Story and photo by Laura Onyeneho, 2016 JAWS Fellow
No matter what your income level, you should be creating a financial plan that will benefit you and your family in the long run, financial adviser Maureen O’Brien told JAWS attendees.
She shared her top 10 tips during her “Financial Planning for Journalists” session at CAMP on Oct. 29.
1. Invest in a Roth IRA retirement plan
“If your 401(k) has a Roth option, I think you should put part of your money in that,” Maureen said. The difference between a Roth and an IRA or 401(k) is that there is no required minimum distribution from Roth accounts: They are tax free, not tax deferred. If you can do a Roth, you can take advantage of that for some of your retirement savings. “I create pools of money for people: Short-term money, mid-term money and long-term money,” she said. “Roths go into the long-term money.”
2. Save for emergencies
Nothing is worse than getting into a situation you can’t financially pull yourself out of. “Emergency funds are an important part of the planning process,” Maureen said. This fund should be separate from your checking accounts and set up for emergencies only.
3. Don’t name your children in the will
People often do wills for the first time when they have a baby, she said. “Don’t say ‘I leave everything to my son Jeremy’ because, if you have a daughter named Julie two years later, she’s not named in the will, she’s not going to get anything,” Maureen said. Instead of giving specific names, just state “to my children who survive me,” she said.
4. Update your will
“You have to update your will every two or three years because your situation changes,” Maureen said. You also need to regularly update the information for money left to charities.
5. Don’t keep your will in you safe deposit box
“The minute the bank learns you are dead, nobody can get into that box and nobody knows what you wanted,” she said. Make sure two people know where your will is. “The original should be in a safe place, but not a deposit box unless it’s a joint safe deposit box where the survivor has a key to get the will out,” she said.
6. Keep track of your credit score
“The credit bureau keeps tabs on you before you even know they exist,” Maureen said. Experian, TransUnion and Equifax each have a methodology for determining a score. The number of credit cards, how much you owe on each, how much is your limit and on-time payments all factor into your score. If you miss a payment, it shows up on your credit report for seven years. Maureen also says you should check your credit report for errors. If you contact an agency, they are required to investigate it.
7. Use a retirement fund calculator
Vanguard.com, Fidelity.com and Americanfunds.com have calculators to help you plan your retirement. “They will generate how much you need to save, what your shortfalls are,” she said. The big respectable mutual fund companies have good calculators that are free to use.
8. Find a good financial planner
Make sure the financial planner you pick fits your needs. And don’t be afraid to ask questions, Maureen says. “Don’t be afraid to fire them if they are talking down to you, or if they are not listening to your needs,” she said.
9. Live within your means
Don’t spend more than you earn and start saving as soon as possible. “You should start saving in your 20s; three months of living expenses, six months is preferable,” said Maureen. Once you start that, think about a retirement account.
10. Life Insurance
Don’t worry about life insurance if you don’t have someone who is dependent on your income, Maureen said. If you’ve already maxed out on your 401(k) and you just need to shelter more money, life insurance can be a valuable legitimate financial tool, she said.