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Financial Education

HOME INSURANCE: A PRIMER

January 13, 2022 / All Blogs, Financial Education, Insurance

A properly set up home insurance policy can be the peace of mind.

 

Home insurance is designed to help you financially if something goes wrong with your home. It’s one of the most important insurance coverages you can have because it protects the very place that protects you.

Home insurance is a contract. Your policy lays out what it covers and what it doesn’t cover. It also includes your rights and responsibilities and those of your home insurance company. So how do you know if you have the right type of home insurance policy? How can you help ensure your home insurance will cover what you need it to cover? Read on to learn some basics.

What does a home insurance policy cover?
Basically, home insurance pays to repair or replace your home or property if it’s damaged in a covered loss, such as theft or fire. A proper home insurance policy also should offer liability protection if someone is injured on your property and then sues you.

Do you have to purchase homeowner’s insurance?
Homeowner’s insurance may be required if you have a mortgage. Your bank will want to make sure the asset is protected, so they’ll likely require you to purchase a homeowner’s policy. They’ll also want to see proof of coverage – sometimes called a binder or an Evidence of Insurance certificate. Such a document will list the insurance limit, deductible, and declare the bank as the mortgage holder.

How much insurance do you need on your home?
The limit for your home policy is based on the cost to replace your home – not the value of the home – and on several other factors. Considerations for replacement cost include:

Construction:  The replacement cost of your home will depend greatly on the construction. Is it a wood frame? Masonry? Concrete block? What is the square footage? How about roof construction? All these construction features will help determine the replacement cost of your home.

Personal property:  The policy limit for your personal property typically defaults to a percentage of the amount for which your home is covered. For example, if your home is insured for $100,000 and the percentage is 50%, the default personal property limit would be $50,000.

Bonus tip:  Highly valuable personal property is excluded from typical homeowner policies. Special property such as antiques, fine art, or jewelry may be covered only up to a certain sublimit. If you have highly valuable property stored within your home, talk to your insurance professional about getting the proper coverage for these items.

Liability insurance:  As stated, a basic home insurance policy should come with some liability coverage to protect you if you end up in a lawsuit. Such a suit may stem from someone getting injured on your property.

Bonus tip:  Homeowners should have some extra liability protection. An “umbrella” liability policy can add more liability coverage in case you end up in a lawsuit.

What type of deductible should I select?
A typical homeowner policy deductible is between $500-$1,000 (this can vary by state).[i] But there are options for $5,000 all the way up to $100,000 deductibles. Some policies offer percentage deductibles where the deductible is counted as a percentage of the policy limit. For example, if your home is insured for $150,000 and you carry a 10% deductible, your out-of-pocket cost in the event of a claim would be $15,000.

Many homeowners opt for a high deductible to save on the cost of the policy. Bonus tip: Select the highest deductible you can afford. Just keep in mind that if you have a claim, you are responsible for paying the deductible. If the damage is less than the deductible, you will have to make the repairs without the help of insurance. Know your risks and select the right policy.

Home insurance policies don’t cover everything. They contain exclusions. For example, many homeowners policies don’t cover flood damage. Flood insurance must be purchased separately. If you live in a coastal area or near a large body of water, consider purchasing a flood insurance policy.

Bonus tip:  Flood insurance has become more important for homeowners in recent years. Flooding can cause catastrophic damage and can also affect homeowners who are not in a so-called “flood zone”.

Knowledge is power. The more you know about homeowners insurance, the better prepared you’ll be if something goes wrong with your home. Get to know your policy’s limits, coverage, and deductibles, so you can help ensure you have the coverage you need, when you need it.

 

Please consult with a qualified professional and read all of your homeowners insurance documents carefully. Make sure you understand your policy(s) and know what situations are covered or not covered.

[i] https://lendedu.com/blog/average-homeowners-insurance-deductible/

BEFORE YOU HAVE YOUR LIFE INSURANCE MEDICAL EXAM…

January 13, 2022 / All Blogs, Financial Education, Life Insurance

When you apply to purchase a life insurance policy, you may be asked to submit to a life insurance medical exam.

