TRP has been good to me, particularly in getting me back on my game after my first (and only) marriage and subsequent divorce, but that's another topic (you can guess the details anyway).

After lurking for a little over a year, I'm trying my hand at posting. I'm starting by sharing my expertise, hoping it will help y'all take bigger risks and thus experience more success without getting your asses handed to you.

I'll start by saying that I'm a real-deal financial planner. Not the guy that pushes mutual funds or insurance for commissions. I own my firm and charge an hourly fee for unbiased, professional advice.

The most critical and overlooked aspects of people's financial lives are budgeting and risk management. Budgeting is pretty straight-forward, so I'll spare you a lecture here, but just like any business, you should know your balance sheet (net worth = assets - liabilities) and cash flow statement. Assets that take money, (housing, cars, toys, etc.) should be minimized and assets that make money (investments, tools for your craft, etc.) should make up the majority of your balance sheet.

Simply put, money management (budgeting) is to your finances what lifting is to your body. It takes discipline, you should be seeking gains, and there's no short cuts, you just have to do it. Moving on...

Those who do the first step well still tend to miss risk management. Here's how that typically plays out: you're financially solvent, doing well and then, BAM! Life serves up it's most famous dish: The shit sandwich. Maybe that killer job wasn't as steady as you thought (by the way, employers are the masters of dread game), you aren't as bulletproof as you thought (illness/injury), or fill in the blank with any other horror story you've heard. Trust me, it all happens, all the time.

The two most effective ways to address these risks are:

1) Emergency Savings - At least 3-6 months worth of living expenses (minus income-related taxes, savings, and work-related expenses) in CASH. Yes, you're not going to make any money here, but this part of the portfolio is for liquidity, i.e. stable value and readily accessable and 2) (The right) Insurance.

Emergency Savings is "Fuck You Money"

An IDGAF attitude is a critical piece of RP theory, but I would submit that the independence it requires absolutely includes your work situation.

I recently landed a generous partnership deal with the largest local bank in my area. I walked into negotiations at an advantage because I was the expert in the room and I didn't need the deal. I carted my nuts in with a wheel barrow and asked for everything I'd need and more to be interested, expecting them to push back. Instead, they happily agreed to all my terms and assured me they'd do more down the road.

Think about how your carreer would be different (assuming you're already constantly sharpening your skills), if you didn't need the money to eat for the next 6 months? I'd wager (and frankly know) that you'd be more confident in your interviews and successful in your business dealings. What's more, you'd take much less shit from people, and unsuprisingly, that tends to make you more happy in your life, overall.

From a risk management standpoint, that level of savings will also typically cover your insurance deductible(s), if something catastrophic happens or get you through the waitting period for most disability policies. You should know what these numbers are and adjust your savings accordingly.

Now some other pointers on insurance:

-Understand and keep track of what is and isn't covered and for how much or hire a professional (not the shmuck selling it to you) that will do this for you.

  • Go through (or at least shop) an independent agent, who writes for many different companies.

  • Buy the damn umbrella policy (it's cheap and you can consider it net-worth insurance).

  • Have health insurance (if you're healthy, consider a High Deductible plan, if available, and max a Health Savings Account).

  • The younger you are, the more important LONG-TERM Disability insurance is because your ability to earn income is most likely your biggest asset.

  • When possible and cost-effective, favor private policies over employer-sponsered coverage. This requires homework, but you want to be able to walk away from your job, if needed, with minimal repercussions. It may even be more cost-effective the younger and healthier you are.

TL;DR - Build your Castle on solid ground and you'll probably only need to do it once. Manage financial risks before attempting to build your empire.