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If you’re ready to get your finances in tip-top shape for the New Year, there is one simple strategy that can help you achieve economic security and success.

The strategy is to ask yourself these “What if?” questions, and then come up with a preventive or proactive solution.

“What if”:

1. I lose my job (Would you consider entrepreneurship if no one re-hired you?)
2. I lose my spouse through death or divorce (Does he or she have life insurance; or do you have a prenup and credit in your own name?)
3. I don’t get that raise or promotion (Would you regret overspending?)
4. I don’t make as much money as I thought I would make (Would you still be able to pay off all those hefty student loans?)
5. My car gets involved in an accident? (Would you have the car insurance you need?)
6. I get sick (Would you lament being uninsured and having no healthcare coverage?)
7. My child needs surgery (Would medical bills drive you into bankruptcy?)
8. I lose my wallet or my credit cards and personal information get stolen? (Would you wish you had looked into identity theft protection?)
9. I lose a big chunk or all of my savings/investments (Would you wish you had hired a financial advisor?)
10. I am sued (Would you know how to deal with a lawsuit or court action?)
11. My house is destroyed (Would you be covered with homeowners insurance to rebuild and know how to avoid contractor scams?)
12. My home needs a major repair (Would you have the extra cash needed to fix things?)
13. My taxes go up (Would you know how to lower your income taxes or slash your property taxes)?
14. My mortgage or rent payment goes up (Would your know whether to walk away from your residence?)
15. I am fined (Would you know how to earn additional money to avoid living paycheck to paycheck?)
16. My ex stops paying his child support (Would you know how to get child support that’s rightfully due?)
17. The court orders me to pay someone else (Would you have to withdraw IRA or 401(k) retirement funds to satisfy this obligation?)
18. My wages are garnished (Would you know how to stop wage garnishment?)
19. My employer asks me to relocate…or else (Would you have other job or career options?)
20. Financial Armageddon happens…and the economy has a repeat of 2008 (could you and your family survive yet another recession?)
21. The Mayans were right (The Mayan Prophecy suggests a cataclysmic or world-ending event will occur on 12/21/2012. If they’re right, what will your financial afterlife look like?)

OK, so I just threw that last one in there for shock value. But I hope you get my point: The single best financial strategy anyone can ever take to prepare for the future is to do some contingency planning.

You Need a Financial Plan B. If any one of these things listed above happened to you, how would you cope?

If you’d be financially sunk by any of these personal and financial challenges, it’s time to stop procrastinating and get serious about fixing your money problems and creating an economic backup plan. Today is as good a day as any to get started.

Do you have a solution to any of these dilemmas or did any of these things happen to you already? Sound off on this topic.

“Ask The Money Coach” is a syndicated column written by personal finance expert Lynnette Khalfani-Cox, co-founder of the free financial advice blog, AskTheMoneyCoach.com. Follow Lynnette on Twitter at @themoneycoach.

Ilyas Akbar, a retirement planning specialist for AXA Advisors, says it’s good for young professionals just starting out to think of their money as three buckets; short, mid, and long-term. BLACK ENTERPRISE and Akbar created a plan to help you identify your financial goals and some possible investment options for achieving those ambitions.

• Short-term

Short-term goals are generally defined as those goals you want to achieve within two years. Akbar says these can include building an emergency savings fund, saving for a down payment on a home, purchasing a car, or going back to school etc. In the event of an unexpected expense “you want to have liquid cash available that’s not tied up in the market,” he adds.

Savings Vehicles:

1. Savings account: Although interest rates are lower, your money is liquid and your deposits are FDIC-insured up to at least $250,000 per insured bank. You can easily transfer or withdraw your money from savings accounts.

2. Checking accounts: Although most are non-interest bearing, some banks and credit unions offer higher interest rates. These accounts are FDIC-insured and can be easily accessed. Banks may impose minimum balances, limit the number of transactions that can be made within a time period or may require direct deposit to qualify for the high-interest rate.

