We understand that not everyone enjoys dealing with money matters. In many joint households, financial responsibilities often fall to one person, with the other having little or no knowledge.
While we are happy to act as a partner to help unravel detailed questions, we also want to emphasize the importance of knowing the answers to certain basic financial matters regarding your own situation. In particular, here are some of the things that are essential to know:
- How much do I/we actually make? Be sure to count all sources of income – from work, pensions, rentals, contract payments, etc. Also be aware of the difference between the gross (before any deductions come out) and the net (the amount deposited into your bank).
- How much do I/we actually spend? This can be one of the most difficult questions to answer, but it’s key to know how much your regular expenses tend to be. Are you getting full value from all of your spending, or are there some items that need to be re-evaluated?
- How are the bills getting paid, and how often are they due? Are they pulled out automatically on a monthly basis? Which expenses are semi-annual or annual, and need to be planned for in advance?
- How much do I/we actually owe? Once per year, take a good look at all of your outstanding debts. How much are the payments and interest rates? How much longer will it take to pay things off? It can be gratifying to watch these balance decline over time. It also tells you something if you see them rise from year to year.
- How much insurance is in place to cover death or disability? Plenty of people never look at their coverage again after initially taking it out. Know if you are over- or under-insured, and adjust accordingly.
- Where can you find financial statements, passwords, or contact information if needed? Do you keep organized paper files, have a password manager installed on computers, or know the names of the companies or professionals you deal with?
One reason that clients choose to collaborate with Johnson Bixby is so that we can provide guidance, clarity, and handle a variety of details. We love the fact that we can fill this role in your lives, but encourage every one of our clients to learn and understand the main aspects of their financial picture, even if they aren’t a “numbers person.” Your planner is a good person to talk to if you don’t know where to start, so please don’t hesitate to ask questions.