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Janice France-Pettit: Sound financial planning is key in a tough economy

Union Bank

Posted: December 11, 2009 4:49 p.m.
Updated: December 12, 2009 4:55 a.m.
 
Today’s challenging economic climate presents a unique level of difficulty for many consumers. Issues such as weakening job security, declining home values and unpredictable consumer prices have generated increasing levels of uncertainty throughout the world.

While it may be somewhat frustrating, staying optimistic, resilient and focused on the future has never been more critical.

Financial planning is paramount and this means habitual saving, creating short-, medium- and long-term goals and concentrating on factors that promote future financial success.

Though the current economic tides may appear treacherous, there are key tactics that consumers can implement to help weather the storm.

Create, stick to a budget
Establishing a budget by making a list of monthly expenses and income will help you see how you are actually spending your money.

Identify problem areas in your monthly expenses and take steps to correct them. Cut back on what you can, live below your means, delay large purchases (such as a car or vacation) and manage your debt wisely.

Now may also be a good time to avoid buying on credit.

If you have to use your credit card, pay it down or off each month to help avoid high interest rates that may put you even further into debt.
 
Build Your savings now
Growing your savings immediately and creating a cash cushion may prove beneficial during these challenging times.
Try to invest as much as you can (at least 10 percent of your gross pay) in savings (like a money market account), a 401(k) plan or other tax-deferred plans and make it a habit.

Continually fortifying your cash reserves with money saved from eliminating unnecessary expenses, preparing a financial plan and strategizing ways to generate future tax advantages can help put you in a solid financial position going forward.

Protect your family
To help protect your finances against disaster, it is important to build safeguards.
Creating a trust is one of the most effective ways to help ensure that your assets are managed as you wish and is a key part of financial planning.

In addition, try to purchase life insurance and maintain health insurance for yourself and your family.
Given the current job market, constantly updating your resume, polishing your skills and networking within and outside of your company are also ways to help protect yourself professionally.

Don’t get too stressed
Staying focused on the present and not turning every setback into a catastrophe can go a long way in managing economic stress.
Be aware of financial stressors and strategically plan to conquer them in your budget.

Invest appropriately
If you are in the position to invest, allocate your assets in a way that coincides with your risk tolerance. Diversification still remains one of the safest investment strategies. In addition, try to avoid raiding your retirement accounts, as penalties and tax implications may have adverse effects on your finances in the long run.

Putting these tactics in motion while working closely with your financial advisors and skilled professionals can help turn challenging economic times into opportunities for real growth and change.

The foregoing article is intended to provide general information about creating a trust and is not considered legal, financial or tax advice from Union Bank. Trusts, wills, foundations and wealth planning strategies have legal, tax accounting and other implications. Please consult a legal or tax adviser. Janice France-Pettit is a senior vice president and regional manager for Union Bank, overseeing the Simi Valley, San Fernando Valley and Antelope Valley regions. Her column reflects her own opinion and not necessarily that of The Signal.

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