 

The insurance company requests this exam to determine your risk for certain medical conditions. They may also test for drugs in your system, including nicotine.

Depending on the insurance company, the medical exam may include blood work, a urinalysis, physical examination, and maybe even an EKG.

Also, in case you were wondering, many insurers will pay for the exam when you’re seeking a whole or term life insurance policy.

What you can expect during a life insurance medical exam
After you submit your application for life insurance, a third party company will contact you to schedule your exam. These companies are hired by the life insurance carrier to conduct exams on their behalf. They may come to your home or have you visit a medical facility.

You may be asked to refrain from having anything to eat or drink for at least 12 hours prior to your exam.

The exam typically takes less than 30 minutes and may consist of:

  • Taking your height and weight
  • Questions about your health as stated on your application
  • A blood draw
  • Urine sample

When your test is complete, and your results are ready, the company furnishes your results to the insurance carrier. You may also request a copy.

What does a life insurance medical exam test for?
A life insurance medical exam investigates three major areas:

  • Confirming the information you provided on your application
  • The condition of your health
  • Illicit drug use

The exam may test for diseases such as HIV or other sexually transmitted diseases. It also may identify indicators of heart disease such as a high cholesterol level. The test results may also point out kidney disease or diabetes.

How to prepare for your life insurance medical exam
Be honest:  It’s important to complete your application completely and honestly. If the insurance carrier finds a misrepresentation on your application, they can deny coverage. Keep in mind, the application may ask about your lifestyle and if you regularly participate in dangerous activities, such as skydiving. You may also be asked about driving history and speeding tickets.
Eat a healthy diet:  Be mindful of your diet in the days and weeks leading up to your exam. Lower your sodium intake as well as your consumption of fatty or sugary foods. Salt, sugar, and fat may elevate your blood pressure and cholesterol, so it may be best to avoid them to help get the best results. Shed a few pounds: If you’re above a healthy weight for your height, try to shed some pounds before the exam. If you’re overweight, your insurance carrier may charge a higher premium on your policy. It’s best to be as close to your healthy weight as possible.
Abstain from alcohol:  Refrain from drinking alcohol for at least 24 hours before your exam. This will help ensure you don’t have a high blood alcohol level.
Drink plenty of water:  Hydrating properly helps to flush toxins out of your system, and it may also make the exam more comfortable. You’ll have an easier time producing a urine sample and your veins will be easier to reach for a blood draw.

Dress lightly and practice good posture: Clothing can increase your weight by a few pounds, so dress lightly. Especially if you are approaching an unhealthy weight, your clothing may push you into a higher weight class. Also, stand tall so you are measured at full height.

Keep calm and…
Undergoing a life insurance medical exam can make even the healthiest person a little nervous. Stay calm and complete the application as honestly as you can.

Hint: If you can’t pass a life insurance medical exam, consider a guaranteed issue life insurance policy.

HOW TO HANDLE AN INHERITANCE

January 13, 2022 / All Blogs, Debt, Financial Education, Retirement, Saving

If you’ve just come into an inheritance or another windfall like a settlement, it may be tempting to spend a little (or a lot) on some indulgences.

Even if – especially if – you’re already prudent with your budget and spending habits. You might be thinking, “I’m on top of my finances. What’s the harm of blowing a little cash on a few treats?” But read on. An inheritance or other monetary bonus – if handled wisely – has the potential to make a lifelong financial difference.

Start with these tips to help you make some lasting decisions about your newfound money.

Don’t make quick decisions
If you’ve received an inheritance from the death of a family member, you may want to take some time to grieve and start to develop a “new normal” before you make any big financial decisions.

Consider parking the money in a money market account or a high-interest rate savings account and letting it sit until you’re ready. A good rule of thumb when making a major financial decision is to give it at least 30 days. Shelve it for 30 days and then see how you feel. If you’re still not sure, put it back on the shelf for another 30 days.

Don’t feel rushed into making decisions about how to handle the money. It’s more important to take your time and make a careful decision than rushing into purchasing big-ticket items or making investments that may not be right for you.

