Scott Adams, Dilbert's creator, came up with a simple, easy to understand way to do financial planning that is quite simply, elegant.
Taaa-Daaaa! That's it.
1. Make a will.
2. Pay off your credit cards.
3. Get term life insurance if you have a family to support.
4. Fund your 401(k) to the maximum.
5. Fund your IRA to the maximum.
6. Buy a house if you want to live in a house and can afford it.
7. Put six months expenses in a money market account.
8. Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement.
9. If any of this confuses you, or you have something special going on (retirement, college planning, a tax issue), hire a fee-based financial planner, not one who charges a percentage of your portfolio.
Wiser money guys than I have praised this plan. It is something you can start to work on while you are still in college or just beginning your career. And you don't need an MBA to see how it works.
Fool.com: Dilbert's Personal Finance Book [Commentary] July 30, 2003