{"id":5258,"date":"2016-02-21T08:44:23","date_gmt":"2016-02-21T12:44:23","guid":{"rendered":"https:\/\/kerryhannon.com\/?p=5258"},"modified":"2016-02-21T08:44:23","modified_gmt":"2016-02-21T12:44:23","slug":"3-top-tips-for-your-finances","status":"publish","type":"post","link":"https:\/\/kerryhannon.com\/?p=5258","title":{"rendered":"3 Top Tips for Your Finances"},"content":{"rendered":"
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\"download<\/a>If you\u2019re not paying attention to your finances because you find it boring or you use the excuse \u201cI\u2019m not good with numbers,\u201d I have two words for you: Oh, please.<\/p>\n

You<\/em> are ultimately responsible for your financial life and financial security. You can\u2019t rely on a spouse and certainly not on your financial adviser to care more about your well being than you do. That\u2019s the core message of Liz Davidson\u2019s new book, What Your Financial Advisor Isn\u2019t Telling You<\/a><\/em>, and what she told me when I interviewed her about it. And I couldn\u2019t agree with her more.<\/p>\n

Davidson ought to know. She\u2019s the chief executive and founder of Financial Finesse<\/a>, a financial education firm in El Segundo, Calif., that offers financial wellness programs at more than 600 large employers.<\/p>\n

MORE:\u00a0<\/span>The Unexpected News About Women, Men and Retirement<\/span><\/a><\/p>\n

I think you\u2019ll be intrigued by the impetus for her book: A former hedge fund CEO, Davidson was stunned that even the high net worth individuals investing with her firm lacked knowledge of the principles of investing, the kinds of investments they were buying and the risks involved.<\/p>\n

Davidson was stunned that even the high net worth individuals investing with her firm lacked knowledge of the principles of investing.<\/p>\n

An Appalling Finding About Money Management<\/h3>\n

More than that, she found this appalling. If these theoretically smart investors didn\u2019t have a clue, Davidson figured, average Americans likely had even less financial savvy.<\/p>\n

Davidson\u2019s book divulges the nuts and bolts of what her 17-year-old firm delivers to its clients. That\u2019s why I think if you\u2019re ready to take control of your financial life \u2014 or if you need a nudge in that direction \u2014 Davidson\u2019s book is a terrific way to start. She lays out easy-to-follow steps to get out of debt and ramp up your retirement savings, with digestible advice on how to talk honestly with your spouse or partner about your household\u2019s finances and financial future.<\/p>\n

\"What<\/p>\n

By the way, Davidson isn\u2019t saying financial advisers are bad. \u201cI devote a whole chapter on how invaluable a great adviser can be when you really need one,\u201d she told me. \u201cThe problem is people expect too much from their advisers \u2014 often thinking their advisers will make them financially secure, when that is actually their own responsibility. Contrary to popular belief, most of the greatest drivers of building wealth have nothing to do with an adviser \u2014 your marriage or life partner, the benefit choices\u00a0 you make at work, using credit and debt wisely and automating your saving and investing behavior.\u201d<\/p>\n

Davidson\u2019s a big proponent (as am I) of setting aside enough savings in your 401(k) retirement plan to get the\u00a0employer match, if one is offered. Fortunately, more firms are offering matches and they\u2019re dangling bigger matches than in the past.<\/p>\n

According to an October 2015 report<\/a> from the Aon Hewitt benefits consultant firm, about 42 percent of (primarily) large companies now offer a dollar-for-dollar match to their workers\u2019 contributions, up to a specified percentage of pay, typically 6 percent. In 2011, only 25 percent did. And before 2013, the average match was just 50 cents on the dollar.<\/p>\n

Davidson\u2019s also keen on understanding your employer\u2019s benefits and making smart decisions about them. She notes, for example, that the least expensive, high-deductible health plan among your employer\u2019s coverage selections isn\u2019t always the best choice. Davidson\u2019s mantra: \u201cYou should fully maximize your employee benefits before you even consider hiring a financial adviser.\u201d<\/p>\n

How to Hire a Financial Planner<\/h3>\n

For those who are ready to hire a financial planner, Davidson is your Sherpa. Her book doles out sage advice on how to find an adviser who has your interests at heart, what questions to ask when hiring one, how much you can expect to pay and what you should look for in return for the money pro\u2019s expertise. Here\u2019s what she told me: \u201cEven if you use an adviser, it\u2019s up to you to make sure they understand your goals.\u201d<\/p>\n

I agree with her recommendations to seek out fee-only planners in particular. Interview a few (there are searchable databases at sites of the Garrett Planning Network<\/a>, the National Association of Personal Financial Advisors<\/a>, the Financial Planning Association<\/a> and the Certified Financial Board of Standards<\/a>).<\/p>\n

Here are three pieces of Davidson\u2019s advice I especially endorse:<\/p>\n

1. Have the money talk with your spouse or partner<\/strong>. If you feel like you two are on separate pages about money matters, force yourself to have a frank money conversation. (Davidson writes that she and her husband, a high school football coach, have had to walk this walk themselves.)<\/p>\n

MORE:\u00a0<\/span>Why 50+ Women Should Take Control of Their Money<\/span><\/a><\/p>\n

The blunt title of her chapter about couples and money<\/a> is Your Life Partner May Be Your Worst Financial Enemy<\/em>. Her opening salvo: \u201cThe person you spend your life with will matter much more to your financial security, and ultimately to how wealthy you become, than anything any financial adviser can do for you.\u201d<\/p>\n

It\u2019s up to you \u201cto determine how your relationship is affecting your finances,\u201d she says. Sadly, too many couples don\u2019t do this. Only a third of them discuss retirement plans, for example, down from around 40 percent in 2013, according to a new study by the Hearts & Wallets financial services research firm<\/a>.<\/p>\n

And if you or your spouse or partner made a financial faux pas in the past (bad credit, for example), Davidson says: get over it. \u201cAgree to leave the past in the past and focus on the future,\u201d she writes.<\/p>\n

Davidson suggests having three bank accounts \u2014 ours, yours and mine. (This system works for me and my spouse, but not everyone is hardwired for this method.) Then, she urges, review your joint finances regularly. \u201cThis is an opportunity to review how you are spending your money and to make adjustments, and it ensures that you are working together to continually build together, rather than operating off of separate priorities and spending habits,\u201d says Davidson.<\/p>\n

2. Consider starting a book club that\u2019s focused on money management<\/strong>. Your group could discuss a financial book chapter by chapter, or by its topic. Each person in the club would be encouraged to offer personal insights and club members with better financial habits could mentor others who are struggling.<\/p>\n

3. Set aside a financial Independence Day once a year.<\/strong> Davidson says this a great way to commit to your financial wellness, using the day for \u201creflection, inspection, and reinvention of all aspects of your financial life.\u201d To help you get started, she provides a checklist in the book and has a website and resources<\/a> to form your own Independence Day group so, as Davidson says, you can \u201clearn from, support and encourage each other.\u201d<\/p>\n

Gee, Valentine\u2019s Day is right around the corner\u2026<\/p>\n

\"Kerry\"<\/p>\n<\/div>\n<\/header>\n

By Kerry Hannon<\/a>\u00a0<\/span>Money & Work Expert<\/span><\/div>\n
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\u00a9 Twin Cities Public Television – 2016. All rights reserved.<\/a><\/p>\n<\/div>\n

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