It’s Your Money
Years ago, Suze Orman’s books helped me understand my debt and get out of it. Dave Ramsey’s books helped me fine-tune my budgeting skills. Quicken and Mint.com also have user-friendly budgeting tools and solutions for tracking spending.
Even if you paint your retirement in broad strokes, it gets you thinking, and planning, for the future.More recently, I took it to the next level and met with a financial advisor to create short-and long-term financial plans. Financial planners ask questions like: what does your retirement look like? It might be a conversation you haven’t had with your spouse. Trust me: it’s a conversation worth having. Even if you paint your retirement in broad strokes, it gets you thinking, and planning, for the future. My wife and I disagree about where exactly we will live when we retire, but we know we want to be in a large city for at least six months of the year, and in a suburban or country setting for the other six months. A financial planner maps out a plan, holds you accountable, and makes sure you stay focused so that dreams like this become reality.
Visit www.cfp.net to find a licensed financial planner in your area. You want an independent financial planner, not one who hawks products. Also take a look at www.finra.org under the “Broker Check” tab to see a history of your financial planner’s qualifications, employment, and if they have a checkered past. Consider adding the items below to your portfolio:
- Life insurance: Many employers offer free or inexpensive life insurance that is one to two times your salary. Make sure you have enough coverage to pay off your mortgage, cover any debts, property tax, six-12 months of living expenses, education, and retirement contributions. Your spouse also needs a life insurance policy – even if, or especially if – she is the primary caregiver of your children.
- Short and long-term disability: Most employers offer some version of disability insurance. Take the most that they offer and make sure your beneficiaries are designated properly. Don’t worry about buying supplemental disability insurance. It’s too expensive to get the best coverage and the cheap coverage won’t do anything for you if you become disabled.
- Retirement plan: If your company matches your 401k, max out your contribution. If they don’t, max it out anyway. If you are self-employed or your company doesn’t offer a 401k, look into an IRA.
- Stocks and bonds: If you are not confident enough to navigate a trading website, hire a professional.
- College savings plans: You need one for each child. Each state has different rules so do your homework. Do not choose a prepaid tuition plan – the future tuition prices are over-inflated.
- Endowments, charities: What legacy do you want to leave behind? Consider your alma mater, your local museum, city library, or any place of inspiration. Resist the urge to include your local watering hole on this list. Unless of course they promise to construct a life-size statue of you.