3. Money Market Accounts: The rate of return is typically higher on MMA’s since they are based on the current market rate of interest. They are generally FDIC-insured. Banks may impose minimum balances, or limit the number of transactions that can be made within a time period.

4. Certificates of Deposit: CDs generally receive a higher interest rate, especially on longer terms, which range from one month to five years. They are fairly liquid, but there is a penalty if you withdraw the funds before its maturity date.

Rate of Return: The average rate of return that one might target is 1-2%. “You won’t earn a lot on your money, but the benefit is liquidity and stability,” says Akbar.

• Mid-term

Mid-term goals are generally those goals that you want to accomplish in the next 5-15 years, such as early retirement, business, education, a second home or a large purchase. “This bucket provides financial flexibility, freedom and allows people to enhance their abilities in their lives,” says Akbar.

Where to Invest:

1. Mutual Funds: By investing in a pool of stocks, bonds, and other instruments with multiple investors, gives you holdings in several different companies (diversification). Like stocks, they can also be converted into cash.

2. Stocks: Ownership of a corporation represented by shares that are a claim on the corporation’s earnings and assets.

3. Real Estate: A publicly traded company that invests in a specific type of property, from shopping centers and office buildings, to apartment complexes and hotels.

4. Exchange Traded Funds: ETFs are similar to mutual funds in that they represent a collection of investments. Unlike mutual funds, ETFs trade on an exchange (hence the name). Some investors prefer ETFs to mutual funds because they have low expense ratios and generate lower capital gains taxes than similar mutual funds.

Rate of Return: The average rate of return that one might target is 6-10%.

• Long-term goals

“This is probably this biggest thing you’ll ever save for,” says Akbar. This savings for your retirement. Social Security won’t be able to fund your retirement. Here are other investment vehicles you may want to consider to help you start investing for your golden years.

Where to Invest:

1. 401(k)-Tax deferred retirement account that an employee elects automatic contributions from their paycheck to the plan on a pretax basis. Distributions received before age 59 1/2 are subject to an early distribution penalty of 10% additional tax unless an exception applies.

2. Individual Retirement Account: An IRA is a fund earmarked for retirement savings (There are several types of IRAs: Traditional IRAs, Roth IRAs, SIMPLE IRAs and SEP IRAs.)

3. Cash Value Life Insurance: An insurance policy that covers you for the duration of your life. It builds cash value

Rate of Return: The average rate of return that one might target is 8-10%.

I have a few retirement accounts set up. Can you provide me with a list of financial planners to help me with my retirement questions and concerns?

—M. Jones
New York

First, you need to determine whether you’re at a stage in your life where you need a financial planner. Not everyone requires one. A lot of investors don’t realize that virtually all of the reputable investment firms that administer retirement savings accounts have well-informed customer assistance representatives who can answer basic questions about your accounts, investing strategy, and even suggest investment products to suit your needs.

I’ve had a Roth IRA with Fidelity for more than a decade, and at least twice a year, I’ve called on the company’s account representatives to answer specific questions regarding asset allocation and diversification in my portfolio. When I got married, they gave my wife and me advice on combining our retirement accounts—all for free. Charles Schwab, ING, and other firms have similarly helpful reps.

You don’t want to discuss your money worries, goals, hopes, and dreams with just anyone. (See “How to Choose a Financial Planner,” Moneywise, December 2009). If you’ve determined that you really need a financial adviser, you can go to the Certified Financial Planner Board of Standards’ search page (www.cfp.net/search) to find a planner in your area. The directory can tell you whether your planner is certified and whether he or she has had any disciplinary actions taken against them. But remember, this Website only gives you a list of names, addresses, and phone numbers. A financial planner is like a doctor or dentist. You’ll have the best luck locating an adviser you like through personal recommendations.

This article originally appeared in the April 2010 issue of Black Enterprise magazine.

I know that the FDIC insures money you have in the bank up to $100,000, but I also have more than $150,000 in an IRA with my bank. Are my retirement funds also safe or should I move that money elsewhere?

