One best action step you can take to build wealth is to keep good records. I just experienced a small earthquake near my home and it made me think about if I was prepared for a disaster. Of course, I have all of my insurance in place- health, property,life and disability. But there are many important papers that should be secured off site or on a disc that I can grab and go. Instead I have a pile of papers in a file cabinet. I started a list of important documents that I will scan or make copies and put in my safe deposit box in another city. I will update these records once a year. That is a small step I can take and part of a good financial plan to build wealth. I will gather these records:

Copies of the purchase and sale of any home or property and receipts for improvements

Copies of the first two pages of the individual and business tax returns

Copies of the car titles, registration, driver’s license and insurance information

Copies of marriage certificates and birth certificates, social security cards, green cards, and passports

Copies of all insurance policies (medical, life, home, auto, health)

List of important phone numbers

Digital copies of important family photos

List of important prescription medications

Photograph of inside and outside of the home

List of important family members phone numbers and emergency phone numbers

List of investments,credit card numbers, bank account numbers, etc.

Preparation can help ease the anguish caused by disaster. It can also hasten the task of recovery. The is an important step to build wealth and maintain it. Don’t think it is unnecessary or it won’t happen to you. Statistics will prove you wrong. Build wealth with your own personal evacuation box.

The post Build Wealth with Your Personal Evacuation Box first appeared on Whole Hearted Way.

I received this reader question recently and wanted to respond publicly:

“I would like to no more about this programs and does it really works? I have made a few investments on the stock exchange through information that i got from Penny Stocks newsletters but was unsuccessful. I want  more wealth but dont no how to start or what to begin with.”

This program is not something I made up or just discovered on my own. It is a well researched and verified process that Certified Financial Planner Licensees use if they practice comprehensive financial planning (which many do not). I have used it personally and in my financial planning practice and found that it works ALL the time if followed correctly. The problem is that many of you will not follow it. Why? Because it isn’t fast, it isn’t sexy, there are NO get rich quick schemes and NO, your life is going to change forever moments.  What it does is give you a road map to arrange your finances to support your current lifestyle and your projected lifestyle (and that means different things to different people). It means taking into consideration how you live, play, what your risk tolerance is, what your tax bracket is and a host of other details.

Where do you start? You start with a strong money foundation and that is following Step 1. to Step 3.

Step 1. Cash and Credit. Cash flow and credit is the life blood of your financial plan. Understanding how much you take in and how much you spend shouldn’t be a painful exercise but a motivator to work with what you got in the best way possible.

Step 2. Risk Management. Everything you acquire can be taken away in one full sweep (and I know you have seen it happen) without the proper insurance.  Getting the right insurance that fits your needs and your budget is a strong step in preserving what you are building on.

Step 3. Estate Planning. You are not building wealth just for you but for your family. A few easy legal documents can insure that they get what you have worked so hard to build and get it easily and without taxation. I have seen so much grief and family burden due to lack of a few simple estate planning documents.

Step 4 is Identify Goals. There is a saying that if you reach for nothing, that is what you will get. What does the future hold for you? Do you see yourself working part-time at age 50? Or would you like to not work at all at age 60? Or maybe you want to change careers or open up a small business? Maybe you would like to send your kids to a private college? Maybe you want to go back to school to learn a new trade? Perhaps you just want to get out of debt and start an investment plan? Whatever you want, that will cost money and you can figure out how to afford those things by goal setting. Unfortunately, it isn’t going to just happen one day. You are going to make it happen by planning for it. Now that you have a solid wealth foundation, you can begin to invest.

Step 5 Investment Planning.  There is nothing complex here.  You pick out (a process called asset allocation)  no-load mutual funds with a variety of asset classes and asset styles based on the return you want, the risk you are willing to take, and the taxes you are willing to pay. Once you have your allocation, it is set it and forget it time. Sorry, I just haven’t seen the research that market timing (darting in and out of investments) works but asset allocation does. You revisit this asset allocation once a year.

Step 6 Retirement Planning. Retirement planning is all about using  these wonderful tax deferred retirement plans (401K,403b,457,etc.) to help us build wealth to meet our goals. Let’s face reality folks. Even if you loved your job and will work everyday until you drop, there will be days,  months, or years during your lifetime that you cannot work. Then you should have your investments replace your earned income.

