Tuesday, February 24, 2009

Your financial "stress test"

Twenty of the largest banks in the US will undergo a financial "stress test" over the next few weeks to determine their overall health and long-term viability.

Now is a good time for Women of Wealth to ask their Financial Advisors, or accountants, or spouses to perform a personal financial stress test on your portfolio of assets. This will help determine what changes, if any, need to be made in order to maintain your financial independence, and a secure retirement. At the bottom of this blog you will find ten things you can begin to do TODAY to carry out your OWN plan to weather the financial storms that lie ahead. Do this in parallel to what your Financial Advisor, spouse, significant other, or parent is doing - and keep in mind the phrase "trust but verify", as you do.

My research has shown that the top priority for Women of Wealth is that they have a secure future, and that the needs of their children and grandchildren will be met. I was also amazed to find that many of these women, despite accounting for greater that 48% of the wealth in this country, have left this in the hands of a spouse, parent, or child. If this is you, then the recent downturn in economic conditions is a wake-up call to gain control, or at least, become better informed, of your personal financial condition.

I can't tell you how many stories I have heard over the last few months of women receiving quarterly statements that show their 401K's or investment portfolios declining in value, but yet had never received a call from their financial advisor offering an explanation or support as to what happened or what to do next.

Most of these blindsided Women had put their trust in a male-dominated, women-oppressing, good-ole-boy system of "they'll never understand this, anyway" thinking that has give us the Madoff, Stanford, and who knows who else, scandals. I'm not saying that trust is breached by men alone, but Women have a much stronger Moral Compass. This has served Women well, and when combined with a strong intuition, faith in themselves, and a desire to be financially independent, can lead to a social biography that brings meaningful change, and builds a better world.

An Action Plan (courtesy of Circle Financial Group)

1. Have an emergency plan in place for your family - have some cash easily accessible and make sure you are in well supported financial institutions.

2. Analyze your spending patterns - do a cash flow statement and be surprised how much you can cut if you choose to. Choose to.

3. Create a balance sheet - understand your assets and liabilities and work to reduce your debt.

4. Review your insurance - make sure you have what you need with sound providers.

5. Review and gather essential documents - wills, medical power of attorney, financial power of attorney.

6. Develop a financial policy statement for your family- identify, prioritize, and quantify goals.

7. Talk with your children as well as your parents - this is an opportunity to have conversations about money that you may have never had.

8. Work with your financial advisor - seek expert thinking by people you trust.

9. Position yourself in the market - make sure your portfolio is positioned for the future and not the past.

10. Create an investment plan to support your goals - money is a resource that enables you to achieve your life goals. Try to align them.

Until next post, continue to believe, receive, achieve. SDG -JBHIV

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