Millions of Americans are scrambling this week to chart their tournament brackets. With the Financial Four, people also have a way to chart their financial goals.
The National Endowment for Financial Education® (NEFE®) and the Financial Planning Association® (FPA®) are partnering on the fourth annual Financial Four (www.FinancialFour.org), an interactive bracket of 32 concepts that helps users identify the financial areas that are most important to them. Expert financial planners and advisors also used the bracket to weigh in on what they recommend people should be thinking about as their top financial priorities throughout 2015.
“Identifying and managing priorities is the key to keeping your financial life in order. The Financial Four takes the madness out of ranking your financial responsibilities,” says Ted Beck, president and CEO of NEFE. “There aren’t any upsets in this bracket.”
Experts identify their Financial Four
Is the priority establishing an emergency savings or using credit responsibly? Is it more important to have open and regular communication about finances with family members or calculate how much you need for retirement? Financial advisors-turned-bracketologists logged on to www.FinancialFour.org and ranked their top priorities for Americans to focus on this year. Based on their voting results, here is the 2015 Financial Four:
- Start Saving Early. The top goal among financial planners and advisors is ensuring that time is on your side when it comes to saving. It’s never too early to start putting money toward your goals and the sooner you begin, the more stable your financial security will be. Remember, with the power of compound interest even small amounts can make a big difference.
- Use Credit Responsibly. A close second in the rankings from financial planners and advisors is to stay within your means when it comes to credit. Try to limit credit usage to one account. Above all, always pay bills on time and pay more than the minimum payment due.
- Live Within Your Means. Spending less than you earn and living within your income is the surefire way to meet your financial goals. Take the time to understand your financial values and the difference between needs vs. wants.
- Ensure Job Security. Take the steps necessary to make certain your employer knows they cannot succeed without you. Make yourself indispensable at work by investing in continuing education and training opportunities.
What is your Financial Four? Complete your own bracket at www.FinancialFour.org. And prioritizing your financial goals is just the first step. For resources, tools and encouragement on successfully managing your finances, visit www.smartaboutmoney.org.
Source: National Endowment for Financial Education
Studying abroad has been a goal of my son’s since his high school days. This summer he’ll be joining other UT students for a month in Germany.
He considered other European countries for his international business studies, but a couple of years ago his focus turned to Germany. His career goal is working in the renewable/sustainable energy industry. Since Germany is world leader in that industry, this was a natural choice.
Germany has another special significance because my father is a World War II veteran. My son wants to see the places his grandfather–at his age–saw, but under very different conditions. A few years ago I decided that if Christopher went to Germany I’d go at the end of his program and travel together to places on my father’s itinerary. My father has no interest in traveling there, but he’s excited about our plans.
That dream will soon be a reality because I’ve been saving. I will truly be able to enjoy the experience because I won’t come home to credit card d
What are you dreaming of? Stop dreaming. Start saving.
P.S. Christopher’s interest in renewable/sustainable energy industry is ironic to me. He hasn’t lived at home in four years, but I still have vivid memories of reminding him to “turn off the lights”.
Last week I started a series of money management lessons for high school students. We started out by considering how people view wants and needs differently and how our values and experiences affect these views.
The group had a good discussion about why a guitar is not truly a need. A proponent of the guitar-is-not-a-need group said simply, “You don’t have to have a guitar to live.” Summed it up nicely. Food (including water), clothing (to keep from getting arrested), and shelter (to stay warm on a day like today) are the basic needs for life. You could add some other items, but these are the basics.
Advocates for the guitar-as-need group indicated it was a way to express himself and another said it was stress relief. While those are good, they fall into a category of things that are nice to have, but not required for life. Several years ago while I was teaching a class for people in Chapter 13 bankruptcy, a gentleman suggested his sky boat was a need because it was stress relief. Really? Many low- and no-cost ways to relieve stress.
How often do we as adults fall into the trap of thinking we “need” something when it is truly just a “want”. You see it’s all good if money is rolling in, we’re able to pay bills, and invest for the future. If not, it’s time for a new view!
With all the challenges families endured to survive the late 2000’s depression, many took on an income that varies from month to month. One of the common questions I receive in financial education sessions goes something like this: “My company closed in 2009. Since then, I’ve started my own consulting company. I enjoy setting my own hours and being my own boss, but my income varies from month-to-month. I want to be better prepared if there’s another downturn in the economy. I know I need to start saving. How do I set up or use a spending plan?”
If you’re a sole proprietor, it’s legal to use your personal account for your business, but it’s not a good idea because it makes it harder to create a personal spending plan. Your business expenses, including your income, would come from the business account. This also makes tax time easier.
As for setting up your spending plan, average your income over the past 12 months. This will give you a projected average cash flow. Some months you will have more income and others, less. You plan your spending based on this average amount. That plan should include saving any extra for the slim months that can occur.
Even though it’s important to be positive about your opportunities for higher income, it is wisest to plan for a worst case scenario. After a year, do a new average to project a new average cash flow. A spending plan can and should change and evolve over time.
January 29, 12:00 p.m. to 1:00 p.m.
An IRS representative will discuss options for free tax filing, provide information about tax credits & deductions, and demonstrate IRS tools to help you with your return. Register at http://bit.ly/taxprep1
With the cloudy and cold days we’ve had so far this year, I’ve been yearning for sunshine and thinking wistfully of leisure time to wander around on a spring day. As a parent. I’ve been known to say, “If you don’t know where you are going, how will you know when you get there?” to my son.
Thinking about sunshine and having leisure time to enjoy it can get you through a January. Interesting how we don’t always get as much of that time as we might like. There are times in life when wandering around may be appropriate as we figure things out for ourselves. I’m thankful my son isn’t doing that quite as much as he used to do.
But when it comes to money, continuing to wander around equals missed opportunities. It means there may continue to be too much month at the end of the money. It means continuing to pay high interest rates rather than paying off debt. It can mean putting off retirement savings. Wandering around rather than having a money plan can also mean failing to have some things we want now and being able to save and invest for long-term needs and wants.
Perhaps you have heard the phrase SMART goals or used the concept. Smart, Measurable, Attainable, Relevant, and Time-bound. The Personal Financial Management Made Easy! program can help you stop the wandering around by defining goals as well as other steps to improve your finances–even if they are already in good shape.
Learn more about the program. Enroll in it and then, get started on your SMART goals for 2015!