Monday April 30, 2001

Financial Planning

Courtney Chapman is 32 and single. She's an a account manager at a radio station Her goal: financial freedom. She says, "I just hope to end up where I am not worried about money all the time."

But she's not there yet, though she makes about $60,000 a year. Her rent is $700 per month. There's $340 per month car payment for her 98 Honda Accord. Her only real vice is shopping She says, "I will spend money on clothes and shoes and just like every other girl out there."

To keep her spending in check Courtney bargain shops and pays off her credit card every month. Her

Leonard Wealth Management, Inc.'s Top 10 List for Financial Security:

Top 5 Do's 1. Do maximize your contribution to your qualified plan (i.e.. 401K) 2. Do create a plan for your financial future 3. Do globally diversify your investment portfolio 4. Do save monthly, no matter how small 5. If working with an advisor - Do work only with a Fee Only, Certified Financial Planner Top 5 Don'ts 1. Don't chase investment trends 2. Don't build up credit card debt 3. Don't make rushed financial decisions 4. Don't spend more than you make 5. Don't make investment decisions based on past performance

goal? Saving to buy a house.

To get her financial house in order Courtney sat down with financial planner Scott Leonard. Scott points out, "She hasn't accumulated a lot of debt, which is great."

But Scott says Courtney, like many of us, could do more like rule #1: maximize her 401k contributions. He says, "She's only putting 10% away now. She should put putting 15% of her pay away."

Courtney has $10,000 dollars gathering dust in a low interest savings account. But Scott says she's not saving money, she's losing money. Rule #2: put savings into a money market account. Scott says, "Put it into a discount brokerage money market account where she's going to earn a much higher rate of interest."

And if like Courtney, you're saving for a home, Scott says follow rule #3, "On a monthly basis automatically transfer money from her checking account to that savings account at the discount brokerage firm and let it continue to grow."

And grow, and grow according to what Scott calls "the rule of seven." In seven years $50,000 becomes a $100,000. In 14 years $100,000 becomes $200,000 and it never stops. Scott says, "So its possible if she keeps this up that she could maybe have a million dollars when she retires."