Managing finances in a single income home

If you live on one income, how you work with your money is important. If you have dependents, careful financial planning and strategic investing is vital.

Developing financial plan will make it easier to achieve goals whatever your situation. 

Create a current net worth statement listing all your assets (what you own) and any liabilities (what you owe). Deduct what you owe from what you own to determine your net worth. 

This will reveal how much of your income you are able to hang on to.

Next, review your monthly obligations against your salary. Track obligations with a budget, which will help you avoid a cycle of overspending and debt.

A budget will help you review areas where you spend more than needed.

Finally, what should you do with your savings? Do you take a long-term or a short-term look?

Do you choose fixed investments or investments that move with the market?

Should you work with an investment advisor?

When it comes to investing, ask these questions:

• What are your liquidity requirements? How much cash should you have on hand or at short notice?
• How do you feel about risk vs. reward? How much risk are you willing to undertake?
• How do you manage your investments? If you do not have investments, how did you select the investment options for your current pension plan?

Working with a wealth manager can take the guesswork out of finances.

Wealth managers are different from traditional investment advisors. They review your entire financial situation, making sure any considerations or specific goals can be met.

Investment allocation is important but so is making sure it fits within your financial parameters.

Carla Seely is a senior wealth manager at AFL Investments Ltd. Call her on 294-5712 or e-mail her at [email protected].