Addressing Financial Planning Issues - Back to Basics

By David Chazin

Regardless of what you’re earning, adhering to the principles of basic financial responsibility is always important, and often overlooked. Many Chevron employees enjoy the comforts of a good job, pension, healthcare coverage, life insurance and long-term care insurance. But following these simple steps can ensure you’re doing what you can to make sure you live comfortably and worry just a little less after you retire from Chevron.

Time for a Reality Check

Developing good financial management skills is a matter of taking time to learn the fundamentals and establish a working financial plan. For Chevron employees who are juggling a variety of responsibilities, however, finding that time can be a challenge. If you’d like to have better control of your finances, below are some suggestions.

Adopt a Budget

Coming up with a budget is a key factor in taking control of your finances, especially if you’re usually out of money by the time payday rolls around. A budget doesn’t have to be about depriving yourself; it’s about seeing how you’re spending your money and deciding where to cut back.

Start by keeping a list of everything you spend for a month or two. Then, divide the list into categories (utilities, groceries, entertainment, etc…), add the numbers up, and go over the results carefully. You may be shocked at how quickly “little” expenses — a gourmet coffee on the way to work every morning, a movie every Friday night — add up. And you may be pleasantly surprised at how easily you can cut back on spending and boost your savings.

Here’s something to keep in mind: According to the Bureau of Labor Statistics, the average American spent $6,129 on food in 2010[1]. Assuming that’s three meals a day, the average meal cost somewhere near $5.60 (and prices are even higher in the Bay Area). Imagine cutting down just $.25 per meal for you and your family over the course of a decade. You’d save thousands, and the lifestyle change wouldn’t be very noticeable. But before you can do this, you need to know what you’re spending by making an accurate and all-inclusive budget. Then you can make prudent decisions on where and how to cut back.

Make Saving a Habit

It’s very likely that you have several financial goals you’d like to accomplish. So you’ll want to put money away regularly. Arranging for a direct deposit from your paycheck into your savings account is an ideal way to make your goals a top priority. Chevron already does this for you by automatically taking pre-tax money out of your pay check and depositing it in your 401(k).

One important goal you should add to your list is to build up an “emergency fund.” Ideally, you want to have a savings account with enough money to cover three to six months’ worth of expenses. Other goals might be saving for new furniture, a car, or the down payment on a house. If you have young children, you may want to save so you can help them with their education expenses.

Protect Your Income

Make sure you have adequate life insurance coverage, especially if your family relies on your income or you stay home to provide care for children or relatives. You may also want to consider disability income insurance to provide needed income in case you’re unable to work. The good news is there is life and disability insurance available to you through Chevron at two times your annual salary.

Invest for Your Future

Investing your money wisely can help you reach your goals. You’ll want to keep some savings in low-risk investments (such as money market accounts) where the money is easily accessible. For long-term goals, consider investments that have more earning potential, such as stocks and bonds, and funds that invest in the stock market. Chevron’s 401(k) plan is a smart and convenient way to invest for the future — especially since Chevron matches a portion of your contributions.

Investing doesn’t have to be complicated. Start with a few basic strategies and build up your knowledge as you go, or enlist the help of a financial professional. Choosing a portfolio of investments and following your progress will be a learning experience.

We’d be happy to sit down with you and discuss some ways to make sure make sure the money you earn at Chevron is going as far as possible. Because we work with Chevron executives, managers, employees and retirees, we're knowledgeable about your various compensation plans and benefit offerings, plus other issues specific to Chevron employees (in addition to the retirement, investment, and estate planning issues everybody faces). In fact, chances are you may know one of our Chevron clients and you can ask them how working with an advisor has helped them.

Please contact us at (925) 659-0217 with specific questions or to schedule a time to meet in our San Ramon, Point Richmond or Houston, TX offices. Also, follow us on LinkedIn.

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 [1] Consumer Expenditures—2010, September 27, 2011. Bureau of Labor Statistics

David Chazin, Insight Wealth Strategies, and Lincoln Financial Advisors Corp. are not affiliated with Chevron.