How to get financially fit in 2016

Dorie Fain
Dorie Fain is the founder and CEO of &Wealth, a boutique financial advisory firm dedicated to helping women who are recreating their lives, with offices in New York City and Baltimore.

Published 1/8/2016 in The Maryland Daily Record

As we begin 2016, I am starting off the year with a Q&A from recent conversations we’ve had with clients who are preparing to start the new year off with a focus on financial fitness.

Q: What are the “need-to-know” facts about my financial life?
A: These are five important financial questions you should be asking yourself or your spouse so when you need it,
you know where to turn:

  • Who do I call? Similar to the list most parents keep in case of emergency (cell phone numbers, pediatrician, fire, police) keep an updated list of key advisers and their contact information, including insurance agents, CPAs, attorneys, investment managers, and other advisers.
  • Where are the documents? Having a road-map of where all of the financial and legal documents are goes a long way when needing to make changes or new decisions about your finances. Are the documents filed in a hard-copy form in the house, online, at the adviser’s office or somewhere else? Everything should be spelled out on paper. Generally, it is better to keep the documents in a central location, clearly marked so you don’t have to run around collecting them.
  • What are the passwords? In a world that is increasingly online, login information is required to access account records. Keep a list of usernames and passwords for all key online accounts as well as any safe combinations and locations of safe deposit box keys. There are easy online “vaults” to save passwords.
  • How much do we spend annually? People often experience significant anxiety about what they can afford when their life circumstances change. Having a good idea of the household budget items and the associated annual/monthly expenses will create a solid starting point for understanding how much money is required to maintain your lifestyle. There are free websites that make tracking expenses and budgeting really easy.
  • Where is the money? Assets can live in many places — financial institutions, safes, safety deposit boxes or even under the mattress. Know the locations, names of institutions, contact people, account numbers, account titles and approximate values. Remember art, jewelry, gold. Are there significant assets other than cash or financial investments that should be valued, appraised or insured?

Q: How to prepare for the worst without totally stressing out?
A: The single most important thing to do to manage stress related to your finances is to plan.

Planning for the worst doesn’t increase the odds of something terrible happening. Planning gives us a sense of confidence that we can go about our lives knowing that we are covered in the event of an unexpected change. In addition to knowing the facts, think about who you would turn to for advice. Who would you trust? Think about who you would feel comfortable confiding in and interacting with. Seek to understand the guiding principles of your financial life to keep in mind if you were to be managing these decisions after a life-changing event.

Q: How can I raise a financially fit girl and empower my daughter to take ownership over her own financial life?
A: Help your daughter manage these three key components that have the greatest impact on her financial life: materialism, ownership and giving.

Materialism: Thinking about my own upbringing, the single greatest motivation I had to take control of my financial life was that I had to buy most of the clothes that I really wanted. My parents provided the basics, but as a teenager, everything that I wanted above that came from my earnings from part-time jobs.

Ownership: How do we help our girls take more ownership? By giving them more ownership, setting an expectation that regardless of our family’s financial ability, we will ask that our children financially contribute to
their own wants and needs and that they learn the concept of “pay yourself first. Setting up a savings account, adding to an investment portfolio, educating girls about the power of having their money work for them. These are concepts that can be taught at a very early age and will carry on throughout their lives.

Giving: Helping kids understand the meaning of charity by giving of their own earnings and time to the material, social, and spiritual welfare of their community. The conversation in our homes can be more open about the values that inform our buying decisions. Getting clear about this for ourselves is an important step toward passing these values to our children. With all of the pressures placed on our young girls, their ability to earn and provide for themselves will help to build the self confidence that goes hand in hand with financial independence.

Dorie Fain, founder and CEO of &Wealth