Don’t shout it from the rooftops
Be cautious with whom you talk to about the inheritance. It’s best to discuss it with only a few trusted friends or family members. The more people you tell, the more “advice” you’re going to get about what you should do with the money. Some might even ask you to invest in one of their interests. (Which may be OK – that’s up to you!)

If you do come in to some money, one of your first calls should be to a qualified financial professional. Remember, it’s probably best to keep input minimal at this point, so tell as few people as possible.

Create a financial strategy
When you’re ready, it’s time to create a financial strategy. A financial professional can help you clarify your financial goals and offer a roadmap to get you there. No matter how much you inherited, developing a financial strategy is a must. Here are a few considerations to start:

Debt:  If you have debt that is costing you money in the form of interest, this may be a good time to pay it off.
Emergency fund:  If you don’t have a proper emergency fund, consider using some of the inheritance to fund one. An emergency fund should be 6-12 months of expenses put away in an easily accessible account for emergencies. An emergency is something like home or car repairs or unexpected medical bills (not a spur of the moment vacation or purchase).
Pay down your mortgage:  If you have a mortgage, you may want to pay down as much as possible with some of the inheritance. The smaller your mortgage the better, because you’ll end up spending less in interest.
Saving for retirement:  Saving some of your inheritance is probably never going to be a bad choice. Work with a financial professional to see what your options are.
Charitable donations:  A charitable gift is always a good idea.

Have some fun
Coming into some unexpected money is exciting! You may be tempted to rush out and start spending. Make sure you do your financial decision-making first and then be sure to have some fun. Maybe give yourself 10 percent of the money to just enjoy. Maybe you want to take a cruise or buy a new high-end kayak. The point is to treat yourself to something, but only after you have a solid financial strategy in place.

An inheritance is a gift
Keep in mind that an inheritance is a gift. Somewhere along the line, someone worked for every one of those dollars. Something to keep in mind is that you can honor that person’s hard work by being a responsible steward of their gift.

UNDERSTANDING COMPOUNDING IN INVESTMENTS

January 13, 2022 / All Blogs, Financial Education, Investment

Successful investors like Warren Buffett didn’t just hit a home run on a stock pick.

Warren Buffett hit lots of home runs, but compounding turned those home runs into history-making investment achievements.

Compounding doesn’t have to be a big mystery. It just means that the annual increase is added to the previous year’s balance, which, on average, gives each year a larger base for the next year’s increase. The concept of compounding applies to any interest-bearing savings or investments or to average percentage gains.

Here’s a quick example:

Starting investment: $10,000 Interest rate: 7%

Screen Shot 2018-11-06 at 1.32.35 PM

The rule of 7 & 10
There’s a reason a 7 percent return was chosen for this example. You can see that the total interest return over 10 years is about double the original investment. This is an example of the “Rule of 7 & 10”, which says that money doubles in 10 years at 7 percent return and that it doubles in 7 years at 10 percent interest. It’s not an exact rule, but it’s close enough so you can quickly estimate without a spreadsheet or calculator.

The simple interest example above only begins to show the power of compounding. It doesn’t include any additional investments after year one. In investing, compounding can come from more places than one, particularly if the stocks you own pay dividends. (A dividend is a share of the profit that is distributed to shareholders.)

Compounding in investing
Investing in stocks or mutual funds may provide an average annual return in line with the simple interest example, assuming investments are well diversified to mimic the broad market performance. For example, the S&P 500 return over the past 10 years is just over 7 percent annualized.[i] When you adjust for dividends, the annualized return is close to 10 percent. If those numbers sound familiar – like the rule of 7 & 10 – it’s a coincidence, but the past 10 years of S&P returns are very close to historical averages. Knowing what we now know, it’s easy to figure out that $10,000 will double in 7 years, assuming that market performance is aligned with historical averages. In reality, market performance may be higher or lower than past averages – but over a longer time line, short term peaks and valleys usually blend into an overall trend in direction.

If you’re concerned that you don’t know as much about investing as Warren Buffett, don’t think you need to be an oracle to be a successful investor. Many times, the best stock to pick for individual investors may be no stock at all. There are a myriad of investment options from which to choose without buying stocks directly. Talk to your financial professional about what choices may be available for you.

