- Our Services
- Publications & Video
- Client Login
Financial RemindersSubmitted by Townsend Asset Management Corp. on April 22nd, 2016
G.K. Chesterton observed, “We need to be reminded more than we need to be instructed.” In some financial areas we all need a degree of instruction and education, but quite often Chesterton’s adage rings true – we know many of the things we should be doing financially, but just don’t do them, so we need to be reminded.
So, here are a few reminders:
• Watch your income and expenses. As Benjamin Franklin remarked in his timeless classic, The Way to Wealth, “Beware of little expenses. A small leak will sink a great ship.”
• Pay yourself first. Before you pay your cable bill or buy your Starbucks coffee, pay yourself by setting aside a portion of your earnings for both short-term and long-term future needs. Don’t make the mistake of budgeting with the idea of saving something from what is left over at the end of the month. Nothing will be left over. Instead, do your savings first and then learn how to live on whatever is left.
• Learn how to be content. Contentment doesn’t come from the accumulation of stuff or bank accounts. However, contentment is also not an excuse for laziness, lack of goals or purpose in life.
• Handle credit carefully. Money is a good servant but a lousy master. Avoid overextending yourself and presuming upon the future with excessive credit.
• Manage your risks. Some risks we can avoid and others we accept as part of life. Some risks can wreck families and their finances, and are things that can be mitigated through insurance. Make sure you have adequate insurance to protect your life, health, ability to work, and your assets.
• Plan for your taxes. We can’t avoid taxes, but we can take steps to minimize them: Participating in employer retirement plans, funding your own IRA, careful investment selection, planning for how you will withdraw money from your various accounts, etc. Take advantage of tax refunds to fund your IRA or other savings account.
• Consider your estate. Protect your family by having in place necessary documents such as a Will, Durable Power-of-Attorney, and Health Care Power-of-Attorney. Think carefully about who you might name as a guardian for your children or to serve as a trustee on any family trust.
• Invest slowly and wisely. Most good decisions are not made emotionally or in haste. Don’t allow short-term events in the markets to disrupt long-term, well-thought-out investment plans. Review your investments periodically and prune when necessary, but don’t overtrade, jumping from one investment or strategy to another.
• Seek good advice. Proverbs 12:15 tells us that “the wise listen to advice” while Proverbs 14:15 cautions that “the simple believe anything, but the prudent give thought to their steps.” These are two excellent bookends for getting advice. Ignoring advice is foolish – but we should also use our common sense to evaluate the advice we receive.
• Start early and take baby steps. A journey of a thousand miles begins with a single step. You may look at your credit card debt or miniscule retirement account and feel discouraged, but don’t let that freeze you into inaction. Obviously, starting a savings plan and controlling your expenses early in life is most desirable. However, at any age we can begin taking one step at a time, paying down high interest debt, paring living expenses, and setting aside a portion of our earnings. Just keep following this path and let time and compound interest work their magic.
Gerald A. Townsend, CPA/PFS/ABV, CFP®, CFA®, CMT is president of Townsend Asset Management Corp., a registered investment advisory firm offering comprehensive wealth management expertise to its clients. Email Gerald@AssetMgr.com for more information. For the latest news and updates, follow Townsend's growing platforms on Linked In, Facebook and Twitter.