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.

Serving as a Financial Caregiver

Good to Know

Women wear many hats.  The COVID pandemic was a stark reminder of how many of us serve as caregivers.  The type of care we provide has also expanded. As our population ages and our financial lives become increasingly complex, financial caregivers are more common. Defining and understanding what the role entails is essential. Have you been asked to serve as a financial caregiver? Are you considering asking someone to serve as a financial caregiver for you or a loved one? The Consumer Financial Protection Bureau (consumerfinance.gov) offers four free guides explaining what it means to serve as a trustee, power of attorney, guardian of property, and a government fiduciary (for Social Security and VA benefits.) A common trait of these types of financial caregivers is that they involve a fiduciary duty. These four guides explain fiduciary duty and offer helpful suggestions on how best to serve in these roles. Guides…

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Home Office Refresh

Essential Home Office

Over the past few years, our home offices have taken on greater importance. Having a functional, organized home office makes our professional lives and our financial lives easier to navigate. If your home office needs attention, it is time to get started. Financial Spring Cleaning Just like when you go through your closet or food pantry to determine what to keep, what to donate, and what to toss, you need to do the same with your financial life. Perhaps even more important than what you keep is what you can shred, recycle, or delete. Keeping unnecessary documents and statements makes it harder to locate vital personal finance information in a hurry. Most of us waste a lot of time trying to find things on our computer and amidst our papers. Getting rid of unnecessary documents frees up precious space in your file cabinet and in your filing system on your hard…

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The Power of Compounding

Educate Yourself

I have heard people refer to it as “The magic of compounding.” Personally, I don’t like the term “magic.” Magic implies something mystical, beyond our comprehension. Rather than “magic,” compounding is just math – incredibly powerful math – but it is just math. Compounding means that there is growth on the growth. For example, an investment of $100 that appreciates 7 percent will be worth $107 at the end of the first year. If the investment grows 7% percent again in the second year, the return would be 7 percent on $107 or $7.49. 7% growth on $100.00 = $107.00 7% growth on $107.00 = $114.49 In year two, the dollar amount increase exceeds that in year one. You have a 7% return on the original $100 and a 7% return on the $7 you earned in year one. Each year, you earn a return on the original amount ($100) and…

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Cash Flow Drives Net Worth

Analyze Finances

Establishing sound personal finance practices while you are young is essential, and thinking about cash flow and net worth is a part of that. For those who are new to personal financial management, you need to think of the long run. Discipline and having the right mindset will help you stay out of debt and achieve your financial goals. Cash Flow Cash flow depends not only on your income but also on changes in your savings and debts. If, at the end of the year, you have not saved, and your credit card balance has grown, there is only one explanation – you consumed more than you earned. If you were able to save money or your debts have declined, you consumed less than you earned. Net Savings In terms of your take-home pay, you either spend it, consume it, or save it. The difference between income and spending or…

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Emergency Reserve and Liquidity

Save and Invest

Experts recommend that you have an emergency fund sufficient to cover three-to-six months of living expenses. Your emergency fund should be a safe, stable reserve such as a savings account or money market fund. If you are new to the workforce, it may take time to build up an adequate reserve. The easiest way is to transfer a portion of your paycheck every pay period directly into an 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 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 and bonds are usually liquid. During periods of financial turmoil, however, you may not want to convert these assets to…

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Simplify Your Bills and Your Life

Get Organized

According to a study by Mercator Advisory Group, more consumers pay bills online than by mail or in person. The pandemic and subsequent rise in remote work and relocation helped to accelerate this trend. When it comes to paying bills online, you have choices. You can (1) use your bank’s bill payment portal; (2) go to each biller’s website and make a payment; or (3) sign up for a non-bank bill pay service. You can arrange automatic payments directly from your checking account for recurring bills such as rent, mortgage payments, and utilities. You can use your credit or debit card for smaller recurring payments like subscriptions. Paying bills online has numerous benefits. The two most important benefits are convenience and simplification. Your records will be digital and easier to maintain and organize. Each person’s financial situation is unique, as is their comfort level with technology. For most bills, using…

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Investment Truths

Save and Invest

Managing your financial life is not a “set it and forget it” exercise. You must take a comprehensive view and stay engaged. As you work through the process and become more conversant with concepts, many 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…

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Understanding Financial Credentials

Educate Yourself

Financial professionals may possess a variety of certifications and designations. These credentials instill a sense of competency. In recent years, however, the number of financial credentials has expanded significantly. If you choose to work with a financial professional, you should understand what these credentials mean. The prestige of certifications and designations and their usefulness to clients varies considerably. The Financial Industry Regulatory Authority, or FINRA, has a designation lookup feature on its website, https://www.finra.org/investors/professional-designations. The tool is beneficial, especially because you can compare different designations. FINRA does not endorse or recommend any of these designations. The list of designations on the FINRA website is extensive. Currently, there are more than 200 listed. How do you determine which are the most meaningful? Look up what is required to achieve and maintain the various designations. If you need help with retirement planning, what are the prerequisites for becoming a Certified Retirement Financial…

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Your Creditworthiness

Analyze Finances

Building good credit is essential. You can pay for large expenditures over time using student loans, mortgages, car loans, and leases, but how you handle these and other debts significantly impacts your net worth. Also, how you manage these debts, plus credit cards and cellular and utility bills, profoundly affect your credit score. Credit scores range from 300 to 850. In general, scores above 700 are good, and scores above 800 are excellent. Not only does your credit score determine your interest rate, but it also determines whether or not you will be able to get credit if you need to borrow. Remember that each lender has different requirements for a minimum credit score that they will approve for potential borrowers. Depending on the lender and the type of loan you are requesting, being in the “Good” range may not be “good enough.” The first step in evaluating your creditworthiness…

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Volatility

Good to Know

The Chicago Board Options Exchange, or CBOE, created the VIX® to measure expected volatility for the US stock market. It is calculated on a real-time basis based on the prices of put and call options for the S&P 500® index over a rolling 30-day period. The VIX® is the global standard for measuring volatility. It is also called the Fear Index because it spikes when markets are turbulent.

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