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Embrace change for financial wellness

A money guide for every life stage

What is your standard response to change? Do you resist or embrace life’s transitions? Do you view change as positive, negative or simply inevitable? I suggest that change is an essential part of life. Without change, people and things become stagnant, not growing and lacking vitality. This doesn’t sound like a place I would like to find myself.

The advent of a new year is a great time to review your past, present and future financial situation. It’s a time to consider upcoming life changes, such as graduating from high school or college, switching jobs, getting married or divorced, having children, losing a significant other or even retirement.

That said, here is some advice for those in various stages of life.

LEARNING THE BASICS

For young people, now is the right time to teach basic money concepts, such as the cost of money. To earn money, we must exchange a portion of our lives and our time. Encourage them to consider how many hours it took them to earn the money they want to spend. Is what they want to buy worth that many hours of their time?

Another great teaching point is the benefit of saving — putting money aside for unexpected expenses and their future. An antidote for the problem of greed so often displayed in our society is teaching the young people around us about the joy of giving and using our lives, our generosity, as an example.

THE BENEFITS OF BUDGETING

As we become adults, we often experience some hard life lessons when we allow our money to manage us instead of us managing it. If you haven’t already learned to budget, there is no better time to begin than now. Budgeting helps you know how much money you earn, as well as how you are spending it and how your money, or lack thereof, may be controlling you.

Budgeting does not have to be a rigid, dictatorial, process. Budgeting done properly is a tool to assist you in making better financial decisions today upon which to build a solid foundation for tomorrow.

PLANNING FOR COLLEGE

While experiencing the joy and stress of our childbearing and childrearing years, we often allow ourselves to become so consumed by the day to day that we fail to plan for our financial future. One thing I often hear parents stress over is setting aside money for college. My first questions always bring the focus back to the parents’ financial health. Can they pay their bills on time? Do they have a budget? How much, and what kind of debt do they have? Do they have an emergency fund? Do they have a retirement account set up that they are actively funding? Do they have sufficient life insurance coverage to replace their income should they die unexpectedly?

If the answer to any of these questions is no, my recommendation is to address each of these issues before attempting to put aside money for your child’s college.

READYING FOR RETIREMENT

Finally, let’s talk about the transition from working to retirement. Statistics show that 50 percent of American households have no savings in retirement accounts, and a full 56 percent admit they’re not on track to retire comfortably.

At ages 55 to 59, the median household had only $24,500 in retirement accounts. One popular rule of thumb states that you should have enough money set aside that you can withdraw 4 percent per year to cover your living expenses. What would your retirement look like if you had to live on 4 percent of your total retirement savings? Would you be in good or dire financial condition?

Based on your current retirement planning, or lack thereof, how easy would it be for you to find yourself among the older adults who are forced out of their job, with little or no retirement savings, still in debt and using Social Security as your primary source of income? If this scenario describes you, now is the time to make changes so your future self will have a better retirement. You will be glad you did.

Written by Kathy Rogers

Kathy Rogers is the vice president of Marston Rogers Group, a life planner and financial consultant. Reach her at (228) 206-5902 or Kathy@mrg.life.

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