Congratulations! You are in the home stretch of 2018. If you take out your January goals and have the guts to compare them to where you are now, you can do a solid review and benchmark of the year. Whether your financial year was amazing or your 2019 can’t get here fast enough, it’s a good time to revisit the ghosts of your past financial actions.
These are the lessons you may or may not have learned, but should have, based on previous experiences. Face it: we aren’t born knowing how to handle unexpected financial situations – or routine ones for that matter. And the truth is that most of us struggle to get a grip on them even as adults. But we can and should learn what to do, and then do it, so that we’re in a better position for a secure financial future.
In my practice I see a wide variety of past financial actions that rise again to cause problems. Yours may be mundane or exceptional, but either way, it helps to know how to handle these issues and even prevent them. Here are the Top 5 Ghosts of Financial Actions Past that I run into with clients.
You lost your job or had to float your living expenses until you got a new job or you had a large unexpected expense that you hadn’t planned for. In order to make ends meet, you had to run your credit card up or take a 401k loan.
Next time: Make sure you fund an emergency account with cash equal to roughly 3-6 months of living expenses. Emergencies happen, but they don’t create as much stress or long-term financial detriment when you have funds set aside for just such an occasion.
You and your spouse have talked about updating your will and estate planning documents. In fact, you even had an attorney chosen, but you just never got around to having the attorney draft documents.
Next time: Get the legal intake form, your balance sheet and life insurance schedule to the attorney and catch a phone call or meeting to get them drafting. It’s a minor hassle in the big picture, and far, far less trouble than your family would face if you were to de without having these documents completed. Bonus points: Have your advisor hold you accountable here.
You meant to revisit and write that life insurance policy to supplement what you have at work. Then you realized that you had what you think is a minor health change. The insurance company, not so much…The policy premium didn’t come out as you had expected.
Next time: Start early. Ensure your insurability outside work. If your health status has changed, so what? Write the policy anyway, unless for some reason your survivorship needs have suddenly changed.
You kept meaning to save money in your retirement account, but you never got serious about it. Now you just had your 40th birthday and you have an amount that’s less than one year of your current income saved up in your IRA.
Next time: There is no next time. It’s ideal to begin saving early, but you are where you are. Keep putting money in there, and if possible, increase the amount. It’s never too late, and the later it is the more urgent your need to create some retirement assets.
It came time to write a check for your kid’s first year of college tuition, but life got in the way and you really haven’t been saving for it. Hey, kids are expensive! And yet, so is college….
Next time: For now, do your best to pay what you can using your income. Remember that working while in school offers valuable experience as well as helping students feel invested in their education. In the future, earmark an account for this or considered using a 529 plan to save for younger siblings or grandkids, so that the accumulated savings can grow tax-free.
The best thing you can do is to learn from these ghosts of financial actions past. Don’t beat yourself up; do continue to focus on doing better. Ideally you can retain a professional advisor that can keep you accountable to your goals, especially as you get ready to begin a new year in 2019. I hope you and yours have a wonderful holiday!
Meredith Moore is a 20-year veteran of the financial advisory industry who specializes in bringing a customized approach to support the highly personal dynamics that govern her clients’ relationship with money and success. She is the recipient of numerous industry awards and a noted speaker and writer focusing on the intersection of power, money, and gender within relationships. Ms. Moore can be reached at www.moorewealthmgmt.com.
Meredith C. Moore, Registered Representative, offering securities through NYLIFE Securities LLC, Member FINRA/SIPC, A Licensed Insurance Agency. 1125 Cambridge Square, Suite C, Alpharetta, GA 30009 (770) 587-0281. Financial Adviser offering investment advisory services through Eagle Strategies LLC, A Registered Investment Adviser. Moore and Associates Wealth Management is not owned or operated by NYLIFE Securities LLC or its affiliates. Moore and Associates Wealth Management, as well as NYLIFE Securities LLC and its affiliates, do not provide tax, legal or accounting advice.