Tuesday, November 4, 2014

Tips for the Family CFO

Stress and concerns over the family budget are perhaps the most common instigator for marriage fights.  Often, the lack of money itself is not the problem, rather an underlying issue.  These tips may not solve the root cause, but they should help ease the stress of the never-ending struggle to make ends meet.

It's Not a One Person Job.  I'm having trouble coming up with a part of marriage and raising a family that is a one-person job.  Sure, one person may actually do the work like mowing the lawn, folding laundry or cooking dinner; but, the other partner is watching the kids or taking care of something else that has to be done.  When it comes to finances, both partners should be familiar enough with the ins and outs that if something happens to one, the other can function so that the electricity stays on and there aren't any overdraft fees.

Your Financial Planner Should be a Fiduciary.  A fiduciary is someone who is required to act in your best interest.  There are plenty of investing coaches and mutual fund managers who are more interested in the commission from selling you a particular stock or fund.  A registered investment adviser is a different breed, and he / she is obligated to tell you what is best for you, not for his / her commission.  One of the best ways to ensure your financial adviser's interests are aligned with yours is to pay based on your portfolio's performance.  If you do well, so does the financial adviser and, more importantly, vice versa.

Manage Credit Cards.  Credit card companies make their money off people not paying the balances off.  Credit cards can be a useful tool, and the rewards can be utilized in very creative ways.  However, if you're carrying large credit card debt and paying interest on it, you're on the losing end of that equation.  It's like Vegas - play long enough, and the house always wins.  I recommend paying off the bill each month and tracking credit card spending as if it were cash.  This isn't easy, especially with 3 credit card offers showing up in the mail every day.

Make a Plan.  At a minimum, there should be a budget.  Quicken has an outstanding program for tracking and managing personal finances, and it is compatible with most banks' online features.  You can download your transactions and then review and categorize them to get a very detailed picture on where your money goes each month.  Next, get an estate plan so that all those dollars you saved by following your budget aren't wasted paying unnecessary fees and taxes.

Have a System for Important Documents.  Keep it old school with a filing cabinet and hanging folders, or scan all your important documents and save them as PDF's on your computer.  If you opt for the PDF route, make sure you have a regular backup service like Carbonite so that when your computer crashes, you don't lose every important document along with the hard drive.

If you have questions on how to get any of these accomplished, or you would like more information on how a Family Legacy Plan can help with the CFO duties, feel free to contact Bobby Sawyer at (704) 266.0727 or rsawyer@sawyer-law.com.

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