Dear <<First Name>>,
Post the holidays we start the year with cheery optimism while we snuggle into winter. The beginning of the year is a great time to review, assess, and consider alternative options in your financial plan. For this month I share some key parts of your regular financial review from one of the many articles in our website resource library. I also want to share with those of you that are subscribers to the Wall Street Journal an article that I wrote for them in December 2016.
Thoughtfully,
Walid L. Petiri AAMS, RFC
Financial Management Strategies, LLC
http://www.fmsadvisors.com
Build Your Financial Foundation with Regular Reviews
Life in the 21st Century offers many exciting challenges and opportunities. Today, there are many financial strategies that can help you reach your short- and long-term goals. Your financial professional can be a valuable resource as you review your financial situation, ascertain your progress, and make any necessary adjustments.
Most everyone has, formally or informally, a financial strategy that should be regularly reviewed. For example, you probably follow a budget, save for special goals, or look over your retirement savings from time to time. Whether paying bills or preparing your income tax return, you frequently look at various parts of your finances. However, once each year, you should pull all your records together and take a close look at your entire financial picture.
Here’s a brief description of what a typical annual review might entail:
1) Cash flow analysis. Does your income equal or exceed your fixed and variable expenses? The amount of income that exceeds what you spend is called positive cash flow. If your expenses exceed your income, you have negative cash flow. If your cash flow is negative, it may be time to reorganize your budget and minimize any unnecessary expenses so that you can focus on saving for your future.
2) Provide money for special goals. For every financial goal you establish, you need to address the projected cost, the amount of time until your goal is to be realized (time horizon), and your funding method (a scheduled savings plan, liquidating some assets, or taking a loan).
You should plan your goals according to priority. Most importantly, you should have an emergency fund of at least three months of income to handle life’s unexpected turns. Secondly, you may establish a savings plan for larger, long-term goals, such as your child’s wedding or educational expenses. Finally, consider the priority of more flexible goals (e.g., purchasing an automobile, enacting home renovations, and planning a vacation).
3) Enrich your retirement. Are you going to have enough money when you retire? Pensions and Social Security may provide insufficient income to maintain existing lifestyles during your retirement years. Consequently, review your retirement needs and plan a disciplined savings program for your retirement.
4) Minimize income taxes. Many taxpayers reduce their liability by taking advantage of tax breaks, such as contributing pre-tax dollars to an employer-sponsored retirement plan. Most also claim deductions for mortgage interest, traditional IRA contributions, or charitable donations. In addition, there may be other ways of reducing your tax liability. For example, under appropriate circumstances, losses or expenses from previous years may be carried over to the next tax year.
5) Beat inflation. Suppose the current inflation rate is 4%. In order to maintain your buying power, you would need a 4% annual wage increase so that your income keeps pace with rising prices. A decline in your buying power would certainly lower your standard of living and affect your lifestyle. Consequently, consider putting your money to work for you to beat inflation.
6) Manage unexpected risks. You are probably well aware that life involves risk, which could lead to financial loss. For example, you could become disabled without income, or an untimely death could cause financial hardship for your family. As a result, many have made insurance the cornerstone of their overall finances because it offers protection that can help cover potential liabilities and risks.
These six steps will help you focus on the important issues that affect your finances. As you review your financial situation on an annual basis, you will probably need to make alterations due to changing goals and circumstances. However, if you faithfully keep track of your progress in these six areas, you may be able to both afford your future and finance your dreams.
Walid Petiri is the owner of Financial Management Strategies, LLC (FMS) a Registered Investment Advisor established in 2000. He has over two decades of financial experience that covers virtually all areas of finance from tax, insurance, stockbroker, personal financial planning and personal banking to corporate credit, business planning, and consumer lending.
Mr. Petiri has frequently been heard on WEAA (88.9 FM) as a financial commentator, appeared on WMAR-TV 2 regarding the 2008 & 2009 economic downturn, and MTA Commuter Connections regarding residential land development. He has been
interviewed and quoted by the Investment News magazine, written for the Journal of Personal Finance, is a frequent contributor to the IARFC publication, The Register, Popular Finance (of China), Minority Enterprise Advocate magazine, and publishes a monthly financial advice column called the Foresight. Mr. Petiri was also quoted in
Bankrate.com and currently writes for the Baltimore Examiner. Most recently, Walid’s articles can also be found on
The Wall Street Journal, Aging News Alert,
Morningstar.com,
USAToday.com, TheStreet.com, Wall Street CheatSheet, and
Examiner.
In June 2012, Walid was featured in
SmartCEO Magazine - Baltimore for the 2012 Top Money Managers Wealth Management. Walid serves on the Finance Committee of Associated Black Charities and is a member of Bethel African Methodist Episcopal Church. He also serves on the Board of Directors for the Reginald F. Lewis Museum and is a devoted parent to his son and daughter.
Contact Us
Walid L. Petiri AAMS, RFC
Chief Strategist
Financial Management Strategies, LLC
1330 Smith Avenue
Suite 7
Baltimore, MD 21209
(p)
410-779-1276
(f)
410-779-1302
please visit our website
www.fmsadvisors.com
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