint. You want to ensure they are comfortable with this role and the related obligations.

Set up your various Power of Attorney designations. You want to make sure specific people are authorized to sign various documents and to handle transactions on your behalf, should you become incapacitated.

A Living Will is also extremely important. This document designates a healthcare surrogate to handle end-of-life decisions. It can be very helpful to your loved ones, because you have already provided information related to your wishes. If something happens to you, it will already be a very emotion situation. Your Living Will can easy part of that burden.

Did You Like What You Heard Today?

As we wrap up today’s episode, we want to encourage you to subscribe, so you don’t miss upcoming episodes.

If you’d like more information about Jeb Jarrell and his firm, visit Jeb’s website at You can also follow him on Facebook.

Thanks for listening!

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