Enjoy your income today while saving for your future. (You Can ...).Client: Name: Marsha Huntington Profession: Account Executive/Design Firm Age: 32 Income: $60,000 Goal: Living for today AND tomorrow Advisor: Name: Bogna Zachura Education: Undergraduate Business Degree, MBA MBA abbr. Master of Business Administration Noun 1. MBA - a master's degree in business Master in Business, Master in Business Administration International Business Community Involvement: Central European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. Business Association Years at AXA AXA Anguilla, Anguilla (Airport Code) AXA Alpha Chi Alpha AXA Animal Crossing Ahead (online forum community/guide to the game Animal Crossing) AXA Auxiliary Artery Advisors: 5 Myth: I should contribute the maximum amount allowed to my company's retirement plan. Reality: The amount you should contribute depends on your current situation. Planning ahead means more than planning for the distant future--it also means planning for today. For a relatively young person without family obligations, such as Marsha, a financial plan should strike a balance between immediate needs, medium-term goals, and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. planning. In Marsha's case, if she was contributing the maximum to her company's qualified retirement plan, too much of her income would be directed to her long-term goals Long-term goals Financial goals expected to be accomplished in five years or longer. . Once she has addressed some of her short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. needs, such as building her savings and paying off debts, she can increase the amount she contributes to her retirement account. For many other people, however, it is advisable ad·vis·a·ble adj. Worthy of being recommended or suggested; prudent. ad·vis  a·bil to invest as much as possible in a qualified retirement plan. That is why seeking professional advice to examine your current financial picture in light of your future goals can help you determine the right proportion between living for today and planning for tomorrow. CASE STUDY #1 Marsha: I'm so glad I found Bogna. She's helped me get my financial priorities in order and clean up my spending habits. Now--I know where all my money is going each month, and I am happy to say that I'm starting to build a nest egg Nest Egg A special sum of money saved or invested for one specific future purpose. Notes: Examples of the purposes for which nest eggs are usually intended include retirement, education, and even entertainment (vacations and cruises). rather than building more debt. Bogna: Marsha was enjoying herself. With a good job and no family to support, there was no reason she shouldn't. But--she was living mostly paycheck to paycheck. The first step I took with Marsha was helping her complete an expense worksheet. Marsha: The expense worksheet only took a few minutes to fill out, but it really opened my eyes. I realized just how much I was spending on designer shoes and dinners out, and how much credit card interest I had accumulated ac·cu·mu·late v. ac·cu·mu·lat·ed, ac·cu·mu·lat·ing, ac·cu·mu·lates v.tr. To gather or pile up; amass. See Synonyms at gather. v.intr. To mount up; increase. . Bogna: I worked with Marsha to show her how to include "fun items" in her budget. She was relieved to know she didn't have to give up buying nice things for herself. She still treats herself to a nice dinner or a new pair of shoes, but does so within her current means, not on borrowed credit. Marsha: I've always known I should be saving and investing for the future. I just didn't think I had enough income to do that right now. Bogna: Marsha and I spent some time talking about where she'd like to be at different points in her life. Then we worked out a financial strategy for her short, medium and long-term goals. First, we set up an automatic deposit into an account marked as her "emergency fund," so she could handle unexpected expenses without turning to credit. When Marsha has 3-6 months of income saved in this account, we'll start working on some of her bigger financial goals, like someday some·day adv. At an indefinite time in the future. Usage Note: The adverbs someday and sometime express future time indefinitely: We'll succeed someday. Come sometime. having enough for a down payment on a house. I also encouraged Marsha to participate in her company's qualified retirement plan by starting off with a small contribution. She had always thought this would reduce her current income, but I explained to her that it could actually help reduce her current taxes. (1) Right now she barely notices the amount coming out of her paycheck, and she's getting the extra benefit of a company match. Marsha: Planning and budgets used to seem very confining con·fine v. con·fined, con·fin·ing, con·fines v.tr. 1. To keep within bounds; restrict: Please confine your remarks to the issues at hand. See Synonyms at limit. to me, but I actually enjoy spending more responsibly while working to build up my savings. And now when I walk into Bogna's office in a great new pair of slingbacks--she knows I've earned them! (1) Withdawals are taxed as ordinary income and, if made prior to age 59 1/2, are subject to a 10% federal penalty. |
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