Couple worried about the investing choices overwhelming themWe all need a financial team on our side every now and then. You need help making decisions or even just bouncing ideas off of someone else. But we often don’t know where to turn for help.

Corporations have boards of directors to help them make decisions and draft corporate strategy. You should do the same. Develop your own team of professionals to help guide you through life and the financial decisions you make for your family. Think of your certified financial planner, lawyer, certified public accountant and real estate broker as members of your personal board of directors.

Add a Financial Planner to You Team

We all need advice from time to time, especially about our finances. We need someone to reassure us that we are heading in the right direction, saving enough for our financial goals and making the best possible choices.

Whether you need a complete financial plan or simply want to make sure that your idea to invest in a Roth individual retirement account vs. a 401(k) retirement plan is a sound choice, having a financial planner on your team who you can turn to will help.

“I would recommend that, at a minimum, people find a CFP professional when putting together a team of trusted advisers,” says Michael H. Baker, a certified financial planner with Vertex Capital Advisors in Charlotte, North Carolina. “A competent CFP can bring valuable insights into all areas of your financial life and potentially act as a coordinator amongst all of the professionals, which simplifies the process for clients.”
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Meeting with a fee based financial plannerYou need to know your net worth. I’m not talking about calculating your net worth every week with the changing fluctuations in the stock market. But, once a quarter you need to sit down and take stock at where your family is financially.

Like a business balance sheet, your net worth lists your assets and liabilities in one location. Take your assets, subtract all of your debts, and you will be left with your net worth. Many of us are far too often left with a negative value for our net worth, as we owe more than our assets can cover.

I can remember my first day of undergraduate accounting class. The professor put the fundamental accounting equation on the board. “Assets – liabilities = equity”

The same is true in our own personal lives. Everything we own — cars, real estate, stocks, bonds, cash, and the like — are our assets. Every debt we have — including our mortgage, car loans, student debt, credit card balances and other debt — make up our liabilities.

What’s left is your net worth. So, why is it important to know this figure and tocalculate your net worth often?

Your Net Worth Tells You Where You Are

Your net worth is a snapshot of where you are in life, your family’s financial health. A negative net worth can quickly show you that you may be over-leveraged, that you have more debt than investments you can sell to pay them off.

If you list every investment and debt that you have, your net worth can quickly show you how much you have saved for certain life events. There are entries on my calculations for my children’s 529 College Savings Plans as well as others for retirement accounts, IRAs, 401(k) plans and the like.

Of course, there are many ways that you can impede your net worth. Lifestyle inflation, credit card and student loan debt, no retirement planning and other land mines can decimate your net worth.
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