6 Practical Tips for Financial Success

Despite every single individual trying to attain financial freedom and stability, the subject is not yet taught in our schools. Thus, it is not uncommon for young people to be clueless about personal financial planning.

It is also not uncommon for a high school student to graduate in an American inner city and barely be able to read because of political correctness in public schools but this is another topic. See The Wire – the 5th season on this! That was junior high school students in Baltimore but the high schools are just as rough.

Moreover, if you are one of those people who are just stepping into this hyper-competitive, time-strapped world, or someone who has been working for a couple of years without any concrete financial goals, the following tips will come in handy.

Self-Control is the Key

Credit cards make it so easy to purchase anything on impulse. And if you are an impulsive buyer, like most Americans, you might be carrying a debt of $15,000 just on credit cards. Not good but this is not uncommon either!

Most of this can be avoided. Avoid eating at fancy restaurants, buying that expensive pair of jeans, or that new smartphone. Learn what delayed gratification is. Always save and purchase anything you wish with cash. Do not buy a couch you cannot afford and make monthly payments on it, for instance. You have to pay interest on that couch so handling your money this way is nonsensical. Pay in cash or do not buy. Go buy some cheap chairs for temporary use and save up to buy the couch.

Emergency Fund

One of the most neglected principles of personal financial planning is emergency funds. No matter the amount of debt you are carrying in the form of student loans, mortgage, credit cards, car loan or a personal loan, ensure you set a certain amount aside for emergencies.

Also, just forget that that the money exists. Treat it as a non-negotiable monthly expense, like your credit card bill. And use a high-interest saving account, money market account, or a CD for building up an emergency fund, or else inflation will erode the value of your savings.

Start Retirement Planning, NOW

If you have nothing saved for retirement, now is the time to start on that. Ideally, you should start your retirement planning the moment you start earning. The sooner you start investing in retirement products; the bigger your retirement kitty will be as long as you do not invest in Solyndra! Company-sponsored retirement plans are one of the most effective tools. Mutual funds, equities, and what not are other options to consider. Again, the mantra is to start early.

Keep the Tax Monster at Bay

Taxes seem to be omnipresent. Even before you get your first paycheck, learn how much of it will go into taxes or what will be your take-home pay. An increase in pay due to promotion or job hopping does not mean you will have extra disposable income like you are hoping. Trump will cut taxes but taxes will still be a part of our lives.

Furthermore, it might happen that you have moved from a low tax bracket to a higher tax bracket which increases your tax liabilities significantly making your increased pay not as impressive as you were hoping it would be.

You should also work with an accountant that can give you concrete tax advice or educate yourself on this topic if you do your taxes by yourself.

Never Ignore Health Insurance

A single emergency room visit can set you back by thousands of dollars, and without health insurance, it would be difficult to manage healthcare costs. Just like an emergency fund, it’s essential to have suitable health insurance for you, and if applicable, for you family too.

Yes, because of the ACA America’s health care picture is not impressive (it will hopefully get better in the years ahead but that is another topic) but you still need insurance regardless.

Also, unlike your wealth, your health will erode as your age progresses thus ensure you exercise regularly to keep yourself fit. As they say, “Health is wealth.”

Guard Your Assets

Guarding your wealth is as vital as acquiring it. A simple mistake can cost you your entire life’s savings. For instance, driving without car insurance and then you cause a wreck can be financially painful.

Similarly, if you rent your property, having renters insurance is of paramount importance. Any damage to the property due to burglary or fire will mean substantial losses to you. If you employ a financial planner, choose fee-only rather than commissioned based financial planner. It will help ensure that you will invest into financial products that are beneficial to you.

It is not difficult to plan your financial life, a little effort in educating yourself will reap rich dividends. Never invest in complex financial products if you do not understand them and if your name is Napoleon Dynamite, do not invest in anything! Protect yourself and your assets with the necessary insurance and avoid impulsive buying.

Follow these six principles to come closer to enjoying a stress free financial life.

Why are Mutual Funds better than Stocks for Low-Risk Appetite Investors?

Investing a certain portion of your earnings enables you to build wealth over a period of time. Though the investment market is full of investment products, stocks and mutual funds are most widely known and preferred by retail and small time investors.

However, considering the fact that stocks are extremely volatile, you should consider investing in mutual funds rather than investing directly in stocks. Here are few reasons you should consider investing in mutual funds rather than in stocks if you have a low-risk appetite.

