You Should Have A Personal Financial Statement

Write Your Own Financial Manifesto

I first learned about this over at a fun little forum called bogleheads. It’s a great place for a DIY investor to learn the ropes from people with many years of experience along with some professionals.

I followed the outline that was posted here and made some changes to suit my needs. It is called an Investment Policy Statement because it is supposed to basically summarize your methodology when it comes to money. You can call it your Financial Manifesto.

example investment policy statement financial manifesto uregent care career

 

In the one I wrote up I stated that I would always have $25,000 of emergency funds which I haven’t been very good about. I had a healthy EF for a long time and then had to raid it when I decided to start paying off my student loans.  It isn’t about achieving perfection, what my financial manifesto has done for me is to make me aware that I always need some $ in my EF which I have done.

I wrote that I would never go into debt again and that I would never purchase a home worth more than 25% of my net worth. I wrote that I wouldn’t take out a mortgage unless it was something that I knew I could pay off in less than 5 years. I am in the process of buying a condo for $140,000 cash so I overshot the 25% mark a little but not bad.

I wrote how aggressively I wanted to invest. This is what some refer to as asset allocation. I have done really well here and mostly maintained my 90% of equities and 10% cash assets. I allow myself to ‘experiment’ with 5% of my investments.

I also added a few things about owning vehicles, paying for a wedding, pre-marital agreements and some other more personal things. Each person has different life circumstances so you would phrase yours accordingly.

 

Have you written one?
How well have you stuck to it?

Share your thoughts...