o you want to improve your financial
future, lower your financial stress and
counter your tendency to overspend? Or
maybe you want to stop the collection agents
and credit card companies from banging on
your door.
It's time to give yourself a spending audit,
says Jim Trippon, CPA, author of "How Mil-
lionaires Stay Rich Forever" (Bretton Woods
Press) and financial adviser to hundreds of
millionaires, many of whom went from rags
to riches by budgeting their money wisely.
Budgeting helps you reach a financial goal,
whether that be breaking even or becoming
a millionaire. In fact, Trippon believes any-
one can become a millionaire by living frugally
and by having a good savings plan.
So grab a pen and paper and set up an
Excel spreadsheet or nab one of the many
budget templates available online. You're on
the way to developing a budget to keep your
spending on track and put more money in
your wallet!
· Determine your monthly expenses. The
first step to budgeting is tracking where your
money comes from and where it's going. Keep
track of all your expenses and income for the
next month or two.
You can do this by recording purchases
and collecting receipts to determine your
monthly costs on items such as food, enter-
tainment, car and housing. Or an even eas-
ier way to track this, Trippon says, is by ask-
ing your credit card company to give you an
annual statement of your expenses for the
last year. Also use your check register to help
determine your average expenses too, which
can also help you track all those ATM cash
withdrawals.
· Create categories for your budget. Break
down your budget into categories such as
housing, food (e.g. grocery store and eating out),
personal care (e.g. haircuts, cosmetics and
clothing), transportation (e.g. car payments,
insurance, fuel and maintenance), enter-
tainment, savings and investments, utilities
(e.g. phone, cable, water and sewer, gas and
electricity), other monthly payments (e.g.
credit card bills and health insurance), char-
itable contributions, and miscellaneous expens-
es such as vacations, unplanned car repairs, or
home plumbing that needs immediate replace-
ment.
· Allocate a percentage to each catego-
ry. Categories vary greatly, depending on your
spending habits, financial experts say. Also,
your geographic location may shape your
budget -- for example, those who live in
New York City may devote half of their income
to rent since housing costs tend to be high-
er there, whereas in other cities, housing may
only make up 30 percent of your budget. As
a general rule, Trippon advises saving 10 per-
cent of your monthly income and then break-
ing the remainder into percentages to cover
the other categories' average expenses. Your
overall goal should be to save 10 percent
monthly as well as not incur any additional
debt, he says.
· Stick to your budget. Hold yourself
accountable to your budget by maintaining
accurate records. Every week, record your
receipts under each budgeted category to keep
yourself in check. At the end of the month,
compare your actual expenses to your bud-
geted amounts. Are you over budget, under
budget or right on track? A re-evaluation of
your spending habits may be in order if you find
you're over budget.
In fact, "You might need to do plastic sur-
gery by cutting up those credit cards," Trip-
pon says. For example, you might switch to a
debit card, where you have to use the money
in your checking account, or you might refrain
from splurging to determine if you really need
that particular item by waiting at least 72
hours before buying it. Also, if you
owe a lot of money on your credit
cards, Trippon recommends asking
your credit card companies for a
lower interest rate -- about half of
the time, they'll grant it, he says.
Or, you might consider switching
to another credit card that offers a
lower interest rate.
· Show me the money. Don't
forget to budget some money toward
savings and investments to improve
your financial future. If you find
yourself falling under budget, pay
the surplus toward any debts, espe-
cially ones with high interest rates,
or use it to save for splurges, like
home remodeling or a new car. Also
take advantage of the maximum
matching contribution your com-
pany offers on your 401k plan by
contributing at least that much,
which can boost your overall compensation
by five to 10 percent.
And if your financial goal is to become a
millionaire, you can achieve that feat by sav-
ing $3.87 a day from age 20 until 65 in a Roth
IRA account or taking advantage of other
savings plans with IRA accounts, Trippon
says. By the time you retire, your tax-free
investments will make you a millionaire!
ost people envision themselves as
young and healthy. No one wants
to think that someday they may be unable
to eat, bathe or get dressed on their own,
or that they could have a disesase like
Alzheimer's. Long-term care is what you'd
need to help you perform daily activities
if you had an ongoing illness or disabili-
ty. You may be in your home, an assisted
living facility or a nursing home. In fact,
about 60 percent of people who reach 65
will need long-term care at some point.
But of course, it comes with a price.
According to the Federal Long-term Care
Insurance Program, the average nursing
home stay is 2.6 years and the national
annual cost of a semi-private room is $52,000.
Nursing home costs go up about 5 percent
each year. By the year 2030, they are esti-
mated to reach nearly $200,000.