No Need to Pick Stocks

Picking the right stock at the right price is one of the critically important factors that determine its success. In the case of mutual funds, a fund manager does this for you. If you are investing directly in stocks, you have to keep track of them, ensure you sell them at the right time and make appropriate allocation in different sectors. This is time-consuming and knowledge intensive exercise. And even if your stock does well, such as Apple or Ford for instance, the stock price could still go down if their future guidance is not right.

That is very frustrating!

Many instances have been found amongst Baby Boomers who invested their money into stocks and never tracked them. Most companies in which money was invested no longer exist. A mutual fund manager, on the other hand, keeps track of all the assets in mutual fund avoiding such situations.

Do not worry, your mutual fund manager will not be Napoleon Dynamite. This person will be a professional and not keep tater tots in his pant’s pockets! That type of behavior does not inspire confidence!

Distributed Costs

As an individual investor, you pay brokerage charges for buying and selling the stocks, which might be in the range of 0.5-1%. However, a mutual fund or the Asset Management Company that manages the mutual fund, due to economies of scale, pays a minuscule brokerage for trading the stocks. The management fee is all inclusive thus your overall costs of churning the portfolio are barely noticeable.

Low-Cost Investing

If you buy and sell stocks within a year, you will be liable to pay short-term capital gains tax which might wipe out profits. Of course, the same situation may be applicable in the case of mutual funds, but there is a difference. For instance, you might have to sell the stock within a short span to book the profits.

So apart from brokerage for trading stocks, you will also end up paying short-term capital gains tax and even with Trump getting the job done and doing things that are long overdue, such as cutting taxes, you still have some taxes to pay. Any time you can save money via taxes is something you should take serious.

A mutual fund, on the other hand, will incur just the trading charges (which are very low), and since your money stays invested in the asset management company, you do not have to pay any capital gains tax. Only if you exit the mutual fund within a year, you will have to pay capital gains tax on the profits made.

Optimized Asset Allocation

A concrete portfolio consists of 25-30 stocks spanning different industries. This requires a significant amount of time and stamina. You should be checking your stocks every day as well; you really do not have to do that with a mutual fund since they own a hundred companies or so and so a mutual fund is not as volatile since the risk is not tied up with one stock but many of them. You may not be in a position to invest that amount of money or time into this craft.

Moreover, it requires in-depth knowledge of stocks to pick the right ones. As you buy units of mutual funds depending on your budget, every unit is equally diversified. This significantly reduces the risk to your portfolio.

However, as the underlying asset for equity-based mutual funds is equities, if the entire market declines, your investment too will decline. A balanced mutual fund which has a mix of stocks and bonds, however, will offer better protection against market volatility as already mentioned. If you are extremely averse to risk, it is also possible to invest in debt mutual funds that offer low but assured returns.

As indicated earlier, you can lose your entire investment in a single stock. That rarely happens in the case of mutual funds since your mutual fund manager is looking after these companies making changes to the asset allocation as per the market conditions and new laws being voted into existence or even ending. He or she will not make the terrible investment decision we saw the main characters make in Horrible Bosses II. Not impressive!

Mutual funds moreover are tightly governed by the SEC. Thus, if you are new to investing, have low risk appetite, and are patient with your investments, mutual fund is the best investment vehicle that suits your profile. It does not mean you should not invest in stocks directly. Do that only if you have the market know-how, can dedicate time towards it, and do not mind taking losses.

4 Finance Tips for New Homeowners

Here is an interesting fact. According to recent research, about 40% of Americans do not own their own homes, but the remaining 60% are enjoying the benefits of ownership. However, there is also a downside of owning your own home which is the cost of an acquisition. It is not only the down payment that you have to manage; there are other expenses that you will have to pay for.

Here are some tips for you if you are a new homeowner:

Always have a budget

It is a known fact that your monthly mortgage payment will always differ, if only ever so slightly, from your rent payment. Most tenants feel that they only have to adjust their budget slightly when they choose to buy but they couldn’t be more wrong. Most buyers, when they are home hunting, they usually go for a home that is larger and more spacious than the one they are currently living in. This increases their cost of living.

They forget to factor in other expenses such as heating and electricity expenses, maintenance cost and so on. Now you have a lawn which needs time and money to maintain and since you are the owner, this is your responsibility. You do not want to end up with a lawn that looks like Dick Harper’s (Jim Carrey) in Fun with Dick and Jane. You also do not want your lawn to be repossessed!

