The first step is to determine your income replacement needs. Currently, a large portion of your income goes to taxes (insurance benefits are generally income tax free) and to support your lifestyle. So begin by determining your net earnings after taxes. Then add up all your personal expenses, such as housing, health care, food, clothing, transportation and entertainment costs.  This represents the amount that your insurance will need to replace annually. You’ll want a death benefit amount which, when invested, will provide income annually to cover this amount.

Income replacement for nonworking spouses is an important and often overlooked insurance need, as well. Coverage should provide for your costs for day care, housekeeping, or nursing care. Add to this any net earnings from part-time employment.

Second, you’ll want to add in any amounts needed to fund one-time expenses,  such as college tuition for your children or paying down mortgage or debt.

Finally, estimate and add in any “final expenses” such as estate taxes, uninsured medical costs and funeral costs.

Portions of this article were prepared by the Financial Planning Association (FPA) using © 2012 McGraw-Hill Financial Communications data/information and provided by Perspective Financial Services, a local member.

Volunteering not helps others in one’s community, it also enhances volunteers’ physical and mental health, and strengthens relationships between employers and employees. Findings from a 2010 volunteer study by United Healthcare and VolunteerMatch show that:

• more than 68 percent of volunteers report that volunteering made them feel physically healthier.
• 29 percent of volunteers who suffer from a chronic condition say that volunteering has helped them manage their chronic illness.
• 89 percent agree that volunteering improved their sense of well-being.
• 73 percent feel that volunteering lowered their stress levels.
• 92 percent agree that volunteering enriches their sense of purpose in life.
• more than 75 percent of volunteers who participate in service activities through work report that they feel better about their employer because of the employer’s involvement in their volunteer activities.

Arizona ranks 37th in the United States for its volunteer rate, according to Volunteering in America statistics. It  has an average annual volunteer rate of nearly 25 percent, with 1.2 million volunteers serving 170.6 million total hours per year. The five states with the highest volunteer rates in the nation are Utah, Iowa, Minnesota, Nebraska and South Dakota.

To find volunteer opportunities in your community, visit the following websites:

Volunteers of America

Volunteer Match

Volunteering in America

If you have a spouse or family who depend on you for financial support (or if you work at home providing your family with such services as child care, cooking and cleaning), then you need life insurance. Older couples also may need life insurance to protect a surviving spouse against the possibility of the couple’s retirement savings being depleted by unexpected medical expenses. Individuals with substantial assets may need life insurance to help reduce the effects of estate taxes or to transfer wealth to future generations.

Before working with an insurance professional, you may want to consider the advice of a fee-only financial planner who can offer you an objective review of your insurance needs and options. Determining an appropriate amount of coverage requires an assessment of your needs, while deciding what type of insurance to purchase depends on your goals.

Once you determine how much insurance you need and what type of policy you want to buy, there are many insurance companies from which to choose. Do some research at the library or online to find companies with the highest ratings from the four ratings agencies: AM Best, Duff Phelps, Standard & Poor’s and Moody’s. You can also ask your financial planner or other trusted advisor for referrals to an independent insurance professional who can help you select a company and make your purchase.

Portions of this article were prepared by the Financial Planning Association (FPA) using © 2012 McGraw-Hill Financial Communications data/information and provided by Perspective Financial Services, a local member.

Growth stocks represent companies that have demonstrated better-than-average gains in earnings and are expected to continue delivering high levels of profitability. While earnings of some companies may be depressed during an economic slowdown, growth companies generally continue to expand their earnings. The primary risk associated with a growth stock is the potential for its price to decline sharply if the company releases negative news that disappoints investors.

Value stocks, in contrast, generally have fallen out of favor in the marketplace and are priced much lower than stocks of similar companies. The lower price may reflect investor reaction to recent company problems, such as disappointing earnings or a lawsuit, which may raise doubts about a company’s long-term prospects. The value group may also include stocks of new companies that have yet to achieve recognition. Value stocks also pose a potential risk — the stock price may not rebound, leaving an investor with limited upside.

Mixing growth funds and value funds within your portfolio allows you to potentially gain as the market moves through different cycles. Past performance cannot guarantee future results. Yet, value stocks, often those of cyclical industries, tend to do well early in an economic recovery; and growth stocks tend to outperform during bull markets, which are normally fueled by falling interest rates and rising company earnings. The good news is you don’t have to choose — combining growth funds and value funds may present a prudent strategy for balancing risk and return over the long term.

Portions of this article were provided through the Financial Planning Association, the membership organization for the financial planning community (through McGraw-Hill Financial Communications), and is brought to you by Perspective Financial Services, a local member of FPA.

“The advertising for debt consolidation loans often fails to mention the downsides of these types of loans,” says Ted Beck, president and CEO of NEFE. “In presenting debt consolidation as an option, much of the focus is placed on the ‘lower’ amount of monthly payments, without regard to impacts like total interest paid. We encourage consumers to enter any financial decision with their eyes wide open.”

The NEFE website has an informative article that offers important details on debt consolidation loans and dispels many common consumer misconceptions.

For example, with such loans, a consumer’s multiple debts are combined into a single loan. Typically, these loans have a longer loan term, resulting in a lower monthly payment. What many people do not realize, however, is that the stretching out of the loan term leaves them with a greater overall debt burden, which must be endured for a longer time. In addition, consumers might be subjected to hidden fees and penalties, which many ads do not disclose.

Many consumers also mistakenly believe that lenders, often labeled as “credit counselors,” are obligated to give them the best rate for which they qualify, noted Lisa Bolton, Ph.D., an associate professor of marketing at Penn State University who led the NEFE research. “Lenders act in their own best interest, not the consumers. They’re trying to sell you a loan for the benefit of their institution, so you need to shop around.”

According to the research, the one-sided marketing of debt consolidation loans doesn’t just make the product look more favorable to consumers; it also could prompt people to continue with risky financial behaviors. For consumers feeling financially stressed, a debt consolidation loan may seem like a “get-out-of-jail-free” card, and it may lead them to continue to spend and borrow beyond their means.

Visit the NEFE website to learn more, including 4 tips for understanding debt consolidation loans and 5 questions to ask a debt consolidation loan lender.