Search results for spending plan

Financial Resolutions

Posted by on Jan 8, 2018 in Financial Planner Boise ID | Comments Off on Financial Resolutions

Financial resolutions are one of the top 3 new year resolutions (NYR) people make. What financial resolution should you make? It depends – – on what your money personality style is. Olivia Mellan describes 5 basic money personalities in her book Money Harmony. Most people are predominantly one style with some traits of a secondary style. Which style are you? Take this quiz to find out > Financial Personality Quiz . There isn’t one style that is better than another. Each has good qualities and short comings. The key is to keep your style in balance.   Hoarders love managing their money. They will have financial goals and prioritize these goals. They can complain about the cost of items – especially those seen as frivolous. Their gifts are ALWAYS practical – like the husband who gave his wife a vacuum for an anniversary present. (They are no longer married.) So, what would a new year resolution be for a Hoarder? Their house is usually in good financial order. A resolution would be along the line of ENJOYing their money and the benefits it can provide. NYR: Buy a frivolous gift for a loved one or for yourself. Take a friend to lunch. Practice giving to others weekly and giving frivolous, decadent gifts.   Spenders tend to be impulsive buyers. They are looking for immediate pleasure in their purchases. They tend to be emotional spenders – when the going gets tough the tough go shopping. They don’t like budgets. It is hard for them to hang on to any savings. NYR: Write down what you spend for 1-week listing amounts and items. Evaluate your behavior. Choose 1 thing to change like fewer lattes. Make a Spending Plan & monitor monthly (Perception change on purpose of budget.) Set up automatic saving contributions especially retirement.   Avoiders do just that – avoid all thing financial. They don’t open their mail regularly. Bills are frequently late. They don’t do bank reconciliations. They are the last to do their tax return, filing extensions. Avoiders don’t know what they have, what they owe or what they spend. NYR: Set up auto deposit for paychecks Set up auto pay of bills Do monthly review of your financial picture. You might invite a financially savvy friend to join you. Set a savings goal – for an emergency fund and retirement.   Ammassers are happiest when they have large amounts of money to spend, save or invest. They feel empty without having money to manage. They often equate their amount of money to self-worth & power. The flip is also true. If there is lack, they feel like a failure. NYR: Take a regular break from monitoring your money. Begin with 1 day and add additional days over time. Strive for only weekly monitoring. Find a desire, dream or goal that doesn’t take money and isn’t about money. Experiment with finding pleasure from something else like a hobby or volunteering.   Money Monks are uncomfortable with money. They tend to have a modest lifestyle. They feel money is evil or dirty. Too much money will corrupt you. They are the last to collect their inheritance. NYR: Study wealthy people you like & respect. How do they handle their money? Imagine having great wealth. What good things could you do with great wealth? Remember, every style has good qualities and short comings. Your resolution is to keep your money personality in balance.    ...

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Rules of Thumb

Posted by on Jun 11, 2015 in Financial Advisor Boise ID, Financial Planner Boise ID, Financial Planners Boise ID, Financial Planning Consultant Boise ID, Financial Services Advisors Boise ID | Comments Off on Rules of Thumb

