Get Your Financial Life in Order
As a new year begins, we typically have the best intentions -- to lose weight, get fit, and get organized. We even make a stab at it the first week of January. But soon, we throw up our hands in a fit of despair over how large the project seems to be, give it up and resort to our familiar sloppy ways.
This year, though, ditch the despair. Resolve to make progress by setting small, achievable objectives. Eat whole grain cereal with berries, and dump the doughnuts. Skip a little tv, and start walking a few minutes a day. Visit the Y and learn to use one piece of equipment. Take stock of your financial fitness, then map out a plan to improve your position.
How to take stock? Start with a book or two.
New York Times columnist Jane Bryant Quinn has written the bible of personal finance, “Making the Most of Your Money Now”, especially helpful to those with little experience managing money. This comprehensive guide may look like heavy going but it is clearly written and easy to understand with separate sections on mortgages, insurance, saving for retirement, investing, estate planning, and wills. Consumers Union calls this the best personal finance book on the market.
In “The 1-2-3- Money Plan: the three most important steps to saving and spending smart”, Gregory Karp offers simple instructions on how to assess your personal financial situation and then provides motivating advice on how to spend less and save more. He also advises about improving credit, defending against identity theft, and selecting appropriate savings and investment vehicles.
What Kids Need to Know
These days, children need to know more about money than their parents did at the same age, and it is up to their parents to teach them. With these helps, it is much less daunting a task to explain money concepts to kids.
In “Raising Money Smart Kids: what they need to know about money and how to tell them”, Janet Bodnar uses real-life examples from her Kiplinger Personal Finance "Money Smart Kids" column to create cures for the grocery-cart "gimmies," plus guidance on how to set up a simple allowance system that works, help kids learn the virtues of working for pay, and how to turn kids onto saving and investing.
Neale S. Godfrey’s “Money Still Doesn’t Grow on Trees” discusses how to help your teen choose his first car, the right bank, a safe credit card, a clothing budget, or a summer job, helps determine how much your child should work during high school and college, explains where, when, and how to leave a proper tip, find bargains, dress properly for an interview, and includes quizzes and worksheets for you and your teen to plan a stable financial future.
Managing On Your Own
Once you have completed school, have joined the work force, and are no longer dependent on your parents, you need advice targeted to this new life stage.
“The Wall Street Journal Guide to Starting Your Financial Life” by Karen Blumenthal offers practical advice about tackling everyday issues like cell-phone plans and pet ownership, how to establish good credit, whether to buy or rent, what kinds of health coverage you need, how to approach big decisions such as investing, buying a car or house, managing an inheritance.
Another helpful title is Beth Kobliner’s “Get A Financial Life: personal finance in your twenties and thirties”.
Preparing for Retirement
Regardless of your age or stage in life, you should be planning to finance retirement, whether it is 5 or 35 years in the offing, and the sooner you start, the better.
“The AARP Retirement Survival Guide: how to make smart financial decisions in good times and bad” by Julie Jason presents information you can put to good use now, especially on health care and finances. Jason reviews the state of retirement 2009 with full consideration of the current economy. She examines the basics (such as the infamous What's your number? discussion), outlines how to approach retirement income products as well as the stock market, and approaches to taxes and to potential advisors. She analyzes CDs, reverse mortgages, annuities, and guaranteed minimum benefits (in the forms of withdrawal and income benefits), tax-deferred accounts, and warns about sales scams to avoid.
Investment adviser Charles Farrell simplifies retirement savings in “Your Money Ratios: 8 simple tools for financial security”. He developed a series of simple formulas for core areas of personal finance (savings, debt, investments, and insurance) to help readers understand what they need to be saving based on age and household income, while reducing the irrational emotion often involved. Formulas reveal how much to save each year (12% of salary under age 45, 15% thereafter), how much to contribute to 401(k)s and IRAs, when to invest in real estate, how much education debt to carry, how to balance debt, how to calculate investment power and how to find a financial adviser for those situations that require extra help. This is a good book for those starting out, to learn the variety and magnitude of expenses one will confront along life's journey. Obviously, the further along life's earnings path one is, the less the chance one will have to seamlessly adjust to achieve the recommended ratios and amounts.
Everyone should consult Melanie Cullen’s “Get It Together: Organize Your Records So Your Family Won’t Have To”. We don’t like to think of the inevitable time when we can’t continue to manage our affairs, but we should plan for it in consideration of the emotional and intellectual burden we don’t want to inflict on those who follow us. Cullen provides a thorough list of all the information we should collect, and includes forms that can be copied and completed for recording details of bank accounts, property, insurance, taxes, business affairs, last letter and more. This is so eminently practical that it would be very appropriate to own your personal copy or give a family member.
Let this be the year you get financially fit.
Handy tip: Get bored walking? Listen to a book using portable audio (Playaways or downloadable to your Ipod or mp3 player) and get caught up in a good story that carries you along to your goal. For a list of titles available, visit us at www.tcplweb.org or call 988-2541. Have a happy, fit 2010!