—W. D. Smith
Haledon, NJ

First, make sure your bank is backed by the Federal Deposit Insurance Corp.; the National Credit Union Administration insures credit unions. Savings, CDs, money market accounts (not to be confused with money market funds) in FDIC-insured banks are now covered up to $250,000 per account owner. Credit union accounts are covered for $100,000 per owner and up to $200,000 for joint account holders.

The FDIC does not insure money market mutual funds, which invest in short-term debt instruments. But in response to the financial crisis, the U.S. Treasury announced over a year ago that it would guarantee those funds for the next year.

You don’t need to relocate your accounts. IRAs and other retirement accounts, such as a Keogh or SEP plan, in FDIC-insured banks or NCUA-insured credit unions are guaranteed up to $250,000 per owner.

Carolyn M. Brown is editor-at-large at Black Enterprise magazine.

The three leaders—Mint.com, Geezeo.com, and Wesabe.com —let users aggregate all or most of their financial information in one location, so there’s no need to shuffle around the Internet to view a credit card statement,  review an IRA, or get updates on personal banking.

They provide services ranging from e-mail and text alerts that help users avoid late fees to identifying ways you can save money by changing credit cards or banks. All three have social networking components—Geezeo and Wesabe even have groups for entrepreneurs. Geezeo.com’s Self-Funded Entrepreneurs group, for example, lets members tap into the collective wisdom of the site’s small business community.  For those on the go, the sites can also be accessed from a mobile phone.  While their goals and services are similar, the streamlined Mint.com is by far the most popular of the three, with more than 1 million users. What’s the attraction at Mint? For entrepreneur Nichelle Stephens, it’s how well the site handles multiple accounts.

“Mint can pull in everything from your student loan to your 401(k),” says the Brooklyn resident, who provides bookkeeping services to microbusinesses. Stephens has Mint.com send alerts when her checking account balance drops below a specified level and uses it to help track how much she spends in different categories. “I didn’t think I shopped that much until I started tracking expenses,” she says.

Social networking expert and Mint.com user Navarrow Wright, president and CEO of the urban hip-hop site GlobalGrind.com, says the user-generated content on Geezeo and Wesabe can be especially valuable to people who need help.

No matter which site you use, you can’t lose.

“They provide a constant reminder to keep our finances up-front,” says Wright. “During the current economic crisis, we all need to take a closer look at where our money is going.”

Which is best for you?

Mint.com

Users: 1 million +

Social Networking: Forums are hard to find; it’s clear emphasis is not social support

Alerts: Yes

Mobile Access: Yes

Offers financial services/products: Yes

Savings goals: No

Geezeo.com

Users: 91,000 +

Social Networking: Groups organized by category. Includes a section called “confessions.”

Alerts: No

Mobile Access: Yes

Offers financial services/products: Yes

Savings goals: Yes

Wesabe.com

Users: 122,000 +

Social Networking: Groups organized alphabetically by title and topic; most active

Alerts: Yes

Mobile Access: Yes

Offers financial services/products: No

Savings goals: Yes

“For some of us, the best way to learn is to find like-minded people who are having problems like ours and to figure out solutions that way,” Wright says.Here’s how to get started.

Spend time on each site. Make note of the differences and your impressions. For example, Stephens likes the how-to information in the “Money 101″ section on Geezeo, so she recommends it to her clients.

Lose the fear. These sites use more security precautions than the Secret Service. Ans because you don’t provide personal identifying information, it’s unlikely a hacker could drain your account.

Know your needs. If you like to learn from peers, Wesabe’s groups are the most active, but if your goal is to find the most cost-effective financial services options, try Mint instead.

This article originally appeared in the August 2009 issue of Black Enterprise magazine.

Though black investment rates have historically trailed whites, the rate of stock ownership by blacks increased to 34% in 2001, up more than 17% from 1992. Those gains have since diminished 12% between 2001 and 2004, according to the study, “The Decrease in Stock Ownership by Minority Households,” which looks at individual stocks and those within a 401(k) and IRA.

