VOLUME 30, ISSUE 2
Jeffrey W. Steiner, DO, MBA
Assistant Professor
Children’s Health Center, Dept. of Anesthesiology & Pain Management
Program Director – Pediatric Anesthesiology Fellowship
UT Southwestern Medical Center
Dallas, TX
Titrate Your Personal Finance Management
It is that time of year again in Texas where the days get longer and the temperature heats up. We all have settled into the year and have put many things on autopilot. You probably had some New Year’s resolutions that centered around weight loss (I’m still working on mine), getting organized, and financial planning. Perhaps this is a good time of year to titrate our personal finance management and work towards some of those financial goals we had at the start of the year.
There are seven areas where you can “Titrate Your Personal Finance Management” to keep you on track.
Your Last Will and Testament
Basic estate planning starts with a Last Will and Testament. The purpose of a will is to dictate what happens to your estate when you die. Wills are state-specific and if you don’t have a Last Will and Testament for the State of Texas, then you need to have one written up today. You don’t want to leave this important part of your estate planning up to the probate courts. Even if you have a will in place for Texas, chances are that you have not updated your will in several years. Your estate has probably changed through marriage, divorce, and more children added to your family. The basic will you had drawn up years ago might not cover these changes or new businesses and other assets. Have your Texas State Will updated so that it truly reflects what you would want to have happen to your estate.
Your Monthly Budget
You have a budget, whether you do it intentionally or not. You will be more likely to follow a budget if you have it written down before you start spending your money. This is simply a plan for your money before you actually spend it. Most people who start living on a budget feel like they got a raise because their money is being spent more efficiently.
If you have not been living on a budget I would challenge you to try it for three months. You are simply telling your money where you want it to go and following through with it. Just like an anesthetic plan, you can change it if you need to as things change during the month.
If you already have a monthly budget in place, then it is a good time of year to see how the plan is working. Do you need to adjust how much you are spending to reach your goals such as savings, paying down student loans, or saving more for retirement? Are there areas that you are spending more money than you had planned? Now is the time to see if your plan is reflective of reality.
Your Student Loan Treatment
Instead of managing your student loan, consider treating them by paying them off. We probably have a wide range of different student loans owed by TSA members. Our members’ loans will vary both in size of the outstanding loan and the interest rates they carry.
Put a plan in place on how you will treat your loans. Are you working towards Federal Loan Forgiveness? Are you planning on keeping them for the duration of the loan because the interest rates are low? No matter your plan, you might have to do some titration of your loans to reach your goals sooner. It is not common to “stumble out of debt”. You will need to be intentional about it.
Your Retirement Savings
When was the last time you reviewed your retirement savings? Have you maxed out your retirement savings? Perhaps you have been maxing out your retirement savings for years, but now you are several more years into your career and have reached the milestone of becoming 50 years old. You can save even more for retirement when you turn 50 years old. For example, if you have a 401k then you can save the maximum amount of $18,500 for 2018 along with the catch-up provision of an extra $6,000 for a total of $24,500 a year. If you have a Solo 401k, then you can save up to a combined savings of $55,000 in 2018 for both employee and employer savings.
Maxing out your retirement savings does several things for you:
- It automates your retirement savings and helps you prepare for your future;
- It might help with some tax savings if you elect to use traditional retirement savings plans; and
- In Texas, as in many states, retirement savings is protected against litigation, so it becomes an easy way to shelter your savings from law suits. Retirement savings is an easy asset protection measure.If you have maxed out your retirement and are looking for further retirement savings, then you may want to consider adding a “stealth ROTH IRA” to your retirement plans. This takes a little work, but it is not overly complicated.
Your Investments
Your investments may be both inside and outside retirement accounts. It is a good time of the year to review your investments and see if you need to rebalance your money allocations in these accounts. Rebalancing followings the basic tenant of “buying low and selling high”. There is some good data that rebalancing throughout the year will help your long-term goals of investing. Rebalancing your retirement and other investment accounts can be automated, depending on the institution that holds your accounts.
Your Insurance
Take a moment to review your current insurance coverage. Perhaps you need to increase your disability insurance, homeowners, or auto insurance to protect a larger income that you now have compared to when you first graduated from residency.
If you are far enough along in your career and your children are out of the house, you might be in a position to not renew your life insurance. Or perhaps, you need to add some more life insurance to cover you through some more years. Having a budget in place will help you know how much insurance you need because you will know how much it costs to have your lifestyle.
Your Overall Financial Plans
Personal finance is … well, personal. What did you plan to do this year financially? Are you on track to make it happen? There are probably other personal finance areas you are working towards like kids’ college savings or supporting aging parents. What do you need do to titrate these areas of your life?
Take some time to sit down and plan out these other important areas of your life. Build deadlines about each goal so that you will actually see these goals reached.
Conclusion:
Today is your day to “Titrate Your Personal Finance Management”. Sometimes you have to make large changes, but more commonly, much like the OR, a few small changes will get your financial plan back on track.
Jeff Steiner, DO, MBA is a practicing pediatric anesthesiologist and has been a TSA member for over a decade. He is author of The Physician’s Guide to Personal Finance: The review book for the class you never had in medical school and is editor at PhysicianLifeManagement.com.
This article is meant to provide educational information and does not constitute financial, legal, or accounting advice. Consult a professional regarding your personal finance decisions.
