Get Your Finances in Order
Getting your finances in order can be the thing that you forever have on your to-do list but never quite seem to get around to. But when you put off getting your finances in order, there can be real and harmful consequences. Making a commitment to change your approach to money matters can be the start of a better, more responsible, and more financially secure future for you and your family. First, you will need to organize your information. This means breaking down your income and expenses, investments and their annual returns, and net worth. Once you know how much you have and how much you owe, it is time to budget for your expenditures. This can help you determine where your money is going and if there are some expenses that can be reduced to divert those savings into a retirement fund or another savings goal. And speaking of goals, you will need develop explicit written goals. Even if you already have a few you are working toward, changes in your life circumstances might require revisiting them. Perhaps you were all about saving for a vacation home or boat, but your kids are getting older and it’s looking like you might have a budding surgeon in the family. That’s great news — but expensive tuition. Reviewing your short- and long-term financial goals on a regular basis can keep your current priorities on track. Your financial goals should be specific, written down, and include a strategy to track your progress in meeting interim, smaller goals along the way to the ultimate one. Part of working toward your goals is a serious commitment to savings. Pay yourself first by automatically saving from each paycheck instead of waiting to see what is left over at the end of the month. You will always find a way to spend that money if it remains discretionary, so make saving a habit you’re unwilling to break. While you are at it, make investing automatic as well. People often do not miss what they don’t see; so instead of relying on your willpower to manually invest each month, set up an automatic payment to your retirement fund. It can be very difficult to save while also paying high-interest loans and consumer debt. Establish an emergency cash reserve so that an unexpected expense doesn’t require you to take on costly debt. The dollar amount for this fund depends on factors like your age, health, job outlook, dependents and obligations, but a general rule of thumb is you should have 3–6 months of your salary saved for emergencies. Once you have this security blanket in place, you will need to get your debt under control. The interest paid on consumer debt reduces the amount you can save and makes credit purchases much more expensive in the long run. Pay down this debt as soon as possible and do not add to it by carrying a balance. While some of the funds you’ll need to meet your savings, investing, and debt repayment goals can come from getting control over off-budget spending, you can also free up some cash by shopping around for better rates and looking for tax savings. Assess your insurance needs when it comes to life, health, disability, long-term care, homeowner, automobile, and personal liability. Your needs will change as you age, so your coverage will need to change with you. Insurance companies often have different discounts, packages, and riders that may offer potential for savings, but you will need to do the work by regularly checking to see if there are better options out there for lower premiums that still offer the coverage you need. While many of these tips may sound familiar, it is the rare individual who takes advantage of all of them.
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This newsletter was prepared by Integrated Concepts Group, Inc. The opinions expressed in this newsletter are for general information only and are not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. The views expressed are those of the author and may not necessarily reflect those held by PlanMember Securities Corporation. Material presented is believed to be from a reliable sources and PSEC makes no representation as to it accuracy or completeness.