Getting Your Reindeer In a Row

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Ann Jenkins
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Getting Your Reindeer In a Row

Dasher. Dancer. Prancer. Vixen.

Comet. Cupid. Donner. Blitzen. (And Rudolph too, of course.)

This is a holiday roll-call that’s instantly recognizable: the reindeer that pull Santa’s magical sleigh. But what if things got so hectic at the North Pole (not a stretch when you’re in charge of delivering presents to every child on Earth), that when it was time to hitch up the reindeer on Christmas Eve, they were all out of order?

Prancer. Cupid. Dasher. Comet. Dancer. Vixen. Blitzen. Donner.

Hmmm, someone’s missing… what happened to Rudolph? (Looks like he got left behind at the North Pole. In all the hubbub one of Santa’s elves forgot to review the pre-flight checklist.)

Since so much can change during the year from one crazy “Happy Holidays!” to the next, your ducks – or reindeer, that is – may not even be in a row at this point. They could be frolicking unattended in a field somewhere! And who knows where your Rudolph even is.

We can help with that. An annual review of your financial strategy is key to keeping you on track for your unique goals. Lots of things can change over the course of a year, and your strategy could need some reorganizing. I mean, did you hear about everything that changed for Prancer? (What do you call a baby reindeer, anyway?)

Here are some important questions to consider at least once each year (or even more often):

1. Are you on track to meet your savings goals? A well-prepared retirement is a worthy goal. Let’s make sure nothing drove you too far off track this year, and if it did, let’s explore what can be done to get you back on the right path.

2. Do you have the potential for new savings? Did your health improve this year? Did that black mark on your driving record expire? Changes like these have the potential to positively impact your life insurance rate, but we’d need to dig in and find out what kinds of savings might be in store for you.

3. Have your coverage needs increased? Marriage, having a child, or buying a home are all instances in which your life insurance coverage probably should be increased. Have any of these occurred for you over the last year? Have you added the new family member as a beneficiary?

If you haven’t had a chance to review your strategy this year, we can fit one in before Santa shimmies down the chimney. Which of your reindeer do you need to wrangle back into the ranks before the New Year gets going?

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5 Things to Consider When Starting Your Own Business

Does anything sound better than being your own boss?

Well, maybe a brand new sports car or free ice cream for life. But even a state-of-the-art fully-decked-out sports car will eventually need routine maintenance, and the taste of mint chocolate chip can get old after a while.

The same kinds of things can happen when you start your own business. There are many details to consider and seemingly endless tasks to keep organized after the initial excitement of being your own boss and keeping your own hours has faded. Circumstances are bound to arise that no one ever prepared you for!

Although this list is not exhaustive, here are 5 things to get you started when creating a business of your own:

1. Startup cost

The startup cost of your business depends heavily on the type of business you want to have. To estimate the startup cost, make a list of anything and everything you’ll need to finance in the first 6 months. Then take each expense and ask:

  • Is this cost fixed or variable?
  • Essential or optional?
  • One-time or recurring?

Once you’ve determined the frequency and necessity of each cost for the first 6 months, add it all together. Then you’ll have a ballpark idea of what your startup costs might be.

(Hint: Don’t forget to add a line item for those unplanned, miscellaneous expenses!)

2. Competitors

“Find a need, and fill it” is general advice for starting a successful business. But if the need is apparent, how many other businesses will be going after the same space to fill? And how do you create a business that can compete? After all, keeping your doors open and your business frequented is priority #1.

The simplest and most effective solution? Be great at what you do. Take the time to learn your business and the need you’re trying to fill – inside and out. Take a step back and think like a customer. Try to imagine how your competitors are failing at meeting customers’ needs. What can you do to solve those issues? Overcoming these hurdles can’t guarantee that your doors will stay open, but your knowledge, talent, and work ethic can set you apart from competitors from the start. This is what builds life-long relationships with customers – the kind of customers that will follow you wherever your business goes.

(Hint: The cost of your product or service should not be the main differentiator from your competition.)

3. Customer acquisition

The key to acquiring customers goes back to the need you’re trying to fill by running your business. If the demand for your product is high, customer acquisition may be easier. And there are always methods to bring in more. First and foremost, be aware of your brand and what your business offers. This will make identifying your target audience more accurate. Then market to them with a varied strategy on multiple fronts: content, email, and social media; search engine optimization; effective copywriting; and the use of analytics.

(Hint: The amount of money you spend on marketing – e.g., Google & Facebook ads – is not as important as who you are targeting.)

4. Building product inventory

This step points directly back to your startup cost. At the beginning, do as much research as you can, then stock your literal (or virtual) shelves with a bit of everything feasible you think your target audience may want or need. Track which products (or services) customers are gravitating towards – what items in your inventory disappear the most quickly? What services in your repertoire are the most requested? After a few weeks or months you’ll have real data to analyse. Then always keep the bestsellers on hand, followed closely by seasonal offerings. And don’t forget to consider making a couple of out-of-the-ordinary offerings available, just in case. Don’t underestimate the power of trying new things from time to time; you never know what could turn into a success!

(Hint: Try to let go of what your favorite items or services might be, if customers are not biting.)

5. Compliance with legal standards

Depending on what type of business you’re in, there may be standards and regulations that you must adhere to. For example, hiring employees falls under the jurisdiction of the Department of Labor and Federal Employment Laws. There are also State Labor Laws to consider.

(Hint: Be absolutely sure to do your research on the legal matters that can arise when beginning your own business. Not many judges are very accepting of “But, Your Honor, I didn’t know that was illegal!”)

Starting your own business is not an impossible task, especially when you’re prepared. And what makes preparing yourself even easier is becoming your own boss with an established company like WSB.

The need for financial professionals exists – everyone needs to know how money works, and many people need help in pursuing financial independence. WSB works with well-known and respected companies to provide a broad range of products for our customers. We take pride in equipping families with products that meet their financial needs.

