I came across a product that I think could be very helpful in getting personal finances in order. The product is called Financial Planning Organizing Kit by a company called HomeFile. I haven't used one yet but am going to order one. I'll post my opinion once I get my HomeFile system.
Wednesday, 10 November 2004
Thursday, 4 November 2004
Getting Organized
Here's an interesting article I found today on the MSN website. This lady has some pretty good pointers on getting personal finances in order.
To that, I might add that it is a good idea to set up an IRA on automatic deposit. This will help a person keep a disciplined investment program.
Good luck!
To that, I might add that it is a good idea to set up an IRA on automatic deposit. This will help a person keep a disciplined investment program.
Good luck!
The Financial Planning Process
What are the steps in the financial planning process? If a person wants to work with a financial planner, what can they expect? What are their responsibilities and the financial planner's responsibilities?
Most Certified Financial Planners* (CFP) use the six step process defined by the CFP Board. Those steps are:
1. Establishing and Defining the Client-Planner Relationship.
This step is usually accomplished with a 30-minute initial consultation. Most planners do not charge for this meeting.
2. Gathering Client Data, Including Goals.
Once the client and planner decide to work together, information is needed from the client. This step can also be conducted during the first meeting.
3. Analyzing and Evaluating the Client's Financial Status.
This step is conducted by the financial planner and can take up to a month to accomplish.
4. Developing and Presenting Financial Planning Recommendations and/or Alternatives.
This step is done in conjunction with step 3. The word "alternatives" means that oftentimes a client's goals are unachievable under current circumstances. Therefore, it is necessary to have an alternative plan of action. This step also requires a client meeting.
5. Implementing the Financial Planning Recommendations.
Once the plan has been accepted by the client, the planner makes out an action items list and both the client and the planner work together during the implementation step. Some clients may prefer to implement on their own.
6. Monitoring the Financial Planning Recommendations.
Notice that these are steps in the Financial Planning Process. A financial plan is a process and not a product. Changes must be made over the years to make sure the plan meets the client's needs. It is recommended that the financial plan be examined at least yearly.
Those are the six steps according to the CFP Board. Not all planners use the six steps, either because they combine various steps or they have additional steps.
I hope my readers found this post helpful. Please send me an email with any questions or comments.
Until next time...
*I am not yet a Certified Financial Planner. I am in the process of preparing to obtain my CFP designation.
Most Certified Financial Planners* (CFP) use the six step process defined by the CFP Board. Those steps are:
1. Establishing and Defining the Client-Planner Relationship.
This step is usually accomplished with a 30-minute initial consultation. Most planners do not charge for this meeting.
2. Gathering Client Data, Including Goals.
Once the client and planner decide to work together, information is needed from the client. This step can also be conducted during the first meeting.
3. Analyzing and Evaluating the Client's Financial Status.
This step is conducted by the financial planner and can take up to a month to accomplish.
4. Developing and Presenting Financial Planning Recommendations and/or Alternatives.
This step is done in conjunction with step 3. The word "alternatives" means that oftentimes a client's goals are unachievable under current circumstances. Therefore, it is necessary to have an alternative plan of action. This step also requires a client meeting.
5. Implementing the Financial Planning Recommendations.
Once the plan has been accepted by the client, the planner makes out an action items list and both the client and the planner work together during the implementation step. Some clients may prefer to implement on their own.
6. Monitoring the Financial Planning Recommendations.
Notice that these are steps in the Financial Planning Process. A financial plan is a process and not a product. Changes must be made over the years to make sure the plan meets the client's needs. It is recommended that the financial plan be examined at least yearly.
Those are the six steps according to the CFP Board. Not all planners use the six steps, either because they combine various steps or they have additional steps.
I hope my readers found this post helpful. Please send me an email with any questions or comments.
Until next time...
*I am not yet a Certified Financial Planner. I am in the process of preparing to obtain my CFP designation.
Tuesday, 26 October 2004
Saving for College
Putting a child or grandchild through college is NOT CHEAP! Therefore, it is important to plan ahead if at all possible. Two of the most popular ways to save for college is a 529 Plan or an Education IRA. I will briefly discuss 529 Plans today and the differences between the two tomorrow.
529 Plans are great, provided they have low expenses. They are excellent for grandparents who want to take money out of their estate and do something for their kids and grandkids at the same time. The grandparent is the owner of the 529 Plan and the grandchild is the beneficiary. If the child gets to college age and doesn't want to go to college, the grandparent can change the beneficiary and give the money to someone else.
For those interested,check out SavingforCollege.com. This is a very nice website dedicated to the 529 Plan.
I'll be back tomorrow!
529 Plans are great, provided they have low expenses. They are excellent for grandparents who want to take money out of their estate and do something for their kids and grandkids at the same time. The grandparent is the owner of the 529 Plan and the grandchild is the beneficiary. If the child gets to college age and doesn't want to go to college, the grandparent can change the beneficiary and give the money to someone else.
For those interested,check out SavingforCollege.com. This is a very nice website dedicated to the 529 Plan.
I'll be back tomorrow!
Thursday, 21 October 2004
Website(s) of the Day (10/21)
This post is basically a continuation of yesterday's "Kids & Money" post.
One of the best writers on kids and money is Neale Godfrey. She has a really nice website at Children's Financial Network. I urge all parents and grandparents to check it out. For those interested, books can be purchased directly from the site.