What you need to do is to budget for all the potential expenses that you will have to bear so you know what it would be like to own a home. Then you can keep track of these costs and be able to evaluate the situation. This will help you come up with a budget to work with it, and help you understand the actual cost of relocating and actually owning a home.

Repairs and maintenance

As long as there are homes, there will be repairs and maintenance. There is no escaping this fact and the sooner you account for it, the better it will be. While most home owners do consider the cost of repairs and maintenance, they often underestimate it.

A suitable rule of thumb is that you are going to spend anywhere between one to four percent of your home’s value on repairs and maintenance every year. So for example, if you own a home that is worth $400,000, you must be prepared to spend anywhere from $4,000 to $16,000 every year to maintain it.

There are also these unexpected financial hits that will smack you every once in a while. For example, getting a new roof or replacing your heating or cooling system. This is why you should have some money saved. An appropriate rule of thumb is to save up to six months of expenses in advance.

Rising property taxes

Property taxes are determined based on local taxes and the assessed value of your home. Take these factors into account before you decide to buy that 2,000-square-foot house, for instance.

At the time of buying a new home, you will be notified of your new tax liability, but it is important that you understand this – property taxes have a cruel tendency to shoot for the north side of your graph which means that it is going to increase in the future. It doesn’t matter whether the value of your home has decreased, property tax might still see an increase.

For example, in the year 2000, about $247 billion was collected in property taxes, and by the time 2010 was here, the number doubled to $476 billion. This happened irrespective of the property bubble burst the US markets saw in the later years of that decade which was caused by Barney Frank but that is another topic.

Depending on the locality that you are residing in, you might have to reassess your property tax every few years. Once again, you will have to make some room in your budget for these hikes. Well, unless you vote for someone who lowers your taxes!

Escrow system

It is possible to merge your property tax and insurance into your mortgage payments using the escrow system. If you are unsure, here is how it works.

The lender will charge you a fixed amount every month which will be above your mortgage payment amount. The access money will be put in an escrow account and this will be used to pay your property taxes as well as homeowners’ insurance amount.

This is not true for all mortgages and you will have to talk to an expert to understand your particular situation. Some will just ask you to pay the exact mortgage amount while being responsible for property taxes and insurance.

If you belong to the second category, once again, you will have to budget accordingly. An average US homeowner spends about $2,127 in property taxes per year. It varies from state to state.

So now that you know how vital a budget is, and the different types of expenses that you will have to deal with once you buy your new home, you can plan accordingly.

Just do not mess up like Dick Harper did! And don’t rob convenience stores!

A New Retirement Plan that Works like a Pension Plan

Americans are known to spend more money than they should (America is trillions in debt and many Americans have thousands in credit card debt) and unlike Asians (the Japanese are known for their thriftiness, for instance), do not believe in saving money for their future. Although, not everyone thinks alike, this is a common and growing issue in the country.

A Growing Issue

According to a study, more than 40 million households in the US do not have any assets for their retirement. This accounts for 45 percent of the total population, a disturbing number. The research was conducted and the report was published by the National Institute on Retirement Security. About 20 million of these households have someone in the age group of 45-65 who is running the house. It is also estimated that many if not most Americans leave behind up to $65,000 in debt when they die.

Those who are saving money for their retirement are not sure if the amount saved will help them get through retirement. 401(k) accounts are self-regulated which means that if you are not competent at handling taxes and know a thing or two about investing, your future is in trouble.

Longevity Income Annuities

Government pension plans provide security even after you retire, and so do some pension plans offered by ubiquitous companies. If you are not part of any of these, there is still a way for you.

In the year 2014, the Treasury Department paved the way for an initiative regarding 401(k) retirement savings plans. Too bad no one has paved the way to prevent any more Jurassic World movies from coming out, that movie was horrendous!

Some tax laws were changed and some restrictions were removed, but the Treasury Department was successful in converting funds that were lying in the retirement savings plans to LIAs (Longevity Income Annuities). This new plan offers lifetime guarantee which is good news for all those who are not or unable to save anything for their retirement and old age.

If you understand deferred annuities then you understand LIAs. They have been active for more than three years now, but picked up steam only recently. It is possible that the treasury department will force it to become part of the target funds in a 401(k).