Anytime you’re ready, I’d be happy to share my experience with you – as well as many other things to consider – when becoming an associate with WSB.

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The Birds Have Flown the Coop!

The kids (finally) moved out!

Now you can plan those vacations for just the two of you, delve into new hobbies you’ve always wanted to explore… and decide whether or not you should keep your life insurance as empty nesters.

The answer is YES!

Why? Even though you and your spouse are empty nesters now, life insurance still has real benefits for both of you. One of the biggest benefits is your life insurance policy’s death benefit. Should either you or your spouse pass away, the death benefit can pay for final expenses and replace the loss of income, both of which can keep you or your spouse on track for retirement in the case of an unexpected tragedy.

What’s another reason to keep your life insurance policy? The cash value of your policy. Now that the kids have moved out and are financially stable on their own, the cash value of your life insurance policy can be used for retirement or an emergency fund. If your retirement savings took a hit while you helped your children finance their college educations, your life insurance policy might have you covered.Utilizing the cash value has multiple factors you should be aware of before making any decision.*

Contact me today, and together we’ll check up on your policy to make sure you have coverage where you want it - and review all the benefits that you can use as empty nesters.

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*Loans and withdrawals will reduce the policy value and death benefit dollar for dollar. Withdrawals are subject to partial surrender charges if they occur during a surrender charge period. Loans are made at interest. Loans may also result in the need to add additional premium into the policy to avoid a lapse of the policy. In the event that the policy lapses, all policy surrenders and loans are considered distributions and, to the extent that the distributions exceed the premiums paid (cost basis), they are subject to taxation as ordinary income. Lastly, all references to loans assume that the contract remains in force, qualifies as life insurance and is not a modified endowment contract (MEC). Loans from a MEC will generally be taxable and, if taken prior to age 59 1/2, may be subject to a 10% tax penalty.

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Boost Your Daily Routine with These 3 Financial Habits

It’s late Friday afternoon. Your to-do list is a crumpled, coffee-stained memory in the bottom of your wastebasket. Another great week in the books!

But as you head out for a night on the town with friends or maybe cuddle up next to your kids to watch their favorite movie, did you ever consider how you spent your after-work time during the week?

Whether you’re routine-driven, a free spirit, or somewhere in between, setting aside a few minutes every day to spend on your finances has the potential to make a huge difference in the long run. By adding these 3 financial habits to your daily routine, you have the potential to give yourself a little more power over your finances.

1. Check your inbox (or mailbox). Whether you pay your bills via credit card, automatic withdrawal, or a hand-written check that you mail in to the company, a daily look-see will help you stay on top of any alerts you get. Spend a few minutes every day glancing over incoming bills, payment receipts, and new online transactions. Being aware of the exodus (or pending exodus) of your money can help fend off late fees, overdrawing your accounts, or maxing out your credit card.

2. Review your spending. Every evening, take quick stock of any spending you did that day – whether in brick-and-mortar stores or online. This exercise can be eye-opening. For instance, are you in the habit of grabbing a piping hot cup of coffee from the drive-thru on your morning commute? Depending on your coffee preference, that can cost up to $5 a day! Maybe 5 bucks isn’t a huge deal, but consider this:

  • $5 for coffee x 5 days a week = $25
  • $25 a week x 4 weeks/month = $100
  • That’s $100 per month spent on coffee!

Just staying aware of those little daily expenditures may make a huge difference in your financial health; when you know how much you’re paying over time for something you could prepare at home (for far less money), you may decide to scale back on the barista-brewed coffee so you can help boost your financial future – and keep yourself on the path to financial independence.

3. Learn a little more. Knowing how money works is a vital part of achieving and maintaining financial independence. Taking a few moments every day to educate yourself a little more about money can make a huge difference in the long run. It can keep you aware of best practices for money management and all the ways your money can work for you. Try a blog post, YouTube video, or a best-seller on finances to keep yourself informed and up to date.

As you start putting these simple financial habits in place, contact me any time! Together we can assess how these small changes could help strengthen your financial strategy and get you closer to financial independence.

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Big Financial Rocks First

A teacher walked into her classroom with a clear jar, a bag of rocks, a bucket of sand, and a glass of water. She placed all the large rocks carefully into the jar.

“Who thinks this jar is full?” she asked. Almost half of her students raised their hands. Next, she began to pour sand from the bucket into the jar full of large rocks emptying the entire bucket into the jar.

“Who thinks this jar is full now?” she asked again. Almost all of her students now had their hands up. To her student’s surprise, she emptied the glass of water into the seemingly full jar of rocks and sand.

“What do you think I’m trying to show you?” She inquired.

One eager student answered: “That things may appear full, but there is always room left to put more stuff in.”

The teacher smiled and shook her head.

“Good try, but the point of this illustration is that if I didn’t put in the large rocks first, I would not be able to fit them in afterwards.”

This concept can be applied to the idea of a constant struggle between priorities that are urgent versus those that are important. When you have limited resources, priorities must be in place since there isn’t enough to go around. Take your money, for example. Unless you have an unlimited amount of funds (we’re still trying to find that source), you can’t have an unlimited amount of important financial goals.

Back to the teacher’s illustration. Let’s say the big rocks are your important goals. Things like buying a home, helping your children pay for college, retirement at 60, etc. They’re all important –but not urgent. These things may happen 10, 20, or 30 years from now.

Urgent things are the sand and water. A monthly payment like your mortgage payment or your monthly utility and internet bills. The urgent things must be paid and paid on time. If you don’t pay your mortgage on time… Well, you might end up retiring homeless.

Even though these monthly obligations might be in mind more often than your retirement or your toddler’s freshman year in college, if all you focus on are urgent things, then the important goals fall by the wayside. And in some cases, they stay there long after they can realistically be rescued. Saving up for a down payment for a home, funding a college education, or having enough to retire on is nearly impossible to come up with overnight (still looking for that source of unlimited funds!). In most cases, it takes time and discipline to save up and plan well to achieve these important goals.

