Finance, Personally Speaking

Article excerpt

That it's been a tough economic climate these past few years is undeniable. Pundits debated whether we were in a global recession or an actual depression. We had a credit crunch, the bailouts of large companies by national governments, and corporate bankruptcies. Jobs disappeared; industries shrunk drastically; housing prices went into free fall; and consumer spending dried up. What's an area of growth? Giving advice on personal finance.

When the economy tanks, people think more about their personal finances. No longer does money just come rolling in. Investments lose value. Furlough days and salary cuts mean less disposable income. Prices go up. Where will people find the money for retirement, for educating their children, for basic living expenses? What about how to handle medical expenses? Is this the right time to buy a house? What investments are recession-proof, if any? What money management techniques actually provide tangible benefits? Can you afford a vacation? What's the best way to put together a budget?

When thinking of online resources to help answer questions such as these, to provide financial guidance, and to create sensible future planning, it's easy to become overwhelmed. Everyone and his brother, maybe even the family dog, wants to give advice on personal finance. The trouble is, those bits of advice can vary tremendously from one source to another.

PERSONAL IS AS PERSONAL DOES

The first thing to recognize is that personal finance is just that - personal. Advice that is relevant to a single 25-year old person will be inappropriate if applied to a married 65-year old person. Existing conditions can affect the validity of personal finance advice. Someone who has lived in the same house for years and has paid off the mortgage is in a very different financial situation from someone of the same age and income bracket who just bought a home and is looking at mortgage payments stretching out 30 years.

Secondly, personal finance is often governed by where you live. If you're in a country that has national healthcare, you don't have the same financial considerations for medical care as you would in a country that lacks national healthcare, such as the U.S. Stock-picking tips for your personal portfolio, however, usually transcend national borders.

Advice about personal finance often centers on the tax implications of actions taken. Tax laws, regulations, and rates differ from country to country. Thus, personal finance advice that is applicable to a U.S. resident might not be useful to a U.K citizen. If you're the latter, you'd be more interested in The Times' Money section (www.timesonline.co.uk/money) than in The Washington Post's Personal Finance section (www.washingtonpost .com/wp-dyn/content/business/personalfinance).

Tax implications aren't limited to a country's legal variations; differences can occur from one part of a country to another. For example, advice that is appropriate to a Washington state resident could be less appropriate to one living in Oregon, even though the states are contiguous. Washington has no state income tax; Oregon has no sales tax. The Retirement Living Information Center (http:// retirementliving.com/RLtaxes.html) compiles data from various sources, such as individual state tax and revenue departments, CCH 's State Tax Handbook, the Federation of Tax Administrators, The Tax Foundation, and the National Conference of State Legislatures, to create a comparative chart of U.S. state tax burdens.

HERE TO HELP

When it comes to financial advice, unlikely as it may sound, the government is here to help. The U.S. Financial Literacy and Education Commission maintains a website, MyMoney.gov (www.mymoney.gov), which is filled with practical information on budgeting and taxes, credit, financial planning, paying for education, retirement planning, saving and investing, and starting a small business. It also provides calculators to help you decide whether to buy or rent, how long it will take you to pay off credit card bills, and the value of savings bonds. …