How LIAs Work

This is how they work and can help you when you need them the most:

You have a retirement savings account with a balance of $100,000. When you turn 65, you use $10,000 to buy a LIA. Now under this situation, according to a report published by National Bureau of Economic Research paper:

“Even in the current low-interest-rate environment, a deferred single-life annuity purchased at age 65 for a male costing $10,000 can generate an annual benefit flow from age 85 onward of $4,830 ($3,866 for a female) per year for life,”

This means guaranteed income which can come pretty handy when the situation presents itself, for example, old age. You have to bet that you are going to live a long life (unless we do something about Iran and North Korea but that is another topic!), long enough to take advantage of this pension plan. In that sense, it can be called a hedge. So what happens when you die early?

AARP

Olivia S. Mitchell, Wharton School of the University of Pennsylvania professor, says that LIAs are available to investors but they are not part of defined contribution plans. This is not to say that the concept has not been considered. There have been talks making them part of target-date suite of funds and even employers are looking for alternatives.

401(k) plans do not have lifetime income streams and annuities as a standard feature. If an individual who is already passed his or her prime is not sure how long they will live, he or she might underestimate their chances of living a longer life than the asset. Some people are simply unable to understand advance or even basic financial concepts. Retirement is a one-time event and people often underestimate it.

This is not to say that LIAs cannot be accessed easily simply because they are not part of defined-contribution plans. There is a plan called AARP that has been actively offering lifetime income program to its members since 2006. There is also a cash refund initiative where if you die before your total payments are equivalent to your annuity purchase price, the person you have nominated as the beneficiary will receive the difference amount.

LIA is not the right option for you if you are in poor health in which case, you should not sign up for deferred annuities. People who are very rich may also not require LIA. This is a plan for a specific class of people. Kind of like the movie Star Wars: The Force Awakens was for a specific class of people, people who enjoy movies with no impressive characters, weak writing, and subpar action scenes but this is another subject!

5 Tax Deductions that some Americans Surprisingly Ignore

The American tax system is vastly complicated and covers literally thousands of scenarios for just those paying personal income tax. There are several avenues by which you can save money on when you are paying your taxes. Some of these tax deductions are well familiar to most, such as the one for mortgage interest. There are several others which are not so well known. Here are 5 of them:

State sales and income taxes

On the question of itemizing deductions, a taxpayer can generally either deduct the amounts they paid towards their state and local sales taxes or their state and local income taxes. Look at the financial information related to both and choose the one that offers the highest deduction.

This is unless you are one of those people who really enjoys paying taxes and not even John Kerry likes doing that even though he votes for higher taxes he keeps his yacht in another state so he can avoid some sort of ridiculous boat tax that he probably voted for himself! What tax increase did he ever vote no for? Well, this is another topic!

In most cases, the state and local income taxes would offer more scope for deduction. However, in states like Florida and Texas which do not have income taxes at state and local level (which is why their economies are doing very well compared to states like California and New York), the sales tax deduction would be a better bet. This is particularly true of people who made large purchases during the tax year.

Child care credit

Citizens with children can avail automatic deductions for their dependent children. Having said that, there are several more deductions which can be claimed when a person utilizes childcare services for their kids. If a child is below the age of 13 or in effect, is disabled, a taxpayer can qualify to deduct up to 35 percent of all of his qualifying childcare related expenses up to a figure of $3,000 for one child and up to $6,000 for two or more children.

In order to qualify,

  • The parent should have been working during the tax year
  • The parent should be the custodial parent and the childcare provider cannot be the other parent
  • Child care should have been used so that the parent could work

Note: While summer camps are also counted, overnight camps are not.

Losses on gambling

Gambling works both ways, as far as the view of the IRS goes. It is true that gains in gambling are hit severely by the IRS in terms of the person in question having to pay up almost immediately whenever they win large, be it from a card game, slot machine, or a sports book. See Ocean’s 13! They helped a man win huge at the airport in a slot machine! At the same time, it is also true that all losses on gambling are considered tax deductible.

Las Vegas or Atlantic City regulars would be well advised to keep close track of their gambling related expenditures. This can help to reduce the tax pay-outs to be made on their gambling related winnings. The gambling related losses are generally claimed under miscellaneous deductions.

Medical and dental costs

Medical and dental costs can also be itemized for deductions once they reach a specific level. If the taxpayer is over 65, the level would be set to 7.5 percent or 10 percent of adjusted gross income, whichever is of higher value. So, the actual deduction would apply only for any expenses that are incurred above this level. What this means, for instance, is that a taxpayer who earned $65,000 in a particular tax year would be allowed to deduct any medical expenses that exceed 10 percent of her income, which means any expenses exceeding $6,500 incurred during that tax year.

