Do Your Finances Need a Check-Up?

Welcome to this week’s guest blogger; Marin Financial Planner- Katy Song.  Katy talks about what we should all be doing to make sure our finances are in tip top health.  Read her tips below and contact her for more personal advice.


As moms, we are diligent about taking our children to the doctor for their check-ups, benchmarking their progress on weight and height charts, and listening to the doctor when it comes to development progress.  I recommend conducting a Family Financial Health check-up! You can do this yourself by following the simple steps below or consult a professional financial planner for advice.

Inoculations = Emergency Fund. Just like getting inoculated against polio or chicken pox, you can prevent succumbing to a devastating financial situation if you are prepared. The rule of thumb is to keep between three to six months of liquidity (cash or CD) in a separate account to cover expenses in the event of an unforeseen job loss or true emergency.  If you don’t have this account set up yet because you do not have the cash to spare, I recommend that you open a high yield savings account anyway and put $50 in it. By opening this account, you are at least setting the intention that you will build the account up over time when you have the resources.

Benchmarking weight & height = Spending Plan. How are you doing with your average monthly spending compared to other families in your area? There are a few rules of thumb when it comes to spending. First, spending on housing should be 28-31% of your gross income. This includes principal, interest, property taxes and homeowner’s insurance (PITI). This is hard for most families in the Bay Area given real estate prices, but it is important to look at ways of keeping your largest expense as low as possible. Rates are still at historic lows. Have you tried to refinance to lower your payments or improve your terms? Second, auto & transportation should be less than 10% of your gross income. This includes car payments, gas, repairs, etc. Third, food expenses typically rank 2nd or 3rd as a percentage of total expenses. Nationally, families spend between $500-1,200 on groceries each month.

Developmental Progress.  While this can be a more subjective category that depends on your personal financial situation, it is still important to not neglect your progress when it comes to your longer term goals such as retirement savings. For example, if you are 35 years old and plan to retire at 65 (and live until you are 90), have $150,000 already saved for retirement and need $6,000 of net income per month in retirement for living expenses, you will need to have saved $4.5million by the time you retire. This equates to saving $46,000 per year for retirement (assuming you can earn 6%) or earning between 7-9% on your retirement savings and maximizing annual contributions every year until retirement. While lots of variables go into the analysis of how you are progressing towards retirement, it is better to know where you stand now than to wait another 10 years and let the power of compounding slip by!

There are numerous online calculators that can help you assess your family’s financial health, including many However, having a professional give you a check-up is the best way to get a comprehensive assessment of your family’s financial health.

Katy Song, CFP®,is a fee-only Marin financial planner and owner of Katy Song Financial Planning in Mill Valley. She specializes in objective and customized financial plans for families with young children and couples starting their lives together. Katy lives with her husband and two children in Mill Valley. You can reach Katy at or