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by Galia
Gichon
Fuel
for your business
When we examine
our priority lists,
our finances tend to
be near the bottom.
Yet, when we examine
our “worry”
list, finances are
usually near the
top. There are three
main reasons why we
don’t make
finances a
priority:
- lack of
time,
- lack of
money,
- lack of
knowledge.
While all are
valid reasons,
making time for a
financial checkup
can help us sleep
better at night and
motivate us to meet
our financial goals.
Did you know that
so-called “high”
planners — those
that demonstrate a
greater willingness
to plan their
finances — have a
nearly 20% higher
net worth on average
than “low”
planners?
Consider this
tale of two savers:
“Jenny” and “Phil.”
Jenny saved $100
each month from age
25 until age 35, and
then stopped. Phil
started saving $100
each month from age
40 to age 65. Who
had more at age 65?
Jenny did — even
though she stopped
saving when she was
35!
Starting
down the path
How many of us have
wanted to start our
own business for
years, but are too
nervous about losing
a steady paycheck
from an employer or
have financial
constraints that
represent continuous
obstacles to living
our dreams? Your
dreams can happen.
And you can
make it happen in
the short-term by
taking a few key
steps:
- set up an
automatic
savings
account,
- refinance
loans at a
lower cost,
- plug the
leaks in
your monthly
spending (do
you really
need that
cappuccino
every
afternoon?),
- move your
money into a
higher-yielding
savings
(such as
money market
or
ultra-short
term bonds).
Design
a plan
When tackling
a major financial
challenge, such as
saving for your
retirement or
getting rid of
credit card debt,
finding the time to
design a plan can
offer tremendous
rewards. By doing
any of the following
you can begin to see
the light at the end
of the tunnel:
- learn the
monthly
amount to
save for
your
retirement
(check out
an online
calculator
at a
financial
website such
as www.money.com
or www.kiplinger.com),
- understand
each of your
individual
investments,
- examine your
monthly
spending
(including
annual
expenses
such as
vacation and
professional
services).
You could start
sleeping better at
night before you
know it!
Time,
money and knowledge
Still worried
about having enough
time? Don’t. Once
you design your own
personal financial
health plan, you won’t
need to monitor it
every week. Simply
schedule a checkup
every six months. As
for money, you can
start saving and
investing right away
— even if you have
no money saved. To
gain knowledge, if
you aren’t
motivating yourself,
take a course, hire
an advisor, or read
a book. Make it a
priority and get
started now! Check
out
Fuel
cells for tips
on how to
begin.
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Fuel
cells
Five
great reasons to
schedule a financial
checkup
Not sure
where to begin? Here
are a few tips and
action steps
designed to help you
get motivated.
Remember, even if
you just pick one
tip, you are on your
way.
- Saving and
investing an
additional
$100 per
month can
turn into
more than
$18,000 in
10 years. If
you can save
a bit more,
$300 per
month can
turn into
more than
$55,000, in
that same
period!
ACTION
STEP:
Set up an
automatic
savings
account at
your bank or
a money
market
account. You
won’t even
miss that
money!
- Tackling
that $5,000
credit card
debt can
save you
over $1,000.
ACTION
STEP:
Find a
permanent
low interest
rate credit
card on www.bankrate.com.
Transfer and
consolidate
all of your
credit card
debt to as
low an
interest
rate you can
get.
- Having a
diversified
portfolio
translates
into
positive
returns even
when the
S&P 500
performs at
–22% (as
it did in
2002). Do
you know
exactly what
investments
you own? If
so, how are
they
diversified
(also called
asset
allocation)?
ACTION
STEP: Look
up one of
your mutual
funds on www.morningstar.com.
Answer the
following
question,
how has this
fund
performed
relative to
similar
funds? If
the answer
is worse,
dig deeper
and question
if you
should keep
the fund.
- Doing a
little bit
of planning
can shave
hundreds off
your monthly
spending.
For example,
I have four
pregnant
friends and
took
advantage of
recent sales
by buying
all of their
baby gifts
in one
afternoon.
This saved
me over
$200, time
(sometimes
more
precious
than money),
and I didn’t
have that
last minute
panic of “What
am I going
to buy?”
that often
leads to
overpaying.
ACTION
STEP: If
you end up
spending
more than
you like
during the
holidays,
set aside
$50 per
month for
buying
gifts. This
little
action will
ease the
strain on
your wallet
when the
holidays
roll around.
- Choosing a
mutual fund
with a low
expense
ratio can
provide
almost
$15,000
extra in
returns over
20 years.
What are the
expense
ratios on
your mutual
funds?
ACTION
STEP: Look
up one of
your mutual
funds on www.morningstar.com.
If you are
paying more
than 1.50%,
realize that
you are
paying above
market
prices for
your mutual
funds.
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Fuel
for your soul
Consider
these words of
wisdom:
“Money is
the opposite of
the weather.
Nobody talks
about it, but
everybody does
something about
it.”
–
Rebecca Johnson,
in Vogue
“Never
spend your money
before you have
it.”
– Thomas
Jefferson
“I'd like
to live as a
poor man with
lots of money.”
– Pablo
Picasso
“This one
step —
choosing a goal
and sticking to
it — changes
everything.”
– Scott
Reed
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