What are the big rocks in your life? If you’ve never considered them, spend some time thinking about it. When you have a few in mind, place them in the priority queue of your life. Otherwise, if those important goals are ignored for too long, they might become one of the urgent goals - and perhaps ultimately unrealized if they weren’t put in your plan early on.

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Now’s the Time for Future Planning

What happened to the days of the $10 lawn mowing job or the $7-an-hour babysitting gig every Saturday night?

Not a penny withheld. No taxes to file. No stress about saving a “million dollars” for retirement. As a kid, doing household chores or helping out your friends and neighbors for a little spending money was vastly different from your grown up reality – writing checks for all those bills, paying your taxes, and buying all the things that children seem to need these days, all while trying to save as much as you can for your retirement. When you were a kid, did those concepts feel so far away that they might as well have been camped out on Easter Island?

What happened to the carefree attitude surrounding our finances? It’s simple: we got older. More opportunities. More responsibilities. More choices. As the years go by, finances get more complicated. So knowing where your money is going and whether or not it’s working for you when it gets there is something you need to determine sooner rather than later – even before your source of income switches from mowing lawns and babysitting to your first internship at that marketing firm downtown.

A great way to get a better idea of where your money is going and what it’s doing when it gets there? A financial strategy.

A sound strategy for your money is essential, starting as soon as possible is better than waiting, and talking to a financial professional is a solid way to get going. No message in a bottle sent from a more-prepared version of your future self is going to drift your way from Easter Island. But sitting down with me is a great place to start. Contact me any time.

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Putting a Wrap On the Sandwich Generation

Ever heard of the “Sandwich Generation”?

Unfortunately, it’s not a group of financially secure, middle-aged foodies whose most important mission is hanging out in the kitchens of their paid-off homes, brainstorming ideas about how to make the perfect sandwich. The Sandwich Generation refers to adults who find themselves in the position of financially supporting their grown children and their own parents, all while trying to save for their futures. They’re “sandwiched” between caring for both the older generation and the younger generation.

Can you relate to this? Do you feel like a PB&J that was forgotten at the bottom of a 2nd grader’s backpack?

If you feel like a sandwich, here are 3 tips to help put a wrap on that:

1. Have a plan. In an airplane, the flight attendants instruct us to put on our own oxygen mask before helping someone else put on theirs – this means before anyone, even your children or your elderly parents. Put your own mask on first. This practice is designed to help keep you and everyone else safe. Imagine if half the plane passed out from lack of oxygen because everyone neglected themselves while trying to help other people. When it comes to potentially having to support your kids and your parents, a tailored financial strategy that includes life insurance and contributing to a retirement fund will help you get your own affairs in order first, so that you can help care for your loved ones next.

2. Increase your income. For that sandwich, does it feel like there’s never enough mayonnaise? You’re always trying to scrape that last little bit from the jar. Increasing your income would help stock your pantry (figuratively, and also literally) with an extra jar or two. Options for a 2nd career are everywhere, and many entrepreneurial opportunities let you set your own hours and pace. Working part-time as your own boss while helping to get out of the proverbial panini press? Go for it!

3. Start dreaming again. You may have been in survival mode for so long that you’ve forgotten you once had dreams. What would you love to do for yourself or your family when you have the time and money? Take that vacation to Europe? Build that addition on to the house? Own that luxury car you’ve always wanted? Maybe you’d like to have enough leftover to help others pursue their goals.

It’s never too late to get the ball rolling on any of these steps. When you’re ready, feel free to give me a call. We can work together to quickly prioritize how you can start feeling less like baloney and more like a Monte Cristo.

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How to Avoid Financial Infidelity

If you or your partner have ever spent (a lot of) money without telling the other, you’re not alone.¹

This has become such a widespread problem for couples that there’s even a term for it: Financial Infidelity.

Calling it infidelity might seem a bit dramatic, but it’s fitting when you consider that money and the stress it may bring are among the most common reasons for divorce.² Each couple has their own definition of “a lot of money,” but as you can imagine, or may have even experienced yourself, making assumptions or hiding purchases from your partner can be damaging to both your finances AND your relationship.

Here’s a strategy to help avoid financial infidelity, and hopefully lessen some stress in your household:

Set up “Fun Funds” accounts.

A “Fun Fund” is a personal bank account for each partner which is separate from your main savings or checking account (which may be shared).

Here’s how it works: Each time you pay your bills or review your whole budget together, set aside an equal amount of any leftover money for each partner. That goes in your Fun Fund.

The agreement is that the money in this account can be spent on anything without having to consult your significant other. For instance, you may immediately take some of your Fun Funds and buy that low-budget, made-for-tv movie that you love but your partner hates. And they can’t be upset that you spent the money! It was yours to spend! (They might be a little upset when you suggest watching that movie they hate on a quiet night at home, but you’re on your own for that one!)

Your partner on the other hand may wait and save up the money in their Fun Fund to buy $1,000 worth of those “Add water and watch them grow to 400x their size!” dinosaurs. You may see it as a total waste, but it was their money to spend! Plus, this isn’t $1,000 taken away from paying your bills, buying food, or putting your kids through school. (And it’ll give them something to do while you’re watching your movie.)

It might be a little easier to set up Fun Funds for the both of you when you have a strategy for financial independence. Contact me today, and we can work together to get you and your loved one closer to those beloved B movies and magic growing dinosaurs.

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Sources: ¹ Mercado, Darla. “Surprise! Your partner may be lying to you about money.” CNBC, 2.8.2017. https://cnb.cx/2MiJrAp. ² Warren, Shellie. “10 Most Common Reasons for Divorce.” marriage.com, 5.8.2018, https://bit.ly/2HC88lf.

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Is This the One Thing Separating You from Bill Gates?

