Manage Your Financial Life

Nancy Doyle

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Nancy Doyle, CFA, is an author, speaker, and advocate for financial literacy. She has thirty years of experience in wealth management, investments, corporate finance, and consulting. She is a graduate of Georgetown University and received an MBA from University of Michigan’s Ross School of Business.

Managing Your Passwords

Essential Home Office

Whether appearing in your mailbox or your browser, financial information inundates us daily, adding to the papers and information (virtual or real) you already have. Some of it is important; some of it is not. Not only should you strive to reduce the amount of paper and computer files that you retain, but you need a system for organizing everything that you decide to keep. Not only are we inundated with information, our lives require more passwords than ever. Time to confess: I have far too many passwords (financial accounts, online shopping, subscriptions, kids’ schools, activities . . . the list goes on). I have wasted a lot of time trying to find or remember them all, and I worry about online security. Your passwords need to be secure, whether you write them on a piece of paper (keep the list hidden far from your computer) or you use a…

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Understanding Basic Investing Concepts

Educate Yourself

These fundamental concepts will provide a foundation for understanding investments, markets, and investment strategies. Supply and Demand The value of an item depends not on what you paid for it, but on what someone else would be willing to pay for it today. What someone is willing to pay is related to supply and demand. For example, if there is a fixed supply of something, and the demand for it increases, then the price will increase. If demand for something remains constant, and there is an increase in supply, the price will decrease. Yield, Total Return, and Compounding For any asset, yield is the income earned (interest or dividends) divided by the price of the asset, such as a bond or a share of stock. Price and yield move in opposite directions. If a $100 bond earns 5 percent interest, it earns $5 on a $100 asset, or $5 divided…

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Creating an ICE Plan

Essential Home Office

With an In Case of Emergency or ICE plan, you assemble key contact and financial account information in one place. An ICE plan guides someone who must act on your behalf—it is like a roadmap of your financial life. If you use a web-based personal financial management service, you have a great head start. To create an ICE plan, prepare a list of: Bank accounts, credit card accounts, retirement accounts, brokerage accounts, and any other investments The name and phone number for anyone who helps you manage your financial life—banker, insurance agent, accountant, investment adviser Details about your lease or your mortgage—the name of your property management company or mortgage company Bills that are on automatic pay, with passwords to access the accounts or the master password if you use a password management service For someone just starting out, your retirement account is likely your most valuable asset. As you…

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Beware of Fraud

Analyze Finances

Advances in technology and mobile communication have changed the way we manage our finances. These innovations save time and allow us to be more informed consumers. However, the innovations have also introduced new risks and exposures. With time, your financial accounts will grow, and so will the potential losses from identity theft and fraud. Review your credit report regularly. You can download your free report and search for errors or indications of fraud at www.annualcreditreport.com. If you will not be in the market for a new loan soon, it is possible to freeze or lock your credit profile to reduce the chance of identity theft. In that case, you need to contact each of the three credit bureaus: Equifax, Experian, and TransUnion. Here is a link to learn more. https://www.consumer.ftc.gov/articles/0497-credit-freeze-faqs If you receive a suspicious email, text, or voicemail that appears to come from your credit card company, do not…

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Understanding Taxes and Tax Efficiency

Educate Yourself

For tax-deferred accounts, such as 401(k)s and 403(b)s, you contribute money from your paycheck before it is taxed, or with “pre-tax dollars.” In other words, you do not pay taxes on the portion of your salary that goes directly into your 401(k) or 403(b). Moreover, each year, you do not pay taxes on the income or capital gains earned. You pay taxes when you withdraw money from the account in retirement at the ordinary income rate. Ordinary income is the tax rate that you pay on your salary, interest, and other sources of income. Roth IRAs are tax-advantaged accounts. You fund Roth IRAs with after-tax dollars, so you do not get a tax break upfront. After you fund a Roth IRA, however, the income, appreciation, and withdrawals are all tax-free. The long-term tax advantages of Roth IRAs are powerful. For taxable accounts, you can access the money whenever you like.  You have complete flexibility.  At the…

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Your Unique Financial Goals

Save and Invest

What Are Your Savings Goals? Today is the perfect time to reconsider your financial goals. If you have a partner, make this discussion a priority. It is the only way to determine if you are on the same page when planning for the future. To assess your financial needs, ask yourself the following questions: Are there any impending near-term changes in your life? Do you need dividends or interest to support your present lifestyle? When do you plan to retire? What about other long-term plans, such as having children, changing jobs, traveling, or starting a business? Do you want to help your children with college expenses? Do you want to support specific charities? Are there unique factors to consider, such as health issues? Do other people rely on you for financial support? Do you have children or other family members with special needs? Are you interested in and willing to…

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Financial Truths To Keep In Mind

Good to Know

Managing your financial life is not a “set it and forget it” exercise. You must educate yourself and stay engaged. As you become more conversant with concepts, many simple financial truths are worth remembering: The importance of time: Compounding is powerful. The importance of risk and return: There are many types of risk. The importance of discipline and conviction: Stay true to your plan. The importance of patience: Study your investment decisions and don’t rush. The importance of value: Value is not what you paid for something. It is what someone else is willing to pay for it. The importance of supply and demand: Both have an impact on value. The importance of expectations: They also drive value. The importance of liquidity: How easily something can be converted to cash is key. The importance of total return: Look at both appreciation and income. The importance of taxes: Timing and keeping…

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Analyze Your Spending Before You Budget

Analyze Finances

Budgeting is not a “one size fits all” exercise. A budget only works if it is realistic.  You must start by analyzing how you are currently spending money. Doing so increases the chances of your success. Analyzing your monthly outlays by type and category is a great place to start. Look at each of your monthly expenses as a percentage of your take-home pay. Assign each expense or outlay to one of three categories: Essentials: things such as rent, transportation, groceries, utilities, insurance, and the like Savings and debts: establishing an emergency fund, saving for retirement, and paying off debts Everything else: travel, entertainment, shopping, gifts Totaling each category – essentials, savings and debts, and everything else – is an excellent diagnostic tool. It shows how you are spending your money and where you can make changes to improve your situation. Take a close look at your nonessential expenses. These…

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Saving for a Rainy Day

Educate Yourself

When it comes to our financial lives, we should remember to “save for a rainy day.” Financial planners suggest that we have an emergency reserve equal to three-to-six months of our essential living expenses. It should be in a safe, stable vehicle such as a savings account or a money market fund. If you don’t have a sufficient reserve, make it a top priority. The easiest way to address the shortfall is to transfer a portion of your paycheck every pay period directly into a savings account. If you dip into your emergency fund, replenish it as soon as possible. In addition to an emergency reserve, you need to think about your overall liquidity. Liquidity is a term from economics that indicates how easily an asset can be converted to cash. Some asset classes are more liquid than others. Cash and money market funds are the most liquid assets. Stocks…

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Make Your Retirement a Priority

Save and Invest

Women often put others’ needs—our parents, partners, or children—before our own. We all have heard the advice that we cannot help others without taking care of our individual needs first, which is also true for our finances. Women take on many roles throughout their lives – daughters, wives, mothers, and, increasingly, businesswomen. The Small Business Administration reports that 50% of all US small businesses are home-based, equating to approximately 15 million. The Census Bureau estimates that women run nearly three-quarters of home-based businesses. Running your own business offers independence and flexibility. These appealing attributes are sometimes the primary reason why women start businesses, especially those who are mothers. At the same time, women business owners need to be even more diligent and disciplined about planning for retirement. Saving enough for retirement is the biggest concern for many of us. For some people, retirement is a long way off. For others,…

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