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.

Prudent Use of Technology

Analyze Finances

Technology is an essential part of how we transact and manage our financial lives.  We are more informed and have real-time access to our personal finances. Along with convenience, however, comes new risks. 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. But the innovations have also introduced new risks and exposures. With time, your financial accounts will grow, as 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:…

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Email Hacks: What to Do

Essential Home Office

Numerous schemes have emerged to take advantage of people’s vulnerability due to COVID-19. Examples include phishing emails referring to urgent pandemic updates, robocalls from the Department of Public Health, texts related to unemployment claims, phony DocuSign requests, and, of course, email hacks. Most experts anticipate that the incidence of fraud will continue to escalate. For the past six years, I have written and spoken extensively about getting one’s financial house in order. Passwords, security, and identity theft protection are all topics that I address. I am well versed in the subject, but despite this I discovered that my personal email was hacked. Data breaches are unfortunately common – we have all seen the headlines. As surprised as I was that this happened, I was equally surprised at how little help I received from my provider to address the issue. While I took some steps right away, there were also others…

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Prioritize Your Goals

Save and Invest

Many recent graduates are moving into the work force. Life transitions often involve a lot of decisions – housing? car? benefits? budget? This is also a good time to consider your financial goals. Different goals have different time horizons. Some are short term—such as establishing an emergency fund—and some are long term, like retirement. Tackling all your savings goals at once is unrealistic, so you should prioritize. The most immediate savings goal is your emergency fund. Experts recommend that you have an emergency fund sufficient to cover six months living expenses. Assets in the emergency fund should be very liquid such as cash in a savings account or in a 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. You may…

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When In Doubt, Throw It Out Or Maybe Not?

Essential Home Office

We all feel better after we clean out our closet or our pantry. The same is true for your financial life. Most people save far more financial information than necessary. An essential part of clearing out your home office is figuring out what you should keep and what you should not. Here are some general guidelines that I follow to get organized: What to Keep Keep tax returns and all supporting documents for seven years from the date that you file your taxes, not seven years from December 31st for a particular tax year. Keep all bank statements and credit card annual statements and summaries for the same seven-year window. Keep receipts for any major purchases and all insured things as long as you have the item. Keep student loan, car loan, and mortgage documents (including payoff notices) and documentation for any other loans indefinitely. If you own your home…

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Why Investment Fees Matter

Educate Yourself

Understanding how much you are paying for investments and investment advice is essential. Fees reduce your return. Over time, high fees can hinder the growth of your assets. In the investment arena, fees are usually charged as a percentage of assets quoted in terms of basis points. A basis point is one one-hundredth of 1 percent, or 0.01 percent. In other words, 100 basis points equals 1.0 percent, and 50 basis points equals one-half of 1 percent, or 0.50 percent. There are many kinds of fees. Some fees are transaction-based: these compensate brokers for putting clients in an investment or for executing a trade. With a commission, the brokerage firm charges a fee for each transaction. In contrast to brokers, who charge commissions, fee-based advisers charge an annual fee based on a percentage of assets under management. The adviser is paid to manage your money and not to execute trades. If the…

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Creating an ICE – In Case of Emergency – File & Plan

Essential Home Office

An In Case of Emergency, or ICE, File and Plan includes vital contact, financial, and legal information. These tools are invaluable during a crisis—just like a roadmap of your financial life. This is especially true when someone must act on your behalf. Pulling together your ICE File and ICE Plan takes some effort. As with all emergency preparation, this groundwork is most effective if it is in place before an emergency happens. Moreover, you need to discuss the File and Plan with your key person(s) – executor, power of attorney, or someone you trust implicitly to help handle your financial affairs. These safeguards are not useful unless someone knows that they exist and how to access them. You may think that your financial profile is simple. Walking through this exercise ensures that your bases are covered. Moreover, with time, your life—and your financial life—will evolve and become more complex. Life…

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Spending: Essential or Non-Essential?

Analyze Finances

Finding ways to save more starts with finding ways to spend less. Analyzing where your money goes every month is a great place to start. Take a close look at your non-essential expenses or “wants.” These are often tied to lifestyle choices. Reducing non-essential outlays will free up cash you can use to pay down debt, shore up emergency fund reserves, and save for retirement. Articulating a plan and exercising discipline increases the likelihood that you will attain your goals. Analyze Your Spending There are a vast number of personal finance websites and apps. Linking your transaction activity to one of the tools helps track your spending on a real-time basis – overall spending levels, spending by category, etc. There are also data security considerations. If you choose a website or app, select a leading one with excellent security. Whereas I am in favor of budgeting tools to analyze spending,…

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Guidelines for Financial Spring Cleaning

Essential Home Office

As many of us work from home, we are rethinking how we use space. Moreover, we are evaluating what we need and what we do not. 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 important 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 drawer and on your hard drive. Check out the link below for suggestions about what to keep and for how long. Everyone’s financial situation is unique, so it is…

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Understanding Tax Efficiency

Educate Yourself

As an investor, you need to consider the impact of taxes. The taxes owed on investments depend on the type of investment account. For tax-deferred accounts, such as 401(k)s and 403(b)s, you contribute money from your paycheck before it is taxed, known as “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, you do not pay taxes on the income or capital gains generated each year. Instead, you pay taxes when you withdraw money from the account. Roth IRAs and college savings plans, such as 529s, are examples of a tax-advantaged account. You fund these kinds of accounts with after-tax dollars, and you do not get a tax break upfront. After you fund a Roth IRA or 529, the income, appreciation, and withdrawals are tax-free. For taxable accounts, income and capital gains are not tax-exempt or tax-deferred, so you…

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Organize Your Tax Files – You Will Be Glad That You Did

Essential Home Office

Preparing your taxes is not a fun task. It can be significantly less unpleasant if you are organized. Your taxes involve a lot of documents, and you must keep good records. In addition to your W-2 (or 1099-Misc forms, if you are a contractor), you will need supporting documentation related to your savings and investment accounts. A 1099 is a statement that details the dividends, interest, and capital gains earned during the year. Some investments are structured as partnerships and provide a year-end, or annual, K-1 instead of a 1099. A K-1 shows an investor’s share of partnership income for a given year. Transactions that you need to document at tax time occur throughout the year. Therefore, I strongly recommend that you keep a Current Year Taxes folder. As you receive tax-related documents in the mail or from a financial firm’s portal, store them in this paper folder or a…

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