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10 Simple Steps to Shore Up Your Financial Life

10 Simple steps to shore up your financial life

Often I am asked, “Where do I start?” when it comes to finances. Most wealth advice starts with basics, like save and invest. But there are several more first steps to consider when you’re trying to make sure your financial life will be both profitable and protected. Below are my 10 simple steps to take when addressing the financial front:

1. Review personal insurance.

Be sure you have life insurance coverage for income replacement for both spouses–even if one does not receive an income. Assess your mortgage debt, college funding, and any special needs as well. Consider disability insurance, because unanticipated costs of living with a disability can be financially devastating. When possible, buy the insurance personally so the benefit is tax-free, rather than using a company plan that provides taxable income. Strongly consider an umbrella policy to cover any unexpected accidents or law suits.

2. Review business insurance.

Does your business have “key man” policies that will fund the cost of replacing a person who is a major contributor? Does your business have buy-sell insurance and an operating agreement to detail and fund a buyout in the event of an owner’s disability or death? Imagine the troubles you could encounter being forced into partnership with your partner’s spouse or children.

3. Title assets to carry out your wishes.

Make sure your assets are titled in accordance with your estate plan. Consider trusts in scenarios where property or businesses are owned in multiple states to avoid the hassle and costs of probate.

4. Fully fund your retirement.

Pay yourself first. There are large tax savings and the tax-deferral and compounding effects are considerable and can have a huge impact on your financial life. Most companies will also match a portion of the contributions.

5. Lock in rates on long-term debt.

When rates are at historical lows, they will be going up. Avoid floating rate debt. This includes some mortgages, home equity lines of credit, credit cards and many personal loans. Paying a slightly higher fixed rate in order to lock it likely makes sense.

6. Thoroughly assess your investment risk.

Avoid long-term, high-quality bonds if rates are rising. Never have more than five percent of your portfolio in a single holding. If you do, hedge it. Shooting for lower, safer returns in this environment is okay, because high risk could mean big losses.

7. Give while living rather than at death.

Many people plan on leaving sizable sums of money to charity or schools. Consider declaring the gift earlier in exchange for a tax benefit, income stream and the satisfaction of giving while alive.

8. Get the whole family involved in your finances.

All too often after a spouse’s death, survivors are left confused and nervous. Insist on both partners playing a role in family finances. I find getting children involved at some point makes a great deal of sense as well, so they are properly prepared to inherit wealth.

9. Be liquid.

Budget for the unexpected or a 2008-like downturn. This means having safe, liquid money available to weather a bad market so you’re not forced to sell into a panic-laden environment. Twelve months of living expenses is suggested in most cases.

10. Live below your means and keep score.

Create a budget, pay yourself first, and don’t spend more. There is software to help track this, but I prefer a simple spreadsheet. Track your budget monthly and live within your income.


These are 10 simple steps to firming up your financial life. I hope these make sense to you, and wish you the best of luck.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendation for individual. To determine which investment is appropriate please consult your financial advisor prior to investing. All performance referenced is historical and is not guarantee of future results. All indices are unmanaged and may not be invested into directly.

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