Well, a few billion things probably separate you and me from Bill Gates, but he has a habit that may have contributed to his success in a big way: Bill Gates is a voracious reader.

He reads about 50 books per year.¹ His reason why: “[R]eading is still the main way that I both learn new things and test my understanding.”

On his blog gatesnotes, Gates recommended Hillbilly Elegy by J.D. Vance, the personal story of a man who worked his way out of poverty in Appalachian Ohio and Kentucky into Yale Law School – and casts a light on the cultural divide in our nation. Gates wrote:

“Melinda and I have been working for several years to learn more about how Americans move up from the lowest rungs of the economic ladder (what experts call mobility from poverty). Even though Hillbilly Elegy doesn’t use a lot of data, I came away with new insights into the multifaceted cultural and family dynamics that contribute to poverty.”²

We all have stories about our unique financial situations and dreams of where we want to go. And none of us want money – or lack thereof – to hold us back.

What things, ideas, or deeply-ingrained habits might be keeping you in the financial situation you’re in? And what can you do to get past them? I have plenty of ideas and strategies that have the potential to make big changes for you.

Contact me today, and together we can review your current financials and work on a strategy to get you where you want to go – including some reading material that can help you in your journey to financial independence.

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Sources: ¹ Baer, Drake. “Bill Gates says reading 50 books a year gives him a huge advantage.” Business Insider, https://read.bi/2JWMN69. ² Gates, Bill. “From Coal Country to Yale.” gatesnotes, https://bit.ly/2vcSWFR.

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Emergency Fund 101: Protecting and Growing Your Fund

Nearly 60% of Americans report that they don’t have savings to turn to in the event of an emergency.*

If something unexpected were to happen, do you have enough savings to get you and your family through it and back to solid ground again?

If you’re not sure you have enough set aside, being blindsided with an emergency might leave you in the awkward position of asking family or friends for a loan to tide you over. Or would you need to rack up credit card debt to get through a crisis? Dealing with a financial emergency can be stressful enough – like an unexpected hospital visit, car repairs, or even a sudden loss of employment. But having an established Emergency Fund in place before something happens can help you focus on what you need to do to get on the other side of it.

As you begin to save money to build your Emergency Fund, use these 5 rules to grow and protect your “I did not see THAT coming” stash:

1. Separate your Emergency Fund from your primary spending account. How often does the amount of money in your primary spending account fluctuate? Trips to the grocery store, direct deposit, automatic withdrawals, spontaneous splurges – the ebb and flow in your main household account can make it hard to keep track of the actual emergency money you have available. Open a separate account for your Emergency Fund so you can avoid any doubt about whether or not you can replace the water heater that decided to break right before your in-laws are scheduled to arrive.

2. Do NOT touch this account. Even though this is listed here as Rule #2, it’s really Rule #1. Once you begin setting aside money in your Emergency Fund, “fugettaboutit”… unless there actually is an emergency! Best case scenario, that money is going to sit and wait for a long time until it’s needed. However, just because it’s an “out of sight, out of mind” situation, doesn’t mean that there aren’t some important features that need to be considered for your Emergency Fund account:

  • You must be able to liquidate these funds easily (i.e., not incur penalties if you make too many withdrawals)
  • Funds should be stable (not subject to market shifts)

You definitely don’t want this money to be locked up and/or potentially lose value over time. Although these two qualities might prevent any significant gain to your account, that’s not the goal with these funds. Pressure’s off!

3) Know your number. You may hear a lot about making sure you’re saving enough for retirement and that you should never miss a life insurance premium. Solid advice. But don’t pause either of these important pieces of your financial plan to build your Emergency Fund. Instead, tack building your Emergency Fund onto your existing plan. The same way you know what amount you need to save each month for your retirement and the premium you need to pay for your life insurance policy, know how much you need to set aside regularly so you can build a comfortable Emergency Fund. A goal of at least $1,000 to three months of your income or more is recommended. Three months worth of your salary may sound high, but if you were to lose your job, you’d have at least three full months of breathing room to get back on track.

4) Avoid bank fees. These are Emergency Fund Public Enemy No. 1. Putting extra money aside can be challenging – maybe you’ve finally come to terms with giving up the daily latte from your local coffee shop. But if that precious money you’re sacrificing to save is being whittled away by bank fees – that’s downright tragic! Avoid feeling like you’re paying twice for an emergency (once for the emergency itself and second for the fees) by using an account that doesn’t charge fees and preferably doesn’t have a minimum account balance requirement or has a low one that’s easy to maintain. You should be able to find out what you’re in for on your bank’s website or by talking to an employee.

5) Get started immediately. There’s no better way to grow your Emergency Fund than to get started!

There’s always going to be something. That’s just life. You can avoid that dreaded phone call to your parents (or your children). There’s no need to apply for another credit card (or two). Start growing and protecting your own Emergency Fund today, and give yourself the gift of being prepared for the unexpected.

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Source: Cornfield, Jill. “Bankrate survey: Just 4 in 10 Americans have savings they’d rely on in an emergency.” Bankrate*, 1.12.2017, https://www.bankrate.com/finance/consumer-index/money-pulse-0117.aspx.

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Retirement Mathematics 101: How Much Will You Need?

Have you ever wondered how someone could actually retire?

The main difference between a strictly unemployed person and a retiree: A retiree has replaced their income somehow. This can be done in a variety of ways including (but not limited to):

  • Saving up a lump sum of money and withdrawing from it regularly
  • Receiving a pension from the company you worked for or from the government
  • Or an annuity you purchased that pays out an amount regularly

For the example below, let’s assume you don’t have a pension from your company nor benefits from the government. In this scenario, your retirement would be 100% dependent on your savings.

