Have you ever wondered if your finances look as good as they should? Do you have a nagging sense of unease that things are not as firm as they could be? Have you recently overdo it and are trying to lose a little extra weight? If so, it’s time to stop, take a deep breath, look in the mirror, and decide to make the most of the financial resources God has given you. Don’t punish yourself. Making positive changes can be as simple and enjoyable as watching your favorite TV show.
Hope and faith
The significant drops in the stock market have left some wondering if there is still hope for their future and others praying for an investment miracle. With the dust of business collapse and fraud still floating in the air, the challenge is knowing who to trust and where to put your faith. More than 400,000 people in the United States call themselves financial advisers of some kind. There is no shortage of bad apples offering bad advice cakes. Investing can be a complex activity and a daunting task if left alone. Seeking an advisor for advice and guidance can be a great idea, but don’t let your faith be blind. Does your advisor only call you when he wants to sell you something? Were all your eggs dropped into an aggressive technology stock basket? Are all of your investments in products that put your advisor’s commission schedule ahead of your best interests? Do you find your instincts telling you that there must be a better plan? If you hear the word “Yes!” ringing in your head as you read these questions, it may be time to get dressed, call a boardroom meeting, do your best Donald Trump impression, and tell your adviser “He’s fired!” Make sure you have an advisor who uses a compensation structure and process that allows them to serve your best interests. Look for professional designations and experience. Find out how you can meet your unique needs. Find out how it has helped others like you. Ask if they pay you fees or commissions. Make sure they understand your risk tolerance and financial goals. Have a written action plan that coordinates your overall financial situation. See a specialist, not a generalist. Take steps to make sure your money is in safe hands.
Desperate housewives
“Tom took care of everything. I don’t know what to do now that he’s gone.” I could see fear in Marsha’s eyes when I first met her. Her husband had recently passed away and she was feeling overwhelmed by having to deal with a long list of problems that she had not had to face before. A flurry of paperwork from lawyers, accountants, and financial institutions was making his head spin. Trusting a spouse or friend to take care of finances can bring a sense of relief. But if you are not on top of the basics of your financial affairs, you may be stuck at a crucial juncture. Death, divorce, and emergencies often bring the need for sudden financial introspection. You don’t need to get a finance degree, but take the time to educate yourself about the assets and liabilities of the home. Know where copies of important documents such as wills, trusts, powers of attorney, and insurance policies are located. Identify key contact information for tax preparers, financial advisers, attorneys, and employer benefits departments. Know where your financial documents are kept and review them at least once a year. Taking a crash course in financial management during a stressful situation is not a good time to learn about the difference between a 401 (k) and an IRA. Simple steps taken now can save you headaches later and help you make clearer decisions in tough times.
Budgetary risk
Have you looked at your checkbook at the end of the month and wondered where the missing digits went? Have you opened your credit card bill and found out? There is never a lack of ways or reasons to spend money. Family needs can be urgent, appliances are inconveniently broken, and your outdated outfit doesn’t fit the way it should. But before you get into a spending frenzy, take a moment to look before you jump in. Itemize 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 you walk out the door. Pay yourself first with systematic savings in personal or retirement accounts. Create a reward system to pamper yourself when you’ve stuck to your plan. Budgeting isn’t sexy, but it will have a dramatic and empowering effect on your life.
Extreme Makeover: Home Finance Edition
Many people have an overloaded filing cabinet, cluttered financial documents, and a desk drawer full of bills waiting to be paid. All of this clutter can lead you to spend time fantasizing about next year’s root canal to avoid facing commercial files. Knowing why you need to keep your financial documents will go a long way in knowing what to keep. Tax returns provide a good financial history, but they also carry a number of supporting paper traces. You can discard tax-related documents after 7 years, as the IRS has three years to dispute the information on your return and 6 years to audit if you have not reported income. However, if you have committed fraud, keep the filing cabinet full; the IRS can challenge your return at any time. If you receive an annual statement from your investment firm that summarizes the previous year’s activity, feel free to discard the monthly or quarterly statements. Keep trade confirmations for seven years after reporting the sale of a security on your tax return. Keep any bank and credit card statements that may be necessary to support your tax return. Keep statements for large purchases, such as jewelry or large appliances, in case of an insurance or warranty claim. Buy a scanner to scan important financial documents. Make multiple backup copies of your electronic records and keep them in a safe and easily accessible place. Optimizing your financial records will provide a sense of inner serenity and a real home makeover.
A life to live
Not everyone has the same amount of money to invest, but we are all given the same 24 hours a day. How we invest this valuable asset will have a significant impact on our lives, our futures, and those we love. Use time to your advantage. Start saving early and often. Benefit from the power of compound interest. Take the time to teach your children fundamental values about money, regardless of their age. Set aside time weekly, monthly, and annually to track expenses, organize finances, and evaluate your progress. Lastly, don’t let the pursuit of wealth keep you from investing in valuable relationships with the people who matter most to you. You have a life to live, spend it wisely.