(reprinted from Decor and Style Magazine, July 2001)

Decorate Your Financial Future With Style
By Candace Bahr

When I was first Given the opportunity to write this column, some of my staff asked, "Why put a financial advice article in a magazine about home decorating?" They wondered whether my readers would have any interest in financial planning, and whether they would embrace the concepts I wanted to address.

I understood however, that the combination of decorating and financial planning makes sense on so many levels. For one thing, Decor & Style Magazine readers enjoy certain luxuries, and the peace of mind that a beautiful home environment can bring. It's the same peace of mind you get knowing you can afford to surround yourself with the things that bring you joy, and that your financial future is secure.

Second, the talents that apply to interior design also apply to creating a sound financial plan. Both are based on the ability to pull together diverse elements into a cohesive whole. It's the ingenuity to see what fits and what doesn't, and to create an environment that reflects your personal style and also meets your lifestyle needs, both day-to-day and over the long term.

Understanding the analogy between decorating and financial planning can help reduce the stress many women associate with managing their money. If you look at creating your investment strategy the same way you look at creating an attractive living space, you can discover the fun and excitement of designing something that suits you to a tee.

First, you will need to start with a budget. You might have a separate stash set aside for decorating your home, but when it comes to your finances, you have to look at the big picture. Write down all your sources of income, and in a separate column write down your expenses, including weekly, monthly and annual expenses. Don't forget medical expenses and insurance premiums, as well as payments on any outstanding debts you have, such as credit cards, loans and your home mortgage. The difference between your income and your expenditures is the amount you have to set aside for investing. (If the difference is a negative number, you should meet with a credit counselor about consolidating your bills and reducing your debt.) Ideally, you want to save or invest at least 10 percent of your income every year--more if you have long-term goals like paying for a child's college tuition or purchasing a second home.

Next, it's time to choose a professional. Just like you hire experienced service providers to paint your home, install new carpet, and reupholster the furniture when you redecorate, you need to find an expert who can help. Think of your financial advisor as the interior decorator for your portfolio. The same way an experienced designer coordinates all the contractors for your home, your financial planner can bring in mutual fund managers, research analysts, annuities specialists and other expert resources to help you build the portfolio of your dreams. Be sure to ask around for referrals from other professionals, like your CPA or attorney, as well as from friends and colleagues. You want to choose someone who not only has several years of experience, but with whom you get along well on a personal level. Don't be afraid to ask a lot of questions during your introductory meeting, and if you have a planner already who doesn't seem to be meeting your needs, get a second opinion. Trust is one of the most important factors when working with a financial advisor.

Together with your planner, you can start to think about the look of your investment portfolio. The same way you might choose a theme for your home---like urban modern, Shaker style, country or traditional you'll want to decide on an overriding theme for your financial plan. Are you most concerned with preserving your capital, or do you want to pursue aggressive growth opportunities? Do you need a steady stream of income, or are you saving toward a long-term goal like retirement? An experienced financial planner will help you assess your personal level of risk tolerance and your time horizon, and together you can pick an investment theme that best suits your needs.

Of course, most peoples' homes don't follow one exact look all the way through. Different rooms often have different color schemes and different moods. The library might be stately and somber, whereas the living room is airy and bright. But, the rooms work off each other to achieve an overriding motif. Similarly, your investment portfolio will incorporate diverse elements that complement each other and are all in keeping with your principal objectives. You might combine a few blue-chip stocks with a selection of small cap companies or foreign equities. Or, you might add the stability of fixed-income investments, like municipal bonds, to your stock mix. You also will want to keep a percentage of your portfolio in cash or cash equivalents, like CDs or a money-market fund. Just like a large house with rooms in various styles, a diversified portfolio can give you a greater sense of security and comfort.

Be sure to keep a time frame in mind as well. Have you ever had work done on your home, and there was no end in sight? The contractor kept extending deadlines, which in turn kept disrupting your plans. You will need to establish short and long-term goals for your financial plan the same way you do when you redecorate. Know the timing of your objectives, like purchasing a new car (short-term) or retiring (long-term), so that you can measure your progress along the way.

Of course, even when you've finished decorating, you don't want to neglect your living space. A nice home requires upkeep--sometimes repairs are needed, or you want to remodel just one of the rooms or add new elements that complement what you already have. The same holds true for your portfolio. You should revisit your investment strategy with your financial advisor at least once a year to see what still looks good and what might need to be rearranged. Also, major life changes like a marriage or divorce can have a major impact on your portfolio, so be sure to let your financial advisor know in advance if your future will follow a different path.

Finally, there is one key difference between home decorating and financial planning: Unlike designing your residence, the results of creating an investment strategy may not be seen for several years. Parts of your plan may be evident from the start, but you might not reap the fruits of your labor on long-term elements like retirement planning for quite some time. In fact, maybe financial planning is more like gardening. You've planted the seeds for your financial future, and with patience, proper attention and up-keep, your portfolio can grow and flourish for years to come.

Candace Bahr is managing partner of Bahr Investment Group in Carlsbad. (Securities offered through Linsco Private Ledger). She has been a financial consultant for over twenty years in the San Diego area and is the co-founder tithe non-profit Women's Institute for Financial Education (WIFE.org).