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Odetta King
Odetta King Financial Professional

Brooklyn, New York

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5 Things You Can Do With A Bonus

It’s your lucky day and you’re flush with cash.

Maybe you just got a bonus at work, or a tax refund, or won that scratch-off lottery ticket.

Hold up. Don’t spend it all just yet. There are some great ways you can put that windfall to work for you before it disappears during a spontaneous shopping spree.

1. Pay off those credit cards
This may not seem like quite as much fun as the Paris vacation you were daydreaming about – but paying down debt is like finding money every single month. Every $100 you pay in interest equals about $130 you’d have to earn when you consider taxes. Paying down debt is the fastest way to give yourself a monthly raise if you come into some unexpected cash.

2. Save it
Experts recommend that you have enough savings to cover at least 3 to 6 months of expenses. This is the perfect opportunity to break away from the statistics and get prepared. Consider a high-yield checking account that allows easy access to your savings.

3. Put it in the college fund
If you have kids, this is a great time to contribute to the college fund or to start one if you haven’t already. Tuition can range from around $10,000 for in-state public schools to nearly $35,000 for private schools (1). And that’s not counting books and boarding! It’s never too early to give your kids a head start!

4. Invest in yourself
This might be the perfect chance to finish off those last few credits for a degree or to earn that certification you’ve been wanting but couldn’t justify spending money to complete. If you choose carefully, the right degree or certification can open doors in your career, potentially enhancing your earning power and helping you break out of the holding pattern.

5. Take a vacation
Maybe it’s a trip to Paris or maybe it’s someplace else you’ve always wanted to go. If all the above are in good shape, go ahead and treat yourself. You deserve it!

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(1) Justin Song, “Average Cost of college in America”, ValuePenguin, 2020


WFG258641-06.20

4 Easy Tips To Build Your Emergency Fund

Nearly one quarter of Americans and almost half of Canadians have no emergency savings, according to a recent report. (1&2)

Without an emergency fund, you can imagine that an unexpected expense could send your budget into a tailspin. That’s why building an emergency fund is so important. You CAN do this!

4 tips to building your emergency fund

Where to keep your emergency fund
Keeping money in the cookie jar might not be the best plan. Mattresses don’t really work so well either. But you also don’t want your emergency fund “co-mingled” with the money in your normal checking or savings account. The goal is to keep your emergency fund separate, clearly defined, and easily accessible. Setting up a designated, high-yield savings account is a good option that can provide quick access to your money while keeping it separate from your main bank accounts.

Set a monthly goal for savings
Set a monthly goal for your emergency fund savings, but also make sure you keep your savings goal realistic. If you choose an overly ambitious goal, you may be less likely to reach that goal consistently, which might make the process of building your emergency fund a frustrating experience. (Your emergency fund is supposed to help reduce stress, not increase it!) It’s okay to start by putting aside a small amount until you have a better understanding of how much you can really “afford” to save each month. Also, once you have your high-yield savings account set up, you can automatically transfer funds to your savings account every time you get paid. One less thing to worry about!

Spare change can add up quickly
The convenience of debit and credit cards means that we use less cash these days – but if and when you do pay with cash, take the change and put it aside. When you have enough change to be meaningful, maybe $20 to $30, deposit that into your emergency fund. Look into ways of automating your savings to make putting away money seamless and hassle free!

Get to know your budget
Making and keeping a budget may not always be the most enjoyable pastime. But once you get it set up and stick to it for a few months, you’ll get some insight into where your money is going, and how better to keep a handle on it! Hopefully that will motivate you to keep going, and keep working towards your larger goals. When you first get started, dig out your bank statements and write down recurring expenses, or types of expenses that occur frequently. Odds are pretty good that you’ll find some expenses that aren’t strictly necessary. Look for ways to moderate your spending on frills without taking all the fun out of life. By moderating your expenses and eliminating the truly wasteful indulgences, you’ll probably find money to spare each month and you’ll be well on your way to building your emergency fund.

