Manage Your Financial Life

Becoming a Couple

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Not only do couples need to be on the same page with respect to finances, but also behavioral finance studies have shown that people tend to make better decisions after discussing ideas with their partner. Explore the blog articles below for helpful advice during this stage of life.

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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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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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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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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Needs and Wants

Analyze Finances

To develop a realistic budget, you must start by analyzing how you are currently spending money. If budgets are unrealistic or unattainable, they will not work. 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 are often tied to lifestyle choices and are easier to…

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Tackling Your Credit Card Debts

Analyze Finances

There are different approaches to tackling your credit card debts. The best approach for you depends on your individual situation. Start by listing the outstanding balance for each debt, along with the minimum payment due and available credit line. For each outstanding debt, you must pay the minimum balance due every month. To achieve your goal of digging out of debt, you must find additional cash every month – by cutting back on day-to-day expenses or finding ways to earn extra income – and apply that cash toward your debts. The main difference between these approaches is the order in which you tackle your various debts. Start with the Smallest Debt Balance Some recommend that you focus first on the smallest outstanding balance (Debt A). After paying the minimum balance due on each of your debts, apply any extra money to Debt A until it’s paid off. Once that debt…

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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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Evaluating Risk: How to Underwrite Yourself

Analyze Finances

Underwriting is what banks or insurance companies do when they evaluate risks associated with lending money or providing an insurance policy. To underwrite yourself, you need to take a close and honest look at your finances, ask yourself some questions, consider uncertainties and exposures, and evaluate your risk profile on many fronts. Analyze Your Sources of Income The first consideration is your income. Ask yourself these questions: Is your salary steady or variable? Do you rely on commissions or bonuses? Do you work in a cyclical industry? If your compensation is variable, you should not carry a lot of debt. Likewise, you should make sure to have an ample cash reserve. Evaluate Your Debt When you are thinking of buying a big item, consider if you can actually afford the item, not just whether or not you can afford the payment. Commit to paying off your credit card balances every…

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Too Many 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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Strategies to Stay Out of Debt

Analyze Finances

Establishing sound personal finance practices while you are young is essential. For those just starting out who are new to money management, you need to consider your financial future. Discipline and having the right mindset will help you stay out of debt and achieve your financial goals. Track and Analyze Your Spending The first step is to analyze your spending to see where your money is going. Limit yourself to one or two credit cards, using one for most day-to-day purchases. This makes it easier to track spending and your total credit card balances. Having multiple credit card accounts is a major reason that card debts grow. As credit card balances climb, it also hurts your credit score. Even if you can pay off your balance every month, using more than 30% of your credit line has a negative impact on your credit score. Peer-to-peer (P2P) networks offer convenience and…

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