Pay Attention to Your Financial Health 

Work-Life Balance 

Remember the fairy tale of the cobbler and his children? The shoemaker allows his children to go without shoes because he pays more attention to everyone else instead of his own family’s welfare.

Compare that tale to real life; because you are a financial professional, accountants are often asked by family, friends, and even clients and customers for advice on how to create and maintain a healthy financial life.

Are you taking your own advice and securing your future? Whether the answer is yes or no—and depending on the kinds of benefits you have with your employer, or even the kind you can get when you belong to professional organizations, clubs, or even as an alum of a university of fraternity/sorority, you’ll want to consider your options. Here’s a summary of what you should know about.

Think Long-Term … Retirement!
Okay, so you’re years and years away from retirement. That’s great, but it’s never too early to plan ahead. None of us really know if Social Security benefits will be in place 30 to 40 years from now, so planning for your monthly government check probably isn’t the safest and most secure route to financial security—and that doesn’t even count what other kinds of income you’ll need to maintain whatever kind of lifestyle you want.

Unless you hit the jackpot and retire early, you’ll want to supplement your income by creating long-term savings tools that earn as much interest as possible.

According to, if you’re in your 20s and just starting to save for retirement, you should save 10% to 15% of your salary each year. If you’re getting started in your 30s, you need 15% to 25%. If you wait until your 40s, you’ll need to put away 25% to 35% of your salary if you want to keep your standard of living. Wow, talk about a dose of reality!

Risk and Investment
Let’s talk about risk and reward. The kinds of investment tools you participate in are based on a level of risk. Do you take chances or do you play it safe? There are quite a few resources on AICPA’s 360 Degrees of Financial Literacy website, including an article on how to gauge your risk tolerance based on your personality, time horizon or the number of years to retirement, and capacity for risk.

Most young CPAs probably can take on more risk. Although the stock market is anything but stable, financial planners most often advise their clients to stay in the market for the long haul rather being reactive to the market by ceasing to invest or pulling out altogether.

Gone are the days of the pension plan, although there are some employers—mainly public service and large private companies—who offer what U.S. News & World Report refers to as a “gold-plated retirement benefit.” Instead, most employers offer Individual Retirement Accounts (IRAs) as the primary, long-term savings tool.

With an IRA, you contribute money that goes into a plan administered by your employer, usually a mutual fund. However, regular contributions are not required and there are no minimums to meet. The savings’ advantage is that you aren’t taxed on the money until it is withdrawn. While pension plans may be gone, matching employer contributions to your IRA aren’t, so be sure to understand what benefits you have and take full advantage of any matching plans. Also make sure you know about your IRA options; there are several different IRAs so you’ll want to make sure you know how they work.

If you’re self-employed, the most popular cousin to the IRA is the Simplified Employee Pension or SEP. It’s really the same concept as an IRA, but intended as an investment tool that offers a savings on your taxes. With entrepreneurs paying self-employment tax, any means to reduce their tax liability to very welcome.

Other Investment Considerations
There are several other ways to ensure your financial health:

  • Parents who want to put away their money for their children’s education should look at 529 plans: education savings plans operated by a state or educational institution to help you set aside money for future college costs. Some 529 plans operate just like IRAs where you invest your contributions in mutual funds; others are prepaid plans where you pre-pay the cost of an in-state public college.
  • Life Insurance also should be part of your financial health because many plans are designed as a way to build savings. If you are not married and have no dependents, carefully consider whether you need any insurance. Would the value of your estate (assets) be able to settle any kind of funeral expenses should something happen to you? Be sure to know what you have at the workplace; some employers provide life insurance as part of their benefits package.
  • Young professionals often look to universal or whole life insurance as a way to save money for the long term, but should only engage in these tools if they understand withdrawal and tax penalties if they draw out the funds prior to maturity. An insurance professional can advise and offer guidance.
  • What about disability insurance? Your employer may offer this as well, but if it does not, then you may want to think about ways to supplement your income if you were unable to work.
  • Finally, there is long-term care insurance. Most young professionals will not need to look at long-term care insurance for quite a few years, but knowing about your options is key to future planning.

Take Your Temperature
The key to any kind of planning is to know your options; maintaining good financial health isn’t any different. Be smart with your choices, but be sure to understand what you’re buying. In the same way you serve as an accounting expert and provide advice to others, you’ll want to seek the advice of credentialed professionals who know how these various tools affect your tax liability and your income.

Know your financial health – after all, it’s your future we’re talking about!


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