Step 7 Tax Planning.  I am all for getting the most bang for your buck and tax planning provides that in your wealth building program. For every dollar that you invest, if you can get ten cents to fifty cents back from the government, well why not do that?  That is why so many deferred compensation plans, IRAs, SEPS , etc.  are so popular. They provide a lot of bang for the buck. Don’t get greedy by wanting tax free everything but do take tax implications into every investment decision you do. The difference between 5% taxable and 5% tax free is huge if you are in a high tax bracket.

Those are the 7 steps to build wealth and I go into detail for each one. I have also given you  resources that I value to help you even more. There are links to get a free credit report, and links to fee-only Financial Advisors, and links to financial calculators.  If you aren’t the do-it-yourself type, I am always available to help mentor you through the steps. What is different about me, Wealth Coach Fern, is that I empower you with the information and the tools to build your own wealth program.

Why is that so important? Because studies have shown that most of you will follow through on a comprehensive financial plan if you “own” it. That is what attracted me so much to the coaching model. I want you to be successful and I can coach you through a complete personal financial plan. I have 30 years (gulp! I am old) experience in this field and very passionate about it. If there is any way I can make it easy or if you need more info on a topic, let me know. I want you to build wealth and wealth beyond money!

The post Does this Wealth Program Really Work? first appeared on Whole Hearted Way.

It’s summer time and people are going places. The kids are out of school and many vacation plans are laid out. It’s also a time when people reflect on their personal development. There are lots of programs to inspire and motivate you to build wealth – there is the book called the Secret, and there is Oprah’s the Power of Now program, and there are many others. But to truly make a change in your life that is sustainable -you must take action. As the famous Zen Master, Suzuki Roshi once said, “You can keep reading the menu, but sooner or later you must eat.“. A lot of wealth coaches work with your money personality or the fears, guilt or shame that surround financial issues and that’s fine, however I am quite different. I acknowledge what has happened in the past but I work with how you are now and where you want to go. In that respect I am very much like a travel agent.

“Hello, my name is Fern. Where would you like to go in the next year, ten years, or even 20?”  We will talk about the barriers to build wealth and the support you have and what you will need to make that happen (skills, contacts, etc.).  Above all, what action are you willing to take today to progress to where you want to be? I have  my bags packed  to go along with you and it is filled with tools and resources (from my 27 years in the financial industry) to help make your journey easier. As a Wealth Coach, I am prepared to support you in any way so when we hit turbulence you will not panic and go off course. I will hold you accountable and I will sometimes challenge you within your boundaries. Along the way, we will make lots of friends and these friends will elevate your financial self-esteem even more and serve as your R&D team long after I am gone.

If you think you can do this yourself, then think about why it hasn’t happened so far. There are lots of excuses why you haven’t started and lots of reasons why you may want to put it off. As we get older, we have a finite number of years left to build wealth and make our dreams a reality. Don’t wait! Would you choose to…

• Launch a new business or product

• Double your income

• Retire early

• Buy a home or rental property

• Transition to a new career

• Work part-time

What’s the cost? Click here for my fee schedule to build wealth. My average engagement is 6 months and I promise to inspire, challenge, enlighten and empower the best out of you, to help you to realize your goals in 2010 and beyond. To see results quickly, e-mail me at fern@wholeheartedway.com to set up a date and time for a complimentary first session to see if we are good travel mates. I’ll’ take you there!

The post A Wealth Coach Will Take You There first appeared on Whole Hearted Way.

Most people don’t move until the last minute to finish their NUTS especially when they come to see me, a Wealth Coach. Time and money are the biggest obstacles that keep people from getting their finances in order. But not addressing your NUTS can drive you into the poor house.

Take for example, Mr A & Mrs. B, they couldn’t agree on what to do with their money and so did nothing . Mrs. B is worried that that they won’t have enough for retirement and Mr. A might lose his job and both worry about the rising costs of college tuition. They worried about their assets declining in value and talked about it and still did nothing. . Both have no idea of how much they spend annually and both haven’t had decent raises in years . They came to me wanting to fix their Nagging, Unfinished, Tasks. It took hourly phone calls every other week for nearly a year at a cost of $6,500 to take eliminate their financial N.U.T.s.. What happened over that time?

