Wealthinking by Paula Hogan

Imagine walking into the house of someone close to you, perhaps a dear friend. She’s just had a stroke and will be incapacitated for several months, perhaps permanently. You've offered to keep her daily finances afloat while she is unable to do so for herself. In her legal papers, you are her named agent. Where would you start?

A recent post detailed the complexity and nuances of personal spending decisions. This week let's take a closer look at some cash management strategies that actually work.

1. Structure is your friend; poor man's bookkeeping works.

If all of your income comes into one account and then is dispersed helter skelter to various planned and unplanned spending, it's hard to keep track – much less manage – overall spending.

A central challenge of financial planning is resolving the awkwardness that comes from the fact that income and expenses don't flow through your checkbook in the same rhythm. Compounding the issue is that most of us think of income and expenses in different units. If you ask someone, "What is your income?" the answer will likely be an annual amount. But if you ask, "How much do you spend?" the answer is almost always a monthly amount. Good luck managing that disconnect!

Here is a fun chart – a map of the world with countries scaled to reflect the size of their stock market (view a full-size PDF of the 2013 World Market Capitalization chart). Notable features include the fact that the global market is now $37.5 trillion as of December 31, 2012, up 18% from the prior year-end. But how might this map inform our thinking about international diversification and investing in the global stock market?

Suppose a friend asks you to describe the portfolio investment strategy for your long-term investments. How would you respond? What information could you offer? Put another way, what features of your long-term portfolio would you expect to be well-addressed by a financial advisor to whom you might delegate investment management? What policy decisions are you using to guide the investment of long-term portfolio accounts?

A very strange aspect of the financial services industry at the moment is that there is no legal definition for the terms financial advisor, financial planner, or private wealth manager. As a result, it's hard to figure out with whom you are working. It's not like going to a doctor and knowing that at least this person has been to medical school, has had some post-medical school training, and passed some pretty hard tests, both written and in practice from being observed on the hospital floor.

In addition to the mechanics of charitable giving and the associated tax aspects of charitable giving, there are some very personal questions to consider when making charitable gift decisions. 

Everyone likes to give to charity in the most tax-efficient manner possible but what does that mean – and how you do it? One key idea is that tax strategies are implementation decisions. Tax strategies muffle the cost of donations that you have already chosen to make because of your personal values and goals. For tax-efficient charitable giving, consider one or more of these standard tax planning implementation strategies.

Ever feel like your family's charitable giving policies could be less haphazard and more effective? To get better organized, consider these 10 tips for charitable giving.