Getting Your Personal Finances in Order (Q & A)

Jan 2015


Q         Dear Rick:

My New Year’s Resolution for 2016 is to get my affairs in order.  I realize I can’t do everything at once so I want you to help me set some priorities as to what I should be doing first.  I’m in my mid 50’s and divorced with two children.  I am estranged from my children and I have no further financial obligations to them or my ex-wife.  I have been able to save money over the last few years and I have over $100,000 in my checking account.  Through my job I have a 401(k), but it’s all sitting in cash.  Obviously, I have not done anything with my investments, nor have I done anything from an estate planning standpoint.  In fact, when it comes to my finances, basically, I have done nothing.   I know me and can only tackle so much at once.  So, my question is, knowing that I haven’t done anything from a financial standpoint, what should I do first?



A         Dear Terry:

Happy New Year!  I think it is great that you’ve decided to get involved with your finances. As far as I’m concerned you shouldn’t beat yourself up over what you could have done; rather, you should look forward to what you can and will do.


In looking at someone’s personal financial affairs, I believe there are a variety of different areas that people need to be concerned with.  These areas are estate planning, taxes, risk management, investing and debt management.  It is important that all five of these areas are looked at. In regard to your particular situation, as far as I’m concerned, the first thing to tackle would be your investments.


Currently, your portfolio is all in cash, which is certainly not productive.  The key is to develop a balanced and diversified portfolio based on your goals and objectives.  My view is that it probably would be best to sit down with someone professionally.  Of course, you can’t hire just anyone.


It’s important when you retain the services of a professional financial advisor that you recognize there are different types.  One of the easier ways of breaking them down is how they are compensated.  Advisors either work on a fee-only basis, a commission-only basis or some work on a commission and fee basis.  I believe the great majority of people ought to take the conflict of interest out of the equation and thus, only deal deal with fee-only advisors.  When commissions enter into the equation, there is a conflict of interest.  Are they recommending this product because they receive commissions and sales incentives, or because it is a good product for you?   Of course, always remember the key to hiring a good financial advisor is knowing you can trust them and feeling comfortable enough to discuss your individual situation with them.


Once you have your investments going in the right direction, I would then make sure you do an estate plan.   You need to determine how your assets are to be handled upon your death.   In addition, you should have medical and durable powers of attorney so that someone can act on your behalf if you are unable to do so.


Once you have your investments and your estate planning done, the next step would be to look at the area of risk management. Risk management could include things such as shopping your homeowner’s and automobile insurance policies around and also relooking at your life insurance needs.


In the old days, personal financial planning was not a major issue because we did not have the options we have today.  Today, personal financial planning is something that you cannot put on automatic pilot.   You have to spend some time on a regular basis making sure you keep your house in order.  I recognize sometimes that can be boring and dull.  However, one of the benefits of being involved with your finances is that you will be more efficient with your money and as a result, you’ll have more money in your pocket; exactly where it belongs.


Good luck!




Rick is a fee-only financial advisor.  His website is  If you would like Rick to respond to your questions, please email Rick at