I started with a financial foundation-I got them an emergency savings account, updated estate plan, and a detailed review of all of their insurance. I taught them how to continually get the ideal rates on their cash and even with the cost of an estate planning attorney, they saved over $1500 .

I got them to blend their accounts together and specify them for goals; IRAs,  Roth IRAs, pensions, 529 college plans, 401ks,  brokerage statement, etc. I helped them prioritize their goals and agree on what they wanted to do with their money as far as inheritances. Aligning money with values and goals is just as important as investing. They now know how to manage their own portfolio as a unit for the purposes they intended. They also agreed on what they strategy they would use when things go south.

Mr. A understood that he couldn’t contribute to retirement and college education if he was out of a job for a long time and Mrs. B understood that she would need to cut back on expenses if she still wanted the family to take vacations every year. Both knew what each had to do to meet their goals.

How much did they save? Hard to say,  but at least $15,000, and the peace of mind- priceless.  But both are extremely pleased that they have a plan and they know how to implement it on their own . Waiting so long to fix their Nagging Unfinished Tasks is their only regret .

If this couple went to a financial advisor, they would have easily paid $10,000 or more and had ongoing fees and expenses and still worried about if they were doing the right thing. Now they are armed with the education, tools, and resources to stay on track. They took the time and actually saved money,saved on taxes, and decreased their stress. Can you place a price on that?

The post Have You Fixed Your Nagging, Unfinished Tasks (NUTS)? first appeared on Whole Hearted Way.

Many people don’t bother reviewing their federal tax return after it has been prepared. That’s a big mistake. As a Financial Advisor, I always insisted on reviewing the federal income tax forms with the client. I can find out a lot about the accounts and the investments of a person through a review of these forms. There are many valuable insights that you can get from an income tax review that can build wealth and help with financial decisions during the year. Here are just a few:

1. When you get your refund or a statement of what you owe, many people mistakenly think that amount is what they paid in tax. That is not true. Go to line 61 of the Federal Form 1040 and see what you paid in tax.  If that is a high percentage of  line 22 which is your total taxable income, then that is a sign you may need more tax deductions.
2. Line 8a Taxable interest and 9a Ordinary dividends are the earnings that you are paying tax on. Those earnings usually come from bank saving accounts and money market accounts. If this is a high amount, then it may be time to look at putting some of that money into a long term growth investment like a mutual fund.
3. Line 13 and 14 are capital gains from your investments. If this number is high, then I would look into the investments you have that are creating such high amounts of capital gains. It may also mean that you sold some investments that had a gain and I would want to know why.
4. Line 15a and 16a have to do with distributions from your retirement plans. If a rollover was done properly, it should show 0. If it wasn’t, I would ask what happened and see if that can be reversed. Believe it or not, I have had this happen. Also, I make sure that IRA distributions weren’t taken out before age 59 ½ because then a penalty would show on Line 58. I would advise the client to look for other ways to get income other than paying income tax and penalty tax on an IRA distribution.
5. Line 20b is the dreaded taxable amount of your social security. Yes, social security is non-taxable but only to those who have income under a certain amount otherwise there is a pro-rata tax on your social security.
6. Anything entered on Lines 23-37 would tell me if the client had deductions against their income. The most popular is line 33 which is student loan interest deduction. If that was a high amount, I would work with the client to get their student loans modified or get the interest lowered.
7. Line 40 is the total of your itemized deductions. Most people who have a loan against their home will have an entry here because of the mortgage interest expense. A tell tale sign that a client should look into buying a home is when the total tax amount is a high percentage of the total income amount.
8. Compare Line 7, total wages with Line 61, total tax. If I see that the client is paying too much in tax compared to their wages, I will ask if they are maximizing their 401K, or 403b, or other deferred compensation plans. Usually I get a no. If they would maximize their retirement plans they would pay less in tax and more towards their retirement security.
9. Line 62 is the total tax withheld from your paycheck. If it wasn’t enough to pay the tax on line 61, then you didn’t have enough withheld. But don’t panic! That’s a good thing. It’s okay to have to pay some tax at the end of the year (but not a large amount that would trigger a penalty). In fact, that’s ideal. That means that you got a higher amount in your paycheck than someone who got a huge refund. Those that get a huge refund are giving the government an interest free loan with their money. Some people who are not financially disciplined use this technique as a forced savings account so they can spend it on a car or vacation. You, however, are the smarty pants that took the extra money each month and invested it and got even more money so now you have to pay a little bit of tax. It was well worth it since you came out ahead.

