A Message from Kimberly Clouse, Financial Expert:

I have worked in the financial services industry for nearly a decade in many capacities, most recently as a financial advisor for individuals. Over the course of my career, I have had the privilege of working with a diverse range of people, from the single mother just starting her own business to the dot.com billionaire. Based upon my experiences, I have learned that the same basic principles and lessons apply to a successful and healthy financial life, whether you're starting out or cashing out. These guiding principles include simplicity, a long-term perspective, and above all, knowing that you have control of your financial destiny, and all the information you need is well within your reach.

Financial Foundations

Good financial planning is about protecting yourself today and preparing for the future. In my many years working as a financial advisor to individuals, I never met anyone who did not want to have a solid financial plan. I would typically talk with new clients--particularly those who had done no planning to date--about financial necessities, those must-have items that would set them on the road to financial health. The basic checklist below is intended to serve as a starting point only; comprehensive financial planning involves considerably more items and actions steps.

Apply for Credit in Your Name: Even if you do everything jointly with your spouse, you should still have a credit card that is in your name only. You never know what the future may bring, so you need to make sure that you--and you alone--have established a good credit record.
Open a Retirement Account in Your Name: Retirement is the single biggest expense for which most of us will save; according to mPower Advisors, the average 65-year-old today can expect to live for another 17½ years! It is financially and psychologically prudent for each of us to have money of our own, and given the cost of retirement, establishing and contributing to an individual retirement account (IRA) or a 401K plan, is a great way to start. (A 401K plan is a retirement vehicle that allows employees to save for their own retirement.) Women in particular should be diligent about saving for retirement: women tend to live longer, earn less, and invest more conservatively than men do.
Draft Your Will: A will is a legal document that specifies how your money and property will be distributed after your death and outlines guardianship of minor children. Without this legal document, the state in which you live will determine how your assets will be distributed, and chances are the state will not allocate your assets the way you would have chosen. A will ensures the rights of your loved ones to receive your assets in accordance with your wishes.
Establish an Emergency Fund: Keep a safety net of 3-6 months take-home pay in readily accessible cash reserves. If, for example, your income is reduced because you unexpectedly lose your job, this money will help you cover your expenses. An emergency fund is usually held in conservative vehicles, such as savings accounts, short-term CDs, or money market funds.
Create a Durable Power of Attorney for Health Care: A durable power of attorney (POA) for health care is a document that allows you to designate another person (usually a spouse or a relative) to make health care decisions on your behalf, should you become incapacitated and unable to make your own decisions. With a durable POA, you are empowering an individual whom you trust to carry out your wishes if you are not able to make them known and act upon them yourself. (A "durable" power of attorney, unlike a regular power of attorney, is not revoked by your "incapacity.")

As with many worthwhile pursuits, the most important and difficult step is frequently just taking step one, so use the checklist as your general guideline for getting started.

This column is designed to provide accurate and authoritative information on the subject of personal finances. It is provided with the understanding that the Author is not engaged in rendering legal, accounting, or other professional services by publishing this column. As each individual situation is unique, questions relevant to personal finances and specific to the individual should be addressed to an appropriate professional to ensure that the situation has been evaluated carefully and appropriately. The Author specifically disclaims any liability, loss or risk which is incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this work.