“It may be that white investors are more experienced with the stock market, so they are prepared for the inevitable drops,” says Hanna Sherman, a financial planning professor at Ohio State University, referring to the 2001 recession, which scared off many black investors.

The rate of stock ownership among white households increased from 1992 to 2001, topping off at 57.5%.  Unlike minority investors, their investment rate dropped less than a percentage point between 2001 and 2004. What’s more, even after equaling out traditionally higher income levels of whites to that of blacks, whites still invest more than African-Americans.

What’s most startling about the survey are the implications for African American’s ability to create and retain wealth. “If you look at high wealth households of all racial or ethnic groups, they tend to either have a lot of stock investments, their own business, or substantial real estate investments, and many of them have all three,” Sherman says. “It’s very uncommon for people to build wealth unless they have one or more of those three types of investments.”

Hanna conducted the analysis using the Federal Reserve’s triennial “Survey of Consumer Finances”  study which recorded data from 4,000 U.S. households. Though the data reflects the Fed’s 2004 report, the most recent survey at the time, modest gains made in the 2007 survey are unlikely to remain constant given the economic climate. “Based on past patterns, I would suspect that bad economic conditions would probably leave a lot of minority households out of market,” Sherman says.

And according to the 11th annual Ariel/Schwab Black Investor Survey, African Americans are on equal footing with whites when it comes to accessing and enrolling in employer-sponsored defined contribution plans, but save far less each month and have a considerably smaller nest egg than their white counterparts.

The Ariel/Schwab survey found that 62% of higher income blacks own stocks or mutual funds compared with 82% of whites.

“My intuition on that is the lack of experience [of blacks],” Sherman says. “When you’re growing up in terms of people you talk to in church, or the neighborhood, you’re less likely to invest in stocks if those people don’t invest. There’s probably been limited marketing by financial companies to African Americans too,” he adds.

But with millions of Americans abuzz about record high stock prices and the instant millionaires of the dotcom boom, African Americans wasted no time getting in on the action, possibly accounting for the steady growth in stock ownership between 1992 and 2001.

“There were five years [1995 to 1999] when the stock market was essentially giving you about 13% to 20% returns,” says Ed Fulbright, CEO and chairman of Fulbright Financial Consulting PA. “When you see people making money hand over fist, everybody wants to get in,” Fulbright adds.

Though many African Americans may be deterred from entering the highly volatile stock market now, many experts still encourage educated investing. “If your employment is stable, I think the best thing people can do is continue to invest in the stock market,” Fulbright says.

Since the interest rate on most savings account barely beat inflation, investing along with saving would mean a greater financial return.

“If you want to build wealth you have to diversity and accept risk,” says Hanna. “If you’re properly diversified you have the ups and downs but over the long run buying stocks is still best way to build wealth.”

Over the next two weeks, we’ll have money management tips and strategies from Harrine Freeman, CEO and owner of H.E. Freeman Enterprises, a credit counseling service.

BlackEnterprise.com: Compared with men, are women savers or investors? Spenders instead of savers? What are some ways women can invest while still maintaining the security of saving?

Harrine Freeman: In many instances women are so focused on their children, spouses, career, and other issues they neglect to focus on their own financial goals and don’t begin saving or planning for retirement until their late 30s or 40s, which in some cases may be too late.

Men are better savers. Women are better investors. Women save later in life and invest more conservatively. According to Bankrate.com, in 2007 men were better savers overall, and with a savings of 81%, compared with a savings of 72% for women. Emergency savings funds for men were 53%, compared with 39% for women. Men gain more interest on their savings than women — 81% for men, compared with 70% for women.

Women live an average of 22 years after retirement and men live 19 years after retirement. After retirement women will need to save 2% more than men every year over 30 years to maintain their standard of living.  Women save later by two to four years and invest less than men.  Women invest 7.3% of their income and men invest 8.1% of their income.