I frequently am asked how much should be allocated on different budget items.  I see so many variances in people and their likes and dislikes.  Some people have 3 closets of clothes, others take extravagant vacations and some have great collections of art or coins or books.  I think you need to make room for your own personality or you won’t keep a budget/spending plan. There is a general rule of thumb to follow.  Put 10% of gross income away for long term goals like retirement and college.  Put 20% away for debt reduction and cash reserves.  And use 70% for monthly living expenses including the mortgage. An easy way to accomplish the long term goal portion of your spending plan is to have automatic deposits into savings or retirement accounts.  Company retirement accounts like a 401(k) have payroll deductions.  You may be able to have payroll deductions made into a savings account or you can do an automatic banking transfer.  Making the monthly contributions automatic is helpful in obtaining your financial goals.  It is the easiest form of budgeting. 20% of your income going to debt reduction and cash reserves is also a critical step.  A cash reserve is different from your buffer accounts.   While it is still a savings account, you use it in time of an emergency.   An emergency is defined as something unforeseen and unexpected; something such as losing your job or being off work due to an illness.  A sale at the department store does not qualify as an emergency. Your cash reserve should be 6 months of your bare bones budget.  I encourage you to keep the first $5,000 liquid in a savings account.  The balance can be in CDs – probably longer terms to get a better interest rate. Another rule of thumb is to keep your housing costs within 25% of your monthly income.   A house is one of the biggest investments a person will make.  You want to be able to do the necessary repairs to keep it functional and attractive.  But you don’t want the house to become a ball and chain if you can’t easily pay the related bills.   And you really don’t want to experience a foreclosure.  While many are walking away from their homes, I wonder how many could have kept their home if they had stayed within 25% of their income. One obstacle to staying true to a budget is keeping harmony in the home.  Spouses can have different ideas of what is important to spend money on.  Finances are one of the leading causes of divorce.    One option to keeping harmony in the home is setting up accounts for each spouse that I call “Mad Money”.  This is an allocation of a reasonable amount of money for each spouse.  (Reasonable is defined by what your spending plan allows.) Mad Money is having money to spend you don’t have to account for.  So if you have a hobby you want to indulge or you really like shopping for clothes, you can do that without ruining the budget and hopefully keep harmony in the home. Follow these rules of thumbs and you will move towards your financial goals....

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Budgeting Made Simple

Posted by on Jun 4, 2015 in Financial Advisor Boise ID, Financial Planner Boise ID, Financial Planners Boise ID, Financial Planning Consultant Boise ID, Financial Services Advisors Boise ID | Comments Off on Budgeting Made Simple

I learned budgeting in my college days.  My dad required me to do a 6 month cash flow projection before I got my ‘student loan’.  I am sure I was the only student who had to do that.  After 20 plus years of working with people and their money, I think every college student should be required to create and live by their cash flow projections. My years as a financial advisor, I have learned a few things that makes creating and keeping a budget easier.  I have found the biggest stumbling block in keeping a budget is the non-monthly expenses.  Things like Christmas and gifts, vacations, medical expenses, car repairs, clothing and home maintenance.  When you pay a monthly bill it is easier to keep on track with your spending plan.   So the key is to make a monthly bill for every item in your spending plan.  You set the money you have allocated for a vacation, car repair and other non-monthly expenses into a savings account.  I refer to this as a buffer account.  If you leave the money in your checking account you are likely to spend it on other things, and be short when you need it. When you need to pay for a car repair, you transfer the monies from your buffer account into your checking account to pay the bill.  The same applies for all the non-monthly expenses.  You can keep track of your non-monthly expenses – accruing the monthly allocation and subtracting your expenditures, and keeping a balance in each expense category. However, if you aren’t one for details, or you don’t have the time, you may want a simpler approach that you can maintain.  Success in a spending plan requires your being consistent.  An easier approach is to total the monthly allocation of your non-monthly expenses and transfer it into your buffer savings account.  Pay all your non-monthly expenses from the buffer account. This approach allows you to have ‘fun’ on your spending plan and not feel guilty or get caught short some months in meeting your bills.  ...

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Financial Goals

Posted by on May 21, 2015 in Financial Advisor Boise ID, Financial Planner Boise ID, Financial Planners Boise ID, Financial Planning Consultant Boise ID, Financial Services Advisors Boise ID | Comments Off on Financial Goals

