Do I need a financial plan?
How much should I be spending/saving?
A good rule of thumb is to start with the 50-30-20 Rule, where 50% of your income goes towards necessities (your bills), 20% towards savings, and 30% on discretionary items (shopping, vacations, the salon, eating out, etc.). These percentages are guidelines. If you have a large amount of debt, for example, 50% may have to be higher – leaving less for discretionary spending.
What is my current cash flow?
Much like a business would assess profitability by evaluating cash coming in minus expenses being paid out, an individual’s monthly cash flow can be a surplus (Income > Expenses) or a deficit (Expenses > Income). Personal income minus monthly expenditures equals monthly cash flow. The use of credit cards to pay for expenses does not count as personal income. Signs of monthly cash flow deficit include charging more on a credit card per month than paying in monthly payments or needing to use credit cards or borrowing to cover expenses. Setting up and monitoring your monthly budget can help you achieve a monthly surplus of cash flow.
How do I set up a budget?
The following 5 step process can help you get started on a budget.
1) Download your last month of bank account activity and total up your actual spending by categories like food, insurance, utilities, debt payments, entertainment, gas, etc.
2) Using the same bank activity, add up your cash deposits.
3) On a piece of paper or spreadsheet add the deposit total at the top of the page, and subtract each of the categories underneath it. The total deposits minus your spending equals your monthly cash surplus (positive) or deficit (negative).
4) If your total is a surplus, create a category for this extra cash to be allocated to, like debt payoff or savings. If your total is a deficit, determine where spending can be cut to achieve a zero total.
5) Download a budget app on your phone or computer, plug your budget into it, and link your account to the budget to monitor and track your spending going forward. You can also create a manual tracking system by repeating step one throughout the month.
Should I pay down debt or increase my investments?
If you have extra money to apply towards debt or additional savings, we would compare the after-tax return on investments to the after-tax cost of debt, as well as give consideration to your tolerance of risk and capacity for investment losses. High minimum payment, high interest rate debt can prevent long term opportunities for building wealth, and can be prioritized within the overall financial goals and needs of an individual.
What is my net worth?
Knowing your personal net worth now can help you achieve your financial goals because you will be able to track the building of wealth. Net worth is the sum of all of your assets (house, car, jewelry, investments, bank accounts, retirement accounts etc.) minus the sum of your debts (mortgage, credit cards, personal loans). As the value of assets grow and earn a return and debts decrease, net worth increases.
What are liquid assets?
Liquid assets include cash or other assets that can be quickly converted into cash and can be sold quickly without impacting the value. Assets that are not considered liquid take longer to sell in order to obtain the amount that they are worth, like real estate, jewelry, cars and collectibles.
How does inflation affect my spending?
Inflation is the decline in the buying power of money and an increase in prices. For example, a dollar today will not be enough to buy the same amount of goods and services in 20 years. Because of the decrease in purchasing power over time, consideration of inflation impact on retirement standard of living can be incorporated into a budget, retirement spending and financial plans.
What is the difference between a 529 plan and an UTMA/UGMA?
While both account types benefit a child, there are big differences between them.
My credit score is lower than I expected, how can I improve my score?
One of the most important aspects of financial health is your credit score. Your credit score indicates to creditors the likelihood you will pay back debt. Having a low credit score can really impact how you plan for the future. Luckily, your credit score is ever changing and you have the ability to improve it over time. Here are some tips from credit experts from money.com on how you may be able to improve your credit score.
Should I Share My Finances With My Partner?
Merging Hearts, Merging Wallets
It’s romantic to move in together, at any age.
Less romantic is merging your finances, especially if you are more financially established.
A financial planner can help avoid bumps in the road when dealing with the delicate subject of how to move forward financially.
“Money never gets discussed until something bad happens,” said Mark Dutram, certified financial planner and wealth advisor with BayView Private Wealth in Destin, FL, and an Ambassador for StrongHer$.
Inspired by the challenges faced by his divorced mom raising 5 children, Dutram’s practice has a special focus on women.
Facing the subject of finances is almost unavoidable, as a study by Ramsey Solutions found that 2/3 of all marriages start off in debt.
Furthermore, the discussion can be a minefield, as money fights are the second leading cause of divorce, also according to the study.
How should new couples start merging their financial lives? And especially, how can women become more engaged in family financial management?
“It takes communication, planning, education and transparency,” said Dutram.
“Start with a neutral party – a financial advisor who is objective and can help with the tough stuff.”
What your advisor does:
· Sets the stage for financial harmony. “Sometimes an advisor is a referee. You’re helping couples unify their goals and philosophies with regards to money and helping them understand each other’s biases and predispositions to their views on money,” Dutram said. “You can shine a light on people’s behaviors around spending, saving and planning.”
· Integrates the myriad aspects of the couple’s financial picture as they join their households. The advisor will look, for example, at tax implications of student loans or titling of deeds, accounts, or estate documents. He or she will also help the couple navigate estate planning, taxes, asset protection, investments, retirement planning, ongoing budgeting and forecasting and more.
· Brings the parties together to collaboratively create a budget and a financial plan. The advisor guides them through what can be a tedious but necessary task – and keeps the peace between them.
“Many people know what they need to do to manage their finances, but say, ‘I don’t have the time, interest, or capacity, to handle this. I need somebody walking beside me as an advocate to help me avoid any landmines or blind spots.’ That’s where we come in,” Dutram said.
Ramsey Solutions, “Money, Marriage and Communication”, April 28, 2021
Student Loans - The 411
Back in March 2020 when the world practically shut down and everyone was frantically baking
loaves of banana bread and hoarding toilet paper, student loans were put into forbearance.
Maybe you took advantage of the 0% interest rate and decided to suspend your monthly payments to pay off higher interest rate debt – if so, here’s your pat on the back for making smart money moves amid a pandemic!
But now that September 30th is lurking around the corner, what’s your strategy for paying off your student loan debt once those payments kick back in?
Here Are 4 Steps You Can Implement to Get Ahead:
1. Make More Than the Minimum Payment
Readjust your budget to expense more than the minimum payment for each month
2. Take Advantage of Automatic Payments
Draft your payment every month automatically when you turn on the automatic payment
3. Calculate Your Pay-Off Date
Calculate your pay-off date so you can accelerate pay off as you see the goal line
4. Consider Consolidation
When you decrease your interest rate, you can utilize more of your monthly payment toward
paying off your actual student loans instead of the interest rate
Student Loan Debt can be overwhelming, but we want to help you navigate it!
Ready to connect with an advisor who can guide you to a financially fearless lifestyle? Visit our Meet Us page!