The amount you require to successfully retire is dependent on two main factors:

  1. The annual income you desire during retirement
  2. The length of retirement

To keep things simple, say you want to retire at 65 years old with the same retirement income per year as your pre-retirement income per year – $50,000. According to the World Bank, the average life expectancy in the US is 79 (as of 2015).¹ Let’s split the difference and call it 80 for our example which means we should plan for income for a minimum of 15 years. (For our purposes here we’re going to disregard the impact of inflation and taxes to keep our math simple.) With that in mind, this would be the minimum amount we would need saved up by age 60:

  • $50,000 x 15 years = $750,000

There it is: to retire with a $50,000 annual income for 15 years, you’d need to save $750,000. The next challenge is to figure out how to get to that number (if you’re not already there) the most efficient way you can. The more time you have, the easier it can be to get to that number since you have more time for contributions and account growth.

If this number seems daunting to you, you’re not alone. The mean savings amount for American families with members between 56-61 is $163,577² - nearly half a million dollars off our theoretical retirement number. Using these actual savings numbers, even if you decided to live a thriftier lifestyle of $20,000 or $30,000 per year, that would mean you could retire for 8-9 years max!

All of this info may be hard to hear the first time, but it’s the first real step to preparing for your retirement. Knowing your number gives you an idea about where you want to go. After that, it’s figuring out a path to that destination. If retirement is one of the goals you’d like to pursue, let’s get together and figure out a course to get you there – no math degree required!

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Sources: ¹ “Life expectancy at birth, total (years).” The World Bank, 2018, http://bit.ly/2I8w4gk. ² Elkins, Kathleen. “Here’s how much the average family in their 50s has saved for retirement.” CNBC, http://cnb.cx/2FX0Ckx.

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Improve Your Love Life... With a Financial Strategy?

Who knew that having a financial strategy in place has the potential to improve your love life?

Here’s the proof: 84% of Americans think a romantic relationship is not only stronger but also more satisfying when it’s financially stable.*

So what does it mean to be financially stable and ready for the Big Financial Talk?

Here’s a simple 5-point checklist to let you know if you’re on the right track:

  1. You aren’t worried about your financial situation.
  2. You know how to budget and are debt-free.
  3. You pay bills on time – better yet, you pay bills ahead of time.
  4. You have adequate insurance coverage in case of trouble.
  5. You’re saving enough for retirement.

If you didn’t answer ‘yes’ to all of these, don’t worry! Chances are this checklist won’t come up on the first date – or the second or the third. But when you have the “money talk” with someone you’ve been seeing for a while, wouldn’t it be great to know that you bring your own financial stability to the relationship? It’s clearly a bonus – Remember the stats up there?

Everyone could use a little help on their way to financial stability and independence. Contact me today, and together we can work on a strategy that could strengthen your peace of mind – and perhaps your love life!

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Source: “Yet Another Reason to Get Your Financial House in Order: Americans Say Financial Stability Makes for a Better Love Life.” Ally Bank*, https://bit.ly/1mwOGue.

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The Advantages of Paying with Cash

We’re using debit cards to pay for expenses more often now, a trend that seems unlikely to reverse soon.¹

Debit cards are convenient. Just swipe and go. Even more so for their mobile phone equivalents: Apple Pay, Android Pay, and Samsung Pay. We like fast, we like easy, and we like a good sale. But are we actually spending more by not using cash like we did in the good old days?

Studies say yes. We spend more when using plastic – and that’s true of both credit card spending and debit card spending.² Money is more easily spent with cards because you don’t “feel” it immediately. An extra $2 here, another $10 there… It adds up.

The phenomenon of reduced spending when paying with cash is a psychological “pain of payment.” Opening up your wallet at the register for a $20.00 purchase but only seeing a $10 bill in there – ouch! Maybe you’ll put back a couple of those $5 DVDs you just had to have 5 minutes ago.

When using plastic, the reality of the expense doesn’t sink in until the statement arrives. And even then it may not carry the same weight. After all, you only need to make the minimum payment, right? With cash, we’re more cautious – and that’s not a bad thing.

Try an experiment for a week: pay only with cash. When you pay with cash, the expense feels real – even when it might be relatively small. Hopefully, you’ll get a sense that you’re parting with something of value in exchange for something else. You might start to ask yourself things like “Do I need this new comforter set that’s on sale – a really good sale – or, do I just want this new comforter set because it’s really cute (and it’s on sale)?” You might find yourself paying more attention to how much things cost when making purchases, and weighing that against your budget.

If you find that you have money left over at the end of the week (and you probably will because who likes to see nothing when they open their wallet), put the cash aside in an envelope and give it a label. You can call it anything you want, like “Movie Night,” for example.

As the weeks go on, you’re likely to amass a respectable amount of cash in your “rewards” fund. You might even be dreaming about what to do with that money now. You can buy something special. You can save it. The choice is yours. Well done on saving your hard-earned cash.

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Sources: ¹ Steele, Jason. “Debit card statistics.” creditcards.com, https://bit.ly/2JB9cGE. ² Kiviat, Barbara. “Going Shopping? How You Pay Can Affect How Much You Spend.” Consumer Reports, https://bit.ly/2sNQiG7.

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Creating Healthy Financial Habits

When it comes to building wealth and managing finances well enough to live comfortably, it’s up to your participation in a long-term financial strategy, which – more often than not – depends on creating healthy financial habits NOW.

Check out these ideas on how you can do it!

Automate it
Fortunately for us, we live in the electronic age, which can make streamlining financial goals a lot easier than in decades past. Whether building savings, investing for the future, paying down debt, or any other goals, take advantage of the apps and information available online. Savings can be put on autopilot, taking a fixed amount from your bank account each month or each pay period. The same can be done for IRAs or other investment accounts. Many mobile apps offer to automatically round up purchases and invest the spare change. (Hint: Compare your options and any associated fees for each app.)

