Financial Security for Women 101: Know Where You Are

Although the intent of this series is to help the average woman develop the basic financial skills, there are people of both sexes, from all walks of life, that opt to allow others (or no one) to manage their finances. It may be 'easier' on the surface to be disconnected from the stress of financial management, but ignorance is not bliss when it comes to your money and your future.

It is our sincere wish that everyone have a happy, wonderful life with none of the pitfalls inherent in our modern lifestyle such as divorce, job loss, illness and death. But unless your name is Cinderella, you need to understand that there are harsh realities you need to prepare for. This is not fiction we're writing here.

One of the first steps on your journey to financial security is to know what your present state of affairs is. Otherwise, how can you map out a success strategy if you don't know where your starting point is? Even Dorothy had a starting point to escape from Oz. It may be unpleasant to face reality, but you gotta know.

Make a file, a notebook- some kind of recordkeeping device that works for you. You can buy books for that purpose, use a computer program, whatever. The important thing is that it be comfortable and easy for you. Don't add to your stress by trying to use a system that takes a lot of effort on your part to work with. My husband likes to do his recordkeeping on the computer but I prefer a notepad and simple accounting ledger.

The next thing to do is find out how much money you have right now in cash, checking and savings accounts. If you are the bill payer for your household, this should be easy, but if you've not been involved in that process previously, you may encounter resistance, even suspicion. It may take a diplomatic effort on your part to reassure your mate that your intentions are honorable. Each partner in any domestic relationship has both a right and responsibility to participate in the financial processes of the partnership. Just as you wouldn't invest in a business then blindly allow someone else to control the money, it is unwise to invest in a relationship with fruits of your labor yet not have a hand in the investment process at home.

When you think of investments, you may think stocks and bonds, but in truth, everything you spend money on is an investment. Buying groceries, paying doctor bills is an investment in your health. That big screen TV you've been wanting would be an investment in your entertainment. Getting up every day and going to work to earn a paycheck is an investment in your financial welfare. Paying bills is an investment in your good credit. Paying the electric bill is an investment in keeping the lights on. Instead of seeing things as expenses, consider them as investments. This is important as it programs your mind to see each expenditure as important and worthy of consideration.

Just as there are good investments that benefit you in both the short and long term, there are poor investments that would rob you of your security. Investing paycheck dollars in alcohol down at the local pub night after night may be an investment in your entertainment, but it is a poor investment long term as the return on your investment would likely be unpaid bills, poor health, possible addiction, legal bills from DUI's and a whole bunch of 'friends' who spend a lot of their resources on that sort of thing as well. Spending money for unnecessary items just to satisfy your desire for something new falls into this category. So does paying with a credit card and racking up big bills if you can't afford to pay them off in a timely fashion.

Speaking stocks and bonds...and retirement accounts, anything considered an investment for the future, you need to know what the value is. This could be as simple as looking at the most recent statement of that account or if it's your twenty year collection of Elvis dolls, having a competent, trustworthy appraisal done. You should make copies of all documentation and keep the originals in a safe place. This way you will have copies of the account numbers and a history record should it be needed. Be sure to include life insurance accounts in this search. Term life insurance does not accrue cash value, but it is good to know what you would have available to you if your loved one dies. Find out when the term of the insurance expires and what renewal options may exist. Whole life insurance accumulates a cash value over time as well.

Next, find out exactly what your total monthly household income is. All payments should be considered, and a copy made of the most recent statements should be added to your file.

Last but most importantly, is to find out where your money is going. Every last dime of it. Not only from the monthly bills, but everyday expenses. It's not a lot of fun, but keep a little notebook handy for a month and track expenses. You need your partner to do the same as well or at least give you the receipts so you can track things. If you meet a lot of resistance, you may have to resort to asking questions, making estimates or, as a last resort, snooping around to find out. This may be the least desirable approach, but every cent that gets spent in your household is an investment in your future. You have the right to know.

Once you have completed the information gathering process, you will begin to have an idea of your true financial health. The next step in this series will be to conduct an honest, straightforward appraisal of your financial health.

Bio:

Karen Walker is a wellness consultant and author. She works from her home in western Montana. She and her husband, Lynn McCormick, maintain websites to help those whose lives have been upset by catastrophic health events.

www.newamericanfamily.com