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Summer Project: Your Family's Finances


by Christina Boyd, Merrill Lynch Senior Financial Advisor in Wayzata, MN

Getting a hold of your family's finances may seem like a daunting task, especially in these economic times. But it is important that we all take time to evaluate our family's financial footing so we can make smart choices about our saving and spending - especially now.

As we know from our busy lives, the better organized and knowledgeable we are, the more in control we will feel and the better prepared we will be to handle unexpected situations. Although it may not be the most fun summer project, getting a handle on your family's finances will help empower you to position your family for future financial growth. Here are a few tips to help you get started.

1. Determine your family's net worth 
Determining your family's net worth is the first step for getting your finances in order. To do so, add up your assets (cash, bank account balances, retirement savings, home value, automobile value, et cetera) and subtract your liabilities (mortgage balance, balance on all loans and credit cards, outstanding tax obligations or insurance premiums, etc). The total of your assets minus your liabilities is your net worth. It's important to be as honest as possible - ignoring money you owe will not help you in the long run, and in fact, will likely only make matters worse.

2. Budget for short-term expenses and long-term goals
 Once you know your family's net worth its time to think about your family's goals - both in the immediate future and more long term. These may include purchasing a new automobile or paying off the balance on your student loans, or possibly even taking the European vacation with your friends that you have been talking about for years. Whatever it may be, develop a budget that accounts for your everyday expenses and allocates money to help you achieve your goals.

3. Critically assess your investments
 Having taken a look at your investments when totaling your assets in Step 1, now is the time to determine if your investments are properly allocated. Oftentimes when the needs of our family change (a baby is born, a child begins applying to college or graduate school or a family member has an unexpected illness or injury) and in all of the excitement, we forget to account for the change in our financial strategy. If you have had a significant change in your family, it is worth taking inventory of your investments to see if it may be time to rebalance.

4. Take advantage of your tax refund
 If you have or will be receiving a tax refund this year make sure to use it wisely. The cash might be best used to pay down debt or to set up an emergency fund. By using this "bonus" money in a strategic way, you may be able to free up some money in future paychecks for items on your wish list. 

5. Don't go it alone
 Although there is a lot you can do on your own to get your family's finances in order, you can't expect yourself to be an expert. Schedule a time with your tax and financial advisors to review your financial situation and tax minimization strategies. Take advantage of their knowledge and ask any tough questions that have been plaguing you. By working together you will be better able to achieve financial stability, and ultimately, the lifestyle you desire.

Christina Boyd, recently recognized by Barron's magazine as the #2 Financial Advisor in Minnesota*, is a First Vice President-Investments and Financial Advisor with Merrill Lynch in Wayzata, MN. She resides in Orono with her husband, Dustin and two children. Christina can be contacted via www.fa.ml.com/ebbgroup, by email: Christina_Boyd@ml.com or by phone: (952) 476-5613.

* Financial advisors considered for Barron's "State-by-State" ranking have a minimum of seven years financial services experience and have been employed at their current firm for at least one year. Quantitative and qualitative measures used to determine the financial advisor rankings include: client assets, return on assets, client satisfaction/retention, compliance records, community involvement, etc.

Categories: Just for me, Money & Work, Newsletter,

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