As you can see an income tax review is a great way to build wealth. I consider the federal tax return a snapshot of a person’s whole financial picture. You can use the federal income tax forms as a guide to answer questions such as whether to contribute more to deferred compensation plans, buy a home, or change your investments, and more.

The post Review Your Federal Tax Return to Build Wealth first appeared on Whole Hearted Way.

I have been a big fan of these 7 steps to build wealth since I have been a Certified Financial Planner for over 26 years and have used them successfully with clients. You won’t find any get rich quick to make up your losses fast schemes here. You will find common sense, everyday action items that you can take to make a wealth building strategy for yourself and your family. Remember, it isn’t how much you earn but how much you keep. These steps will start with strong foundations which are steps 1 though step 3. Ignore these and you risk messing up the rest of your efforts. Like building a house, you need a strong financial foundation that will lay the groundwork for attracting and building wealth over a lifetime. Here are the 7 steps:

1. Get an estate plan. Okay you may be single with no family and you say you don’t need an estate plan. Not true. Make a holographic will and just give everything to your favorite charity. Do you have kids and an extended family? This is all the more reason to have a good estate plan. The basics would be a will, power of attorney for health care (or medical directive), and a power of attorney for financial care. Have a large estate? Then you can add things like a revocable living trust, charitable trusts, etc.

Don’t get an estate plan and then don’t be surprised when the ex-wife inherits everything because your spouse didn’t change the beneficiary designations or the will. I have seen it happen too many times.

2. Manage Your Cash Flow. I don’t care if it is just a checkbook. You need to know how much is coming in and how much is going out before you can save or even think about investing. Pretending you know or just ball parking numbers doesn’t work. You can add and subtract -so figure it out. Why? Because you can’t save, invest for your future, or try to reduce your taxes if you don’t know where your money is going. With all the great tools out there such as Mint, and Quicken, there is no excuse not to be tracking your cash flow.

3. Risk Management. This means that as you grow your net worth, you also manage the risks that can destroy it along the way.  That means health, life, auto, home insurance and so on. Think you can’t afford it? Think again. What would happen if you got cancer and didn’t have health insurance?  It wouldn’t be pretty when all that you have worked hard for is wiped out because you didn’t want to pay health insurance premiums.

Of course, we all can’t afford to insure against everything so you pick and choose your battles. This means managing your risks with a combination of self insuring (no insurance and high risk), or partial insuring (small amount of insurance and high deductible), or being fully insured (100% coverage by insurance). Pick a plan that is suited to you, what risk you are willing to take and what you can afford.

Now that you have the top 3 covered, it’s time for the fun stuff.

4. Financial Goals. That’s right you need a goal. Without one you are shooting in the dark and that is scary in these economic times. Remember that these goals are just a starting point. They aren’t set in stone. It could be to retire at 50 or to fund the kids’ college education or to make that trip around the world. Whatever it is, make sure it is SMART- specific, measurable, attainable, realistic, and timely. Setting up goals like to quit work at 55 when you are 40 and only have $100,000 saved would not make the cut.

5. Invest. For those who want to invest but aren’t willing to budget, I say take the first 20% of all of your income and invest it before it hits your checking account. That is an easy and painless way to pay yourself  first which is the first tenet of building wealth. After you make this leap, you won’t even notice that money. Meanwhile it wasn’t spent on stuff, it was spent on you- and that’s a good investment. Investing isn’t about trading in and out of mutual funds or real estate. It is about sticking with an investment over a full market cycle of ups and downs. If you panic easy when the markets goes down, then fine, just stuff your money into cash and cash equivalents, like treasury bills and bonds and such. But it will take you a lot longer to meet your goals than a good mix of cash, bonds, and equities (stocks, mutual funds, etc.)

6. Retirement. So you are never going to retire? Don’t bet on it. Even if you wanted to, your mind and body will one day say no more.  When that time comes, what will replace your paycheck? It isn’t going to fall from the sky. You have to have a bankroll to replace a minimum of 25% of your salary to survive. Remember, social security wasn’t meant to be your sole source of retirement income. It was meant to be supplemental to your own savings account. Don’t say that time will never come, because it does and you better be ready or it won’t be pretty. Have you known someone whose sole source of income is a social security check?  Enough said.

