Financial Planning Series: Phase I
Posted on April 08 2019
As parents, finances are something we all think about. Having children adds another layer of difficulty to the financial planning process. I’m no expert in this area but feel this information is desperately needed to guarantee we are setting our families up to be in the best position possible.
My dear friend, Anitra Blue-Francis, is a highly respected Chartered Financial Consultant, ChFC. She started her career in 2007 while studying at Louisiana State University. She’s obtained prestigious designations, i.e., Chartered Life Underwriter, CLU® , Life Underwriter Training Council Fellow, LUTCF, and Retirement Income Certified Professional, RICP®. She has been recognized as a Million Dollar Round Table advisor and received Bronze, Silver, Gold and Platinum awards within the first 4 years of practicing. She knows the ends and outs of the best strategies to help families and is best qualified to tackle such an imperative topic.
For the next three weeks, she will be covering 3 of the most important areas of financial planning for families. This weeks topic is PROTECTING. Let’s get our families on the right track to financial success by learning from one of the best in the business.
Let’s get our finances in order Kuties!
Protecting: By Anitra Blue-Francis
Almost 12 years ago, I began my financial planning practice. I have the pleasure of meeting people and learning about the most intimate things most important to them. I use that shared information to design a personal plan to help them achieve financial security. I impact the lives of the people you love the most by focusing on three areas: protect, optimize and grow. My focus is protecting you from life’s ups and downs and helping to find the best ways to pay down any debt in order to reposition those debt dollars to grow your net worth.
As a mother of two young kids, my mind is constantly thinking about the needs of my family. Noting the grocery list, home maintenance and upgrades, extracurricular activities for the kids, planning family vacations, weekend getaways with my husband, kids' school schedule and the demands of life!
As a financial advisor and business owner, I am often thinking about the “what ifs” in life. What if this happens? What if that happens? What will happen to my family if I didn't come home tonight? How will I maintain my lifestyle, and continue my savings strategy, if I couldn't work due to a sickness or disability? Do I have access to enough money to cover an unexpected expense?
How can I better prepare my family and position my practice for life's unexpected ups and downs?
Making sure my income is protected from all angles are very important to me. Protecting my earned income from loss due to a disability, a premature death or in the event of an emergency are all very important to me. I know these things are important to you as well and I want to help you to have peace of mind.
These are 3 simple steps you can take to ensure your family and business are protected.
1. Implement a long-term disability income plan.
Many of you work for an employer that offers a group long-term disability benefit that will replace a percentage of your salary after a period of time. This benefit will continue for as long as you are out of work or your normal age of retirement. Review the details carefully because most group benefits are limited. Typically, benefits are 60% of your base salary that is taxable to you at the time of claim. For example: if your monthly base salary is $5,000 and your employer offers a 60% benefit, the amount of the benefit you will receive after taxes is $3,000 (assuming a 20% tax bracket). Many people implement an individual disability plan to supplement the group disability benefit in order to increase financial security.
For my self-employed moms, you will have to be proactive with your planning by implementing an individual disability income plan to protect your personal earned income and disability overhead expense plan. Protecting your business monthly expenses are imperative to your security.
2. Buy sufficient life insurance.
No amount of money paid to survivors could replace the loss of a family member who dies unexpectedly. However, the right amount of funds can alleviate the financial burden caused by that loss. Research shows that many individuals are underinsured from an income replacement standpoint. People often own insurance at a level of 5-7 times their earned income, when they need and qualify for up to 15-20 times their income.
I am often asked, "What is the right amount of life insurance to own?" My response is, "The amount of life insurance you own isn't necessarily right or wrong until you compare it to what you would want to happen if you didn't make it home today."
A needs based analysis should be used to help determine the proper amount of insurance needed, as every insured's situation is unique. In addition to income replacement, you should also consider the amount of current debt, final and funeral expenses and cost of current and future education for your children.
3. Establish an emergency fund.
It is important to have cash equal to 3-6 months of your fixed expenses, minimum debt payments, disability income and life insurance premiums and discretionary spending accessible to you WITHOUT having to jump over hurdles to get your hands on your cash you need in the event of an emergency. A great place to save for this emergency fund is a savings account or money market account. The interest rate earned on this account should not be the focus. Instead, focus on the liquidity of the account.
In the second segment of this financial series, we will discuss how to optimize........ Tune in next week.
For more information on how to secure your financial future, visit www.anitrablue.nm.com and/or dial 504-620-4749 to schedule a 15 minute phone consultation.