Paycheck Chronicles

Do These Financial Headlines Apply To You?


If it bleeds, it leads.

It’s been true since the birth of media, and the adage is still accurate in our world of 24/7 news coverage.

As a Certified Financial Planner™ professional, I keep my eyes and ears open, especially for financial news of note. The stories that catch my attention are usually a bit tamer than the shocking top-of-the hour headline-grabbers. Some news reports over the past few months, though, have left me cringing. Although there’s no real blood spilled in these stories, you can tell many of them aren’t headed for fairy-tale endings. I’ve included some examples below.

I’ll admit I jazzed up the headlines and added a little financial planning humor as subheadlines, but the situations are real (read the original reports for the details). I hope they make you smile, and consider whether they could be talking about you.

Headline: Many Americans Unprepared for Unexpected Expenses*

Subheadline: Squirrel infestation torpedoes family’s finances

A recent survey found that only 37% of Americans could cover a $1,000 surprise expense. Others would resort to cutting back on expenses, borrowing money from family or friends, or using credit cards.

If I had a dollar for every time I’ve recommended maintaining three to six months’ worth of regular expenses in an emergency savings account, I’d have that $1,000 and then some! All kidding aside, an emergency fund can provide breathing room so you don’t get caught short when hit with unanticipated expenses.

It’s surprising that so many people are unprepared since you can build an emergency fund with small steps. Start setting aside $25 or $50 per pay period, and you’ll begin to build a savings cushion.

Interestingly, nearly a quarter of the survey’s respondents said they would pay for an emergency by reducing spending on other things. Why not do that now and begin to build your emergency fund? You never know when you’ll need it, so the time to build it is now.

My own experience bears this out. My family dipped into our emergency fund when we had a water heater leak the night before last summer’s vacation.

And the year before? Well, that was the squirrel infestation.

Headline: 70 Million Americans Need More Life Insurance**

Subheadline: Proposed life insurance premium a budget-buster, causes cancellation of one pizza night a month

The reasons to have life insurance are well known, but a recent LIMRA study uncovered that 30% of Americans — 70 million people — know they need more than they have. As far as reasons go, 65% said they wouldn’t buy it because they thought it was too expensive. Interestingly, the same survey revealed many Americans’ ignorance about insurance prices. They almost always think it costs more than it actually does.

I recommend taking the time to look at your life insurance and encouraging your family members to do the same. The protection can be priceless, at a surprisingly modest cost — perhaps only the price of a few pizzas a month.

Headline: Family Balance Sheets in a Precarious State***

Subheadline: The numbers are in: We have more month than money

This report from the Pew Charitable Trusts highlighted a wide range of frightening facts about U.S. family finances. One that grabbed my attention: 47% of households were spending as much or more than they made each month.

At the most basic level, a solid financial plan allows you to spend less than you earn and lets you save consistently. Spending plan, budget, cash flow management — call it what you will, but having a game plan to meet your monthly obligations, including saving and investing, is critical to financial security.

Headline: Military Families See Saving for Retirement as Major Obstacle****

Subheadline: Many believe money problems will solve themselves before retirement

Blue Star Families’ 2015 Military Family Lifestyle Survey indicated 39% of active-duty families felt that not saving for retirement was a key roadblock to financial security. And 63% of those who aren’t saving said they couldn’t afford to start.

In America today, whether in the military or the private sector, workers bear the brunt of the retirement burden. For that reason, we can’t afford not to save. Commit to a retirement plan, whether contributing to the Thrift Savings Plan or a 401(k) at work, funding an IRA or starting an automatic investment plan. The first step is the most difficult, but even a small contribution moves you in the right direction. If you’re already doing it, look for opportunities to increase your efforts.

Headline: Most Americans Have No Idea Where They Stand*****

Subheadline: Planning for retirement takes back seat to vacation planning

A recent Employee Benefit Research Institute study showed that Americans spend more time planning vacations than retirement.

For most of us, a successful, stress-free holiday or vacation doesn’t just happen; it requires forethought. We identify our goals, construct a plan to achieve them and then carry out the steps. Retirement is no different: Long-term financial success comes from creating and executing a financial plan.

If you fail to pack the right clothing for a vacation, you’ll likely be uncomfortable. Likewise, failing to make financial plans can ensure you miss your financial goals. Make this the year you commit time to thinking about your finances.

I’ll admit, the financial news I’ve selected here isn’t tabloid material — but it’s probably more important to us personally than most of the news we consume. The important information, what we at USAA call our core advice, isn’t flashy, but it’s solid: Protect your life, loved ones and possessions; spend less than you earn; save enough for emergencies; save now for retirement; have a will and other legal documents; and have a plan, review it annually, and update it with major events.

If you do these things, you’ll be on the right side of tomorrow’s financial headlines.

*Bankrate Moneypulse, 1/6/16 ( )

**LIMRA Fact Sheet, 2015)

***Precarious State of Family Balance Sheets (2015 Pew Charitable Trust Study)

****Blue Star Families Military Lifestyle Survey, 2015

*****Employee Benefit Research Institute, Retirement Confidence Survey 2015

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