Leadership and Executive Development for women of all races, cultures and backgrounds
Issue link: https://diversitywoman.epubxp.com/i/343997
DW Life > d i v e r s i t y w o m a n . c o m S u m m e r 2 0 1 4 D I V E R S I T Y W O M A N 37 Ellen Rogin, fnancial advisor and pres- ident of Strategic Financial Designs in Northfeld, Illinois, recommends people subscribe to a "values-based spending plan." This is where a person looks at her spending based on her personal value system and decides if what she is spending money on really matters to her. "For example, parents spend a ton on kids for things like lessons and soccer, but then wonder why they don't have the money to save for college," she says. "If they looked at what they value, they may make different spending decisions." So how does this affect fxed costs? Rogin explains that a cost is only fxed if you make it that way. There are exceptions to this—legal fees for pend- ing litigation are one exception—but most things can be changed, includ- ing insurance and mortgage costs. "Maybe traveling the world is what would make you happy but you have a mortgage to worry about," says Rogin. "You can change that so-called fxed cost and downsize or rent. It is all up to you." DW Have you ever evaluated your "fixed" costs? A. Why would I? Fixed costs never change; I can't do anything about them. B. Yes, I recently reevaluated my fixed costs and realized that very few of them were actually fixed. I changed several costs and now spend less. C. I'm too busy to evaluate my fixed costs. What value would it add to my life, anyway? Answer: B How much of your salary are you saving for retire- ment? A. The maximum that my com- pany matches—10 percent or more. B. I'm going to wait until I get a better job to save for retire- ment. C. I'm relying on my trust fund to buoy me during my later years. Answer: A "People tend to spend what they earn—out of sight, out of mind," says Carol Khouri, CFP, CDFA, principal at Wingate Wealth Advi- sors in Lexington, Massachusetts. "Therefore, it is so important to maximize the amount you can contribute, especially if you have a matching retirement plan at work." If your company doesn't have a matching retirement plan (or if you are self-employed), plan to con- tribute at least 10 percent of every paycheck, recommends Khouri. An emergency fund is a pot of money that is accessible at all times. It could be sitting in a sav- ings account, checking account, or money market account. It's there in case you lose your job, fall ill (or a family member falls ill), or the like. This is the money reserved for true emergencies (not those involving fashion). Establishing an emergency fund is more important than any other fund. Saving six months' salary can be a daunting task, but it is pos- sible. "Start with $50 per month," recommends Leonard. "Next year, go to $55 or $60, if you can handle it. Go up from there." How much money should be in your emergency fund? A. What emergency fund? B. Equivalent to six months' salary, after taxes. C. $10,000, no matter how much money you make. Answer: B