Financial Counselor Notebook Preview

Take control now and build a secure financial future. Copyright ÂŠ 2009 Melissa Shaw

THE SIX AREAS OF FINANCIAL PLANNING 1. Income Allocation:

Where does your money come from and where does it go?   

Savings and Investments Fixed Expenses Variable Expenses

2. Risk Management

What risks are you exposed to that could sink your financial ship? Risk management addresses insurance issues.

3. Investing for Wealth Accumulation

Save money for specific goals, on purpose and make informed decisions. These investments tend to be known as non-qualified monies. They are usually after tax investment dollars.

4. Tax Planning

The govenment is in partnership with you. Review and understand your 1040 return. Know that we have two tax systems: The income tax and the estate & gift tax.

“The goal in a marriage is not to think alike; it is to think together.”

5. Retirement Planning

Build net worth through systematic savings and invest it wisely. These dollars are referred to as qualified money since they are usually in a qualified retirement plan.

6. Estate Planning

How your estate passes can be in your control. It is important to understand how title affects ownership and the rights of a beneficiary designation. Address guardianship issues for young children. Which estate planning documents should you have? Plan for the worst case scenario and you’ll find peace of mind.

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FINANCIAL INDEPENDENCE IS THE OVERALL GOAL OF FINANCIAL PLANNING The objective is to turn Cash Flow into Net Worth over time.

“Financial Independence is when your investment net worth is generating the annual income with which you need to live.”

There are two things that make you money:  You at work  Your money at work “Spend the golden eggs

1. Increase Your Income 2. Decrease Your Spending 

Unwise Spending — Distinguish between “needs” and “wants.” Ask yourself, “Do I really need this, or do I just want it?” Learn to tell the difference.

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Reduce Taxes

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Unforseen Loss — Bad investments — Unexpected expenses

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Loss of Purchasing Power through Inflation

and don’t slaughter the goose.” $1,000,000 @8% $80,000 a year to live on

3. Invest Wisely

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YOUR MASTER PLAN: STEPS IN FINANCIAL PLANNING 1. Gather Facts

“In a marriage, your household runs just like a company, with it’s own unique economy. Is it running in the black? Do you have a mission statement? One of you is the President and the other is the Chairman of the Board.”

2. Develop meaningful goals and objectives for the short term and the long term. Create a family mission statement. Know your family values. 3. Work from where you are now and design a plan for the future. 4. Use the team approach.

“Your personal Board of Directors may also include people who helped establish your values. These may include people who are no longer living, like your grandparents, who helped establish your family values and character.”

 You  Financial Planner  Attorney Insurance Agent  Accountant  Tax Preparer  Trust Officer  Investment Advisor  Stock Broker 

5. Implement the plan and take care of the details. 6. Periodically review and update the plan. Create a Statement of Financial Position annually. Make note of your progress. Are you growing your net worth?

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CASH FLOW MANAGEMENT Fixe

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d Ex

pens es Regu lar M o Outfl nthly ow Vari able Expe  nses Prop erty T axes  Car Regi  stra Insur ance tion Prem iums 

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Budget

Net Spendable Income (after tax planning)

Investments

How much cash flow do you need? These needs will dictate:

1. Cash Reserve Level

This is your emergency fund. Financial experts recommend three to six months of living expenses.

2. Debt Level Limitations 3. Tax Strategies Available

“Do you ever find that you have too much month

4. Investment Dollars Available 5. Types of Investments Available 6. Financial Security

at the end of the money?”

“The annual cash flow summary is the punchline to the money game.”

Protect the assets you have now while you work to accumulate more. Life and disability insurance can help to protect your basic cash flow.

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A CASH MANAGEMENT CONTROL SYSTEM A system is necessary to monitor and direct your cash flow. Here is a way to separate monthly expenses from future expenses. All monthly income is deposited to the Master Account

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Food Clothing Transportation Medicine Housing

Variable living expenses which are not monthly      

Property Taxes Auto Insurance Vacation Allowance Estimated Taxes Insurance Premiums Car Registration

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Regular monthly living expenses

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Distributions:

Interest Bearing Account  Interest Bearing Checking Account  Money Market Fund

Investments  Mutual Funds  Deferred Annuities  Stocks & Bonds  Real Estate  Permanent Insurance

“The secret to successfully saving money is to learn to pay yourself first.”

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BUILDING A SECURE FINANCIAL FUTURE

Diversification is an important part of any financial plan. A financial plan is built on a strong foundation: Own a home, have cash in the bank for emergencies and have insurance to protect your assets. Then, understand your objectives, time horizon and tax consequences of every investment.

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“LOOKING AHEAD...” “Creating a future you desire to live in helps control your destiny.”

When you are willing to use your mind's eye, you can see your own future.

“Having hope for the future.”

You can work to create your future and make your dreams come true. Creating a future you desire to live in helps you control your destiny. It increases your chances of finding happiness.  Where does your happiness come from? Be sure to work towards goals that include happiness and lifestyle.  What do you know now that can help shape your future?  Who do you want to become?  Who are your heros?

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TAKE CONTROL OF YOUR FINANCES TODAY

Follow these steps: 1. Build a Statement of Financial Position Collect a statement from each investment. This is a snapshot of your current financial position.

2. Analyze Your Cash Flow Where does your money come from? Where does it go?

3. Work with the Goals & Objectives Section to Help Define Your Goals

Here's what you need to get started: Pay Stubs  Bank Records  Tax Returns  Investment Statements 

4. Define Your Financial Strategy 5. What Else Should Occur to You?

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ORGANIZE YOUR FINANCES IN ONE EASY LOCATION The Financial Counselor Notebook is a tool to help couples share information about their finances. It’s an opportunity for single people to organize and get control of their finances in one easy location. It’s a helpful tool in case of an emergency. If the house is on fire, grab your Financial Counselor Notebook on your way out. You can rebuild your financial future with the information it contains. If there is a tragedy that involves a disability or death, the information is readily available for those in charge. Being organized will make you more comfortable when traveling, knowing those left behind are well informed. There are many reasons and benefits for using The Financial Counselor Notebook. It will inspire you to set goals and objectives and review your performance! So how do you get started? We look at where you are now. The Data Collection process is very important to the accuracy and quality of the reports that are generated using the input worksheets. Begin by collecting as much information as possible for financial analysis:        

The Financial Counselor Notebook will help you gain control of your finances and Win the “Money Game.” Here you will find the principles of sound decision-making and the information you need to handle banking, credit and mortgage choices, do tax and financial planning and make investment decisions.

Bank Statements Pay Check Stubs Tax Returns Pension Plan Statements and Summary Plan Description if available. IRA Statements Investment Statements Wills and/or Family Trusts Insurance Policies with annual statements if available.

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