I got an email yesterday from the David McCurrach, owner of the Kid'sMoney.org telling me about a new book he has written called Allowance Magic: Turn Your Kids Into Money Wizards and AllowanceMagic.com. I haven't yet had a chance to read the book. I'll review it and post my thoughts as soon as I get a copy.
Please check out those sites and let me know what you think by sending me an email.
One of the best writers on kids and money is Neale Godfrey. She has a really nice website at Children's Financial Network. I urge all parents and grandparents to check it out. For those interested, books can be purchased directly from the site.
I got an email yesterday from the David McCurrach, owner of the Kid'sMoney.org telling me about a new book he has written called Allowance Magic: Turn Your Kids Into Money Wizards and AllowanceMagic.com. I haven't yet had a chance to read the book. I'll review it and post my thoughts as soon as I get a copy.
Please check out those sites and let me know what you think by sending me an email.
Wednesday, 20 October 2004
Kids & Money
One of the best gifts we can give our kids is a solid understanding of the handling of money. Unfortunately, most parents do not talk about money with their kids, leaving the kids to either follow in their parent's footsteps (whether good or bad) or fend for themselves. This can be a recipe for disaster.
So, what's a proactive parent to do? First off, get an education. There is a wealth of resources on the internet that can help parents teach their kids about money. One such site is iVillage's "kids and money" website. They have put together a very nice website, full of articles and information that should be of interest to parents. Another nice website is David McCurrach's Kid'sMoney.org. Parents of older kids will especially like the Kids' Making Money section.
Secondly, parents should help their children come up with their own budget. Understanding and practicing the "live within your means" philosophy can put kids on the highway to financial success. Because the child can see where their money comes from and where it goes, they get a sense that money is very real and very important.
Finally, once the child has come up with a budget, parents should help them set some goals to work towards. Perhaps it's a new bicycle or a Playstation. Let the child decide. Then, figure out how much the goal is going to cost (remember to add sales tax). Write down the amount and decide on how much money the child is going to put towards that goal each pay period. Then, make them stick to it. Fulfilling that goal will show the child the power of goal-setting and hopefully help them start a habit that will last a lifetime.
I urge ALL PARENTS to start teaching their kids proper money management skills. It just might save your child from committing some serious money mistakes.
Good luck!
So, what's a proactive parent to do? First off, get an education. There is a wealth of resources on the internet that can help parents teach their kids about money. One such site is iVillage's "kids and money" website. They have put together a very nice website, full of articles and information that should be of interest to parents. Another nice website is David McCurrach's Kid'sMoney.org. Parents of older kids will especially like the Kids' Making Money section.
Secondly, parents should help their children come up with their own budget. Understanding and practicing the "live within your means" philosophy can put kids on the highway to financial success. Because the child can see where their money comes from and where it goes, they get a sense that money is very real and very important.
Finally, once the child has come up with a budget, parents should help them set some goals to work towards. Perhaps it's a new bicycle or a Playstation. Let the child decide. Then, figure out how much the goal is going to cost (remember to add sales tax). Write down the amount and decide on how much money the child is going to put towards that goal each pay period. Then, make them stick to it. Fulfilling that goal will show the child the power of goal-setting and hopefully help them start a habit that will last a lifetime.
I urge ALL PARENTS to start teaching their kids proper money management skills. It just might save your child from committing some serious money mistakes.
Good luck!
Tuesday, 19 October 2004
What are Exchange-Traded Funds?
Stated in the simplest of terms, Exchange-Traded Funds (ETF) are index mutual funds that trade like an individual share of stock. There are ETFs for practically any sector or market imagined.
The advantage to using ETFs is that if a person doesn't want to index the broad market, they could buy individual ETFs that cover the areas they are interested in. For instance, a person could just buy an ETF that covered biotechnology. Although it is risky to buy just one sector like biotechnology, it is less risky to do so than just buying a couple of biotech stocks.
To learn more about ETFs, go to iShares. IShares is one of the biggest providers of ETFs. They have put together a really nice website to help individuals understand ETFs. Another good website to check out is Ameritrade's ETF section. They have a ton of information regarding ETFs to help people make informed decisons.
Now before running out and buying an ETF, it is important to understand that since the ETF is essentially a "stock," buying shares will require a transaction fee. In other words, there is no free lunch. Therefore, it might be prudent to use ETFs in a long-term buy and hold strategy rather than trying to trade them. Also, regular index funds may be better for those people who are trying to build wealth by dollar-cost averaging since most index funds don't charge a fee every time a purchase is made (as long as their minimums are met).
Good luck!
The advantage to using ETFs is that if a person doesn't want to index the broad market, they could buy individual ETFs that cover the areas they are interested in. For instance, a person could just buy an ETF that covered biotechnology. Although it is risky to buy just one sector like biotechnology, it is less risky to do so than just buying a couple of biotech stocks.
To learn more about ETFs, go to iShares. IShares is one of the biggest providers of ETFs. They have put together a really nice website to help individuals understand ETFs. Another good website to check out is Ameritrade's ETF section. They have a ton of information regarding ETFs to help people make informed decisons.
Now before running out and buying an ETF, it is important to understand that since the ETF is essentially a "stock," buying shares will require a transaction fee. In other words, there is no free lunch. Therefore, it might be prudent to use ETFs in a long-term buy and hold strategy rather than trying to trade them. Also, regular index funds may be better for those people who are trying to build wealth by dollar-cost averaging since most index funds don't charge a fee every time a purchase is made (as long as their minimums are met).
Good luck!
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