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Money Issues
But
when so much worry and fear pervades the financial pages these days,
it’s hard to determine which way is up, especially when no two families
share exactly the same situation.
“It seems many of the
people we talk to are taking a different approach to life these days,”
shares Peter Fisher, co-founder of Human Investing, an investment firm
located in Lake Oswego, Oregon. Fisher and his business partner, Dirk
Anderson, have a unique approach to working with clients that forms the
basis for their firm: Focusing on the things that matter in life, such
as relationships, shared experiences, and serving the needs of the
community, the team at Human Investing works with their clients to grow
their resources in order to fund the things that really matter in their
lives.
“Over the last ten years or so,” Fisher says, “it
seems everyone had a little more margin to operate on; a decent job, a
relatively stable economy, and enough to pay the bills. Today, the job
stability is gone, and…with all that has gone on in the economy, the
client goals have definitely changed, but our investment advice is still
the same: manage risk, be wise about using debt, save, and invest.”
So
as personal goals and aspirations change in families throughout North
America, what does it take to make sure you are on the right path with
your investments and financial goals? “Most people who are in a
difficult spot financially know the pain and toll it can have on a
family and relationships,” Fisher says. “Taking the time today to get it
all onto a piece of paper is a first positive step to getting back on
track…there is a great deal of peace that comes from taking the time to
plan and put together a game plan for financial success, whatever you
deem that to be.” The following general principles will help you
establish a firm footing and develop a sense of peace about your
finances in an economy that is on its way to balancing out.
1. Live within your means.
This
first step includes building a budget that includes all expenses with
line items for saving and debt reduction as well. Fisher also recommends
a cash budget, which he and his wife employ in their own household. “My
wife takes three withdrawals a month from the ATM and pays with cash
for everything but fuel,” he says.
“We found that even debit
cards were too easy to spend, and we didn’t feel the pain in the same
way as we did when we counted through a wad of twenties and paid for
something we really didn’t need.”
2. Pay off debt.
“There
are a lot of persuasive sales people who would encourage you to take on
debt, even if it’s not the best thing for you,” Fisher says, “[but]
it’s really hard to get into a financial pickle if you have little or no
debt.”
3. Take advantage of retirement plans offered through your employer or IRAs.
“Contributions
are deductible,” Fisher advises, “and whether or not there is a match,
if someone has a 25% tax bracket, every cent they put into that plan
earns 25% the second they put it in, because the alternative is not
contributing and paying the taxes. I’ve heard people are stopping
contributions to the retirement accounts because they are too risky.
That may be true relative to how their stockbroker has them invested,
but there is most often a safe or risk-free option.” Fisher advises that
if you are scared of the market, you should still contribute to a
tax-deductible investment and place the funds into a safe or guaranteed
account.
4. Beware of fees.
“For every dollar you pay to invest,” Fisher says, “it’s a dollar less you have in your account.”
5. Be wise about what you are investing in.
“Invest
in things that have the opportunity to grow over time, such as
children, retirement accounts, homes,” Fisher says. “Don’t invest in
things that go down most of the time, such as cars, boats, and jet
skis.”
6. Make your bank pay you something for what you deposit with them.
“They don’t loan you money for free,” Fisher says, “so you shouldn’t loan them money for free.”
Written by Amber Lindros.
