Expert Interview with Laura D. Adams About Understanding Money

Personal finance expert Laura D. Adams knows about money. She’s been featured in dozens of magazines and on several television programs where she discusses financial practices that help people of all backgrounds. Adams helps individuals to better understand money without the fear that comes along with worries about debt, bills, and having enough money to last a lifetime. She shared several tips with us for understanding money so that people can invest well, spend better, and feel comfortable with whatever their income levels are now and will be in the future.   Your website states that you make money easier to understand. How do you go about this task? I enjoy helping readers, listeners, and students by explaining complex financial topics in a simple way. The approach to teaching anything is to break it down into small amounts of information or tips, rather than making it overly complicated. My goal is to encourage others to learn and take action to improve their personal finances.   People of all ages worry, or at least think about, retirement. What kinds of tips and advice do you lend to those interested in being able to retire comfortably? Start contributing to a qualified retirement account early and increase your contributions annually. The easiest way to save on a regular basis is to automate your contributions as much as possible. I recommend setting up a payroll deduction that goes directly into a retirement account. Also, unlike the infomercial tag line “set it and forget it,” we should review our progress every year.   Your blog lists all sorts of tips from checking credit reports to finding ways to save on auto insurance and other services. What kinds of tips do you think are most relevant for people near retirement age? And for those who have already retired? Whether you’re approaching retirement or are already retired, it pays to continually watch your expenses. In my award-winning book, Money Girl’s Smart Moves to Grow Rich, I encourage people to become their own “spending detective.” Instead of putting your nest egg at risk by chasing higher returns, find ways to save money on expenses. Raise your insurance deductibles or inquire about discounts that you may be eligible for. Refinance or consolidate debt to cut the interest you have to pay. And consider downsizing or relocating to a less expensive city that will allow you to stretch your monthly income.   How do investment needs change during the retirement years? What are some tips that you can share with people who still want to grow their portfolios? As you begin relying on the monthly income from your retirement nest egg to finance your lifestyle, it’s critical to keep it safe. Otherwise market volatility can create unnecessary emotional and financial stress. However, retirement can last several decades, so we may need to keep our money growing at a modest rate of return. Since everyone’s situation is very different, I recommend working with a qualified investment adviser who can assess your unique needs and give you comprehensive advice before and during retirement.   What would you say are some of the best investments one can make for retirement? I believe that investing in your health is one of the best investments you can make for a happy retirement. Studies show that Baby Boomers fear health care challenges even more than running out of money. Lifestyle changes that improve health and longevity can help you work longer, avoid expensive health care costs, and get more enjoyment out of retirement. As for financial investments, it’s wise to use tax-advantaged retirement accounts as early as possible. These might include a 401(k) or 403(b) plan offered by an employer, or an IRA that you open up on your own. A fixed indexed annuity is another option to secure a portion of your retirement with guaranteed income.   In your opinion, are there things people worry about in terms of financial security that are actually misguided? For instance, what are some things people should be concerned about financially that they might be overlooking? People tend to overestimate the rate of return they’ll get over time and underestimate inflation and how it will erode their future spending power. So be conservative in your estimated returns, and don’t underestimate inflation.   Do you have any tips that you can share regarding predatory services out there for people looking for financial security? In general, always be suspicious of something that seems too good to be true because it probably is. Always trust your gut instincts and never invest in or buy any financial product that you don’t understand. Stay safe online by learning to recognize phishing scams that come to your email inbox. These types of emails prey on our emotions with some urgent need to click on a link. Never click on a link in an email; instead enter the website address directly into your browser. Cyber criminals try to steal your account passwords, get your personal information, or infect your computer with malware. A good virus or anti-phishing software is a good insurance policy, but your common sense and awareness is the best defense.   When creating a budget, what kind of elements should one consider (at any age) that individuals regularly overlook? Since having a “budget” feels and sounds restrictive to me, I encourage you to have a “spending plan” instead. The most important goal of a spending plan is to align your spending with your values. It’s easier to make sacrifices when a goal has deep meaning for you. So consider what you’d like to accomplish in the short- and long-term, such as creating a holiday gift fund, paying for a child’s education, or having a comfortable retirement. Remembering the importance of your goals can motivate you to stay on track with a reasonable spending plan.   Please share anything else about saving money, your website, retirement, or finances that you would like readers to know. For comprehensive and common sense financial advice, check out my award-winning book, Money Girl’s Smart Moves to Grow Rich. It’s full of great tips and advice along with a full chapter devoted retirement. You can also find my weekly Money Girl audio podcast on iTunes or connect with me at LauraDAdams.com, Facebook or Twitter.