Smart Money Strategy

CHAPTER 9The Framing Strategies

Budgeting, what you spend and earn, sits at the centre of your strategy stack — this is the Basic Stack, which I introduced in Chapter 4 (think of it as the floor on which you build your strategy stack). But to build a stack you need a set of strategies that frame your stack, in much the same way as a house frame structures the walls and rooms when you're building a house.

There are four Framing Strategies that shape how you build your strategy stack:

• The Budget Management Strategy — this strategy takes a closer look at how you use your income and expenditure. Are you saving anything?
• The Cash Flow Management Strategy — this strategy looks at the flows of income and expenditure. Have you got enough money to pay the bills when they arrive?
• The Debt Reduction Strategy — this strategy considers your options for reducing debt and, as a result, the amount of interest you pay (which could be going to other things). Many people have a plan to spend, but do you have a plan to pay back your debt?
• The Risk Assessment Strategy — this strategy evaluates your appetite for risk. Are you conservative or aggressive in how you approach your financial life?

This chapter covers these Framing Strategies in detail and just like the Basic Stack (where spending meets earnings), these collection of four strategies should be used at the start of every strategy stacking journey you take.

The Budget Management Strategy

The Budget Management Strategy is probably the ...