The S.M.A.R.T.  guidelines work well for financial goal setting.  Some common financial goals people have are sending kids to college, retirement and large purchases such as a house or a car. Applying S.M.A.R.T.  to these goals would looking something like this: Specific:  Being specific would be setting a dollar amount on the goal.  How much do you want to pay for your child’s college education?  That will depend on the college the child attends and what percentage of cost you as a parent plan to pay.  Use a college funding calculator found on many websites to help you determine the amount you need to save.  There is a link on this blog for your convenience. http://www.savingforcollege.com/college-savings-calculator/ Retirement is another common financial goal.  A rule of thumb for retirement is 75% to 80% of your current income.  And you have to decide when you want to retire – how many years of retirement do you need to provide for?  If you plan to retire at 65, you would look at 20 years.  Life expectancy is mid-80s.  You may come from a gene pool that you need to plan into your 90s.  Many retirement calculators are available.  Here is an option: www.finra.org/retirementcalculator Measurable:   Knowing the total dollar amount you need to save is the first step.  Breaking the total into smaller monthly amounts makes it easier to accomplish. Achievable:  Technology has made monthly savings easier.  You can automatically make deposits into 529 plans for college or into savings accounts for emergency reserves.  401(k) plans also allow you to easily save with monthly payroll deductions.   Using the automatic options with banking and payroll deductions is a good tool to use to achieve your goals. Realistic:  Saving for college and retirement are long term goals.   If you start early and are consistent with investing, you can reach your goal.  But what if that isn’t the case?  What if you are just starting?  Then you need to be realistic in what you can do.  You need to choose a less expensive college.  You may need to work a little longer before retiring.  To be realistic, you may need to adjust your goals. Time:   Most financial goals have a time frame of when the monies are needed – for college or for retirement.  You have a deadline to work towards.  However, it isn’t uncommon to become more disciplined in saving the closer a person comes to the goal date. Achieving your financial goals requires a plan.  This plan is usually called a budget.  For the more free spirited individuals, you may refer to it as a spending plan.  Next week we will look at simple steps to creating an effective budget/spending plan....

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Individual Service

Posted by on May 6, 2013 in | 0 comments

Individual Service

Personal Financial Planning and Management Services Understanding your unique lifestyle, current plans, and future desires are the first steps to creating the financial plan best for you. With so many financial pieces to consider and so many life changes, it can be overwhelming. Peggy Farnworth CPA, CFP asks the right questions and really listens to put you on the road to a more certain future. As Financial Planners in Boise ID, Peggy offers confidential analysis, planning and management in the following areas: Retirement Counseling: How much is enough? Are you maximizing your benefits? Maintaining flexibility? Investment Analysis: Does your portfolio match your risk profile? Is it balanced? Are there any underperforming investments? Cash-Flow Management: Do you have a spending plan? What are your goals for college or retirement? Are you concerned about out-living your money? Financial Planning: What is the big picture? How can you blend your life goals? Insurance Review: What are your employer benefits? What happens when you can’t work? Divorce Settlement Planning: How can a difficult transition have win-win solutions? Long Term Care: How can you protect your assets form being consumed by assisted living costs? What are your options? Estate Planning: How can I minimize estate tax issues? How can I ensure all my assets will be distributing according to my wishes? Financial Products, Services and Portfolio After creating a plan and setting financial goals, how can you choose the best financial service offering to get there? As Financial Planners in Boise ID, Peggy Farnworth CPA, CFP can help narrow options based upon your needs, evaluate feasibility reports and study risk-to-benefit options, so together the best investment strategy is formed. Peggy offers account set-up and management for: Mutual Funds* Money Market Funds* Stocks and Bonds* Annuities* Managed Accounts* Life Insurance Long Term Care Insurance *Securities and advisory services through KMS Financial Services, Inc. Philosophy & Mission Every person has unique dreams, goals and desires for the future. As trusted financial planners in Boise, ID, our goal is to know and understand our clients as a whole person to better serve their financial plan to secure the future and still enjoy today. Choosing Peggy Farnworth, CPA, CFP means: Friendly, personalized service to ensure your plan is right for you. High integrity and creative thinking to maximize your assets and minimize risk. Sound financial planning, advice and guidance to build towards the future. Easy-to-understand financial counseling to empower each client in the decision-making process. Commitment to ongoing professional development to keep up with changing tax laws and products availability. Our trusted Financial Planners in Boise ID, are easily reachable for questions and concerns. “Securities and advisory services offered, in states where licensed, exclusively through representatives of KMS Financial Services, Inc., Member FINRA<http://www.finra.org SIPC<http://www.sipc.com and an SEC<http://www.sec.gov Registered Investment...

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