By: Carolyn Clark
Reprinted from FMOnline
I am a fully licensed representative for a Fortune 500 Company in the financial services business, and I work with people to help them put in action a plan for better “financial health.” I have been in the financial line of business for almost 13 years now, and would like to offer some tips on how you and your family can make sure you are safe from “financial disease.”
As we all know, especially those of us with fibromyalgia (me included), prevention is the best policy. If we had known how to “prevent” our painful condition, wouldn’t we have followed the advice of a professional and done everything we could to prevent it? Well, it’s the same with your finances. So many of us go through life “blind’ about money–what to do with it, how to make it, keep it, and do our best with it. If you are like me, an average Jane, you weren’t taught about money growing up. Unfortunately, I had to learn at the ripe old age of 17, because of sad circumstances.
My father passed away when I just graduated high school, leaving my 48-year-old, stay-at-home mom with seven children ranging in ages from 6 to 21. We had $200 in the bank. My dad left behind no life insurance and no savings; they didn’t own a home, and the hospital bills were astronomical. We ended up on welfare for a year, until Mom got on her feet with a few jobs. Why am I sharing this? Not so you can feel sorry for me, but to give you some tips as your “money doctor,” so that maybe I can save a few of you from the same fate.
The first tip: put in place a term life insurance policy. If you have someone relying on your income, and you’re the breadwinner, this is a must! If you know nothing about life insurance, basically it is a lump sum of money (to pay for your burial and any expenses) to leave behind for those you love, so they can have peace of mind, due to the fact that they can continue to carry on their lives financially, as if your paycheck is still coming into the household.
The second tip is: put an emergency fund in place. This is money, usually a total of what you need to live on for six to nine months, that is accessible to you—liquid cash that you can get your hands on immediately. If you were to lose your job or be temporarily out with a short-term illness or surgery, where would you get the money to take care of day-to-day demands? Sadly, most people turn to their credit cards and get in debt, which brings me to my third point.
Have you incurred debt? Did you know you can pay off your mortgage sooner, and consolidate your debt, all with one payment—and in most cases, save thousands of dollars?
My fourth tip is about retirement. Are you putting away at least 10 percent of your income into a company-sponsored program, or one outside your job? Many people feel they need to have a lot of money to receive a lot in return in the future—but that’s not so. Remember this: “It’s not what you make, it’s what you keep!” This is all based on compound interest, or the rule of 72. Simply put: if you were to take the number 72 and divide it by what you are earning on your money, that will tell you how long it will take to double your money.
Example: you have $2,000, and you are getting 3% on your money. 72 divided by 3 is 24, so you will have $4,000 after 24 years. If you were able to get a higher return, say 8%, with the same monies, you’d end up with $13,000 in the same amount of time! It takes time and consistency to build a nest egg.
The last tip I’d like to share with you is about long-term care. Basically this is a plan to protect you, so in the case that you are physically disabled, ill, or unable to care for yourself again, you and your loved ones would have peace of mind, knowing that you will have help with your everyday needs.
Carolyn Clark is solely licensed in the state of California, (license # 0B48611 and #603-6607) and by compliance, may only deal with families within that state. She offers a complimentary, comprehensive, and comprehensive Financial Needs Analysis to look at where you stand today with your finances. Information: (310) 783-0338.