Financial Planner Q&A: How Do I Maximize My Employee Benefits?

A commenter asked what financial planning questions you wanted to see answered. This week I answered the question, "How do I maximize my employee benefits?"

I love this question, because we would never say we want a salary cut, but if we don't take full advantage of our employee benefits, it's as if we're doing just that. To get the most out of what your employer offers, start by asking human resources for a benefit plan summary. They usually have a document they can email you or can provide you a company benefits website with personal login information. The benefit plan summary gives you an overview of what is offered.

Here are some of the more common benefits that might be available to you.

Health and Dental Insurance - This is a benefit most of us are familiar with. Many companies have healthcare optimizer quizzes. It asks you questions about your health, the medications you take, number of doctor visits a year etc., and matches you with a plan. Be aware of open enrollment periods (often in the fall). If you anticipate an elective medical procedure, plan ahead and pick the insurance coverage that is most beneficial to you.

Sick Days, Short-term Disability, Vacation Days and Other Paid Time Off - You want to have an understanding of when you'll be compensated even when you can't be at work, and how these days accrue. Be aware of whether or not vacation days are "use it or lose it" so you don't miss out.

Life Insurance - Many employers offer a minimum amount of life insurance. Make sure to choose a beneficiary. This will ensure the policy is properly paid out if something were to happen to you.

Retirement Plan - Most commonly, this is a 401(k). In most cases you will be required to contribute your own funds. However, if you leave the company, you can roll that money over into an IRA; in other words, take it with you! If a company offers a match to your retirement account, make sure to contribute the necessary amount in order to receive the full match. You'll also want to choose the appropriate investments within your 401(k) as well as the percent of your salary that you'll contribute each pay check. Be aware of IRS contribution limits. Although it's becoming less and less common, you might also be offered a pension. Be sure you know the qualifications and payout as they can be detailed and restrictive.

Stock Options - These give you the opportunity to purchase company stock. They are often misunderstood or valued incorrectly. There are a number of important considerations to take into account, including risk vs. reward, time value, diversification and taxes. If you don't feel you have the resources or time, work with a financial professional who can help create a strategy that is effective for you.

Sometimes even the benefit plan summary can be a long and intimidating document. I've reviewed summaries for clients that stretch over 100 pages. Ask HR to clarify how benefits work and if there are additional costs for those benefits. There are many other benefits that could be offered to you.

Here are some examples:

You might get a gym membership (or discount on one). A flexible spending account (FSA) is another one to look out for. Remember you need to spend the funds on qualifying expense within a specific time period. Some companies offer long-term care and/or disability insurance or additional life insurance at a discount. Free or discounted psychological and other counseling services or legal aid are other possibilities. You might find that some education expenses are covered, like continuing education in your field or even tuition assistance for the children of employees. Industry-specific benefits are another potential perk. Be aware of discounts on products or services offered by your company.

Benefit plans can vary widely, so be sure to request information on the specifics of what is offered to you.

Good Places for Seniors to Get Financial Planning Advice

Seniors as much or more than anyone can benefit from assistance with their personal finances. With age can come a slowing down, a greater forgetfulness, and a general lowering of capacities in certain areas, including those relevant to making sound decisions about one's finances.

There are certain signs that one who cares about an elderly person-or a self-aware elderly person himself or herself-might spot that indicate a reason to consider seeking assistance with personal finance matters.

Are things being left undone? Unpaid bill notices, letters from the Internal Revenue Service (IRS), etc. could mean the person is having a problem keeping up with their financial responsibilities. It could be forgetfulness, a tendency to make mathematical errors, vision problems, physical difficulties writing checks, or other issues.

Is there evidence of financial scams? If a person receives way more than usual junk mail or telemarketing calls, it could be an indication they're on a "suckers" list because they've responded to such scams in the past. If a person has written checks to unrecognizable companies and individuals out of state or worse yet out of the country, if they speak favorably about supposed investment opportunities that earlier in their life they surely would have been wary of as too good to be true, there's a good chance their judgment is impaired and they're being taken.

Is there a new "friend" on the scene, a little too eager to "help" an elderly person with financial matters? Very few elderly folks are lucky enough to have an Anna Nicole Smith to enjoy for a few years in exchange for a chunk of their money-more often it's a garden variety con artist who's insinuated himself or herself into their life and gradually gained more and more influence over them and their financial affairs.

