Can anybody tell me what is so important about the next four weeks?Christmas and New Year's Eve parties do not count as valid answers.Instead, you are given a few last opportunities to get your 2003finances in order to minimize the tax bill you'll pay next April.
We all know about mortgage deductions, and charity giving beingdeductible and a few other things like that. We also know about thestandard deduction, home business expenses and other stuff that youcan learn from software programs like Turbo Tax (not an endorsement).But what about the lesser known deductions - medical savings, andothers that I am not going to get into because I am not a tax expert.I do know who to recommend you go to talk to: a financial planner.
Preferably a Certified Financial Planner.
Okay; here's a short test - all True or False answers.
1. T or F Financial planners are the same as stockbrokers
2. T or F Financial planners are primarily investment advisers
3. T or F Rich people are the only ones who can afford financialplanners
4. T or F Financial planners aren't worth the money you have to pay
5. T or F You should only work with fee-only planners
6. T or F You can develop your own financial plan
Tally up your totals. How'd you do? If you have more than 5 Falsemarks you're doing great. Anything less, read on and learn what youcan about how to improve your year end financial planning.
1. False - the Financial Planning Association notes that astockbroker, insurance agent, and other financial sales personnelhave the function of selling financial products. These days justabout anybody can hang out a shingle claiming to be a financialplanner.
A good planner's job is to help you identify your financial goalsand working with you to develop a plan to reach those goals.
2. False - investment advice is just one part of what a plannerdoes. Financial planners are supposed to look at your entirefinancial picture - debt, taxes, retirement, savings, estate planningand insurance.
3. False - an increasing number of planners are working with modest-income clients. Go to www.fpanet.org to look for a financial planner.
4. False - sometimes you get what you pay for. A planner is anobjective third-party who can help you budget better, reduce taxes,or even prevent a costly financial catastrophe.
5. False - with a caution. Fee-only planners can cost $100 an hourand so can be prohibitively expensive. If you have a planner who alsosells financial products, beware of high-pressure tactics. Financialplanning won't help you if the planner pressures you into buyingproducts you can't really afford or aren't what you need.
6. False - with a caution. This depends on what kind of person youare. If you are good at planning your financial future you won't needa financial planner. If, however, you are like most people you don'thave the time or inclination to figure out how best to use your moneythen you really should consider hiring a financial planner.
So in the last four weeks of this year you need to sit down anddecide what financial moves you can do to best help yourself. If thisrequires the use of a planner, don't hesitate to contact one. At thevery least, sit down for an hour with all your paperwork in line andsee if they have any suggestions as what you can do. With the powerof the Internet behind you there is little reason why you can'timprove your financial situation in this remaining time if you justknow what to do.
Roger Sorensen
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