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(1) Maurie Backman, “Nearly 50% of Americans Don’t Have Enough Emergency Savings to Get Through the COVID-19 Crisis”, the Motley Fool, March 27, 2020.

(2) Steve Randall, “Almost half of Canadians have no emergency fund”, Which Mortgage, January 9, 2019.


WSB258602-06.20

How To Save For A Big Purchase

It’s no secret that life is full of surprises. Surprises that can cost money.

Sometimes, a lot of money. They have the potential to throw a monkey wrench into your savings strategy, especially if you have to resort to using credit to get through an emergency. In many households, a budget covers everyday spending, including clothes, eating out, groceries, utilities, electronics, online games, and a myriad of odds and ends we need.

Sometimes, though, there may be something on the horizon that you want to purchase (like that all-inclusive trip to Cancun for your second honeymoon), or something you may need to purchase (like that 10-years-overdue bathroom remodel).

How do you get there if you have a budget for the everyday things you need, you’re setting aside money in your emergency fund, and you’re saving for retirement?

Make a goal
The way to get there is to make a plan. Let’s say you’ve got a teenager who’s going to be driving soon. Maybe you’d like to purchase a new (to him) car for his 16th birthday. You’ve done the math and decided you can put $3,000 towards the best vehicle you can find for the price (at least it will get him to his job and around town, right?). You have 1 year to save but the planning starts now.

There are 52 weeks in a year, which makes the math simple. As an estimate, you’ll need to put aside about $60 per week. (The actual number is $57.69 – $3,000 divided by 52). If you get paid weekly, put this amount aside before you buy that $6 latte or spend the $10 for extra lives in that new phone game. The last thing you want to do is create debt with small things piling up, while you’re trying to save for something bigger.

Make your savings goal realistic
You might surprise yourself by how much you can save when you have a goal in mind. Saving isn’t a magic trick, however, it’s based on discipline and math. There may be goals that seem out of reach – at least in the short-term – so you may have to adjust your goal. Let’s say you decide you want to spend a little more on the car, maybe $4,000, since your son has been working hard and making good grades. You’ve crunched the numbers but all you can really spare is the original $60 per week. You’d need to find only another $17 per week to make the more expensive car happen. If you don’t want to add to your debt, you might need to put that purchase off unless you can find a way to raise more money, like having a garage sale or picking up some overtime hours.

Hide the money from yourself
It might sound silly but it works. Money “saved” in your regular savings or checking account may be in harm’s way. Unless you’re extremely careful, it’s almost guaranteed to disappear – but not like what happens in a magic show, where the magician can always bring the volunteer back. Instead, find a safe place for your savings – a place where it can’t be spent “accidentally”, whether it’s a cookie jar or a special savings account you open specifically to fund your goal.

Pay yourself first When you get paid, fund your savings account set up for your goal purchase first. After you’ve put this money aside, go ahead and pay some bills and buy yourself that latte if you really want to, although you may have to get by with a small rather than an extra large.

Saving up instead of piling on more credit card debt may be a much less costly way (by avoiding credit card interest) to enjoy the things you want, even if it means you’ll have to wait a bit.

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WFG258466-06.20

Why You Should Pay Off High-Interest Debt First

Credit card debt can be sneaky.

Often, we may not even realize how much that borrowed money is costing us. High interest debt (like credit cards) can slowly suck the life out of your budget.

But paying down high-interest debt can free up cash flow in a big way. It might take time to produce a meaningful return. Your “earnings” will seem low at first. They’ll seem low because they are low. Hang in there. Over time, as the balances go down and more cash is available every month, the benefit will become more apparent.

High Interest vs. Low Balance
We all want to pay off debt, even if we aren’t always vigilant about it. Debt irks us. We know someone is in our pockets. It’s tempting to pay off the small balances first because it’ll be faster to knock them out.

