Business & Finance

Financial Professionals Say Many People 'Simply Do Not Know' Where Their Money Goes

a64121ad38c63829bd96_david_allegra-1.jpg
David Allegra
4c6a3519b900f36743d5_kaplan_cropped_color.jpg
Eve Kaplan
ddd95b3ae40d13e797b1_walter_pardo_1_-2.jpg
Walter Pardo
a64121ad38c63829bd96_david_allegra-1.jpg

When Jon Corzine recently told a U.S. Senate investigations committee that “I simply do not know…” how $1.2 billion of client funds disappeared from the embattled broker-dealer MF Global, some observers may have been tempted to shake their heads at the former CEO and New Jersey governor’s alleged lack of knowledge.

But in fact, a lot of people share a similar predicament, say some financial professionals: money comes into households, but people simply don’t know where it goes.

“Years ago, soon after I set up my business, I got a client whose W-2 (wage and tax statement) reflected a million-dollar salary,” said Michael Mazzucco, partner of the Chatham CPA firm Michael Mazzucco & Associates. “One of the first things he asked me was, ‘Where did it all go?”’

Sign Up for E-News

It sounds like a simple task to find out, but in fact it’s not so easy, said Mazzucco.

“People withdraw cash from an ATM machine and they lose track of how they spend it,” he cautioned. “Instead, they need to keep track of it, perhaps by sweeping a certain amount each month into a separate account for cash expenses and then identifying it in ‘buckets’ like gas or food purchases, or repeating bills like utilities; and by using personal financial software like Quicken to keep track of your expenditures.”

Many people get unpleasantly “surprised at the end of the month” when their credit card bills arrive, noted David J. Allegra, president of Allegra & Co., a full-service financial and wealth management firm based in New Providence.

“A large number of people neglect to budget for the future,” he said. “They spend all their money and then there’s nothing left over for savings.”

Allegra said certified financial planners and other professionals can help clients set up automatic checking withdrawals “to pay themselves first” by funneling money into college funds, individual retirement accounts and other savings and investment vehicles.

“Sometimes we also take on the role of a psychological counselor, getting couples to sit down together and examine their goals and spending habits,” he said. “People get used to doing things a certain way, but sometimes they have to cut up their credit cards or take other steps to change their habits.”

The slow economy has helped spur more people to take a closer look at their financial strategy, but some people still “expect a windfall” to come along to help them pay down big credit card balances, observed Walter Pardo, managing director of Wealth Financial Partners LLC in Basking Ridge.

For the most part, though, Pardo said his clients “are aware of how they’re spending their money. People are more conscious about budgeting than they were before, and they’re buckling down and spending less. For many years, the baby boomers drove the markets, but many of them are speeding towards 60 years old, so there’s some slowdown now.”

Good financial planning means “looking at everything, including income coming in and what’s going out,” according to Eve Kaplan, owner of Kaplan Financial Advisors LLC in Berkeley Heights.

“Knowledge is power,” she said. “We look at how clients’ investments are allocated, whether they’ve got the right insurance in place, and what their tax strategies and goals are. The process is like going to a department store, everyone has different needs.”

Sometimes she finds that a client’s retirement goals may not match up with their current savings strategy.

“It’s better to find that out now, instead of waiting until you retire to find that out,” she added. “Even after we’ve worked out a financial plan, I encourage clients to periodically monitor where they are to be sure they’re still on course.”

Some couples avoid that kind of self-scrutiny because they’re worried about stirring up strife, Kaplan said.

“But when you with a professional, we create a non-judgmental atmosphere. It’s not about what you should have done, but what you can do going forward.”

TAP Into Another Town's News:

You May Also Be Interested In

Sign Up for E-News

Berkeley Heights

NJ Audubon: World Series of Birding

April 21, 2018

NJ Audubon: World Series of Birding
New Jersey Audubon Event at Scherman Hoffman Wildlife Sanctuary

Once again the Scherman-Hoffman Wildlife Sanctuary will field teams for the World Series of Birding, the Big Stay and the Century Run and invite you to join them for the day or collect pledges to help support the conservation, education and research goals of NJ Audubon. For more information, ...

Primrose School of Berkeley Heights Spring Fling Charity Event Set for May 19

BERKELEY HEIGHTS, NJ - The Primrose School of Berkeley Heights is excited to announce our Annual Spring Fling Event. Since our opening in 2014, our school has donated over $10,000 to community organizations such as the Rotary Club, the Berkeley Heights Rescue Squad and the purchasing of the immensely used Drug Awareness & Education Kit for the Berkeley Heights Police ...

Free Public Panel Will Explore Sexual Assault and Consent

The Union County Board of Chosen Freeholders invites members of the public to attend a panel discussion on sexual assault and consent on Wednesday, April 25 at 2:00 p.m. in Room N-4 at Union County College, 1033 Springfield Avenue in Cranford. The panel will feature a question and answer session.

The panel discussion is intended to raise awareness about sexual assault and consent in ...

Free Living History Event Showcases World War I Centennial

The Union County Board of Chosen Freeholders invites residents and visitors to experience battlefield life as a World War I American Salvation Army volunteer, featuring Ms. Laurie MacDonald-Gaulke, actress and storyteller, in a special free presentation of “Doughnuts for Doughboys: A Salvation Army Lassie in France.”

Doughnuts for Doughboys takes place on Tuesday, April 25 at ...

Thank You, St. Joseph's Volunteers

April 16, 2018

Thank You from St. Joseph Social Service Center

In recognition of National Volunteer Week, we would like to express our gratitude to the countless volunteers that serve the poor and homeless at St. Joseph Social Service Center in Elizabeth (http://www.sjeliz.org).  Whether you make a sandwich, collect toiletries, tutor in the job program, make soup, wrap Christmas gifts, donate food, ...

New Providence Borough Council to Cultivate Relationships with County Officials

April 12, 2018

NEW PROVIDENCE, NJ – Councilman Robert Robinson touted the importance of personal relationships with Union County representatives at the Monday, April 9 council meeting.

Union County Freeholders Angel Estrada and Bette Jane Kowalski attended the Street Smart campaign kick-off event prior to the meeting providing the council members with the opportunity to chat face-to-face with the two ...

Chatham Township Committee Unanimously Adopts Ordinance to Ban Marijuana Retail Sales; Cannabis Advocates Disagree

April 13, 2018

CHATHAM, NJ - Chatham Township Mayor Curt Ritter began the new year by pledging to oppose Gov. Phil Murphy's plan to legalize the recreational use of marijuana and Thursday night he followed through by voting to adopt an ordinance that prohibits "marijuana cultivation, production testing, manufacturing facilities and retail stores' in the township.

The Chatham Township Committee ...

Upcoming Events

Carousel_image_11433c9e92ddbc063eae_103a27776b9f3cdaaab1_img_2579

Sat, April 21, 11:00 AM

Our Lady of Peace , New Providence

Our Lady of the Peace Church Holds Healing & ...

Sun, April 22, 1:00 PM

17 Kent Place Boulevard, Summit

Self-Care Event

Health & Wellness

Sun, April 22, 1:00 PM

17 Kent Place Boulevard, Summit

Self-Care Event

Health & Wellness

Sun, April 22, 1:00 PM

Miller-Cory House Museum, Westfield

Sheep to Shawl Festival

Other

Sun, April 22, 1:00 PM

Miller-Cory House Museum, Westfield

Sheep to Shawl Festival

Education Other

Sun, April 22, 2:00 PM

New Providence Memorial Library, New Providence

Celebrate National Poetry Month @NPML

Arts & Entertainment