Risk Management

Risk management is the process of identifying, assessing, and prioritizing types of risk followed by “coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events” (Hubbard, 2009). In other words, risk management is the process of mitigating and/or reducing the impact of a specific decision or event. Effectively managing risk with insurance implies you are recognizing the importance of being prepared should something truly tragic occur in life- whether it’s a car accident or your home burning to the ground.

Financial Goals and Plan

Equally important as utilizing risk management techniques is identifying and developing a financial plan that allows one to realistically achieve his/her financial goals. A financial plan can encompass a myriad of topics to include saving money for a house, funding a child’s college education, retirement planning, and estate planning. I’ve created a financial plan consisting of my short-term, intermediate-term, and long-term goals. They are as follows:

In the short-term, my financial goals consist of the following:

• Save 10% of the gross amount of each paycheck

• Cut back on discretionary spending such as dining out and small expenditures that tend to add up over time (i.e. coffee)

• Research and become more familiar with various ways of investing and saving for retirement

In the intermediate-term, my financial goals are as follows:

• Continue to save at least 10% of the gross amount of each paycheck

• Continue to keep discretionary spending in check

• Use the excess $170 per month that would have normally gone towards my car payment to either save more, or make larger payments on the one credit card that I carry a balance on.

• Explore various brokerage firms to set up an IRA in addition to the 401k I have with my current employer.

• Reduce my investment exposure to the US stock market and the US dollar

• Have my student loan paid off in 5 years...