This deduction greatly aids those who suffered from a debilitating illness during a tax year and also includes travel expenses for reaching the doctor or a hospital.

Education costs

Education costs also can be claimed as a deduction on your taxes. Any amount spent on educational expenses such as fees up to an amount of $2,500 per student is considered tax deductible. Under this, not only the cost of classes, but also the cost of textbooks and other costs associated with course material is considered.

Once a person graduates from college and continues to repay their educational loans, student loan interest deduction can be written off up to $2,500 per student. This can be taken advantage of by those who are single and who have graduated so long as their income is less than $80,000 per year. In the case of married grads, the combined income needs to be less than $160,000 per year.

Save that money! Uncle Sam takes more than enough!

Be Organized So You Can Better Maintain Your Financial Records

Organize your financial records

A key part of managing your personal finances is making sure that your financial records are well organized. Whether it is a Social Security card for purposes of wage reporting or utility bills to show proof residency, there may be times when you need to quickly locate a financial document or record.

You do not want to keep your records like Peter Le Fleur did in Dodgeball! That is not impressive!

By taking the time to tidy up and organize your financial records, you will be able to find exactly what you need exactly when you need it.

What Documents should You Keep?

Are you the type who keeps stuff because you never know when you might need it? Your home office or desk is probably overflowing with documents that you do not need or your closet like Peter Le Fleur’s closet! One of the first things you need to ask is “Why do I need to keep this?” – this will help you determine what records to keep.

You should keep documents that are difficult to obtain, like:

  • Proof of identity
  • Insurance claims
  • Legal contracts
  • Tax returns

On the other hand, if you have documents that you can duplicate easily, such as credit card and online banking statements, you probably do not need to keep hard copies since that will add up year after year.

How Long should You Keep Your Records?

Generally, you should keep your financial documents and records only for as long as necessary. For example, credit-card and ATM receipts should be kept only temporarily, until they have been reconciled with your credit-card and/or bank statement. On the other hand, if a document is difficult to replace and/or legal in nature, you may want to keep it for a longer period or even for an indefinite period. And not wide out in the open either; file it away in your office desk, closet, or even safe.

There may be more specific timetables for some financial records. For example, it is generally recommended by the IRS that taxpayers maintain federal tax returns and the documents that support them for at least 3 years up to 7 years from the date of filing. There may be certain circumstances that warrant keeping your tax records for an indefinite period of time as somewhat insinuated above.

Here is a list of some recommendations for the time period you should keep specific documents:

Records to Keep for 1 Year or Less

  • Bank or credit union statements
  • Homeowners and auto insurance policies
  • Utility bills
  • Credit card statements

Records to Keep for Over a Year

  • Mortgage contracts
  • Tax returns and supporting documents
  • Property appraisals
  • Receipts for home improvements and major purchases
  • Annual investment and retirement statements

Records to Keep for an Indefinite Period

  • Social security card
  • Birth, death, and marriage certificates
  • Citizenship and military discharge documents (DD-214 for those exiting the military)
  • Adoption records

Keep in mind that these are general guidelines. Based on your personal circumstances, you may need to keep these documents for longer or shorter periods of time.

Where should You Keep Your Records?

You could use a set of labeled folders for your financial records and keep them in a file drawer. However, for more critical documents, it may be better to keep the folders in a fire-resistant safe (as somewhat mentioned already as well), file cabinet, or safe-deposit box.

If your space is tight and you need to make sure that there is minimal clutter, electronic storage for some financial records may be a stellar idea (certainly for some financial tax documents). Online documents can be saved and you can scan documents to convert them into a digital version of themselves. Backup copies should be kept on a portable hard drive or a storage device (USB for instance). You should also make sure that your computer files are properly secured.

Another option is a cloud storage service. Your loaded information gets encrypted and stored remotely. Make sure that you use a reliable company if you are learning towards cloud storage – pick a solid company that offers technical support and automatic backup.

Once you have found a place to store your financial records, organizing and storing them according to specific categories – e.g., proof of identity, banking, etc. – may be helpful since it will make it easier for you to access your records when you need to.

Remember that your financial records are important documents that need to be properly maintained. You never know when you might need them. Keep the tips mentioned above in mind and make sure that your financial records are safe, secure, and easily accessible whenever you need them.

 

 

 

What is Personal Finance?

