CREATE A BUDGET FOR YOUR SIX-FIGURE INCOME

If you are earning a six-figure income, you might think that you do not need a budget. Nothing could be further from the truth! We have all heard about entertainers and athletes who have lived extravagantly on the income from their current movie or contract, only to squander it away, leaving them bankrupt. Learn a lesson from today’s newsmakers - everyone needs a budget.

Many of us live beyond our means out of sheer laziness. It takes time and effort to track our expenses and plan our spending, but this is time well spent. The result of a lack of forethought is that we could be spending hundreds or even thousands more per month than if we budgeted and planned carefully. To take charge of your finances, track your expenditures for a few months on housing, insurance, transportation, groceries, medical expenses, clothing and entertainment. There are quite a few financial computer programs available on the market, designed specifically for budgeting. The results might surprise you.

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The largest item in your budget is most likely your mortgage payment. Have you compared your interest rate with the rates available now? If you are planning home repairs or re-modeling, make sure to get several estimates, as the cost of a project can vary greatly among contractors. Also, take a look at your house and what you need. Do you live in a high tax area or is your home much larger than you really need?

Another area where you should comparison shop is for insurance - Auto, Property and Casualty, Long-Term Care, Disability, and Life insurance. Talk to our insurance professionals to make sure you have the right types and amounts of insurance for your needs. Increasing deductibles and practicing safe habits can save you hundreds of precious dollars each year.

Everyone knows the pitfalls associated with credit cards. Just because you have that hefty income does not mean that credit cards are not a danger. Carrying a balance on your cards can cost you hundreds or thousands in finance charges every year. Take positive steps toward reducing your credit card debt. Carry cash and pay for items right away. Switch balances from high-rate cards to low or even no-interest credit cards. Take several months of tightening your expenditures to pay off your credit cards entirely, and then enjoy having extra money every month that is not earmarked for bills.

In America today, we are obsessed with our cars. Although this obsession might be fun, it can be costly. How many vehicles do you have? Are you using all of them for their intended purposes? Could you do without that large SUV and its considerable insurance premiums and fuels costs, and choose a sedan instead? Do you spend a lot of money every year repairing your vehicle? Switching to a cheaper or more reliable car can save you substantially. Also, carefully consider leasing versus buying your vehicle. Consult our financial professionals to determine whether a lease or purchase is the best for you.

Entertainment expenditures can make a surprisingly large impact on your monthly budget. How many times a week do you and your family eat out? What do you do for lunch every day? Eating lunches out with co-workers and stopping off on your way home to bring in something for dinner are very expensive habits. Smart grocery shopping and taking a few extra minutes to prepare a lunch or make something ahead of time can save you hundreds per month, especially for a large family.

As motivation to stick to a budget, imagine how you could be spending these extra hundreds of dollars per month. You could donate to charity, save for retirement, or even a family vacation. Whatever you do with the money you save, the important thing to realize is that, regardless of income, we can all benefit from budgeting and comparison-shopping for the goods and services we use. You work hard to generate income, and the last thing you want to do is to squander away your hard-earned dollars. Formulate a budget that works for you, and exercise the self control to carry it out.

MANAGING YOUR INHERITANCE: THINK CAREFULLY BEFORE SPENDING

Seniors today are among the richest generation in history. During the next few decades many of their children and grandchildren stand to inherit a substantial amount of money. But planning for a sizable inheritance could be the key to retaining some of that money, after the initial shock has subsided.

In general, Americans today are big spenders. We have accumulated large amounts of debt, and many of us have saved very little for the future. Older generations were more disciplined to save for a rainy day. Because of this, our parents’ and grandparents’ death might leave us with the benefits of their money management styles. Receiving an inheritance, however, brings about a whirlwind of conflicting emotions. You might experience the anguish associated with a loved one passing away, while at the same time you experience the euphoria of a sudden windfall of money. Handling the feelings of guilt is enough to cause some to avoid the topic of their inheritance altogether. However, avoiding the topic is not a good strategy. Talking about the inheritance ahead of time is critical to coming to terms with and managing the money successfully.

It is not surprising to learn that many people who inherit money put little thought into its management, and spend it all quickly. They have not planned ahead and earmarked the money for specific family needs. In fact, many individuals find themselves financially worse off than they were before they received the inheritance! For instance, if you use your new money for a down payment on an extravagant home that you otherwise could not afford, you might start living a lifestyle that exceeds the realities of your income. Or, maybe you remodeled your current home, took an expensive trip, and bought a new sports car. In this case, you might suddenly discover that only a fraction of your original inheritance is left, leaving you wondering where it all went.

If you are anticipating an inheritance, the best strategy is to talk to your family members and financial planners. Although discussing the inheritance and creating an estate plan with the person who will leave you the money might seem inappropriate at first, it could actually soothe your concerns about the inheritance. It also provides the donor with a chance to discuss their hopes and dreams for the money once it lands in your hands. By establishing an estate plan and an open discussion, you might even decide to begin the transfer of wealth through the establishment of trust funds and lifetime gifts.

Speak with one of our financial planners to plan for how to reduce the tax burden and preserve more of the capital for use. Utilize this time to talk about your concerns regarding the inheritance and to make sure your plans will honor the wishes of the donor. By creating a dialogue with those involved and by educating yourself about the estate planning process, you can eliminate the difficulty of rational financial planning at a time when you would rather spend precious moments with your loved ones.

IMPORTANT LESSONS FOR WOMEN REGARDING FINANCIAL SECURITY

A 2007 report by Allianz shows that although there has been a significant increase in the amount of the world’s wealth held by women, there has also been an increase in the amount of women who feel financially insecure. The report stated that 90% of the women surveyed felt either somewhat or not at all financially secure.

There is no genetic reason that a woman should feel less financially secure than her male counterparts. If this feeling exists, it is more likely to be the result of a difference in education regarding finance than a gender deficiency. Since we know that, it becomes very easy to attack this problem and create generations of women who hold a large portion of the nation’s wealth and feel secure about it.

1. Look at national averages: The first thing women should do is understand where they rank among their male and female counterparts in terms of debt and spending. Understanding whether you are handling your money worse, as good as, or better than others will help either generate confidence in your decision or help you to devise a plan to improve.
2. Get educated: Take a course at your local college or community center about investing, finance, or any other topic relevant to handling your money. You can also buy books on any financial topic that is relevant to your life, goals, or lifestyle. Read them and learn from them. This will help you feel more confident when developing a plan and implementing it.
3. Recognize your planning needs: Once you start taking classes and reading the books you buy, you might find that even if your savings and debt are in a good place for someone of your age group, you still need to take steps to get your financial house in order. After all, having cash in the bank is nice but if it isn’t invested properly and you aren’t taking advantage of qualified accounts then it isn’t working hard enough for you and likely won’t grow and accumulate enough to get you through retirement. Work with an advisor to develop a plan for your savings and debt and then put the plan into action.
4. Get an agent: As you create your plan you might find that you need a Life insurance policy, Long-Term Care policy, or Annuity for your retirement plan. Our agents can help you determine what type of policy or annuity suits you and your needs best and can help you to get it.

Remember, the keys to feeling secure about your money lie in knowledge and action. The more you know about what to do with money and the more complete your plan is for creating a sound financial foundation, the more secure you will feel -- whether you are male or female.