There are a number of steps that can be taken to safeguard an elderly person's personal finances.
Many processes can be automated, such as bill paying directly from one's bank account, or having Social Security and pension checks direct deposited. The "no-call" telemarketing list, caller ID, and a good e-mail junk mail filter are among the measures that can cut down on scam solicitations. If you care about an elderly person, you can stay on the alert about newcomers to their lives (or even less than scrupulous family members and such) who are showing just a little too much interest in their finances, and you can warn the person early before the newcomer fully has their hooks in them.
However, though of course an elderly person should be protected from turning their financial affairs over to a con artist, at the same time it may indeed be advisable for an elderly person to turn over some or all of their financial affairs to someone more appropriate as they become less able to handle them themselves. Or if not to turn over the actual decision making, at least to seek financial guidance and advice from someone knowledgeable about their situation.

One option is to rely on a family member or friend. This should only be done with great caution. The person relied on should have proven over the course of a long relationship to be trustworthy and to be knowledgeable and responsible about money matters. It should also be someone who will handle the affairs in as open as possible a manner, so that other friends and family members are always aware what's being done and thus can provide an additional safety check.

But depending on one's circumstances, the better option could be to hire an actual financial planner.
If you go this route, however, it's important to hire a reputable, licensed individual or firm. Don't respond to slick marketing from people calling themselves "financial planners" who may have no credentials and who may indeed have far greater skills at marketing than financial planning.
It is advisable instead to find a financial planner through a professional association or regulatory body. Good places to start are the Certified Financial Planner Board of Standards, Inc., the Financial Planning Association, and the National Association of Personal Financial Advisors.

Any of these can help connect an elderly person with an appropriate financial planner, rather than someone who will take advantage of them.

Personal Financial Planning: Excellent Tool for Individual Money Management

Personal financial planning is a part of managing your income according to your financial management. Nowadays, it is one of the most important aspects of any individual's life. Everyone positively thinks about personal financial planning directly or indirectly.

Personal financial planning is an instrument to carry out some principles of finance regarding money matters of an individual or family. It positively assists you in keeping all records of your earning, spending and saving. It requires a little sensible approach from your side to be successful in your money management. It will not happen overnight. Because individual financial planning is a continuous process. It has flexibility to change with time.

Personal financial planning is in contrast with hiring a financial advisor -- with personal financial planning, you do it yourself.

To be good in your financial management, you need to know basic information about it. Planing is the key factor of your financial management. It requires daily observation and reassessment of your income, spending and savings. Below are few points which can be useful for your financial planning.

1. Current financial position - Know your current financial position. Consider you're all income sources, spending and savings. This includes calculation of your income sources and expenses. Calculation of income sources includes your post tax income, spouse's income, investment income and any other. Calculation of expense includes spending on grocery, medical, laundry, house, lifestyle etc. Thus, you should consider fixed expenses which are house rent, children's fees, loan repayment, insurance premium, etc. It will assist you in drawing out an outline of your money management planning.
2. Setting financial goals - After reviewing your financial position, figure out your financial goals. Remember, you should draw out goals within your income limits. Your goals should be achievable. Consider how much you are going to earn in the period of completing your goals. This will aid you not to fix your financial goals blindly.
3. Action plan - Create an action plan to achieve your goals. Brainstorm possible ways which are suitable to your plan. While making an action plan, you should not neglect above two points. Make more than one action plans. Those should be drawn out with the help of your financial facts. Choose that action plan which will positively help to your success.
4. Plan implementation - Now it is working time on your action plan. You have selected the best plan which guarantees your maximum success. Be flexible about your plan. You may be required to make slightly changes if there is any necessary demand of time. Carefully made a plan should be carefully followed.
5. Progress observation - Keep daily observation on your plan's progress. Because, times and circumstances change. That time you may not be able to work on your action plan. Review your progress and do adjustment as well as changes. If the action plan is doing considerable progress you want, then go ahead with it.

Personal financial planing is an excellent tool to control on your financial life. However, it needs to bring it in reality with true commitment. Then you will get true results of personal financial planning.

Making Up for Gaps in My Financial Planning

I am behind when it comes to saving for retirement. Paying for my student loans in my 20s put me behind on saving for my children's college. According to a recent article by Manilla.com, there different stages of financial planning by age. At age 40-something, I've missed at least half of financial milestones I should have met. I don't think life is a competition to see who dies with the most money in the bank. Still, I would like to plan for my family's financial future, making up for many of the gaps in my financial planning through the years.

Working as soon as possible

One of the best things I did was start working at the age of 16 and never stop. I was able to pay part of the cost of my private college tuition, which reduced the amount of money I owed in student loans. I'm going to try to improve my financial situation by working until my full retirement age of 67 or even beyond. Unlike in my teens and 20s, I can save a portion of my earned income for retirement.