Personal finance is a very broad term and pertains to financial activities and decisions that an individual or a household undertakes to manage earnings and expenditures in a balanced way. The ultimate goal of personal finance is to secure the financial freedom of a person or a family using various financial tools.

These includes record keeping, savings, insurance, credit planning, retirement planning, and finally estate management. To understand personal finance, each of the above-mentioned personal finance tools needs to be understood.

How America Fares in Personal Finance?

According to Gallup, just 32 percent of households in the country budget their earnings. Out of a 300+ million population, only 30 percent of 90 million+ people have savings and financial goals. Those are not stellar numbers. It gets worse from here. As per a CNN report, 76 percent Americans live paycheck-to-paycheck and less than a month’s income is kept aside as an emergency fund. What does this say about the economy for the past several years? Not impressive! What does this say about our educational system that does not teach students about budgeting? Not impressive either!

This can change if you manage your finances in a smart way, continue reading to know how.

Record Keeping and Budgeting

Record keeping is the most fundamental aspect of personal finance. While some people like to keep track of every cent they earn and spend on a day-to-day basis, most just do it every week or month. The underlying principle of record keeping is to keep track of your earnings and expenditures. This, in turn, helps in allocating budget for necessities and avoid unnecessary expenses.

Tracking your earnings and expenses regularly also enables you to estimate your future income and upcoming expenses. Years ago, record keeping was a tedious task as all records had to be kept in a record keeping book. With computers and smartphones, most of the tasks now can be automated with minimal work to be done on your part. Record keeping and budgeting should always go hand-in-hand for salient results.

You do not want to keep your records like Peter La Fleur (Vince Vaughn) did in the movie Dodgeball! Not impressive!

Tax Planning

You cannot escape taxes. However, you can minimize the tax burden by making smart financial decisions. A Certified Public Accountant (CPA) can maintain accounts and do tax planning for you, but relying solely on your CPA is not recommended.

Investments

The key to financial success lies in maximizing your income. Savings in the form of cash or Certificate of Deposit (CDs) is just a safety net in times of financial crisis; the real financial freedom comes only when you invest your money wisely and earn more from it. Thus, in personal finance, the need for understanding various investment avenues for individuals and families arises.

Government departments and private organizations offer a plethora of financial products that can be used for making investments and growing your money. However, all these decisions have to be made depending on your current net worth, future earnings and expenditures, and risk appetite.

If you want to learn a little about risk, go watch Along Came Polly which is an OK comedy with Ben Stiller. His character Reuben Feffer knew all about risk!

Credit Planning

Any form of legal debt including mortgage, home-equity loan, credit card debt, student loans, and personal loans come under credit planning. The golden rule is to stay away from debt. However, that is hardly possible in today’s consumerist world. The cautious approach thus is to borrow within your means. Investing or splurging with borrowed money is the worst financial sin one can commit.

In personal finance, you learn how to manage your debts so that your interest payments on debts is minimal. For instance, knowing that putting in 20 percent down payment while buying a home will result in lower mortgage interest rates. This results in thousands of dollars or savings over the years.

Insurance Coverage

Insurance is for protecting your financial interests against uncertainties. A serious health condition can wipe out your entire life’s savings or engaging in extreme activities like Leland Van Lew enjoyed doing in Along Came Polly!

A fire can destroy your dream home. In the worst case, if something happens to you, your dependents will be left to fend for themselves. However, as insurance products are complex financial planning instruments, learning a bit about them and making smart purchases will help you in staying stress-free even in times of uncertainties.

Retirement Planning

One day you will stop working and so the income you have been earning will dry up. If you have practiced smart retirement planning, you can enjoy the golden years of life without having to worry about day-to-day expenses or any medical expenses. Retirement planning ideally should start somewhere around the age of 25, but if you have not, some tools and products will help you achieve these retirement’s financial goals. It is easy to get overwhelmed with IRAs and other retirement products. A little bit of financial knowledge, however, can ease this process.

Estate Planning

Just like taxes, death too is certain. All inheritances are taxed (though Trump may change that!). Moreover, if the will for your successors is absent or not drafted properly, it might lead to infighting among them. Estate planning thus is the last, but not the least important aspect of personal financial planning.

As stated earlier, personal finance is too vast to be covered in a single article. The key is to understand a little bit of everything. You can hire someone to do this for you, but if you are aware of the basics of personal financial planning, it will save you lot of time and money.