Get Your Financial Affairs In Order

By: James L. Moore, Attorney and Counselor at Law; (as published for AARP Modern Maturity Magazine)

Estate Planning - Get Your Financial Affairs In OrderFor Jeff Rodgers of Grandville, Michigan, this year is a turning point in his life. He has started a new business and has hit the magic age of 40 years old. Naturally, he’s filled with New Year’s resolutions about his health, his life and his finances. He talks a lot about his family, the stock market his retirement plans, and when you ask him what one resolution comes to mind first, he doesn’t hesitate. “I’ve got a lot of different stacks of paper at home and at the shop,” he says, “and for once I would really like to organize everything.”

We all have money-related resolutions after a birthday, the new year, etc. to get ourselves organized, to save more, to spend less. Few make it past the birthday cake or the eggnog, but that won’t stop you from resolving to make changes. Let’s start with Jeff’s wish for some “order” and “control” in his life.

 

GET ORGANIZED
You need two things to get organized: a place dedicated to your personal records and papers, and a system for filing the information. A small two-drawer filing cabinet should be big enough for most bills and papers. You can get a new one for under $50.00, or hunt for one at a garage sale.Label a file folder for each account you have-from the electric bill to the car payment, each savings and checking account, insurance premiums, and each mutual fund or savings plan etc. you are in. Then move those stacks of paper into the files that they belong in. Each month when the bills come in, drop them into their appointed places. With account balances and information easily at hand you will be able to spot and monitor glitches and other problems as they happen. And as you round up insurance policies and retirement plan information and documents, you can double-check to be certain that the beneficiaries reflect your current estate and/or family or business succession plan.

 

GET A PLAN IN PLACE FOR YOUR SPENDING AND SAVINGS
Financial Planner Gary Mattson of Lake Odessa, Michigan tells his clients that once they’ve got their papers in order, the next step is to measure their net worth. Total the value of your assets; for example, the equity in your home, your savings, and any other holdings, then subtract your debts. what’s left is your net worth. Then he tells his clients to track spending to measure cash flow. Finally, they devise a budget together. He tells them to do this one step at a time; “Okay, now that you have at least got a handle on getting your financial house in order there are some other things we can now do this year that will make a substantial difference in your financial well-being.”

 

SAVE A LITTLE MORE
Then a little more than that, and a little more than that, etc. Financial Planner Lorie Snedeker of Grand Rapids, Michigan says that his greatest concern is that we’re are not saving nearly enough for our retirement. This is especially critical as more and more of us rely on 401(k) and similar savings plans. They don’t guarantee a fixed benefit like traditional retirement plans do-and that keeps many of us in the dark about how much we will really need to live on and enjoy life when we retire. “It’s shocking how much you will have to live on once you retire, compared with how much most people THINK they will need to live on.” Snedeker says. “the stock market won’t always be this strong, so I tell people to lower their expectations so that they will think about actually saving more.”Your mission, should you chose to accept this assignment, is to save at least 10% of your gross salary. If that figure scares you, begin by saving at least half that amount and each year add one or two percent until you reach 10%.

 

Regardless of what you chose to do, now is the time to begin. There is no “good or perfect time” to start anything, so why not you and why not now? I’m sure you will find that having once gotten started it will be easier to stay the course. An organized and sound financial plan when coupled with a properly designed retirement and estate plan, all coordinated with the help of your financial planner and estate planning attorney will give you an incredible sense of well being and a peace of mind few people enjoy.