Be mindful of small purchases
It can be much easier to be aware of making a large purchase (physically large, financially large, or both). Take a physically large purchase, for instance: it’s difficult to go into a store and come out with a washing machine and not have any memory of it. And for large financial purchases like a laptop or television, some thought usually goes into it – up to and including how it’s going to get paid for. But small, everyday purchases can add up right under your nose. Ever gone into a big box store to grab a couple of items then left having spent over $100 on those items… plus some throw pillows and a couple of lamps you just had to snag? What about that pricey cup of artisan coffee? Odds are pretty good that the coffee shop has some delicious pastries, too, which may fuel that “And your total is…” fire. $100 here, $8.50 there, another $1.75 shelled out for a bottle of water – the small expenses can add up quickly and dip right into the money that could go toward your financial strategy.

Paying with plastic has a tendency to make the tiny expenses forgettable… until you get that credit card bill. One easy way to cut down on the mindless purchases is to pay in cash or with a debit card. The total owed automatically leaves your wallet or you account, perhaps making the dwindling amount you have to set aside for your financial future a little more tangible.

Do what wealthy people do
CNBC uncovered several habits and traits that are common among wealthy individuals. Surprisingly, it wasn’t all hard work. They found that wealthy people tend to read – a lot – and continue learning through reading.¹ Your schedule may not allow for as much reading time as the average billionaire – maybe just 30 minutes a day is a good short-term goal – but getting in more reading can help you improve in any area of life!

Another thing wealthy people do? Wake up early. This may help you find that extra 30 minutes for reading. You’ll get more done in general if you get up a little earlier. A 5-year study of self-made millionaires revealed that nearly 50% of this industrious group woke up at least 3 hours before their work day started.²

Making these healthy financial habits a part of your regular routine might take some time and effort, but hang in there. Often, success is about the mindset we choose to have. If you stay the course and learn from those who’ve been where you are, you can experience the difference that good habits can make as you keep moving toward financial independence!

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¹ Paine, James. “5 Billionaires Who Credit Their Success to Reading.” Inc., https://bit.ly/2LvAM94. ² Elkins, Kathleen. “A man who spent 5 years studying millionaires found one of their most important wealth-building habits starts first thing in the morning.” Business Insider, https://read.bi/2aXjejh.

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Tips on Managing Money for Couples

Couplehood can be a wonderful blessing, but – as you may know – it can have its challenges, too.

In fact, money matters are the leading cause of arguments in modern relationships.* The age-old adage that love trumps wealth may be true, but if money is tight or if a couple isn’t meeting their financial goals, there could be some unpleasant conversations (er, arguments) on the bumpy road to bliss with your partner or spouse.

These tips may help make the road to happiness a little easier.

1. Set a goal for debt-free living.
Certain types of debt can be difficult to avoid, such as mortgages or car payments, but other types of debt, like credit cards in particular, can grow like the proverbial snowball rolling down a hill. Credit card debt often comes about because of overspending or because insufficient savings forced the use of credit for an unexpected situation. Either way, you’ll have to get to the root of the cause or the snowball might get bigger. Starting an emergency fund or reigning in unnecessary spending – or both – can help get credit card balances under control so you can get them paid off.

2. Talk about money matters.
Having a conversation with your partner about money is probably not at the top of your list of fun-things-I-look-forward-to. This might cause many couples to put it off until the “right time”. If something is less than ideal in the way your finances are structured, not talking about it won’t make the problem go away. Instead, frustrations over money can fester, possibly turning a small issue into a larger problem. Discussing your thoughts and concerns about money with your partner regularly (and respectfully) is key to reaching an understanding of each other’s goals and priorities, and then melding them together for your goals as a couple.

3. Consider separate accounts with one joint account.
As a couple, most of your financial obligations will be faced together, including housing costs, monthly utilities and food expenses, and often auto expenses. In most households, these items ideally should be paid out of a joint account. But let’s face it, it’s no fun to have to ask permission or worry about what your partner thinks every time you buy a specialty coffee or want that new pair of shoes you’ve been eyeing. In addition to your main joint account, having separate accounts for each of you may help you maintain some independence and autonomy in regard to personal spending.

With these tips in mind, here’s to a little less stress so you can put your attention on other “couplehood” concerns… Like where you two are heading for dinner tonight – the usual hangout (which is always good), or that brand new place that just opened downtown? (Hint: This is a little bit of a trick question. The answer is – whichever place fits into the budget that you two have already decided on, together!)

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Sources: Huckabee, Tyler. “Why Do People In Relationships Fight About Money So Much?” Relevant*, 1.3.2018, https://bit.ly/2xiflG9.

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Money Woes Hurt More than Your Bank Account

How do you handle job stress?

Sticking to a solid workflow? Meditation? A stress ball in each hand?

Whichever way you choose to lessen the stress (that 80% of American workers experience¹), there’s another stress-relieving tactic that could make a huge difference:

Relieving financial stress.

Studies have found that money woes can cost workers over 2 weeks in productivity a year!² And this time can be lost even when you’re still showing up for work.

This phenomenon is called ‘presenteeism’: you’re physically present at a job, but you’re working while ill or mentally disengaged from tasks. Presenteeism can be caused by stress, worry, or other issues – which, as you can imagine, may deal a significant blow to work productivity.

So what’s the good news?

If you’re constantly worried and stressed about financing unexpected life events, saving for retirement, or funding a college education for yourself or a loved one, there’s a life insurance policy that can help you – wherever you are on your financial journey.

A life insurance policy that’s tailored for you can provide coverage for those unknowns that keep you stressed and unproductive. Most people don’t plan to fail. They simply fail to plan. Think of a well-thought out insurance strategy as a stress ball for your bank account!

Contact me today, and together we’ll work on an insurance strategy that fits you and your dreams – and can help you get back to work with significantly less financial stress.

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Sources: ¹ “Workplace Stress.” The American Institute of Stress, 1.12.2018, https://bit.ly/2sejIdl. ² Pinkser, Beth. “Money Stress Is Totally Killing Your Work Productivity.” TIME Money, 3.8.2016, https://ti.me/1pwZaMr.