Women are more fearful of losing money than men. Some women do not contribute enough to their retirement account — a minimum of 10% per month. Women can invest while maintaining the security of saving by:

–Create a budget to track spending. Include savings goals in your budget.

–Set long-term financial goals to include retirement planning.

–Set a retirement date and determine where you want to live when you retire and the lifestyle you wish to have.

–Talk to a financial adviser to map out a plan for your future. Review the plan every year and adjust as needed.

–Increase your retirement allotment with each salary increase.

–Educate yourself on investing.

–Sign up for your employer’s 401(k) and take advantage of employer-matching contributions–this is free money that helps your retirement plan grow.

–Create an emergency fund to cover 8 to 12 months worth of bills.

–Purchase a home warranty and maintain the warranty during your retirement years.

–You can also purchase your own IRA in addition to your employer’s 401(k) plan.

–Use automatic deduction for 401(k) allotment and to contribute to your savings accounts.

However, if you’ve been receiving Social Security benefits, pension payments, or distributions from retirement accounts, a return to the workforce could cause a complicated tax situation. To prevent any unwelcome surprises, ask yourself these questions before accepting a new job:

How much more will I pay in taxes?

“One of the biggest issues retirees have when they return to work is an unexpected increase in taxes. Sometimes the additional income pushes them into a higher tax bracket, and they weren’t anticipating it,” says Steven Sanders, chairman and CEO of First Genesis Financial Group, a financial advisory firm in Newtown Square, Pennsylvania.

How will a new job affect my Social Security benefits?

It’s fine to have a job while you’re receiving retirement or survivor benefits. The extra income would be averaged into your total earnings history, so you could actually receive a higher Social Security benefit in the future.

At the same time, if you’re receiving payments, but you’re not at full retirement age, some of your benefit amount could be reduced based on your income. To find out more information, visit the Social Security Administration’s Website or call 1-800-772-1213.

How is my IRA affected?

You can receive distributions from your Roth IRA or Traditional IRA if you meet the conditions (see IRS.gov for details). However, you might choose to wait before receiving all of your allowed payouts. “Many clients are taking only the minimum required distribution from their IRAs so they can let the money in their IRAs last longer,” Sanders says.

While this may be a prudent choice, keep in mind that individuals will have to start taking mandatory distributions from traditional IRAs at age 70 ½. The withdrawals, which can be significant if there haven’t been any distributions up to that point, are taxed as ordinary income. “Those mandatory distributions could put an individual at the highest tax bracket for the rest of their lives,” says Gary Oliver, a partner with Fortius Financial Advisors in Salt Lake City, Utah. He suggests focusing on retirement planning in advance to try to reduce that tax burden.

Are there any waiting periods for health insurance?

One major reason retirees return to work is to access health insurance. Ask your potential employer if there’s a waiting period before you can receive this valuable benefit. “Many people want to go back to work to increase their cash flow, but that cash flow could be automatically improved if they didn’t have to wait to pay for (individual) health insurance,” Sanders says.

When can I retire again?

You may choose to continue working because you enjoy it, but you should still save for retirement. “You don’t want to be forced to keep working and never retire,” Oliver says.  Don’t let a job be your only retirement strategy!

What else should I know?

Everyone’s individual situation is different, so contact an experienced financial advisor to answer your specific money, tax, and retirement questions.

Once you’ve done your planning, you can head back to work with confidence. “When a retiree re-enters the workforce, employers benefit by having the wisdom and experience those seasoned citizens have, and the employee has a place where they can receive additional cash flow and maybe enjoy reduced health care insurance costs,” says Sanders.  It’s a true win-win for everyone.

But you don’t have to wait until the “normal” retirement age to stop fighting rush-hour traffic. You can quit work and start to collect Social Security retirement benefits at age 62. But if you start then, or any time before the normal age, your monthly checks will be smaller.