7. Tax Plan. Tax planning is all about keeping more of what you earn. It is an easy way to keep your cash flow up. It means taking all the legal deductions that are due you. But you can’t do that if you keep sloppy records or refuse to manage your cash flow as in number one. It pays big time to keep good records not just in getting a bigger tax refund or more monthly cash but in having more to invest for your future. Tax preparation is not an easy task for anyone even if you own the software. I have had people pay me my full fee just to review their entries into the tax preparation software. That’s not a wise use of your money.  Get a good tax preparer and keep good records.

Make these 7 steps to build wealth your new year’s resolution.  Check in with a fee-only Financial Advisor or a Wealth Coach to review what you have done.  Then you will have a wealth building strategy that you can refer to every year.

The post The 7 Steps to Build Wealth in 2012 first appeared on Whole Hearted Way.

1. Fear of knowing– What you don’t know won’t harm you- so the saying goes. But it also will keep you poor. Those who know how much they are saving, spending and investing have the knowledge to build wealth and keep growing it.

2. Professional help is too expensive– Think it is too expensive to go to a fee-only planner?  You are right. So don’t get the help you need and stay poor. Sometimes you have to spend money to make money.

If you can’t afford a Financial Planner, then use a Financial Coach and if you can’t afford a Financial Coach, then buy books or take a course in personal finance to get you going in the right direction. Think of it as an investment in yourself -not an expense.

3. Resistance to change– There are so many choices and options out there; so you freeze until you find time to figure them all out. No choice is a choice. By not changing your situation for the better you can stagnate in poverty consciousness for the rest of your life and then one day wonder why you never built up your net worth to enjoy the lifestyle you deserve. Learn how to constantly change your personal finances to build wealth for the long term.

Usually people wait to for a life changing event like a birth, death, career change, retirement, or inheritance to deal with their finances. But with the tools that are available on the internet you can make your own financial plan for very little cost. The trouble is that there is so much “noise” out there. How will you tell what’s a good resource and what’s not? That’s when a good Financial Advisor or a Financial Coach can help you plan your finances around the lifestyle you want and show you the right tools and resources specifically for your situation. Isn’t that valuable to you?

What makes working with a financial professional powerful is the financial knowledge that you can take with you. You are building on a money making relationship with your Financial Advisor. You work hard for your money. Isn’t it time to get your money working for you? Avoid these 3 mistakes and you can build wealth easily.

© Fern Alix-LaRocca CFP® All Rights Reserved

The post To Build Wealth You Must Avoid These 3 Mistakes first appeared on Whole Hearted Way.

In order to build wealth you need a good financial plan. Most people start by talking with a Financial Advisor or a Stock Broker.  The most unfortunate thing that happens is that they ask for advice right away without even considering what it is that they want.  A financial professional can guide you to what to do with your money to make the best of it, but only you can decide on how those  funds will come about. Will it come from wages, self-employment income, inheritance, other investments?

Many people will just say that they want to make money. That’s a little like saying I want to be rich. Yeah, well that is nice but the  next step is what you are willing to do to get there. If you don’t have any idea of how much you can save or what action you can take to meet your goals, you will likely be disappointment. Why? Because you are counting on someone telling you what to do and right away you will say that you don’t want to do that.

So before you even discuss personal finance with a professional and I hope it is a fee-only professional, you and your partner should have an idea of actions steps that you would be willing to take to build wealth.  A good wealth coach can help you come to some conclusions about that. Options may be reducing debt, moving to a smaller home or less expensive one, saving more, sacrificing education plans for more retirement money, reduce spending on vacations, etc.

All of the above may sound difficult but let’s consider the alternative. You do nothing. That is a choice in itself. By doing nothing you are insuring that you will lose. It takes action to get ahead of taxes and inflation in order to build wealth. Are you ready to take action?

Don’t let a Financial Professional  tell you what action to take. They are there to guide you and a Wealth Coach can mentor you into the minefield of personal finance but only you can decide to take the actions to build wealth that will help them do a good job for you.

