Your Real-World Financial Plan
Day 11. Time for a software discussion
I am tempted to call a financial plan a “model.” Usually, models are simple representations that help us make sense of our world. Economists do this a lot: They find financially relevant questions, impose some assumptions, deploy math, and extract hypothesized relationships to test the validity of the model’s implications with data.
Stay with me.
Like much of the population, I use the word "model" more broadly. A model is a how-to, a guide to practical outcomes, without the traditional intellectual precision of the word. For example, “Let’s build a model of our home to get the colors just right.” Or, as a high school football coach stated to his assistants at a Monday morning meeting: “We will never model our defense after the Dallas Cowboy defense. They suck.”
Your Best Plan Determines Your Best Living Standard
Do you know your living standard can be modeled? You may live it, feel it, complain about it, and want to increase it, and there is a number. The number can become an annual target. A new number can be determined when life changes for whatever reason. I began PFE because among all the investment newsletters, financial columnists, and gurus, there was not a sniff of economics-based personal finance. Why? Professional education had not caught up to the knowledge and technology.
Here, you have the resources to find your “magic number” surrounded by other interested subscribers who care about making really good financial decisions for themselves with my support.
Remarkable is that your financial details, aspirations, and investment preferences can be combined to determine your magic number, a convoluted endeavor because of taxes, the risk of investments, and our human longevity. Technology solves the “life is complicated” excuse, and that is what today is about.
The thinking process surrounding the life-cycle model for financial understanding is available under the Start Here tab. Much of this content follows Chapter 2 of “Economics-Based Personal Finance.” We are ready to move toward commercial software that is much more efficient at handling the real world. The software is MaxiFi Planner.
This day’s course notes and Chapter 3 of the book walk you through the how-to of working with MaxiFi Planner. This tool will help you build your financial plan. Over the years, I’ve found that my students are really good at exploring consequential financial questions and interpreting financial solutions. You will, too.
Free subscribers and followers: today’s content is very important. It is under a paywall because there will never be ads, and my effort is part of my value proposition. I’ve priced it inexpensively. As paid subscribers will experience today,
has generously shared a substantial coupon code for MaxiFi Planner.I’d love for you to join us.