Many people want to retire before age 62–even as early as age 55. If you’re among them, more than likely you’ll need to tap a retirement account such as your IRA or 401(k) to cover your living expenses.

The catch? “If you draw down your retirement account before age 59-1/2, you may owe a 10% penalty,” says Mark Cortazzo, senior partner at MACRO Consulting Group, a financial planning firm in Parsippany, New Jersey. Say you pull $20,000 from your IRA when you’re 57. Not only will you owe income tax on that $20,000, you’ll owe a $2,000 surtax (10% of $20,000) as well.

There isn’t anything you can do about paying income tax if the money in your IRA or 401(k) has never been taxed. But there are a couple of ways to dodge the 10% penalty.

For starters:

1. Stay on the job until age 55. “The tax code provides penalty-free access to the money in your company’s retirement plan as early as the year you reach age 55 in case of ‘separation from service’ that year or later,” says Natalie Choate, an attorney with Nutter McClennen & Fish in Boston. Therefore, if you

retire at age 55 or later and leave your money in your former employer’s 401(k) plan, you can take withdrawals and escape the 10% surtax.

2. Take “substantially equal periodic payments.” The age-55 exception won’t help everybody. Your company may not allow former employees to stay in its 401(k) and take withdrawals. Even if it does, you may not want to keep your money there, limited as it would be to the plan’s investment choices.

What’s more, this exception applies only to money at the company you left at or after age 55. “Money you might have in IRAs or other company plans won’t qualify,” says Choate, author of Life and Death Planning for Retirement Benefits (Ataxplan Publications; $89.95). Perhaps most important, this exception won’t help if you want to retire before age 55.

At any age, as long as you’re retired, you can avoid the 10% surtax on any or all of your retirement accounts with a “series of substantially equal periodic payments,” according to Choate, or what she calls SOSEPP. In essence, you take an annuity based on your life expectancy. If you start the withdrawals at age 48, for example, you would use your official 36-year life expectancy to calculate how much you can take
out, penalty-free.

Five years or 59-1/2. Suppose, for example, John Smith retires at age 48 and wants to tap his IRA without paying a penalty. He does not have to start by taking out 1/36 of his account in year one and gradually draw down the entire account over 36 years. Instead, he can keep up his SOSEPP for five years or until age 59 1/2,
whichever comes later.

John starts his withdrawals at age 48, so he must continue until 59-1/2. If Tracy James starts at age 56, she must continue until at least age 61. Once you’re past both the five-year and age-59-1/2 hurdles, you can take out as much or as little as you’d like, without paying a penalty.

More or less. The SEPP rules permit you to decide among various methods, which result in different distribution amounts.

Minimum distribution amounts. You may want to take a relatively small amount from your IRA or 401(k), leaving as much as possible in the account to support a long retirement. In that case, you might take 1/36 of the account in year one, if you have a 36-year life expectancy, about 1/35 of the account in year two, etc.

Maximum distribution amounts. The Internal Revenue Service permits you to use an “amortization” method instead. In essence, you project how large your retirement account will grow over the years and take your SOSEPP based on that projected appreciation. Depending on your age and on the level of interest rates in effect at the time you start a SOSEPP, you might be able to take two or even three times as much from your retirement account, penalty-free, as you could with the minimum distribution method. (The IRS also permits an “annuitization” method, but it’s seldom used.)

Using recent interest rates, for example, a 50-year-old using the minimum distribution method would be able to withdraw nearly $11,000 a year from a $500,000 IRA, without owing a 10% penalty. With amortization, he could take out $23,000 or so, penalty-free.

Your accountant or financial adviser should be able to walk you through the calculations so you can choose the appropriate method for SOSEPP withdrawals. Be careful, though.

“Contributing just $1 to an account that has begun these distributions could trigger retroactive penalties plus interest,” says Cortazzo. Withdrawing more or less than the permitted amount can also trigger penalties. Therefore, you should be confident that you’ll maintain your SOSEPP precisely until you pass both five years and age 59-1/2.