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Spark Joy in Your Financial House

Marie Kondo is an organization guru.

Her KonMari Method™ of organizing and her best-selling book The Life-Changing Magic of Tidying Up sparked a revolution in keeping homes clear of clutter. Kondo’s rule of thumb: Keep only what “sparks joy,” get rid of everything else, and have a designated place for every item brought into the home.¹

This may work well to clear out those old sneakers you never wear anymore or that tennis racket from 1983 that still looks brand-new (we all know you really intended to take those lessons), but you may end up reaching for the ibuprofen once you hit that unorganized stack of financial documents! A pile of paper may not spark the same joy that your grandmother’s china set or your kid’s childhood art might, but they still need to be kept on hand. And keeping them well-organized could save you hours of anxious searching and help preserve your peace of mind in emergency financial situations.

Getting your financial house in order isn’t an easy task to accomplish on your own. I can help. Contact me today, and together we’ll sit down and examine your current financial situation. And don’t forget to bring that shoebox full of financial papers! We’ll tackle it all together.

Once we’re through, you may even find that having your financial documents in order and filed away safely sparks a little more joy in your home.

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Source: ¹ “Who We Are.” KonMari, 2018, https://bit.ly/2Mw8Q9R.

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What to do first if you receive an inheritance

In many households, nearly every penny is already accounted for even before it’s earned.

The typical household budget that covers the cost of raising a family, making loan payments, and saving for retirement usually doesn’t leave much room for spending on daydream items. However, if you’re fortunate, you might be the recipient of some unexpected cash – your family might come into an inheritance, you could receive a bonus at work, or you might benefit from some other sort of windfall.

If you ever inherit a chunk of money or receive a large payout, it may be tempting to splurge on that red convertible you’ve been drooling over or book that dream trip to Hawaii. Unfortunately for many though, newly-found money has the potential to disappear with nothing to show for it, if there is no strategy in place ahead of time to handle it wisely.

If you do receive some sort of unexpected bonus – before you call your travel agent – take a deep breath and consider these situations first.

Taxes or Other Expenses
If a large sum of money comes your way unexpectedly, your knee-jerk reaction might be to pull out your bucket list and see what you’d like to check off first. But before you start making plans, the reality is you’ll need to put aside some money for taxes. You may want to check with an expert – an accountant or tax advisor may have some ideas on how to reduce your liability.

If you suddenly become the owner of a new house or car as part of an inheritance, one thing to consider is how much it might cost to hang on to it. If you want to keep that house or car (or any other asset that’s worth a lot of money), make sure you can cover maintenance, insurance, and any loan payments if that item isn’t paid off yet.

Pay Down Debt
If you have any debt, you’d have a hard time finding a better place to put your money once you’ve set aside some for taxes or other expenses that might be involved with an inheritance. It may be helpful to target debt in this order:

  1. Credit card debt: This is often the highest interest rate debt and usually doesn’t have any tax benefit. Pay your credit cards off first.
  2. Personal loans: Pay these next. You and your friend/family member will be glad you knocked these out!
  3. Auto loans: Interest rates on auto loans are lower than credit cards, but cars depreciate rapidly (very rapidly). Rule of thumb: If you can avoid it, you don’t want to pay interest on a rapidly depreciating asset. Pay off the car as quickly as possible.
  4. College loans: College loans often have tax-deductible interest, but there is no physical asset with intrinsic value attached to them. Pay these off as fast as possible.
  5. Home loans: Most home loan interest is also tax-deductible. But since your home value is likely appreciating over time, you may be better off putting your money elsewhere if necessary, rather than paying off your home loan early.

Fund Your Emergency Account
Before you buy that red convertible, make sure you’ve set aside some money for a rainy day. Saving at least 3-6 months of expenses is a good goal. This could be liquid funds – like a separate savings account.

Save for Retirement
Once the taxes are covered, you’ve paid down your debt, and funded your emergency account, now is the time to put some money away towards retirement. Work with your financial professional to help create the best strategy for you and your family.

Fund That College Fund
If you have kids and haven’t had a chance to put away all you’d like towards their education, setting aside some money for this comes next. Again, your financial professional can recommend the best strategy for this scenario.

Treat Yourself!
NOW you’re ready to go bury your toes in the sand and enjoy some new experiences! Maybe you and the family have always wanted to visit a themed resort park or vacation on a tropical island. If you’ve taken care of business responsibly with the items above and still have some cash left over – go ahead! Treat yourself!

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The state of financial literacy

We learn a lot of things in school.

Some of which are useful later in life, some of which are hurriedly memorized and then promptly forgotten, and some of which barely get a passing glance. In decades past, financial literacy wasn’t an emphasis in school curriculum – unless you include the odd math problem that involved interest rate calculations. For all our years of education, as a nation we were woefully unprepared for one of the largest challenges in adult life: financial survival.

Recently, however, schools have begun to introduce various topics regarding financial literacy to the K-12 curriculum. Some states have fared better than others in this effort, with graded results ranging from A to F, as measured in an analysis done by the Washington Post.[i] Read on for the breakdown.

How we’re doing so far
In its annual Survey of the States, the Council for Economic Education reported that not one state had added personal finance to their K-12 standard curriculum since 2016, and that only 22 states require high school students to take a course in economics. Only 17 of the 50 states require students to take a course in personal finance.[ii]

We can’t count on schools (at least not right now)
While it’s easy to pick on schools and state governments for not including financial literacy education in the past and for only making small strides in curriculums today, that’s not solving the problem that current generations don’t understand how money works. As with many things, the responsibility – at least in the short-term – is falling to parents to help educate younger people on financial matters.

Other financial literacy resources
Given the general lack of financial education provided in schools, unsurprisingly, most teens look to their parents to learn money management skills.[iii] Fortunately, there are some great online resources that can help begin the conversation and help educate both parents and children on topics such as budgeting, how (or if) to use credit cards, differences in types of bank accounts, how to save, managing credit scores, etc.

