By; James L. Moore, Attorney and Counselor at Law; (as
published for AARP Modern Maturity Magazine).
For Jeff Rodgers of Grandville, Michigan, this year is a
turning point in his life. He has started a new business and
has hit the magic age of 40 years old. Naturally, he's
filled with New Year's resolutions about his health, his
life and his finances. He talks a lot about his family, the
stock market his retirement plans, and when you ask him what
one resolution comes to mind first, he doesn't hesitate.
"I've got a lot of different stacks of paper at home and at
the shop," he says, "and for once I would really like to
organize everything."
We all have money-related resolutions after a birthday, the
new year, etc. to get ourselves organized, to save more, to
spend less. Few make it past the birthday cake or the
eggnog, but that won't stop you from resolving to make
changes. Let's start with Jeff's wish for some "order" and
"control" in his life.
GET ORGANIZED
You need two things to get organized: a place dedicated to
your personal records and papers, and a system for filing
the information. A small two-drawer filing cabinet should be
big enough for most bills and papers. You can get a new one
for under $50.00, or hunt for one at a garage sale.
Label a file folder for each account you have-from the
electric bill to the car payment, each savings and checking
account, insurance premiums, and each mutual fund or savings
plan etc. you are in. Then move those stacks of paper into
the files that they belong in. Each month when the bills
come in, drop them into their appointed places. With account
balances and information easily at hand you will be able to
spot and monitor glitches and other problems as they happen.
And as you round up insurance policies and retirement plan
information and documents, you can double-check to be
certain that the beneficiaries reflect your current estate
and/or family or business succession plan.
GET A PLAN IN PLACE FOR YOUR SPENDING AND SAVINGS
Financial Planner Gary Mattson of Lake Odessa, Michigan
tells his clients that once they've got their papers in
order, the next step is to measure their net worth. Total
the value of your assets; for example, the equity in your
home, your savings, and any other holdings, then subtract
your debts. what's left is your net worth. Then he tells his
clients to track spending to measure cash flow. Finally,
they devise a budget together. He tells them to do this one
step at a time; "Okay, now that you have at least got a
handle on getting your financial house in order there are
some other things we can now do this year that will make a
substantial difference in your financial well-being."
SAVE A LITTLE MORE
Then a little more than that, and a little more than that,
etc. Financial Planner Lorie Snedeker of Grand Rapids,
Michigan says that his greatest concern is that were are not
saving nearly enough for our retirement. This is especially
critical as more and more of us rely on 401(k) and similar
savings plans. They don't guarantee a fixed benefit like
traditional retirement plans do-and that keeps many of us in
the dark about how much we will really need to live on and
enjoy life when we retire. "It's shocking how much you will
have to live on once you retire, compared with how much most
people THINK they will need to live on." Snedeker says. "the
stock market won't always be this strong, so I tell people
to lower their expectations so that they will think about
actually saving more."
Your mission, should you chose to accept this assignment, is
to save at least 10% of your gross salary. If that figure
scares you, begin by saving at least half that amount and
each year add one or two percent until you reach 10%.
Regardless of what you chose to do, now is the time to
begin. There is not "good or perfect time" to start
anything, so why not you and why not now? I'm sure you will
find that having once gotten started it will be easier to
stay the course. An organized and sound financial plan when
coupled with a properly designed retirement and estate plan,
all coordinated with the help of your financial planner and
estate planning attorney will give you an incredible sense
of well being and a peace of mind few people enjoy. |
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