Staying out of credit card debt

According to the Manilla.com article, by age 25 a person should have good credit by establishing low-interest credit cards and making regular payments. I ran up credit cards in college, which left me with tens of thousands of dollars of consumer debt in my 20s. I can't turn back the hands of time, but I can stay out of debt by making micro payments on my credit card throughout the month with my online banking. Even if I only spent $7 on my credit card, I go online and transfer money from my checking to my credit card.

Contributing to my retirement

The article suggests people contribute to a 401(k) in their 30s if they have not started doing so already. I didn't have a full-time job in my 20s, but still contributed to a Roth IRA when it was introduced. I saved as much as I could to my 401(k) in my 30s, but made the mistake of taking out 401(k) loans. I'm hoping to make it up by making catch-up contributions when I become eligible to do so. My goal is to max out my Roth IRA each year.

Retiring in place

At age 70, the article recommends people downsize their home or move to a less expensive area. By paying down my mortgage in my 40s, I'll be able to retire in place in my Florida home. Most of the people I know who are struggling on a fixed income in retirement have to juggle the costs of their medications and food costs with mortgage payments. Without a mortgage, I'll be able to compensate for the nest egg I could have built in my 20s if I wasn't bogged down with student loan and credit card debt.

In a perfect world, people could save for retirement, their children's college and emergencies while simultaneously paying off their mortgages. In the real world, it's hard to stick to a financial planning timeline. I learned from my financial mistakes at earlier stages of my life, which I'm hoping will afford me a second chance at financial security if not prosperity and abundance.

5 Habits for Achieving Personal Financial Success

With the right spending and savings habits, it is possible to achieve personal financial success regardless of your income level. Careful planning and self-control are essential, and a few tried-and-true habits:

1. Pay yourself first. Financial gurus across the board say that, no matter what your income level, your first priority should always be to save a portion of every paycheck. 10% of your income is the recommended minimum, but if putting away this portion will leave you short on bills, then determine what you can afford to put away and commit to it. Whether you save five, ten, or fifteen percent, or just $50 from every paycheck, make sure you do this on-time, without fail. Make this money work for you by investing it in a high-yield savings account or certificates of deposit.

2. Set financial goals. One of the most important aspects of achieving financial success is goal-setting. Without financial goals, it will be pointless to make decisions on savings and investments, and to use your money to take you where you want to go. When setting financial goals, think about what you want in the short term and long term. Sit down (with a spouse/partner if you have one) and think about where you want to be financially in the next year, five years, ten years, and so on. What are you saving for? Retirement, a family vacation, buying a home, starting a small business? Write these goals down and keep them with your budget so you can periodically evaluate your progress towards achieving them.

3. Make and keep a budget. Only those who know exactly where their money goes will achieve financial success. Live within your means and keep detailed records of your expenditures, from rent/mortgage payments to snacks in the checkout line. Keeping these kinds of records will show you what your spending habits are, so that you can plug any leaks and be more responsible with your money. Budgets can be kept in a checkbook, a spreadsheet on your computer, a ledger, or even with budgeting software such as Quicken, PearBudget, or GnuCash.

4. Plan for emergencies. Anything can happen at any time, whether it be a layoff, medical emergencies, auto accidents, or natural disasters, and it's always better to be prepared than not. So you won't be forced to depend on credit cards, loans, or government assistance, stash away money in an emergency fund separate from your savings account. It should be at least three months' worth of income and go untouched unless it's an absolute emergency. You can start an emergency fund by saving as little as $10 from every paycheck and increase as you're able to.

5. Don't buy on impulse. Impulse buying is the quickest way to blow your budget. If you aren't able to control what you spend, you will remain in debt and not achieve financial success. For grocery and household shopping, make a list and stick to it. Don't be tempted to grab extra or pick up something else because it's on sale. If you really need it, you can go back for it. Don't keep cash - bills, credit/debit cards, or checks - with you during the day so you aren't tempted to spend on unnecessary items. Plan for every expenditure, even the little things. Don't browse for the sake of it - buy what you need and leave the store.

You can achieve financial success with the right habits. There are no hard rules and your situation and abilities may change over time, but always keep these paradigms in mind to live with financial freedom.