 

[i] https://dqydj.com/sp-500-return-calculator/

This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies for saving and/or investing that may be available to you. Market performance is based on many factors and cannot be predicted. Before investing or enacting a retirement strategy, seek the advice of a financial professional, accountant, and/or tax expert to discuss your options.

YOU’RE NOT TOO YOUNG FOR LIFE INSURANCE

January 13, 2022 / All Blogs, Financial Education, Life Insurance

If you’re young, you may not be thinking you need life insurance yet, but life insurance isn’t something only for your parents or grandparents.

Even if you have a free life insurance policy through your employer, you may not have as much coverage as you need.

There are many great reasons to buy life insurance – and a lot of those great reasons are even better reasons for young people.

So, read on for a little illumination about why you are not too young for life insurance. If you have dependents, life insurance is a must.

Take a moment and think about who depends on you and your income for their well-being. You may be surprised. Most of us think immediately of children, but dependents can include your parents, siblings, a relative with a disability, or even a significant other. A solid life insurance policy can protect the people that count on you.

What would they do without your financial help? A life insurance policy can ensure they are protected if something were to happen to you.

The older you get, the more life insurance costs.
From a simple, cost/benefit perspective, the best time to buy life insurance is when you are young. That’s when it’s the most affordable. As you age (i.e., become more likely to suffer from accident or illness), the cost of the policy will most likely go up. So buying a life insurance policy while you’re young may save you money over the long term.

Your employer-provided life insurance may be problematic.
Getting life insurance through your employer is a great benefit (you should take advantage of it if it’s free).

But it may present some problems. One of the drawbacks is that this type of life insurance policy doesn’t go with you when you leave the company. That may be a challenge for young people who are moving from company to company as they climb the career ladder.

Second, employer-sponsored life insurance may simply not be enough. Even dual-income couples with no dependents should consider purchasing individual policies. Keep in mind that if one of you passed away, would the other afford to maintain your current lifestyle on a single income? Those “what if?” scenarios may be uncomfortable, but they are the best way to determine how much life insurance you need.

You’re never too young to think about your legacy.
It’s not too soon to think about this. Did you know a life insurance policy can provide a lump sum to an organization you select, not just to a family member or other beneficiary? A life insurance policy can allow you to leave a meaningful legacy for the people or causes you care about. When it comes to buying life insurance, generally the younger you are when you start your policy, the better off you’re going to be.

UNDERSTANDING LIFE INSURANCE LIVING BENEFITS

January 13, 2022 / All Blogs, Financial Education, Life Insurance

Most of us think of life insurance as something that only pays off once you die.

 

Once upon a time, that’s all life insurance did – the basics. However, today’s life insurance policies can be simple (if that’s what you’re looking for), or feature-packed and customized to your needs. Life insurance policies now can even pay living benefits. Yes, that means what you think it means: A policy can pay benefits even if you are still alive.

Term life insurance living benefits
Usually, a term life policy is among the most basic of policies, providing a fixed death benefit. It can provide coverage for a limited time at a guaranteed rate. But many companies are now offering a rider (that is, an add-on feature) that can provide living benefits with your term policy.

Living benefits can allow you to access the value of your policy under certain conditions:

  • Critical illness
  • Chronic illness
  • Terminal illness

Terminal illness is a commonly offered living benefit as an accelerated death benefit. Any amount withdrawn from the policy would be deducted from the policy’s face value. For example, if your term policy provides coverage for $250,000 but $100,000 is paid as an accelerated death benefit, your policy would still provide $150,000 as a death benefit to your beneficiaries.

Living benefits may also provide access to money from your policy in the case of chronic illness or critical illness.

Chronic illness can be a little confusing. Insurers usually look at the six activities of daily living (ADL): eating, bathing, transferring (walking), dressing, toileting, and continence. If your chronic illness prevents you from performing these activities, you may be eligible to receive a portion of your death benefit in advance.

Critical illness such as a heart attack, stroke, cancer, and some other illnesses may also make you eligible for an advance payment of your death benefit.

