With a roller coaster economy, high job unemployment, and increasing federal debt, this is the time to take stock and ask yourself some important financial questions to make sure you keep your financial house in order. Here are 5 important questions to ask yourself now?
- Do I have an exit strategy with my investments? If the stock market has another free fall or your company stock takes a dive, how will you put some sort of cushion to secure those assets which have grown over the past year? You should be asking yourself questions such as how far your money may go down before you exit the stock market, or how much it needs to make before you might take some profit off the table. Learn from the ups and downs you saw in the early 2000’s and in 2007/2008.
- Do I have enough of a cash reserve? With job market uncertainty, you want to make sure you beef up your cash reserve for at least three months more than you would normally have. If you are used to having 3 months in a cash reserve, than I would recommend doubling it to 6 months to be more safe.
- Do I have a spending plan or budget in place? If your income begins to expand again over the next couple of years, I think it is critical that you keep your spending plan in check. Make sure to save at least 10% of your income, with the real target being 20% of your total income. By really examining your budget now, you can determine your wants versus your needs. It is certainly a good idea to reward yourself from time to time, but staying away from any unnecessary major purchases that are not in your budget will be a key to building wealth during the next up economic cycle.
- Are my insurance coverage’s in place? Even though the health care bill passed recently, it is important to review your insurance coverage’s from what you have at work to the personal insurance you currently carry. If you lose your job or decide to leave, many coverage’s such as disability insurance go unnoticed until it is too late.
- Are my beneficiary designations up to date? With many people entering into second and third marriages with both spouses perhaps having kids from prior marriages, it is important to make sure you review your beneficiary designations. I often find that people don’t review these until it is too late.
As more and more people get their financial homes in order, asking yourself these five questions can help you run your family finances like a business.
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Ted Jenkin, CFP®, AAMS®, AWMA®, CRPC®, CMFC®, CRPS®
Co-CEO and Founder oXYGen Financial, Inc.
Request a FREE Financial consultation: www.oxygenfinancial.net
oXYGen Financial, Inc. co-CEO Ted Jenkin is one of the foremost knowledgeable professionals in giving financial advice to the X and Y Generation. Unless sources are noted, the information is the opinion of the author.
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