When it comes to personal finance, we get a lot of commonly asked questions. This area of the site is dedicated to those questions, and will continue to grow as we add more and more to the list! The answers to these questions are the short versions – we will have more in depth answers in form of articles on the site in the near future. If those articles already exist they will be cited in the answer to each question. Enjoy!
1.) Am I contributing the correct amount to my 401k?
When it comes to your 401k, every penny counts. If your employer offers a 401k plan, it is important to ensure that you are taking advantage of it! Some employers match a % or even all of your contribution, and if that is the case with your job then make sure that you are taking the free money. Each year 401k contributions change, and frequently they increase, so make sure that you are continually reviewing your plan to make sure that it is setup and optimized correctly.
2.) How should I plan on spending my money in 2015?
When you are trying to get your debts in order it is very important to plan ahead, anticipating your future income AND expenses. Always reflect back on the previous year, what were your spending patterns? (Both good and bad!) Do you think they will change this year? Can you improve those habits? Are you planning on making any large purchases throughout the next year? (House, car, having a baby?) Do not be afraid to get granular! Take a look at cable TV bills, cell phone bills and even how much electric/gas you may be using in the home. It is the little things with proper planning that will make the best difference. Plan to succeed, do not think that you will automatically.
3.) How can I pay off some (or all) of my debts?
Everyone wants to get out of debt, it is a very common conversation that we come across in our day to day lives. Like the previous answer, planning is key! Instead of telling yourself and everyone else that you are going to get out of debt…stop procrastinating, make a plan and put it into play! Action is louder than words! Analyze your existing income and monthly debt and put together a budget. Avoid money pits and “wants” – focus on “needs” and “goals”. Nothing happens over night…but making a plan and sticking to it will get you on the road to success!
4.) Is my thought process for saving money a smart one?
Just because you are saving money does not mean that you are doing it in a smart manner. If you put together your plan, stuck with it – and now you have pile of cash sitting in your bank account doing nothing than put it to use! How? Well if your debts are not paid off, maybe you are saving “too much” and some of that money can go to buying some of that debt down quicker. If you are debt free, or at least in a comfortable debt to income ratio – then put some of your money to work buy throwing more into your 401k, roth IRA or perhaps put some of it into a money market account. On the flip side, just because you have that money does not mean that you need to go beyond your comfort zone. Plan wisely!
5.) How can I plan my paycheck so that I am getting the most out of it?
There are different ways that employees can receive a paycheck. Some get paid once a month, some bi-weekly, some on the 1st and the 15th of each month. Others have taxes withheld, some have to withhold their own. Some take paper checks, others have direct deposit. The way to be smart about your paycheck is to analyze yourself and if you have options on how/when you get paid, make the smart choice that is going to keep unnecessary expenses to a minimum!
6.) When should I retire?
This is a question every age group should think about…not just the age group that is almost of age to do so. The sooner in life you plan for retirement, the sooner you will be able to retire in a comfortable manner. When you plan in advance you will be able to choose a portfolio that will match your goals and you get you to the finish line without stressing out.
7.) Should I have someone manage my money?
When you get to the point in life where you start making moves and throwing some money into the world of investing, there are a lot of choices of “who” should represent you. Do not just pick anybody. You want to find someone that you trust and has a proven track record. You also want to ensure that this same person is investing YOUR money like it is his/her own!
8.) What should my objective be when it comes to investing my money?
When planning out your investment strategy you need to make sure that you figure out A.) what you want your portfolio to accomplish, and B.) when you would like to accomplish that goal by. You also need to figure out how much risk you want to take regarding where you feel comfortable putting your money. Communicate with your money manager or accountant and make sure you guys are both on the same page.
9.) Should I have a will?
It is never fun to talk about death. However, this is something that you need to plan out while you are still alive. When the time comes, your family will be devastated of the loss of you – this is not the time to slap them with a funeral bill that will put them in financial detriment. Plan properly with your loved ones in mind. If you have developed a decent amount of wealth, you need to clearly outline where that wealth will end up. This will avoid causing unnecessary rifts in the family.
10.) What questions should I be asking myself?
You should always be asking yourself questions regarding your personal financial situation. Doing so will make sure that you are keeping yourself on your toes! What should you ask yourself? – “Am I staying on top of my finances?”, “Where can I make improvements?”, “Have I been ignoring anything?”. Asking these types of questions will prepare you for anything that may happen.
Stay tuned for more commonly asked questions!