Pepperdine University offers a “Financial Literacy Guide for Kids, Teens and Students”[iv], which covers many of the basics but also provides a useful set of links to resources where kids and parents alike can learn more through interactive games, quizzes, and demonstrations.

Included highlights are mobile apps which can be useful for budgeting, saving, and so forth, and even listings of websites that can help kids find scholarships or grants.

So if you feel like you haven’t learned quite as much about money and finances that you wish you had in school, contact me so that we can explore how money works together, and I can help put a strategy in place for you and your family!

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[i] https://www.washingtonpost.com/news/answer-sheet/wp/2017/12/19/grading-u-s-states-on-teaching-financial-literacy-some-earn-as-while-others-flunk/?noredirect=on&utm_term=.3faad208d1d9
[ii] https://www.councilforeconed.org/wp-content/uploads/2018/02/2018-SOS-Layout-18.pdf
[iii] https://www.juniorachievement.org/documents/20009/20652/2015+Teens+and+Personal+Finance+Survey
[iv] https://mbaonline.pepperdine.edu/financial-literacy-guide-for-kids-teens-and-students/

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3 Advantages to Being the Early Bird

Extra-large-blonde-roast-with-a-double-shot-of-espresso, anyone?

As the old saying goes, “The early bird catches the worm.” But not everyone is an early riser, and getting up earlier than usual can throw off a night owl’s whole day.

But there are a couple of things that, if started early in life (and with copious amounts of caffeine, if you’re starting early in the day, too), could benefit you greatly later in life. For example, learning a second language.

The optimal age range for learning a second language is still up for debate among experts, but the consensus seems to be “the younger you start, the better.” It’s a good idea to start early – giving your brain an ample amount of time to develop the many agreed upon benefits of being bilingual that don’t show up until later in life:¹

  • Postponed onset of dementia and Alzheimer’s (by 4.5 years)
  • Much more efficient brain activity – more like a young adult’s brain
  • Greater cognitive reserve and ability to cope with disease²

Imagine combining that increased brain power with a well-prepared retirement – an important goal to start working towards early in life!

Here are 3 big advantages to starting your retirement savings early:

1. Less to put away each month

Let’s say you’re 40 years old with little to no savings for retirement, but you’d like to have $1,000,000 when you retire at age 65. Twenty-five years may seem like plenty of time to achieve this goal, so how much would you need to put away each month to make that happen?

If you were stuffing money into your mattress (i.e., saving with no interest rate or rate of return), you would need to cram at least $3,333.33 in between the layers of memory foam every month. How about if you waited until you were 50 to start? Then you’d need to tuck no less than $5,555.55 around the coils. Every. Single. Month.

A savings plan that aggressive is simply not feasible for a majority of Americans: 78% of American full-time workers are just getting by, living paycheck-to-paycheck.³ So it makes sense that the earlier you start saving for retirement, the less you’ll need to put away each month. And the less you need to put away each month, the less stress will be put on your monthly budget – and the higher your potential to have a well-funded retirement when the time comes.

But what if you could start saving earlier and apply an interest rate? This is where the second advantage comes in…

2. Power of compounding

The earlier you start saving for retirement, the longer amount of time your money has to grow and build on itself. A useful shortcut to figuring out how long it would take money in an account to double is the Rule of 72.

Never heard of it? Here’s how it works: Take the number 72 and divide it by the annual interest rate. Assuming the interest rate is compounding annually, the answer is approximately how many years it will take for money in an account to double.

For example, applying the Rule of 72 to $10,000 in an account at a 4% interest rate would look like this:

72 ÷ 4 = 18

That means it would take approximately 18 years for $10,000 to grow to $20,000 ($20,258 to be exact).

This formula really shows the value of a higher interest rate, doesn’t it? Also keep in mind that this is just a mathematical concept. Interest rates will fluctuate over time, so the period in which money can double cannot be determined with certainty. Additionally, this hypothetical example does not reflect any taxes, expenses, or fees associated with any specific product. If these costs were reflected the amounts shown would be lower and the time to double would be longer.

Getting a higher interest rate and combining it with the third advantage below? You’d be on a roll…

3. Lower life insurance premiums

A well-tailored life insurance policy may help protect retirement savings. This is particularly important if you’re outlived by your spouse as he or she approaches their retirement years.

End-of-life costs can deal a serious blow to retirement savings. If you don’t have a strategy in place to help cover funeral expenses and the loss of income, the money your spouse might need may have to come out of your retirement savings.

One reason many people don’t consider life insurance as a method of protecting their retirement is that they think a policy would cost too much.

How much do you think a $250,000 term life insurance policy would cost for a healthy 30-year-old?*

Less than $20 per month. That’s a cost that would easily fit into most budgets!

You may still need a little caffeine for the extra kick to get an early start on powering up your brain (or your retirement savings), but sacrificing a few brand-name cups of coffee per month could finance a well-tailored life insurance policy that has the potential to protect your retirement savings.

Contact me today, and together we can work on your financial strategy for retirement, including what kind of life insurance policy would best fit you and your needs. As for your journey to the brain-boosting benefits of being bilingual – just like with retirement, it’s never too late to start. And I’ll be here to cheer you on every step of the way!

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*Example Quote: $250,000 for 20-year term life policy coverage for 30 year old male, non-smoker with preferred health. Life insurance premiums are based on a number of factors including the existence of both general and specific health concerns, such as sex, health, age, tobacco use and family history.

Sources: ¹ Alban, Deane. “The Brain Benefits of Learning a Second Language.” Be Brain Fit, 2018, https://bit.ly/2k5U3AH. ² Dr. Mercola. “The Brain Benefits of Being Bilingual.” Mercola, https://bit.ly/235b8fn. ³ Dickler, Jessica. “Can’t keep up: More Americans living paycheck-to-paycheck.” USA TODAY, https://usat.ly/2x3OYlP.

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