Often, when a person reads about financial planning, the most common topics are saving and investing. However, there are several other areas that a person should consider when optimizing their financial life. This post will discuss four areas to consider when optimizing your financial life.

Cash Flow

Cash flow is truly the cornerstone of a person’s financial life. Cash flow is simply income minus your expenses. Creating excess cash after taking care of the necessities in your budget allows people to spend on things they want and save for future goals. If you are trying to figure out where to start improving your finances, you can always work on your cash flow by finding ways to increase your income or reduce your expenses.

Risk Management

Risk management is crucial to protecting your financial life from catastrophic financial risk. Risk management can include activities such as building an emergency fund and purchasing appropriate insurance coverage for your health, home, and automobile. Focusing on managing the risks to your financial life can ensure you do not fall into debt or erode the savings you have built for other goals. Each family’s risk is different, so it is critical to understand what financial risks could impact your family and to plan accordingly.

Education Planning

Getting an education, whether through a bachelor’s degree, a master’s degree, trade school, or a certification program, can be an excellent way to increase your marketability as an employee and increase your income. However, spending on education can be a risky proposition. Generally, when someone is choosing to further their education, the expectation is that they will get some benefit in return. However, suppose you rack up a lot of debt or even spend a lot of capital on furthering your education and do not reap any additional economic benefit. In that case, these decisions can feel less than stellar. Planning for your education can be a crucial financial decision, and these decisions go beyond whether to take a loan or go to college at all. They can include whether to attend school full-time or part-time, whether it makes sense to pursue a master’s degree or a certification, and even school choice. Education planning can become even more challenging for parents as you could be planning for your education expenses and your child’s. Spending time thinking through how, when, and how much to invest in your education can have long-term effects on your cash flow.

Employee Benefits

Reviewing your employee benefits can often be taken for granted as a crucial financial planning activity. Employee benefits impact several areas of a person’s financial life, like their retirement savings allocations, health insurance, disability insurance, and life insurance. Many of these decisions can only be made once a year and must cover your needs for the remainder of that year. Employee benefits can affect your cash flow, risk management through insurance, and savings goals. 

As you think through moves you can make to create a better financial life, make sure you fully consider the financial decisions you make beyond saving and investing. While those activities are necessary for a solid financial plan, several other areas of your financial life also require attention. They can be a great place to hone your skills in financial decision-making, even if you are just getting started or have a more established financial life.