05 Jul Getting Your Financial House in Order
We live in one of the most wonderful yet challenging times on this planet. There are so many things pulling on our attention, from career and family responsibilities, to household needs and improvements, to paying bills, and technology changes. Add to the mix a sick, aging parent or spouse, and you’re completely overwhelmed. It seems like society is traveling at lightning speed, and if you’re like me, it can feel hard to keep up. Thanks to the Internet, there is more information at our fingertips than we even know what to do with, but this can make it tricky when you’re figuring out how to get your financial house in order.
Some women may consider themselves the chief financial officer in their home. Females often like to be apart of the financial decisions for the home and managing the budget. Many times, women are just more in tune with what the family has, what the family needs, and what the family will need in the future. And if you’re a single mom, then it’s all on you, right?
Usually, women not only work full or part time, but also they make many of the decisions about weekly shopping, clothing for the kids, arranging for school lunches, and paying the bills. Let’s face it—women are usually the coupon cutters and sale shoppers, right? They are the detail-knowers; they know the details of the calendar, the weekly menu, and the financial status of the home. Furthermore, statistics also indicate that more and more women own businesses and manage business income too.
However, women, specifically, seem to wear many hats each day, and it’s easy to let the urgent override the important. Yet you know that you need to get your financial house in order because your future and your family’s future depends on it. But where do you start? Read on, friend!
- Get your spouse on board.
If you are married, you will want to get your spouse involved. It’s important that you agree on your goals because money is one of the most common things that married couples argue about. And remember that negotiation is not a four-letter word (wink wink); you may need to give a little to get a little.
Remember that you and your husband are on the same team, so cooperating to get your financial house in order will help you achieve it that much faster.
If you’re not married, you still want to be very clear about your financial goals so that you can develop a plan to make it happen.
- Determine your cash strategy.
A couple of months ago, I offered to give a ride to one of the boys on my son’s soccer team. The boy’s grandmother was having a hard time finding my house, so she called me. She was explaining where she was (using nearby street signs), but I couldn’t figure out where she was to tell her which direction to go to get to my house.
That’s exactly what happens when you don’t have a budget. You don’t know where you are, so you can’t get to where you want to go.
So, if you don’t have a budget, get a budget sheet from your financial advisor. Heck, there are free ones online, too, so there’s no excuse for not having a budget. Do your best to figure out your income and expenses so you know what you have to work with. And remember, your budget may change from month to month (especially if you’re an hourly worker instead of salaried), so you may need a different budget for each month.
After you’ve created your budget, you’ll want to establish an emergency fund. Aim for $1000 cash to help you get out of an unexpected jam like a car repair or hospital or doctor bill. Use this money only for true emergencies, and then replace the money you used as soon as possible to get it back up to that $1000.
Finally, you’ll want to work toward eliminating debt. Get a debt snowball going, and attack the smallest debt first, then the next smallest, and so on. Consider getting an extra part-time job and putting everything you make toward reducing debt. And determine not to go into more debt! After your debt is resolved, work toward creating a 12-month liquid net worth fund. This reserve is helpful if you get hurt and can’t work for an extended period of time.
- Protect your family.
You’ll want to review your life insurance policy to ensure it’s adequate. It’s not unusual for life insurance needs to change over time as you climb the career ladder and make more money.
You will also want to consult with a trusted financial advisor about disability insurance, group benefits, and long-term care. If you don’t understand what these mean, no worries. It’s your advisor’s job to help you get your financial house in order and navigate all the ways that you can responsibly protect your family now and in the future.
- Consider estate and tax management.
It’s never too early to begin planning for the end. And there’s no greater gift you can give your loved ones than a clear, well-planned end-of-life plan. You’ll want to either create a will and/or trust or have your current one updated. Your financial advisor can help you with probate avoidance too.
And with a good advisor, you won’t have to worry about taxable, tax-deferred and tax-free questions concerning your estate; he or she can give you clear advice every step of the way.
- Manage your assets.
It’s never too early to plan for your retirement. If you work and your company doesn’t offer retirement benefits, what’s your plan? You don’t know? Then get with your financial advisor ASAP. Think you can’t afford it? Think again. By planning how you’ll take care of yourself after retirement, you’re ensuring that your kids don’t have to take care of you (and I can guarantee that they’ll be grateful for that!).
Are investments part of your portfolio? Then be sure to monitor your dividends and interest, and you’ll want to consider Growth Investments versus Conservative Investments. Again, this is where your financial advisor’s knowledge and experience come in very handy.
Be honest.
Finally, be honest with yourself. If you don’t get your financial house in order, who will? Pull up your big-girl panties and just do it! You’ll feel much more financially secure and confident about your and your family’s future. Determine which number you’re at above (1-5), and start the ball rolling. With so many things in this world competing for your energy and attention, isn’t it nice that you can mark this one off the list?
This newsletter was prepared by a third party company to be used on the Russell & Company and Simple Money Tips for Women websites.