Not all term policies offer living benefits for chronic illness or critical illness, but an increasing number are offering this option as a rider, and a handful are offering this expanded coverage as a built-in benefit of the policy.

As always, speak with me or your financial professional about what living benefit policy options may be right for you and your family.

HOW TO EXPECT THE UNEXPECTED

January 13, 2022 / All Blogs, Debt, Financial Education, Saving

Unexpected expenses can put a damper on your financial life.

 

You never know what may come up – vet bills, car repairs, unplanned travel expenses. Life is nothing if not full of surprises.

So, how do you pay for unexpected expenses when they arise? Borrow? Use your credit card? Take out a payday loan?

There is a better way. Wouldn’t it be nice to have some cash stored away to help you out when those emergencies pop up? Well, you can! It’s called an emergency fund. That’s what it’s for!

What is an emergency fund?
An emergency fund is a designated amount of cash – easily accessible – to prevent you from going into debt in case of a financial emergency. But how much should you put aside? Most experts agree a suitable amount for an emergency fund is 6-12 months’ worth of expenses.[i]

Sound like a lot of money? It is, but don’t let that stop you. An emergency fund can help make the difference between getting through a single emergency with merely a hiccup or spiraling down the financial rabbit hole of debt. Or it may help you ride through a few months if you lose your source of income.

It’s okay to start small
The thought of saving six months’ worth of income might make most of us throw up our hands in defeat before we even start.

Don’t let that get you down, though. The point is to start, even if it’s small. Just don’t give up. Begin with a goal of saving $500. Once you’ve achieved that, celebrate it! And then work on the next $500.

Slowly, over time, your emergency fund will increase and hopefully, so will your peace of mind.

Take advantage of “found money”
Found money is extra money that comes your way, that isn’t part of your normal income. It can include things like bonuses, inheritances, gifts, or cash from selling personal items.

When you find yourself with some found money, keep the 50/50 rule in mind. Put half the money toward your emergency fund, and put half toward whatever you like – your retirement, making this holiday season a little extra special, or add it to the college fund.

Let’s say you earned a bonus of $500 at your job. You worked hard and want to reward yourself. Go for it! Use half the bonus to buy the new shoes or the basketball game tickets, but put the other half in your emergency fund. It’ll be a win-win for you.

Take advantage of direct deposit
One of the best ways to help build your emergency fund is to make your deposits automatic. Siphon off a percentage of your paycheck into your emergency fund. Again, it’s key to start small here.

Know what an emergency is and what it is not
One of the fundamentals of building and maintaining an emergency fund is knowing what an emergency is and what it’s not. Unexpected expenses that require a dip into your emergency fund will happen – that’s what it’s for. But tapping in to your emergency fund on a regular basis shouldn’t be the norm. (If it is, you might need to take a look at your overall budget.)

Unexpected expenses your emergency fund may help cover:

  • Car repairs
  • Unexpected medical bills
  • Emergency home repairs
  • Unplanned travel for a death in the family

Some expenses that are not really emergencies:

  • A great sale on a cute winter coat
  • A spur of the moment weekend getaway
  • A spa day – no matter how much you need it!

Keep financial safety in mind
So the next time you see a gorgeous pair of shoes that you just “have to have” – ask yourself if they’ll be worth it if your 10-year-old dishwasher fails and your next dishwasher has to be you!

Don’t forget – start small. An emergency fund is about helping put a financial safety net in place. Don’t find yourself potentially compounding the difficulty of a true emergency by not having the funds to deal with it.

 

[i] https://www.nerdwallet.com/blog/banking/banking-basics/life-build-emergency-fund/

BUDGET LIKE A ROCK STAR WITH YOUR FIRST JOB!

January 13, 2022 / All Blogs, Budget, Financial Education, Saving

Congratulations! Landing your first full-time job is exciting, especially if you’ve been dreaming of that moment throughout college.

 

Now you can loosen your belt a little and not spend so much brain power on creative ways to make ramen noodles. But before you go and start spending on the things you’ve had to skimp on in school, it’ll be worth it to take a breath, do some self-examination, and create a budget first.