Finding Inspiration in Your Personal Finances

Finding inspiration in your personal finances these days might seem like searching for a needle in a haystack. You can read all the articles you want to about what others do to motivate and inspire themselves when it comes to money management, but really, it all comes down to finding what truly works for you. Without that proper motivation, you might just feel like there's no reason to start saving in the first place.

If lack of willpower or just lack of interest is what's currently holding you back from getting a firm grip on your personal finances, here are a few tips that might help you take that first step toward organizing your finances.

Goals

Setting goals can be a great way to motivate yourself to rein in your spending and begin organizing your personal finances. Whether they are big or small, short term or long term, goals can act as guides to assist you in building or modifying your personal financial situation. Goals can be as small as building a $500 emergency fund in the next several months or as large as creating a million dollar retirement portfolio.

One of the most important things to remember when it comes to goals however, is that goals often work much better when they mean something to you and are achievable. This is why it is important to realize that when reading articles regarding personal finance, you might want to take what the author has to say with a grain of salt. Since each of us has his or her unique financial situation, goals and their associated effects can vary widely. A $500 emergency to one person might seem like a lot, while that same amount to another might be insignificant and provide little or no inspiration.

Financial Planning

Setting goals to achieve with your personal finances is one thing, but actually planning out routes to reach those goals is another. It's easy to say that you want to build a million dollar retirement fund, but how exactly do you plan to do that? It's much the same, although on a much smaller scale, with building a $500 emergency fund. Goals without plans are like cars without gas -- they may be pretty to look at but probably won't do you much good in getting where you need to go. To build that emergency fund, are you going to stick $20 bucks a week into a jar on your dresser, pull $100 from your paycheck for the next two months or are you going to yank the band-aid off all at once and just stick $500 bucks in your savings account? Having a plan can make your financial goals easier to achieve and with attainable goals often comes the inspiration to fulfill your personal financial dreams.

Step-by-step

Still, even by setting goals and with steady preparation and planning, it might take some time to ease into organizing your personal finances. You likely won't want to step headlong into the fray without some careful consideration. Jumping the gun could leave you disoriented, unmotivated, and unwilling to continue working toward your goals. Easing into the re-organization or creation of your personal finances can make the transition easier and more successful. While you may be excited to get started working toward your financial goals, moving too quickly can lead to missed details, lack of planning, poor investment or savings choices, and frustration when you find you aren't moving as quickly or successfully as you had hoped. As the saying goes, "You must learn to walk before you learn to run".

Finding That 'Warm and Fuzzy' Feeling

Finally, it is important that when looking for inspiration within your personal finances that you find aspects of your money and investment strategy that appeal to you and make you feel good about your financial decisions. Whether investments vehicles such as savings accounts and savings bonds make you feel safe and secure or the stock market provides a sense of excitement and intrigue, finding inspiration in your personal finances often hinges on finding enjoyment in and being comfortable with the investment decisions you make.

Disclaimer:

The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute legal or financial advice. For financial advice, readers should consult a licensed financial advisor. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.

Using Financial Planning to Reach Retirement Goals

Today's economy requires careful financial planning in order to achieve retirement goals. The weakened economy and increased cost of living has left most people with less money to contribute for their future. However, strategies exist to help Americans build personal wealth and save for their golden years.

Many misconceptions surround financial planning. People often believe creating a financial plan is reserved for the wealthy. Others believe they do not have sufficient income to save for the future. Some believe financial planning is too difficult and requires the services of a professional financial planner. These false beliefs prevent people from reaching their financial goals and oftentimes leave them living paycheck to paycheck.

The truth of the matter is financial planning is available to anyone, regardless of income. With determination and a commitment to trim expenses, most people can save at least $50 per month. Over the course of time, minimal savings can add up to a substantial nest egg.

Several options exist to help individuals engage in financial planning. A good place to start is opening a high yield savings account. Another is to purchase a few stocks and bonds or mutual funds. As savings grow, many people turn to real estate investing and buy houses for use as rental properties.
Individuals living on a tight budget should take time to review expenses and determine where to cut costs. Financial expert, Suze Orman, recommends paying yourself first. This is the opposite of what most people are taught, but if you want to get ahead in life you must learn how to effectively budget money and set aside funds for the future.

Most Americans have more money than they realize, but waste it purchasing items they don't need. One of the most effective ways to determine how much money is being wasted is to track expenses daily for a month. Most people are astounded to discover how quickly little items such as morning lattes and fast food lunches eat up their household budget. The average American can easily save $100 per month by budgeting finances and avoiding impulse buys.

