Cops have enough to stress about. We certainly don’t need to list examples, but if money is one of them—and if you’re like most, it probably is—a new Calibre course, Financial Planning for Law Enforcement, is here to help.
The program, which premiered two weeks ago, was created and is instructed by Tim Glennon, an experienced financial planner and investment advisor representative who designed the class with the nuances of police work in mind. Tim also holds a degree in Criminal Justice and grew up in a law enforcement family, so he knows money and he knows cops.
Back to stress. Fiscal strains and uncertainty can cause a lot of it. But that doesn’t have to be the case. By spending time learning about and taking advantage of financial options and strategies, you can develop a feeling of security and control and minimize monetary angst, hopefully to the betterment of your physical and psychological health and your relationships.
Whether it’s taking advantage of the power of growth over time by actively saving and investing when you’re young so you’ve got financial reserves when you’re older, or you’re trying to determine whether you can retire, decisions about where, when and how to use your money are obviously important.
Here’s a sample of five take-aways, drawn from the wealth of information Tim shared during the first three-hour course, that you can consider right now. For more, be sure to register for the next Financial Planning for Law Enforcement program being conducted online February 25.
1. Save. Realistically, reliably and right now.
Sounds simple. The most basic of financial principles, right? But you might be no stranger to the fact that it’s not always that easy to stay faithfully dedicated to a savings plan unless you’re fully and tirelessly committed. Just like New Year’s resolutions, oaths to save money can be shallow and short-lived. Things pop up that tempt you to step off the track to your goal…maybe necessary things, maybe not. You may convince yourself that you’ll “catch up” after you skip over some savings contributions. But be honest: maybe you will, maybe you won’t.
One thing that can help you stay true to bolstering your savings account is to have a plan and set realistic goals for what you’re going to—and able to—consistently contribute. Overshooting can set you up for frustration and disappointment. Undershooting only undermines what you could enjoy—or need—down the road. Candidly evaluate your current financial state and be realistic in your savings contribution goals.
Also remember that it’s never too early to start saving and it’s never too late. Anything helps. Nothing does nothing.
Don’t fall prey to: “I’m young. I have time. It’s time to have fun and when I settle down, I’ll get serious about saving.” Sure. Have fun. But remember that the money you put away every month over 20+ years can turn into some real numbers.
In the same vein, don’t fall into the: “It’s too late. Too much time has gone by. Trying to save now is useless.” Like we said, nothing does nothing. Don’t let unexpected financial burdens you ran into or an inability to save anything at certain points paralyze positive financial thinking at a point where you actually can put a few bucks away. It’s never too late to get in the game, regardless of how much time has gone by or how much you’re saving.
2. Understand liabilities & debt.
Virtually everyone owes money in one form or another. It’s part of life and that’s not all bad. However, if you don’t understand the difference between liabilities, “acceptable” debt and potentially “dangerous” debt, you need to educate yourself.
You don’t need to fear debt nor should you avoid liabilities, but you definitely need to respect them both. The ability to strictly manage and control debt and adeptly leverage liabilities are key skills that support financial well-being. Get to fully understand the differences between say a mortgage payment and a credit card payment in terms of financial principle. At core, what does each of those represent in your life?
Make sure you’re watching and understanding interest rates and how you might consider behaving in low- versus high-interest scenarios. Candidly evaluate your lifestyle in terms of over-extension of your means. How disciplined are you when you face “nice to have” versus “need to have” scenarios? Are you quick on the trigger with a credit card?
When it comes to going into debt or taking on a financial liability, knowledge and discipline can strengthen your financial foundation. Ignorance, inattention and lack of self-control can shatter it.
3. Understand IRAs, HSAs, 457s, 529s and the rest of the alphabet soup.
Unless you’re inherently attracted to the world of finance, studying the details of various tax-impacting investment and saving plans can seem like reading the 50-pg. instruction manual for an elaborate piece of electronics. However, taking the time to do that can make a tremendous financial difference for you and your family. It’s a wise time investment and worth any temporary boredom or discomfort. Trust us.
Understanding the different IRAs, health savings plans, education financing plans, etc. and taking the time to thoroughly consider the wisest decisions based on your specific situation and current and future needs isn’t optional. It’s necessary.
Be patient and commit to exploring a variety of tax-associated investments. Which type of IRA can be more beneficial long-term given the amount of time you have to let it sit? What plan will allow you access to funds in an emergency? How much can you afford to contribute to which type of plan…and which do you feed first? How does a health savings plan work and is it worth it? What restrictions if any are related to educational saving plans?
The more you look into the various plans the clearer the salient questions become. Take the time to consider what those questions are given your unique life scenario, answer them, then act.
4. Get to know insurance.
Like it or not, insurance is a given. You hope you don’t need it, but you can’t live without it…and you don’t want to die without it, either.
The two core questions you need to answer are: What kind and how much?
There are a number of things you need to consider insuring—your home and other assets, your health, your ability to work, your life—and there are many options for types of coverage. Take the time to look into all of those and seriously consider getting professional guidance. If you’re concerned that an insurance salesperson is just going to try to sell you as much as possible, whether you need it or not, remember that advice doesn’t need to come from a salesperson. It can come from any other financial guidance professional.
Also, don’t underestimate the numbers. It’s not uncommon for someone, particularly someone at the start of their career, to underestimate need and therefore uninsured themselves. For example, if you’re 25, $100,000 in term life insurance may seem like a lot of money. But if you plan on getting married, buying a house, having kids, educating those kids, needing a couple of cars, etc. you should know how fast that $100,000 is going to disappear. Fast.
Making realistic, well-informed insurance decisions can be one of the best things you can do for those who do—or will—depend on you.
5. Know how to run your numbers and define “someday”
Why do you work?
Answers may vary—and hopefully there’s at least a small amount of, “Because I enjoy my work” in there—but it’s a safe bet that for most, the answer is, “So I can provide for myself and my loved ones…and so I can someday stop working.”
Here’s the million-dollar question: When is someday? You need to know how to figure that out, and it may not be as easy as you think.
There are a lot of things to consider when deciding when, and more importantly if you can retire and they’re not all obvious. Be sure you are exploring every single aspect of financial need as you plot your course. Mortgage. Health insurance and health issues. Savings. Dependants, including your kids, your aging parents, and/or others you may find yourself responsible for assisting down the road. Investment income. An “emergency fund” for an unexpected rainy day. Life expectancy.
ALL of these things will drain your retirement reserves, which is OK and to be expected, but remember that.
Be realistic. Don’t just assume that because you have what you consider to be a decent amount of money saved, relatively healthy investments (would they remain healthy in a down market?), you’re in pretty good health and you think can live frugally you’re ready to wrap it up. Know how to run your numbers. ALL OF THEM. And get professional guidance. The investment in a skilled financial advisor can literally be the best one you’ll ever make when it comes to deciding whether you can retire.