As a family-business advisor, whenever I meet with clients, we
invariably discuss their goals, objectives and yes, even their
dreams. In many cases, there are obstacles that can put a dent in
these plans. Changes occur constantly in life: marriage, the birth
of a child, a major purchase, divorce, retirement, illness and so
on. Isn`t it curious that we check our house, our cars and even our
bodies on an annual basis; however, when it comes to our personal
financial affairs, we tend to ignore them until there is a problem
or a major life event? Why do we do this? Well, that's a topic
for a separate article, but I can provide you with a checklist for
reducing your financial stress. (Think of me as your financial
psychologist as many of my clients do.)
For your consideration, below is a list of my top 10
recommendations to jump start the process to improved financial
health. Not only will your doctor be pleased with the results, but
so will you.
Set financial goals (not just for
first-timers): Both short- and long-term goals. Otherwise, it is
like steering a rudderless ship. Articulate your thoughts by
putting them on paper. Discuss them with your trusted advisor(s).
Set predefined times to review and revise your goals accordingly. I
review mine annually unless a major life event occurs in the
Determine net worth (total assets less
liabilities): What is your net worth today? Where you want it to be
in a year from now? Where do you want it to be over the next five
years? If you don't track it, you can't react to life
Budget: Do you know whether you are spending
more than you earn? For example, look at your debt load and see
which direction it is going. It is easy to have a false sense of
security, given low interest rates, but they will not remain low
forever. Develop a habit of tracking your cash flow. It is now much
easier with the software packages that are available today. The
payoff is enormous when you take the time to see if your money is
being put to the best use.
Minimize income taxes: Take the time to spend
with your accountant and ensure that the appropriate strategies are
implemented to minimize your taxes.
Managing debt: Review the makeup of your
overall debt load. Can you lower the interest rate you are paying?
Would consolidating your debt help in attaining a better rate? Is
there an opportunity to convert non-deductible interest to
deductible interest? Do you have a plan to repay your debt or to at
least bring it down to a manageable level?
Account for up-coming changes in your life:
There is no time like the present to adjust your financial plan to
take into account a significant change in your life. For instance,
retirement is becoming a significant factor as the baby boom
Check your insurance coverage: Evaluate
whether you have enough insurance - health, life, disability,
long-term care, homeowner`s and auto - to name a few.
Review your wills and powers of attorney
(POA): When was the last time you reviewed your wills and
POAs? If you have had a major change in your life, such as having a
child or going through a divorce, don`t ignore it just because you
don't like talking about it. Do you have a will and POAs? Are
you willing to take the risk that your assets will not go to those
loved ones? A properly drafted estate plan should give you comfort
and put you at ease; not the opposite.
Start your retirement planning: What I have
learned both personally and in dealing with clients is that the
earlier you start, the better off you will be financially.
What is your happiness factor? : This plan is
all about what you want to do with your finances. It comes back to
what your objectives, goals and dreams are. If you are not
satisfied with them, then it is time to re-evaluate them.
Remember this is an annual process. When you have completed your
current year`s checkup, set up an appointment for next year around
the same time, (unless circumstances change in the interim), so
that you stay the course. You will be much healthier, financially
About the Author
Alan Wainer is a partner in the Audit & Advisory practice at
Crowe Soberman LLP. He is also the facilitator in the firm's
Family Business Services Group, which is also known as SuRE. Alan
and his fellow partners in the group are frequent authors and
speakers on issues on Succession, Retirement and Estate
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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