Financial Conversation Starter from Your Greater Philadelphia Tax Preparation Office

April 29, 2013

I don’t know about you, but I get pretty excited about the spring around here in Greater Philadelphia. When the cold is gone, and the trees don’t seem so desolate … and am I right that the angle of the sun is a bit less harsh?

Or maybe it’s just because tax season has finished and I’m getting more sleep? 

Well, I hope you and your family will have some “spring” this year — in the more figurative sense; whether or not it’s in the next couple of months. The winter always seems longer than it really is (even when it really *is* long!), but I’m also reminded of how necessary it is.

You see, like the lifecycle of an economy, I still believe that it’s a *good* thing to experience a time of dormancy. Speaking biologically, plants and flowers often need that time of “being withdrawn” to survive the “facts on the ground” (really cold temps!).

They’re a classic picture of a healthy cycle — pull back a little when it’s harsh, but look for the warmer temps and be ready to bloom.

I don’t know all the details of your personal situation. But I do know that you and I have a choice about how we’re going to weather our different financial seasons. Keep acting like it’s summer (when it’s really winter out there), and you’ll wither, and suffer for it.

But the opposite is also true — keep staying “shut down” and dormant when the weather is turning up … and, well, you’ll miss your chance to really grow up and blossom.

Fine — I’m a Greater Philadelphia tax pro, not a poet, but you get the point. Don’t be afraid to step out again, just because it’s been cold for awhile out there.

And yes, there IS some good news in our economy out there (consumer spending, GDP, to name a few). And speaking of delivering good (or bad) news, this week I thought I would take up the topic of how you and your partner can get on the same page when it comes to finances. I think you’ll enjoy, and as always–send me your feedback!

Financial Conversation Starterfrom Your Greater Philadelphia Tax Preparation Office
Do you get a knot in your gut when your spouse asks you how the finances are looking? Do you practice a policy of “Don’t ask, Don’t tell”?

One of the best tools I’ve seen to keep your spouse or partner in the loop about your finances is the simple concept of the monthly report. If you find it useful, and once you’ve established the format, you can also do it twice a month to take a look at how you’re meeting your goals.

Why You Should Do This
While there are many benefits to the monthly report that are outside the scope of this discussion, some of the major ones that apply to most families are:

* You keep each other accountable.
Neither one of you can step too far outside the artificial boundaries you set up for yourselves (budgets, investments, etc.), because you know that you have to answer to the other every 15 or 30 days. This helps you avoid making major financial mistakes.

* Awareness of your financial situation.
Each one of you is fully aware of your current financial situation at all times, including your account balances and other major metrics.

* An opportunity to discuss goals and progress.
Your meetings to review and discuss the report give you the opportunity to talk about your major financial goals, how you’re progressing toward meeting those goals, challenges that lie ahead, and potential changes you might have to make in your financial management to meet those goals.

* You can celebrate successes. Seeing your progress on paper allows you to look back and celebrate how far you’ve come, and encourages you to know you’re moving in the right direction.

What Should You Include?

The great thing about setting up a template like this, is that you’ll likely not change it very much at all after the first month or two. I would include the following:
* The Date (and whether the report is a mid-month check-in or an end-of-month summary).
* Money In: All income and transfers into your accounts.
* Money Out: All expenses and transfers out, categorized by bills, other expenses, investments/savings, and loans. I also recommend breaking down the biggest expenses within each of these major categories.
* In Minus Out: Cash flow for the month, and the plan for the resulting shortfall or surplus.
* Net Worth: A quick overview of all assets and liabilities to determine your month-to-month net worth.
* Credit Score: Update of your credit score from a monitoring service, and a comparison to last month’s score.
* Goal Monitoring: If you set up any special savings or financial goals at the beginning of the year, this is the place where you track them and keep each other accountable.
* Notes: This is where you can explain any unusual activity, or make notes on upcoming expenses or issues. This is also where you can make notes as to important milestones and successes you’ve made, particularly when year-to-year comparisons are important to make.

In particular when one partner is primarily in charge of handling the finances, this kind of reporting can make a huge difference in your peace of mind — and your relationship! can make this extremely efficient, as can other free softwares on the market.

The most important thing I want to communicate? Have that open conversation. And if you need a referee, let me know — I’m always glad to be a neutral sounding board.

And I’m always grateful for our friendship, and for your referrals!

E G Neve

PS — For those of our clients who have previous years’ tax returns at another preparer, OR for their friends…
“No Charge” Return Review
Special Gift Certificate
As a complimentary service this year, we will provide a Return Review To Any Non-Client.
We will also review prior year returns from clients who did NOT have us handle their taxes during the year under question. No charge will be made, unless we have to file an amended return. Email our office or call 1-888-ASK-NEVE to set up this complimentary service!
Deadline May 10th

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