Financially Savvy

Money thought of the day... "Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver." ~Ayn Rand, Atlas Shrugged The key to success in financial matters rests in planning. It all starts by establishing your financial goals. Take the time to contemplate what you want your life to look like. Go beyond "I want to retire" by describing what you will do in retirement. Will you travel? Will you take up new hobbies? Let your imagination run wild. Visualize yourself retired. Ask yourself, "What do I need my money to do for me and when? Envision the "Quality Life" you want to achieve. Let this vision drive your financial goals. To help you drive the financial planning process, check out the Goal Setting Worksheet.

I came across some interesting statistics today while reading Journal of Financial Planning: America ranks as number 1 among 42 countries for highest percentage (22%) of citizens who have no money left after paying essential bills and spending discretionary dollars (ACNielsen) 28% of Americans with no money left to save at the end of the month in a similar ACNielsen survey six months before (ACNielsen) 9 out of 10 affluent families will lose their fortune by the end of the third generation (Chrisitian Science Monitor) In my own business I've noticed an increase in the number of clients who hire me to help them figure out why they are still living paycheck to paycheck. In the 1990's, most of my clients wanted to learn how to invest. Today they want to learn how to make their money go further. I don't pretend to know the reason for this shift or the scary statistics above. I have a guess to offer - overuse of credit to finance daily existence. Financial Planners recommend tha...

Okay, the New Year has begun. As is par for the course, we've drafted our resolutions for change and self-improvement in 2006. Do you remember last year's resolutions? Did you achieve them? If you're like most people you answered "no" to both questions. You can't remember last year's resolutions and therefore you didn't reach their fruition. So, why is it that "the best laid plans of mice and men are soon laid awry"? By the way, the first person to email me at cfitz@financiallysavvy.com with the correct name of the person who first coined this phrase, or it's close proximity...hint, hint, hint...will receive a gift certificate for a free teleseminar, a $12.95 value. In my opinion, we break our resolutions for one key reason: we select results we can not control rather than actions we can take. This year, write your resolutions but keep this rule in mind: set goals for results. Let me give you a few examples: Eliminate debt (res...

A friend of mine shared this story with me the other day. I felt it had a really valuable lesson for us all to keep in mind as we go about managing our money. A group of working adults got together to visit their University lecturer. The Lecturer was happy to see them. Conversation soon turned into complaints about stress in work and life. The Lecturer just smiled and went to the kitchen to get an assortment of cups - some porcelain, some in plastic, some in glass, some plain looking and some looked rather expensive and exquisite. The Lecturer offered his former students the cups to get drinks for themselves. When all the students had a cup in hand with water, the Lecturer spoke: "If you noticed, all the nice looking, expensive cups were taken up, leaving behind the plain and cheap ones. While it is normal that you only want the best for yourselves, that is the source of your problems and stress. What all you wanted was water, not the cup, but you unconsciously went for the bette...

5 reasons the Fed will fumble in 2006 I came across this article by Jim Jubak. It makes for interestingreading."Even with a new chief at the helm, the Fed is heading toward a policyblunder that will inflict a lot of pain on investors. Here are five bigreasons why." http://moneycentral.msn.com/content/P131828.asp Happy reading! Catie Fitzgerald Personal Finance Coach www.financiallysavvy.com

With approximately 75 million baby boomers gearing up for retirement, some investors are concerned that this huge wave of retirees will cause a stock market meltdown. The team at the Vanguard Group considers this event unlikely. Here are the reasons they give for a more optimistic point of view: Withdrawals will happen gradually rather than a mass exodus. The riches 10% of the US are likely to sell their investments during retirement, living off of dividends generated by their portfolios. This group owns 88% of the stock owned by individuals. The market has other participants besides the Boomers (other generations, foundations, international investors, etc.). The normal risks of stocks outweigh the demographics (the state of the economy, the level of interest rates, the tax environment, and the outlook for corporate earnings). What do you think? Will the retirement of the baby boomers lead to a melt down in the stock market?

Mutual Fund Overdose! I came across an article today about a woman who owned 84 mutual funds. So what, you might say? Well, having too many mutual funds can lead to several problems: Time crunch – difficulty finding the time to stay up on developments that could negatively impact your portfolio performance such as a fund manager retirement Increased risk - due to overweighting in a particular stock owned by several different mutual funds Diluted returns – if you have too many mutual funds, you could see the returns canceled by the losses in a one-to-one ratio such that your portfolio performance goes nowhere. How many mutual funds should you own to achieve effective diversification? The answer to this question varies depending upon your investment goals but you can use a standard rule of thumb to help make this decision. The Asset Classes Investors can choose from 15 different asset classes to include in their portfolio. In light of this, your portfolio should have no more t...

Do You Know Your Credit Score? While doing a little research on credit card statistics, I came accross an interesting story on www.CardWeb.com . The article discussed the impact of FICO credit scores on tha annual interest charges paid by consumers. Apparently, a 30-point increase in a consumer's credit score could save more than $16 billion in annual interest charges! The most dramatic savings occurs when the FICO credit score moves above 660. For a full view of the statistics from this study conducted by Providian check out the article " Score Savings ". So, I have to ask. Do you know your credit score? Do you know what impacts your FICO credit score? Some of the tactics most sane people consider sound money management, such as closing credit cards you don't use or need, can actually hurt your score. I encourage you to check out your FICO credit score and learn more about what impacts that score. To learn more about the FICO credit score, visit the credit education ...