The post Are You or Your Broker In Charge of Your Wealth? first appeared on Whole Hearted Way.

Buying your home is one of the biggest financial decisions you will make in your life and your first path to build wealth. Don’t hurry through this process or it will cost you dearly. These are 7 of the most common mistakes I see:

1.Getting a house in a neighborhood that does not support your lifestyle. For example, if you are a young professional couple with kids, why buy into a senior neighborhood?

2. Getting too big or too small a house without considering your health (stairs? no stairs? family size, etc.) Think about relatives and guests coming. How long will they stay? Will they be comfortable? Are there enough bathrooms to accommodate the family?

3. Not putting 20% down. You need this to get a little equity in case you know what happens.

4. Getting the wrong kind of loan. Determine how long you are going to stay in the home and do not purchase the loan with the lowest payment loan but the loan with the lowest interest and fees. That is how you save money on a mortgage loan (despite what a loan broker will tell you).

5. Not repairing your credit rating. The time to repair your credit is before you consider buying a home not after. Clean it up and you will save loads of money since you will get better loan rates. Better loan rates means you pay less interest over the life of the loan.

6. Not considering taxes, insurance, water, utilities, garbage, and assessment fees. Home ownership means you pay all of the extras too. Don’t underestimate these charges. They add up.

7. Not making sure all appliances, electrical outlets, plumbing, lighting, window and roof leaks. Many people rely too heavily on home inspectors who really don’t thoroughly inspect the things that you are going to be using every day.  Take the time to turn on and off all of the appliances, check water temperature and flows, look for good sealed windows and insulation, etc. It will pay off in fewer home maintenance fees –especially in the first couple of years.

Once you are in, don’t have buyer’s remorse. Look at the mistakes as a learning experience and look at your home as something you will enjoy for years to come.

The post 7 Biggest Mistakes When Buying a House first appeared on Whole Hearted Way.

I get that question all the time and I laugh. What’s good?  What is on a hot streak? There are lots of investment products out there that can build wealth and people treat these things like shiny new objects to pick off the shelf.

Every investment will have some sort of risk, some range of return, some tax implication, and some expense associated with it, and more. Sounds complicated?  It is!  But when you come from a perspective of looking at these things on the shelf and comparing them to each other, you come from a sense of poverty. You immediately assume that you are lacking something- whether it is a higher return on your money or a feature you like, or whatever it is that attracted you to that in the first place.

Each shiny object on the shelf tells you of something that you need or want or have to have. It could be a higher return or a tax feature or a safety element or a low expense ratio. But that doesn’t matter. What matters is that you are looking for investments to build your wealth through the perspective of not having what they offer. No wonder you feel confused! Everything looks attractive and you want them all but you can’t afford them, so you ask friends and relatives and read the paper and listen to television anchors for financial advice. What you get will be advice for things that worked for your friends- their situation, their tax bracket, or you will get people trying to sell you stuff in which they get a commission. In other words, your need to choose and compare investments will be clouded by other people’s judgment and conflicts of interest.  Sounds familiar? It is no coincidence that so many people have gotten burned with financial advice that was given by close friends and commissioned based sales people (remember your first experience buying a car? Ugh!) . We want someone to help us and we figure if it worked for Warren Buffett, or our rich buddy on the golf course, then it is good enough for us. We don’t have to do any due diligence because it obviously must be good. This strategy usually doesn’t end well- just look at all the friends and families that invested in Bernie Madoff.

In order to build wealth for ourselves and our families, we must take a bigger perspective. We must come from opening the lens to acknowledge the existing wealth that we have. When you can honestly acknowledge what we have, then we can see what we need to accompany what already exists. In other words, your investment decisions will become much clearer and easy because you come from a perspective of abundance- not poverty. With this approach you can begin to open to what your true needs are to choose the right investments at the right time to enhance what you already have. This clarity makes your personal finance life much smoother and less stressful. You can now concentrate on exactly what your needs are because you have insight into what you have more than what you lack.  That perspective is the one of abundance and wealth. This is what you need to cultivate in order to pick the right investments that suit your tax bracket, your risk tolerance, and your needs and goals. Focus on your wealth- however big or small, and you will drawn easily to the right choices.

The post What’s the Best Wealth Building Investment Right Now? first appeared on Whole Hearted Way.