Have you ever wondered if your finances are looking as good as they should be? Do you have that nagging feeling that things aren’t as strong as they should be? Have you recently over-indulged and tried to shed some extra pounds? If so, it’s time to stop, take a deep breath, look in the mirror and decide to make the most of this God-given financial resource. Do not blame yourself. Making positive changes can be as simple and fun as watching your favorite TV show.
Hope and Faith
The significant downturn in the stock market has left some wondering if there is still hope for their future and others praying for an investment miracle. With the dust of corporate collapse and fraud still lingering in the air, the challenge is knowing who to trust and where to put your trust. More than 400,000 people in the United States call themselves some sort of financial advisor. There’s no shortage of bad apples that offer a pie of bad advice. Investing can be a complex activity and a daunting task if left alone. Turning to a counselor for advice and guidance can be a great idea, but don’t let your faith blind you. Does your advisor only call you when he wants to sell you something? Did all your eggs fall into the aggressive tech stock basket? Are all your investments in products that place your advisor’s commission schedule above your best interests? Do you find your instincts telling you that there must be a better plan? If you hear the word “Yes!” echo in your head as you read these questions, maybe it’s time to get dressed, hold a boardroom meeting, do your best Donald Trump impression and tell your advisers, “You’re fired!” Make sure you have an advisor who uses a compensation process and structure that allows your best interests to be served. Seek professional designations and experience. Find out how he can serve your unique needs. Find out how he has helped others like you. Ask if he is being paid a fee or a commission. Make sure your risk tolerance and financial goals are understood. Have a written action plan that coordinates your overall financial situation. Go to specialists, not generalists. Take the necessary steps to ensure your money is in the right hands.
Desperate housewife
“Tom took care of everything. I don’t know what to do now that he’s gone.” I could see the fear in Marsha’s eyes the first time I met her. Her husband had just died and she was feeling overwhelmed at having to deal with a long list of problems she didn’t have to deal with before. A flurry of paperwork from lawyers, accountants, and financial institutions made his head spin. Trusting a partner or friend to take care of your finances can bring a sense of relief. But if you can’t get up to speed with the basics of your financial affairs, you could run into trouble at a crucial time. Death, divorce, and emergencies often bring a sudden need for financial introspection. You don’t have to get a degree in finance, but take the time to educate yourself about household assets and liabilities. Know where copies of important documents such as wills, trusts, power of attorney, and insurance policies are located. Identify key contact information for tax preparers, financial advisors, attorneys, and employer benefits departments. Know where your financial documents are stored and review them at least annually. Taking a crash course in financial management during a stressful situation is not the right time to learn the difference between a 401(k) and an IRA. Simple steps taken now can save you from future heartache and help you make clearer decisions in difficult times.
Budget Danger
Have you ever looked at your checkbook at the end of the month and wondered where the missing numbers went? Have you opened your credit card bill and found out? There is never a shortage of ways or reasons to spend money. Family needs can be urgent, household appliances are easily damaged and your old clothes don’t fit properly. But before committing to the spending frenzy, take a moment to look before you jump in. Break down your household expenses. Ask yourself if what you are about to buy is a need or a want. Just use a budget to control the direction of your cash flow before it goes out the door. Pay yourself in advance with systematic savings into a personal or retirement account. Create a reward system to pamper yourself when you’ve stuck to your plans. Budgeting isn’t sexy, but it will have a dramatic and empowering effect on your life.
Extreme Makeover: Home Finance Edition
Many people have full filing cabinets, messy financial documents and desk drawers full of bills waiting to be paid. All this mess can have you spending time fantasizing about next year’s root canals to avoid dealing with business files. Knowing why you need to keep financial documents will go a long way in knowing what to keep. Tax returns provide a good financial history but they also carry a supporting paper trail. You can discard tax-related documents after 7 years because the IRS has three years to challenge information on your returns and 6 years to audit if you have underreported income. However, if you have committed fraud, fill the filing cabinet – the IRS can challenge your return at any time. If you receive an annual report from your investment company that summarizes the previous year’s activity, feel free to discard the monthly/quarterly report. Keep trade confirmations for seven years after reporting the sale of securities on your tax return. Keep bank statements and credit cards that may be needed to back up your tax return. Stick to a statement for major purchases such as jewelry or major equipment in case of insurance or warranty claims. Purchase a scanner to scan important financial documents. Make multiple backup copies of your electronic records and keep them in a safe and easily accessible location. Streamlining your financial records will provide a sense of inner peace and real change in your home.
One life to live
Not everyone has the same amount of money to invest, but we are all given the same 24 hours each day. How we invest these valuable assets will have a significant impact on our lives, our future, and those we love. Use the time to your advantage. Start saving early and often. Take advantage of the power of compound interest. Take the time to teach your kids the core values of money – no matter how old they are. Set aside weekly, monthly and yearly time to track expenses, manage finances and evaluate your progress. Finally, don’t let the pursuit of wealth keep you from investing in valuable relationships with the people who mean the most to you. You have one life to live – spend it wisely.