So who will pay for it? Your adult children
may be financially unable. Medicare covers
only a limited amount of care after a hospi-
tal stay, and Medicaid will apply only when
your savings run out. Health insurance cov-
ers medical care for illness, injuries or hospital
stays. Disability insurance replaces only the
income you lose if you can't work after an
accident or injury.
However, there is help available. Long-
term care insurance can cover the cost of
this care and protect your assets. Once you qual-
ify, you'll remain eligible as long as you pay
your premiums. Apply as soon as possible;
the premium is based on your age when you
get the insurance, and it usually stays at that
rate. In most cases, you cannot qualify for
long-term care insurance if you are already ill.
Remember -- long-term care insurance claims
may be paid 10 or 20 years after the policy is
written. That's why it's a good idea to choose
a stable insurance company with a history
of writing long-term care policies. Check
with ratings services before making a choice.
When shopping around, look for a policy
that you can customize with the right com-
bination of benefits for you such as:
· Location of care: in your home, in a
nursing home, in an adult day center or in an
assisted living facility
· Type of care: skilled nursing care, cus-
todial care, home health aides
· Options for benefits (pay monthly or
daily) and length of coverage
· Flexibility in applying benefits
· The number of days that you pay before
your policy benefits begins, (ranging from
30 to 365 days)
· Coverage of mental illness such as
Alzheimer's
It's a difficult thing that you likely don't
want to think about, but getting long-term care
insurance now will save you headaches and
hassles when the time arrives later.
any people resolve to be more finan-
cially savvy at the start of the New
Year. But how do you do it? These days every-
thing is more expensive, and carefully mon-
itoring income and expenses is key. Perhaps
you want to learn how to make your money
go further, but don't know who to trust or
how to get started. According to Mary Carac-
cioli, financial expert and host of "Money
Matters Today" on CN8, The Comcast Net-
work, the first step to improving your finan-
cial situation is as easy as getting organized.
Caraccioli offers the following 10 easy
tips to make New Year's financial resolutions
a reality:
1) Buy a label maker and manila folders:
Start organizing with something that has
been piling up. As you put your statements
into one folder, examine spending habits.
Before you know it, you will have a better
understanding of your financial situation and
a stack of organized, easy-to-find financial
files.
2) Prioritize your new folders: Take 15
minutes to stack your new folders in order
of significance. Whether you want to refi-
nance a mortgage or pay down debt, move the
most important folders to the top of the pile.
3) Call a family meeting, even if you are
single: Talking about money is crucial to
financial success. Bring everyone to the meet-
ing who is part of your financial life -- your
spouse, children, parents or partner. Discuss
the folders and important financial issues.
Money is not a taboo subject and managing
it requires open dialogue and input.
4) Set goals: After the family meeting,
write out new financial goals. For example,
if you want to do a better job living within your
income level, make a plan on how to do that.
Write out your goals so you can review them
throughout the year.
5) Divvy up the duties: Involve family
members. Find out who is willing to take
responsibility for various financial tasks. Even
children can participate, with easy jobs such
as reminding the rest of the family to watch
the thermostat to save on the utility bill.
6) Think back and think ahead: Taking
a few minutes to consider what life changes
you experienced last year and what you expect
in the coming year can help you make bet-
ter decisions. If you know a child will be
starting high school, consider how these
changes will impact spending or investment
habits. The start of high school is a great
time to re-examine your child's college fund,
and last year's job promotion could enable
you to increase your 401k contribution.
7) Get out the checkbook and last month's
credit card statements: This is a quick way to
get a rough idea of what you spend month-
ly. There are certain things like mortgage
and car payments that are consistent, but
pay attention to the other expenses, like din-
ner outings, shopping trips and doctors vis-
its. This can help provide an important real-
ity check about your spending habits.
8) Where is your stuff: You spent the time
to organize all your important financial doc-
uments in the manila folders, now make sure
someone knows where they are stored in case
of an emergency. This should include your will,
medical proxy and account information.
9) Give 10 minutes a week: If you dedi-
cate just 10 minutes a week to review one
aspect of your financial life, you will be more
organized by the end of the year. You may
also start making better choices for yourself
and your family.
10) Invest in yourself: There are two
major things that can prevent you from sav-
ing money: an accident or illness. Protect
yourself by adding long-term disability insur-
ance to your portfolio and make sure your
regular healthcare coverage suits your cur-
rent lifestyle. Health is your most important
asset -- protect it with passion.
Long-term care
options
Make money matters a priority
How to create a budget
K
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Y
K
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8
January 29, 2006
Secure Your Future
The Citizen, Auburn, New York
The Citizen, Auburn, New York
Secure Your Future
January 29, 2006
5
Contiguglia Law Offices LLP
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