This is probably the absolute best time in your life to start a habit of budgeting that will last you a lifetime – before life gets more complicated with a family, mortgage, etc. If you become a whiz at your personal financial strategy, tackling all the things that life will bring your way may (hopefully) go a lot smoother.

So here are a few tips on setting up your budget with your first job:

1. Think about why you want a budget
It may sound silly, but knowing why you’re putting yourself on a budget will help you stick to it when temptations to overspend flare up. Beginning a budget early in life when you start your first job will help lay the foundation for responsible financial management.

Think about your goals here. Having a budget will help you (when the time is right) to acquire things like a home, new car, or a family vacation to the islands. Budgeting can also help you enjoy more immediate wants, like a designer handbag or new flat screen TV.

2. Get familiar with your spending
You can’t create a budget without knowing your expenses. Take a good, hard look at not just your income but also your “outgo”. Include all your major expenses of course – rent, insurance, retirement savings, emergency funds. But don’t forget about miscellaneous expenses – even the small ones. That coffee on the way to work – it counts. So does the $3.99 booster pack in your favorite phone game.

Track your expenses over the course of a couple of weeks to a month. This will give you insight into your spending, so your budget is accurate.

3. Count your riches
Now that you have your first job, add up your income. This means the money you take home in your paycheck – not your salary before taxes. Income can also include earnings from side jobs, regular bonuses, or income investment. Whatever money you have coming in counts as income.

4. Set your budget goals
Give yourself permission to dream big here and own it! Set some financial goals for yourself – and make them specific and personal. For example, don’t make “save up for a house” your goal because it’s not specific or personal. Think about the details. What type of house do you want, and where? When do you see yourself purchasing it?

For example, your budget goal may look something like this: “Save $20,000 by the time I’m 27 for a down payment on an industrial loft downtown.“ A good budget goal includes an amount, a deadline, and a specific and detailed outcome.

5. Use a tracker
A budget tracker is simply a tool to create your budget and help you maintain it. It can be as simple as a pen and paper. A budget tracker can also be an elaborate spreadsheet, or you can use an online tool or application.

The best budget tracker is the one you’ll stick to, so don’t be afraid to try a few different methods. It may take some trial and error to find the one that’s right for you.

6. Put it to the test
Test your budget and tracking system to see if it’s working for you. Try to recognize where your pitfalls are and adjust to overcome them, but don’t give up! It’s something your future self will thank you for.

7. Stick to it
Creating a budget that works is a process. Take your time and think it through. You’re probably going to need to tweak it along the way. It’s ok!

The best way to think about a budget is as an ongoing part of your life. Make it your own so that it works for your needs. And as you change – like when you get that promotion – your budget can change with you.

THE MORE YOU KNOW! BUILDING A FINANCIAL VOCABULARY

January 13, 2022 / All Blogs, Financial Education, Retirement, Saving

Part of gaining financial literacy is becoming familiar with the lingo.

Like all subjects, finance has its own terms, acronyms, abbreviations, and slang.

If you’re just beginning to dip your toe into the pool of personal financial planning, here’s a handy guide to some terms that are likely to come up when learning about finance and investments.

ROI:  ROI stands for Return on Investment. It’s an acronym usually used when referring to the performance of a stock. ROI can also refer to the performance of other investments, including real estate and currencies. In short, the term describes how much bang you get for your investment buck.

Compound Interest:  Compound interest refers to the instance of interest collecting on interest. The best way to understand compound interest is with an example. Let’s say you invest $1,000 in a high interest bearing account. Over the course of one year, your savings collects $100.00 in interest. The next year you’ll earn interest on $1,100.00, and so forth.

Money Market Account:  You may hear about money market accounts if you’re shopping for a savings account. A money market account is like a savings account, but it may earn higher interest rates – making it a better choice for some.

There are money market accounts that come with checks or a debit card, so your funds are easily accessible. If you’re planning on opening a money market account to hold your savings or emergency fund, pay attention to any minimum balance requirements and fees.

