Financial Insights
Map Out a Financial Strategy
When it comes to finances, you may be fairly sure where you’re headed this month, but less certain where
you’ll end up 5, 15 or even 30 years down the road. Now is the perfect time to take stock of your financial
situation, identify your financial goals and map out a strategy to meet them. Here are some ideas to help
you on your journey.
Before You Begin
Educate yourself. Books, magazines, TV, radio, seminars
and the Internet are good sources to help you learn
about personal finance. The financial arena constantly
changes—regulatory codes, tax laws, interest rates and
types of investment vehicles all can change frequently.
Invest some time in your future and keep abreast of
financial news.
Seek professional advice. Not everyone can be a pro in all
areas of money management. Create an advisory board of
professionals to help you: an accountant, attorney, real
estate broker, banker and financial planner. Consult with
them and evaluate their advice.
Where Are You Going?
Set financial goals. Write down your short- and longterm financial goals. Involve the whole family,
including your children. A short-term goal is one you
want to achieve within five years, such as buying a new
car. A long-term goal takes more than five years to
achieve, for example saving for retirement.
Establish an emergency fund. An important short-term
goal for everyone is to establish an emergency fund. Set
aside enough money in a safe and accessible account to
fund bare necessity living expenses for three to six
months. Many people put money into a savings or
money market account for their emergency fund.
Determine each goal’s cost. Once you’ve set your
short- and long-term goals, determine how much
each goal will cost (factor in inflation for long-term
goals) and how long you have to save toward each
goal. Calculate how much you’ll have to put away
each month to reach each goal. If you need help,
consult your financial advisors and the educational
resources listed above.
Where You Are Now
Take a financial snapshot. Get out pencil and paper and:
• Add up what you own (assets) and subtract what you
owe (liabilities). The difference is your net worth.
• Keep track of your current spending for two or three
months.
• Take note of even the smallest amount. You may be
surprised at where your money is going.
Review your financial documents. Your insurance
policies and your will are important financial
documents. As you review them, consider if:
• Your insurance coverage matches your current
financial picture.
• Your will reflects changes in tax laws and/or your
personal situation (birth, death, divorce, inheritance, etc.)
How You Get There
Commit to your goals. Goals are futile if you don’t follow
through with them. One common and costly problem is
procrastination. Start now.
Start a budget. Now that you have an idea of where you
want to go and where you are, put your income, expenses
and goals into a monthly budget. If you don’t have enough
money each month to save for all your goals, here are
some options:
• Increase your income (take a second job, apply for a
better position).
• Lower expenses in other categories to free up money
for your goals (eat out less, buy a cheaper car, and
entertain at home).
• Readjust or eliminate some goals.
• Prioritize your goals and gradually work them into
your budget. Make it realistic—you don’t need to
accomplish everything at once.
Pay yourself first. This is the most effective savings
tactic. When you pay your monthly bills, put away money
for your short- and long-term goals. To avoid temptation,
have money automatically deducted from your paycheck
and deposited into your savings or other investment
account. Money you don’t see, you won’t spend.
Try these other saving tactics. In addition to paying
yourself first, here are some other ways to save:
• Alternate between putting your raises or bonuses
toward a goal and your day-to-day spending. This way
you can save toward your goals and still have fun.
• Raise the deductibles on your home and auto
insurance. This can free up premium dollars for
savings (but first have a solid emergency fund in place).
• Pay for cash items with paper money. At the end of the
day, save your pocket change in a jar. You’ll be
surprised how fast it adds up.
• Set up accounts for variable expenses. Insurance
payments, for example, may come once or twice a year.
Divide total annual insurance costs by 12 and set aside
that amount each month in a savings account that you
can draw on when the bill comes due. This also helps
even out monthly cash flow.
Pay off your credit cards. Misuse of credit cards can
sabotage your financial goals more than any other single
factor. Paying off an 18 percent credit card is as good as
earning 18 percent on an investment. If you haven’t
already, switch to a low, fixed-interest, no-fee credit card,
and keep it paid off each month.
Use the value of time. One of the most potent factors in
building net worth is time. Over time your money can
make more money by compounding. If you invest $100
in an account that earns 10%, you’ll have $110 at the end
of the year (a $10 gain). At the end of the second year,
you’ll have $121. This additional $1 increase is due to
compounding - earnings earned on earnings. Time,
combined with regular investing, allows compounding to
work to increase your net worth.
Diversify your portfolio. Don’t put all your eggs in one
basket. By diversifying your investments, you can
eliminate a large portion of the risk in your investment
portfolio.
Have Fun. – Reaching your financial goals is serious
business, but life is short. Free up some money so you
can do the things you enjoy. If your financial journey is
too hard, it won’t work. Create goals that work for you
and that you can live with.
This article was prepared by NewKirk for the use of the sender with permission from the publisher and is provided to you by MetLife Resources,
a division of Metropolitan Life Insurance Company (MLIC), 200 Park Avenue, New York, NY 10166. Securities products offered through MetLife
Securities, Inc. (MSI) (member FINRA/SIPC), New York, NY 10036. MLIC and MSI are MetLife companies.
The foregoing discussion is general in nature and not intended as specific advice. Neither MetLife nor its representatives are engaged in
rendering tax, accounting or legal advice. A qualified professional should be consulted regarding the effect of such considerations on the
matters covered in this publication. No reference to any MetLife product is intended.
While diversification through an asset allocation strategy is a useful technique that can help to manage overall portfolio risk and volatility,
there is no certainty or assurance that a diversified portfolio will enhance overall portfolio return or outperform one that is not diversified.
PEANUTS © United Feature Syndicate, Inc.
© 2010 METLIFE, INC.
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