Money & Retire

Top 10 Rules for Your Financial Success

It’s considered a “timeless classic.” You know the story, the kind your parents read to you at bedtime when you were a little girl. The plot is some version of this:

Through no fault of her own, a young maiden is mistreated and finds herself at the mercy of a wicked queen or other scoundrel. She faces horrible trials and tribulations until, low and behold, she is rescued at the eleventh hour by Prince Charming. From that moment on she lives happily ever after, ne’er to be in distress again.

Fairy tales have their place in sparking the imaginations of young girls, but they’re not real. When it comes to women living in the modern era with a sense of financial security, this folklore rendition of life can be misleading, even downright disastrous. Alas, many women abdicate their financial planning to almost any man in their lives — their husbands, fathers and, perhaps worst of all, their son’s college roommate who is just getting started in the investment business.

Let’s update the fairy tale to a modern-day classic in which women feel as vested in their financial life as they do in other parts of their lives, such as their careers and health. The truth is, nobody’s going to care about your money more than you do, and no one else is going to have to rely on it for the long term as you will.  Let’s get started with the rules to your reign:

    1. Don’t abdicate your financial health to anyone else.  Regardless of your marital status, fully participate in the financial decisions within your household. Be engaged in the decision making just as you would with your health decisions.  
    2. Set your goals.  What do you want? When do you want it?  How much will it cost? When will you retire?
    3. Learn the numbers – how much you have and how much you spend.  Get comfortable with budgeting and creating a simple cash flow statement. Determine how much it costs you to live by tracking expenses.  
    4. Match the amount of money you’ll need with when you’ll need it.  Make thoughtful choices about how you spend your money. 
    5. Spend less than you earn and save as much as you can. Living within your means is essential to your long-term financial security.
    6. Evaluate your insurance needs and options to protect your health and your stuff.  Insure against risks that would be catastrophic to your financial situation: life, health, disability, property and casualty (home and auto).
    7. Make sure your investments are appropriate for you.  There are many different financial products and every person’s situation is unique.  Make sure your investments meet your needs, goals and risk tolerance. Those are the primary factors against which you should measure performance.
    8. Maximize your retirement plan.  Participate in any company-sponsored retirement plans as soon as you are eligible and, at a minimum, defer enough of your salary to receive the maximum match the company makes on your behalf.
    9. Get your affairs in order.  Have a will, powers of attorney (legal and medical) and a medical directive.
    10.  Ask for help when you need it.  Ask your friends for referrals to financial advisors and meet with a few to determine whom you feel most comfortable working with. Understand how your financial advisor gets compensated and how it might or might not, affect her recommendations.  Enter into an engagement agreement with your advisor so you know what to expect from the relationship, including what your responsibilities are and what hers are.

You have the power to rule your financial future.  You can do this – either on your own or with some qualified help.  Making informed decisions about your short and long-term financial security is critical to preserving your independence and expanding your options in life.  Because today, happily ever after is not a fairy tale; it’s a choice and it’s never too late to start!

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