Tip Tuesdays: The Cycle of Personal Finance

I think personal finance is a cycle of events and actions:

1. Identify your Financial Goals.
2. Outline a Strategy to achieve your Financial Goals
3. Pick Financial Instruments that execute this Strategy.
4. Monitor and take preventive/corrective actions when necessary.

Financial Goals => Strategy => Financial Instruments.

Any other sequence and the result is almost always financial disaster.

What do you think?

Tip Tuesdays is my initiative to share practical personal finance tips — every Tuesday. I’d be delighted if you could share a tip or two from your own experiences. Drop a comment to submit your tip. And, as always, do spread the word if you find this useful.

Further reading:

1. Tip Tuesdays: Investing Just to Avoid Paying Income Tax is a Really Bad Idea
2. Tip Tuesdays: Personal Finance is a Lifelong Journey
3. Tip Tuesdays: Personal Finance Resolutions for 2009
4. Tip Tuesdays: Personal Finance is as Simple as You Make it to Be.
5. Tip Tuesdays: Use Your Credit Card for Emergencies Only After You Have First Created a Real Emergency Fund with Real Cash in a Savings Account

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