Special
Features / March 2007
Good News, Bad News, W-2's
 Diane McCurdy
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By Pat Lawrence
W-2’s are good and bad news. The good news is, there WAS an income. The bad news is, it doesn’t seem like quite enough.
It can be discouraging.
Sometimes it isn’t the income, it’s wondering where it all went. After bills, credit card balances and daily expenses, suddenly another year has gone by with no savings, for retirement or even an extra nice vacation.
Don’t fret, says financial planner Diane McCurdy, author of How Much Is Enough? Balancing Today’s Needs with Tomorrow’s Retirement Goals. She says this is the perfect time for a woman to change her financial ways, so she will be patting herself on the back, not kicking herself, in 2008.
According to Diane, making a budget is not only the responsible thing to do; it’s also a fast-track ticket to getting the fun stuff.
“Budgets may be painful, but they’re a practical path to realizing dreams. “Creating one might help you get the new car, vacation, or flat screen TV sooner! You can’t get financial freedom without organizing cash flow, but that includes a wish list as much a priority as recording purchases.”
Diane believes in the life-affirming power of budgets. By embracing the ‘B’ word, women can delve into their money attitudes, identify their personal pitfalls, separate wants from needs and chart out a realistic financial road map.
“If a woman doesn’t control her money, it will control her. It will cause strife in her marriage, crush her under a load of debt, and force her to toil her life away, and maybe her health, to pay a mountain of bills.
Looking at a budget that way, it’s not a straight jacket-it’s liberating.”
Once a woman gets serious about getting a handle on her finances, Diane says the process is surprisingly easy.
If the “B" word is depressing, “Change the terminology. Call it a cash flow statement!” Like “diet”, “budget” suggests deprivation but a cash flow statement is empowering. “It implies life can be run like a business, a profitable and deeply rewarding business. A cash flow statement is a tool for helping women get what they really want out of life, rather than watching money trickle away one latte at a time.”
She says “Starting now!”, write down every cent spent for the next month. Record every gallon of milk, tank of gas, daycare check, or DVD. “Write them down every day. Live normally, not conservatively during the month. Spouses should record their expenditures, too. At the end of the month, add them up.”
For many people, that’s the scary part, Diane says. “It’s as though if they don’t total up the numbers they don’t have to face the awful truth.”
Even out-of-the-ordinary expenses should be listed-presents, new tires or emergency vet bills. “No month is ‘typical’. Good budgets account for unexpected expenses.”
Arrange purchases by category before adding it all up. Then subtract the total expenses from the monthly income.
For those living within their means but having trouble saving, the cash flow statement will show where money is hiding. And it can show those that aren’t living within their means, why not. “Basically, the statement shows where money needs to go versus where it’s going now. That knowledge is power.”
People are often amazed at how much they spend unconsciously. “Fifty dollars a week on lunch is $2500 a year. Double that for couples. Add unused gym memberships, magazines no one has time to read, cable channels not watched. Many women have no idea how much they waste until they see a budget.”
The big step is to stop neglecting the retirement issue. “It’s easy to procrastinate. Like Scarlett O’Hara, most people prefer to think about it tomorrow. But crunching numbers is the only way to know if current savings will get you there.”
She says a wish list can take the sting out of saving. “Plan for tomorrow, but enjoy some money today. Sit down with the family and come up with a wish list. The point is to decide what you really want and start putting money toward that, instead of dribbling money away on things that don’t matter.”
She recommends employing the 48-Hour Rule. “When you see something you want, wait 48 hours before buying it. Clients tell me 90 percent of the time, they’ve forgotten about it two days later”.
It may take two or three attempts before a new budget finally sticks. Diane says, “Don’t give up! Intellectually, people know what they must do to build financial security, just like they know what to do to lose weight. The problem isn’t brains; it’s emotions. All sorts of emotional issues are tied up in money, and those issues can override common sense. But, money is just a tool, a tool to help women shape the kind of life they want to live”
How Much Is Enough? Balancing Today’s Needs with Tomorrow’s Retirement Goals by Diane McCurdy, CFP, is available at bookstores nationwide or from the publisher, 800-225-5945.
Copyright © 2007 A Woman's View. All rights reserved.
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