One of the most trusted sources for obtaining accurate budgeting information and financial planning tools is Dave Ramsey. Ramsey is known for his no-nonsense approach to overcoming debt and achieving financial freedom regardless of income. His infamous Gazelle Budget™ Lite online budgeting software helps consumers develop a financial plan based on a zero-budget.
Ramsey's website provides visitors with a wealth of financial planning articles, budgeting forms, personal finance and money management books, investing guides, financial classes, and personal wealth coaching from Ramsey's Financial Peace University. Visitors can participate in Ramsey's community forum at DaveRamsey.com to learn and share financial planning strategies.
Another good source for learning financial strategies is certified financial planners. These professionals can help individuals achieve long- and short-term investment goals. They are trained to help consumers recognize destructive spending habits and learn how to implement strategies to get out of debt through the development of solid financial plans.

One of the best places to locate professional financial planners is through the Financial Planning Association website at FPAforFinancialPlanning.org. FPA provides a variety of financial tools to help educate consumers about retirement planning, estate planning probate, saving for college education and buying a home.

It is never too early or too late to begin financial planning. In fact, the sooner you start, the easier it is to build wealth. Begin your wealth-building journey by taking time to conduct research and determine which type of investments will help you reach your goals. Then, create an action plan and make a commitment to stick to it!

Financial Security = Budgeting + Financial Planning

Financial Security = Budgeting + Financial Planning

We all want financial security. We all want to make enough money to support our lifestyles, raise and educate our children, save for a wonderful retirement, and have fun along the way.
So to achieve it all, what will help you more - having a financial plan or a budget? The answer is both!

Let's Review

I am against financial planning when its sole purpose is to make a sale or to market a financial service. Fortunately not all financial planners and financial plans are about making sales (most are, but not all). In actual fact, a well-documented and thought-out financial plan is an essential element when working toward your financial security. And another important element is a complete and accurate budget plan.

Think of Yourself as a Corporation

One good way to view and approach the quest for financial security is to view your personal finances the same way as every corporation and organization does. When it comes to running a successful business two of the most important elements are the budget and financial plan.
A corporation does not view financial planning and budgeting as an "either / or" proposition. They have an annual budget that guides the day-to-day revenue and expense decisions while their financial plan dictates the corporation's future goals and offers guidance on long-term decisions.

Step 1: Just like a Corporation, Start with the Budget

Just like any successful corporation, you first need an accurate accounting of all your day-to-day revenues, expenses, assets and liabilities.

In financial terms, budgeting is a process whereby you keep track of your current income earned, the daily expenses you incur, the value of your assets and the amount of your debts and liabilities. It is a snapshot of your financial reality today.

Here are the two basic components for a complete budget plan:

• The Household Budget: This is where you identify and list all of your day-to-day expenses. Accuracy is critical. The old saying "Garbage in, Garbage out!" applies. Don't just guess and estimate. Find a great budgeting software, spreadsheet, or calculator that is comprehensive and detailed. And don't settle for a budget that lists only the major items. Did you know that most of our reckless, wasteful spending is in the small items, the small details we subconsciously forget? (Like those daily Timmies or Starbucks pick-me-ups, yet another new hat or sweater in this season's shade of green, and don't forget those new shoes, and so on.) Your budget is critical to your eventual success, as it is the foundation for your corporation. Your budgeting goal should be the same as it is for any corporation. In corporate jargon that means maximize the value of every dollar allocated to an expense! Wasteful and errant spending should not be tolerated. (Translation: Get serious! Count every penny you waste on the big and little things … because it all adds up to you losing your bottom line!)
  

• Your net worth statement: A net worth statement (corporations call this their balance sheet!) is another basic component to a complete budget plan. It helps to track your progress in accumulating financial wealth (or not). It tracks the current value of your assets and the amount of your loans. Remember, there are only three ways to accumulate wealth: win the lottery, inherit it, or (as is the case for most of us) work hard, watch your spending and pay off your debts. Your net worth statement is a snapshot of your wealth. When the value of your savings and assets increase, so does your net worth. When you pay down your debts, your net worth increases. And if you spend your savings or borrow more money, your net worth declines. Again, accuracy is critical. Don't just guess and use estimates. (You're only fooling yourself!) Your net worth statement is like a report card that grades your budgeting activities. It tells you if you got an A+ or you need to "repeat."
  

