Taking Back Control

by Valerie Peck, MBA, CFP® – Fee-Only Financial Advisor

Originally published on the San Diego State University Planned Giving and Estates Blog

Markets are volatile
China is scaring us
We thought low energy costs were supposed to be GOOD for us

So how are we supposed to react to all of this?

Taking inventory helps. Inventory of what’s working in your life.  Inventory of what you have, of what you want, of what you care about.  Inventory of what worries you and what threatens you.

What’s Your Big Picture?
Consider what’s important to you. If you were looking back on your life, what would you wish you did/had/established for yourself and for others?  How are you protecting you and yours for the downside of life – a cash cushion, insurances, future incomes?  What’s the legacy that you want to leave?

Identify Resources
Identify what assets you have – savings, investments, retirement, home, future income. Recognize the insurances you have that protect you on the downside. Consider the costs vs. the benefits for investments of time or money. Get some facts to confirm your assumptions.

Identify the Liabilities
Look at your liabilities like credit card, mortgage, car loan, student loan. Target dates to have debts paid off, not just paid down. A helpful website for shopping low rates on loans and credit cards is http://www.bankrate.com.

Make a Plan
How will you use your resources of time, money and talent? Be specific. Identify your priorities – how do you want to spend your time, give your energy, and invest in your future.

You can accomplish a great deal with a pad of paper and a determination to act. Carl Richards has written a book called The One-Page Financial Plan that is a helpful place to start.  He also has a podcast called “Behavior Gap Radio” that shares ideas to help you stay on track. You can hire a financial advisor to work through a financial plan with you.  (If the plan is free, be sure you understand how they make their money.) There are a lot of ways to get this done in a manner that works for you.

A good plan reminds you what is important to you as an individual. It might be stability, education, fitness, travel, opportunity, flexibility, fun, health, protection, security for yourself, for those dear to you and for your larger community. It acknowledges your concerns- perhaps a loss of independence or opportunity. Your list will vary. It should vary. It’s your list and your priorities.

Be as specific as you can. I know a woman who received a scholarship designed for a female who was a 2nd generation San Diegan of Mexican descent. The scholarship paid for her books and fees for four years of college. Four decades later, it still touches her that someone thought so specifically about their legacy and how it would help the next person.

Take Action
Look at how present-day realities align with the future plans. Do the numbers add up? Are assets held in a way that you can get to them when you need them – for retirement, for educations, for legacies? Are you thinking about how things are taxed now and in the future? With or without a professional in the room, you will see discrepancies in your present situation vs. where you want to be. Start to reconcile those discrepancies. Identify the what, when and how of your actions.

A financial plan doesn’t wipe away the bumps or the discomfort of challenging times. It gives you direction on the road to your priorities.

-Valerie Peck has been helping people prepare for financial change, whether in their personal lives or their work lives, since 2003. She was trained as an educator, worked in business in Europe, Asia Pacific and the U.S., and now focuses on her role as a financial planning advisor and investment manager for her clients. She is a Certified Financial Planner ™ professional and a member of NAPFA and the Estate Planning Council of San Diego. She received her MBA from the University of Colorado and her teaching credentials from San Diego State University.