By Frederick A. Fisher MS, CFP®
Rick Fisher, Ostrofe Financial Consultants
While many of us are spending more time at home due to COVID-19, this may be a good time to work on our personal finances. One way to start is to create a financial checklist to make sure we are addressing all important aspects of our financial lives. Though not in any order, the important thing is to address each item as appropriate.
A good place to start is with a budget. A realistic formalized budget can help build a solid financial foundation. This will help the household finances grow and keep financial goals on track. The key to an effective budget is ongoing monitoring and making realistic goals that can adapt to changing circumstances.
Next, have you set a goal for building an emergency fund? This fund can be used for unforeseen expenses. A reasonable goal is three to six months of basic living expenses. Depending on your budget, this may take a year or two to accumulate.
A retirement savings plan should also be toward the top of the list. This goal is more long-term than the emergency savings and will take decades to build. This will be vital for a comfortable retirement. Setting a realistic goal will depend on income, number of years till retirement, and expected cash flow at retirement. In order to achieve your emergency fund and retirement savings goals, it will be important to fund these as a non-discretionary expense, along with housing, food and transportation expenses.
One of the most neglected financial items on our checklist is life insurance on the wage earners. No one expects an untimely death but should a wage earner die it can leave a family financially and emotionally devastated. There are many tools to estimate how much is needed, and many types of insurance to fit almost any budget or goal.
Another often neglected item on a financial checklist is estate planning. Items like wills, trusts, and powers of attorneys are critical for proper financial management and protecting the family from unnecessary cost and delays in estate settlement. Using an attorney who specializes in estate planning is important; he or she will be able to recommend a plan that is appropriate and affordable.
The last item on our financial checklist is tax planning. Proper tax planning can save you money and prevent tax surprises, which can be costly and usually avoidable. From proper withholding, deduction tracking, and capital gains management, there are plenty of items that need to be monitored. This
financial checklist is just a start and can be expanded to include proper casualty insurance coverage as well.
Should you want more information on our financial checklist give us a call at 530-273-4425 and discover our beyond investments approach.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
Frederick Fisher is a Registered Representative with, and Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Ostrofe Financial Consultants, Inc., a Registered Investment Advisor and separate entity from LPL Financial.
For questions or suggestions, contact Frederick at (530) 273-4425, or frederick.fisher@lpl.com, or visit ostrofefinancial.com. Branch address: 420 Sierra College Drive, Suite 200, Grass Valley.