Step 2: Financial Planning (Even Corporations Need to Dream)

Even for corporations the financial planning aspect of working towards financial security is the fun part. The financial plan establishes goals - financial success, financial wealth and financial security!
Just like a corporation, your financial planning should be built around your budget plan. Your budget tells you how much money you have leftover after paying all of your expenses. It tells you how much money you can add to your savings and how much money you have for paying down your debt.
Your financial plan should adopt a corporate approach, not a marketing approach. What do I mean by that? A corporation uses a financial plan with actual numbers as identified by the budget and net worth statements. (Can you imagine if corporations used guesses and mere estimates when coming up with a financial plan? (!*#$!) In other words, you have to do some real math. For example, if your net worth is $100,000 today and you can comfortably save $400.00 per month for the next 20 years, at a reasonable investment rate of return equal to 4.0%, compounded annually, your financial goal would be $362,047.00.

If this financial goal is inadequate, then just like a corporation, you will need to revisit your budget to see how you can increase your revenue, reduce your expenses, or alter your assets to enhance your ability to achieve a greater financial goal. It's a matter of very real numbers and simple math.

Then There's the Other Stuff: More Than Just Numbers

Finally, after working with all the real numbers, your financial plan should also consider all those things you can't control. It consider unknowable and uncontrollable events like births, illness, death, disability, property destruction, etc. Depending upon your personal circumstances, this aspect of your plan may be very simple or very complex. (This is another article just on its own!)

Remember: Your Dreams Must Be Firmly Planted in Reality!

Attaining financial security requires both an accurate budgeting plan and a comprehensive financial plan. Corporations have known this for decades and have recognized the need for both, and so should you. Having a budget without any idea where you are heading is about as useful as having a financial plan without a clue where your finances are today. (It's kind of like sitting in a rowboat with only one oar.)

So, if you really want to attain financial security, then start by defining where you are financially today by establishing a household budget and a net worth statement. Then establish and define realistic goals within a corporate-style financial plan.

Smart Financial Planning Before Turning 40

So many things happened during the previous decade-you got married (or decided never to), had children, or made life-changing career shifts. It was one roller coaster ride that taught you countless valuable lessons. Now that you're about to turn 40, expect more bumps and humps, particularly where money is concerned. But to ensure stability and security for yourself and your family, here are tips for smart financial planning in your 40s.

Build a reliable emergency savings fund

Do you think you can manage without cash reserves? But what if unexpected expenses arise? What if you suddenly find yourself without a job? If you say that you'll simply rely on your credit card, then you're making the same mistake that over half of the American population is making all the time.
Having an emergency fund of ideally three to six times the amount of your monthly expenses saves you from taking on a large credit card debt that can leave your financial health seriously hurt. According to financial expert Jean Chatzky, "…an emergency cushion is insurance against debt."

Start paying your debts

Speaking of debts, now is the time to start clearing your debts whether medical bills, credit card debts, or any other that you've taken on in the last few years. Eliminating debt is the first step in making sure that your income gets to the right places and these are into savings and investments. If you have too many debts up your sleeve, then you might need to find lower interest rates or consider debt consolidation. Becoming "debt-free at 40" is a huge achievement.

Pump up your retirement savings

To make it easier (and compulsory) for you to save money for retirement, make the decision to automate your retirement savings. That means a portion of your money will be automatically taken out from your paycheck to go into your retirement savings account. Most companies' opt-in programs start at 3 percent.

Save up for your kids' college tuition

If you have kids, this is a necessary step to undertake. Most financial experts would advise you to start as early as possible. Saving even just a small amount right after your kids are born can go a very long way. Another way is to start on a 529 college savings plan. There are also prepaid tuition programs offered by some state universities that you would want to check out.

Get sufficient insurance coverage

People don't like to talk about or even think of insurance policies. After all, it's that one thing that you need to buy but would never want to use. But taking out the right policies can save you from financial disasters.
First, conduct an "insurance-needs analysis" which you can avail from an independent financial adviser. Make sure that you are amply covered in your home, life, health, and auto insurance policies. For those with more than $1 million assets, an umbrella insurance policy is a must for added protection.

Take advantage of company benefits

Open up your eyes to the many benefits that your company offers. Some of those that you need to know more about include wellness plans, assistance programs, financial planning, health savings, pretax transportation allowance, tuition reimbursement, and many more.

Learn how to invest

It's about time that you get over your fear of investment. Talk to a financial expert and get to know the ins and outs of the stock market. Find out your options on investments and long-term savings. Either take a personal finance course in a community college, or do a self-study online using sites such as the Smart About Money, or both.
Becoming financially savvy may not happen overnight but make no mistake about it, now is the time to start thinking about and planning for your finances. Smart financial planning in your 40s start with these fundamental techniques.