As a Certified Financial Planner I encourage my clients to embrace their roles as financial caregivers by being good stewards of their assets for themselves and their families. As April is National Financial Literacy month, it serves as a timely reminder for everyone to reassess their personal financial knowledge. Have you been making an effort to improve your personal financial understanding or are you wondering how much more you need to learn? Perhaps the real question is: have you put into practice what you already know? It’s important to constantly re-evaluate your financial knowledge–especially if you are supporting others than yourself.
As a parent and former teacher, I am well aware that children focus more on our actions than our words. They will know if you are under stress if you are living beyond your means, they will know that attending college will be much easier if you have established a college fund and they will know that you have provided well for yourself by contributing regularly to a retirement fund when, in your advanced years, you’ll be living comfortably.
I encourage you to spend the next 30 minutes thinking about the next 30 years. Defining the values and goals that are most important to you is the best place to start in getting your finances in order and then get organized. Your personal financial plan can begin with creating a budget that enables you to understand your own spending habits. It’s important to know what you are willing to spend and what your saving goals are. Creating a budget can be a big task in itself and sticking to one requires constant re-evaluation.
Next, create a net worth statement that includes what you own and what you owe—something many of my clients find eye opening when it comes to their financial stability. Then go back to those goals you have defined and set a savings plan for the house you want to buy, the retirement you want to enjoy and the family vacations you want to take every year.
I also highly recommend putting all important documents (from your financial plan to key legal, insurance, and financial documents) into a one big organized binder. You can access my firm’s Family Records Organizer here. Remember to keep this organizer in an easily accessible and safe location. If your financial information is kept anywhere online, I recommend being particularly cautious of accounts’ security as well. Finally, reach your retirement goal earlier by increasing your monthly 401(k) Plan (or IRA, etc.) payments now. Or have a better balanced household budget now by altering your spending habits where you can. Provide your child with the best possible college education by setting up education funds now. Time is precious and there is no better time than the present to prepare for the future.
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Kristen Fricks-Roman is a Financial Advisor with the Global Wealth Management Division of Morgan Stanley in Atlanta. The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Wealth Management, or its affiliates. Please be advised by clicking on a third party URL or hyperlink, you will leave morganstanley.com. Morgan Stanley Smith Barney LLC is not implying an affiliation, sponsorship, endorsement with/of the third party or that any monitoring is being done by Morgan Stanley of any information contained within the web site. Morgan Stanley is not responsible for the information contained on the third party web site or your use of or inability to use such site. Nor do we guarantee their accuracy and completeness.
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