Liquidity:  Liquidity refers to how easy it is for an asset to convert to cash. You can think of it as an investment’s ability to “liquidate” into cash. For example, real estate investments may offer great returns over time, but they aren’t considered liquid assets because they are not easily turned into cash.

A stock or bond, on the other hand, has high liquidity because you can sell a stock and have access to its cash value quickly.

Roth IRA:  A Roth IRA is a retirement savings account. IRA stands for “Individual Retirement Account”. A Roth IRA allows you to make contributions or deposits to fund your retirement. The contributions are made with taxed income, but when you take deposits from the account in retirement, the income is not taxed.

A few characteristics of a Roth IRA:

  • Your contribution is always accessible, tax and penalty-free at any time
  • It can help keep you in a lower taxable income bracket during retirement
  • You can contribute to a Roth IRA at any time if you have a job

Bear Market:  A Bear Market is a term used to refer to the stock market while there are certain characteristics present. Those characteristics include falling stock prices and low investor confidence.

The term is said to originate from the way a bear attacks – swiping its arm downward on its prey. The downward motion illustrates falling stock prices as investors lose confidence, become pessimistic about the market, and they may begin to sell their stocks to try to prevent further losses.

Bull Market:  A Bull Market is a period in which stock prices are increasing and investor confidence is high. A Bull Market mostly refers to stocks, but it can also be used to describe real estate, currencies, and other types of markets.

This term may come from the action of how a bull attacks, by swiping its horns upward.

Finance lingo is for everyone
No matter where you are on the personal finance spectrum – just beginning to create a budget with your first job or preparing to retire – there are special terms to describe financial phenomena, tools, and features. Learning some of the lingo is a great first step toward taking charge of your financial life!

PERSONAL FINANCE: HIRE A PROFESSIONAL OR DIY?

March 18, 2022 / All Blogs, Budget, Financial Education

Contrary to popular belief, professional financial planning can potentially benefit people of all income levels.

 

So the question you may want to ask is not if you make enough money to need professional help, but rather, is your money working to create the life you want?

If your answer is “I don’t know” – no worries. There’s help!

A professional financial planner is, well, a professional
It’s true that personal finance is personal, but for many of us, it can be complicated too. Plus, it’s not something we usually learn about in school. So for many – even for those on the lower end of the income scale – a financial planner may have a lot to offer.

Even though there are some people who do just fine with financial planning on their own, many of us need help to connect the dots. Having a solid financial strategy often isn’t just coming up with a monthly budget and sticking to it. Many Americans don’t seem to have a grip on how personal finance intersects with their lives. In fact, about half of Americans don’t have a financial plan at all. (Are you one of them?)

Maybe you know exactly what you want – let’s say to retire by 60. But you don’t know how to get there. This is where a financial planner may help.

Maybe you don’t know what you want, even though you’re already a disciplined budgeter. You may still need a good financial planner who can help you imagine and create a strategy for the future of your dreams.

A financial planner can foster accountability
One of the most difficult things about creating and living by a financial strategy is accountability. Let’s be real. It can be difficult to find the discipline to consistently stick to a budget, save for retirement, and live within our means.

If you’re coming up short in the discipline department, hiring a financial planner may help create some accountability for you. This isn’t to say they’re going to wag their finger if you splurge on a spontaneous girls’ weekend in Cozumel, but they may help create a sense of accountability by checking in with you regularly to see if you’re on the right track. You might decide that girls’ weekend could be planned a little closer to home instead…

A financial planner offers expertise at every life stage
A financial strategy isn’t something you create and then forget about. A wise financial strategy changes as your life changes, so it must be revisited. A good time to take a fresh look at your financial strategy is during life events such as:

  • Getting a new job
  • Making a major purchase, such as a home
  • Starting a business
  • Getting married
  • Having a child

Every one of these milestones signals a time to revisit your finances. A professional financial advisor can help ease these transitions by taking the pulse of your financial health at every life change.

What a financial planner can’t do
If you’re not ready to deal with your personal finances, a financial planner won’t be much help to you. In other words, they can’t make you take initiative when it comes to your financial life. But if you’re ready to explore the world of personal finance, they may help make the difference between a dream and a reality!

 

 

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