Financial Four: Money has a Bracket Too

Experts Rank Top Financial Priorities

DENVER—The madness of March is winding down, but there is a financial frenzy on the horizon as the tax deadline looms. Expert financial planners and advisors are weighing in on what Americans should be thinking about as their top financial priorities in 2012.

The National Endowment for Financial Education® (NEFE®) and the Financial Planning Association® (FPA®) have partnered on the Financial Four, a bracket of 32 concepts that helps users identify the financial areas that are most important to them. Using rankings from more than 300 financial experts from FPA membership, NEFE and the FPA used the Financial Four to identify the primary topics that people need to keep in mind to get through 2012 in the black.

“There aren’t any upsets in this bracket,” says Ted Beck, president and CEO of NEFE. “It can be overwhelming to prioritize all of the things you need to accomplish to keep your financial life in order. The Financial Four is a fun way for people to visually rank and arrange their financial responsibilities.”

“FPA and its expert members are proud to team with NEFE to narrow down the top financial areas that consumers should focus on this year,” says Marvin W. Tuttle, Jr., CAE, and FPA’s executive director and CEO. “Our aim is to help Americans take some of the ‘madness’ out of planning for their financial future by providing basic tools, resources and access to trusted professionals so they stay on the path to prosperity.”

What is your number-one financial priority? Is it establishing an emergency savings or having a budget? Is it more important to calculate how much you will need for retirement or write a will? In a head-to-head matchup, how does performing a regular financial checkup stand up against having a debt-payoff plan? The participating planners and advisors turned bracketologists logged on to www.financialfour.org and ranked their priorities. Based on their voting results, here is the 2012 Financial Four:

  1. Live Within Your Means. Not surprisingly, this was the overwhelming top choice among financial planners and advisors. Spending less than you earn and living within your income range is the best way to ensure you meet your financial goals.
  2. Protect Yourself with Adequate Insurance. Ensure your financial security by having adequate insurance coverage in place for health, disability, long-term care, auto, homeowners’ and renters’ to protect yourself and your assets.
  3. Build an Emergency Savings Account. Prepare for the unexpected by having this important reserve. Keep this account separate from your savings and aim for three- to six-months of living expenses. Starting with a small reasonable goal—as little as $500—will help springboard you toward this goal. Your tax return may provide a great way to start!
  4. Establish Life Insurance for Wage Earner(s). Protect your family by having adequate life insurance for all wage earners. Having a policy in place to cover six to 10 times your gross annual income will ensure financial security for your loved ones if you are not there to provide for them.

How would you rank your Financial Four? Complete your bracket and see your prioritization at www.financialfour.org. For a complete list of all of the 32 financial concepts and where they ranked, visit the NEFE website here.

About the Financial Four
The Financial Four, a joint project of the National Endowment for Financial Education (NEFE) and the Financial Planning Association (FPA), is designed to help people identify their top financial priorities. The interactive bracket allows users to rank each topic until they advance their selections to the top choice. This is the first version of the Financial Four and therefore does not allow for historical comparisons. To complete the bracket online, visit www.financialfour.org.

About the National Endowment for Financial Education (NEFE)
NEFE is a nonprofit foundation that inspires empowered financial decision making for individuals and families through every stage of life. For more information, visit www.nefe.org.

About the Financial Planning Association (FPA)
The FPA is the largest membership organization for personal financial planning experts in the U.S. and includes professionals from all backgrounds and business models. FPA members adhere to the highest standards of professional competence, ethical conduct and clear, complete disclosure to those they serve. Based in Denver, Colo., FPA works in alliance with academic leaders, legislative and regulatory bodies, financial services firms and consumer interest organizations. For more information about FPA, visit www.fpanet.org.

Sidebar: Financial Four Complete Rankings

  1. Live within your means
  2. Protect yourself with adequate insurance
  3. Build an emergency savings account
  4. Establish life insurance for wage earner(s)
  5. Understand short and long-term goals
  6. Communicate with family
  7. Know amount of debt/have a payoff plan
  8. Ensure job security
  9. Perform a regular financial check-up
  10. Spend less than a third of income on housing
  11. Have a will/financial and health-care power of attorney
  12. Know your partners’ financial personality
  13. Pay yourself first
  14. Take advantage of savings programs available at work
  15. Calculate what you will need for retirement
  16. Understand the time value of money
  17. Experience change before it happens
  18. Spend wisely
  19. Understand financial terminology
  20. Save at least 10 percent of what you earn
  21. Make tax time financial planning time
  22. Understand investing risks vs. returns
  23. Budget for anticipated holidays/celebrations
  24. Understand income
  25. Use credit responsibly
  26. Manage service providers
  27. Understand and take advantage of workplace benefits
  28. Prepare a financial emergency kit
  29. Protect financial documents
  30. Track spending
  31. Keep up on maintenance
  32. Pull credit report

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