Granted, paying off small balances feels good – especially when it comes to making the last payment. However, the math favors going after the big fish first, the hungry plastic shark that is eating through your wallet, bank account, retirement savings, vacation plans, and everything else. In time, paying off high interest debt first will free up the money to pay off the small balances, too.

Summing It Up
High interest debt, usually credit cards, can cost you hundreds of dollars per year in interest – and that’s assuming you don’t buy anything else while you pay it off. Paying off your high interest debt first has the potential to save all of that money you’d end up paying in interest. And imagine how much better it might feel to pay off other debts or bolster your financial strategy with the money you save!

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WFG258307-06.20

Opportunity cost and your career

“Opportunity cost” refers to what you can potentially lose by choosing one option over another – even when you aren’t thinking about it.

Nearly every choice you make precludes something else that might have been.

Opportunity cost exists in everything from relationships to finances to career choices, but here we’ll focus on that last one. Over a lifetime, the cost of career decisions can be massive.

The math
For opportunity costs that can be measured, usually in dollars, there’s even a math equation.

What I sacrifice / What I gain = Opportunity cost[i]

Let’s say you have two career choices. One is to work as a mechanic at $50 per hour and the other is to work as a karate instructor at $20 per hour.

Opportunity A / Opportunity B = Opportunity cost

Here it is with numbers: $50 / $20 = $2.50

To translate that, for every $1 you earn as a karate instructor, you could have earned $2.50 as a mechanic. The ratio remains the same whether it’s for one hour worked or 1,000 hours worked because it’s based on earnings per hour.

Adding a time element
We can only work a certain number of hours in a week and we can only work for a certain number of years in a lifetime. Adding time into the discussion doesn’t change the math relationship between the opportunities but it does recognize real-world constraints. Sometimes these limits are by choice. You could be both a full-time mechanic and a full-time karate instructor, but most people don’t want to work 80 hours per week. Something has to give, and that’s where considering opportunity cost comes in.

If you only want to work 40 hours in a week, you’ll have to choose one career over the other or split your time between the two. But even in splitting your time, there is an opportunity cost. Think about it like this: Every hour spent in a lower paying job costs money if you had an opportunity to earn more doing something else.

The bigger picture
In our example using the mechanic vs. the karate instructor, the difference in annual income is over $60,000 per year ($104,000 minus $41,600). Over a 40-year working career, the difference in earnings is nearly $2.5 million, and it all happened one hour at a time.

Life balance
Your career choice shouldn’t just be about money – you should do something you enjoy and that gives you satisfaction. There may be several other considerations as well – like opportunity to travel, the kind of people you work with, and the greater contribution you can make to the world. However, if there are two choices that meet all your criteria but one pays a bit more, just do the math!

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Should You Live With Your Parents?

Plenty of people move back in with their parents.

Data found that 37% of Californians and close to 1.9 million people in Canada between 18 and 64 live with their parents (1 & 2). That might not sound ideal, but is it really that bad? Here are some pros and cons to consider before deciding to move back home.

Pros
Living with your parents isn’t necessarily the end of the world. For starters, it might be cheaper than renting an apartment or buying a house, depending on the deal your parents offer you. Negotiating rent with your mom is typically easier than wrangling with a landlord! On that note, at home you’ll be surrounded by people who love you. That can be a serious boost to your mental health and give you some footing for your next move. And you can’t forget that free food is awesome. (If that’s part of the deal!)

Cons
But moving back in might not necessarily be all rainbows and sunshine. It can be incredibly demoralizing for many people. We tend to estimate our self-worth and how much we’ve accomplished by our independence from our parents. It’s easy to see living with our parents as a step back. Plus, it can encourage laziness. Not having to hustle for food and rent can remove a sense of urgency from your work. Nothing motivates you quite like the imminent threat of bankruptcy!

If you have to move back in with your parents, do it with a plan. Maybe you give yourself six months at home to get your business off the ground. Your goal might be more long-term like caring for a parent. Just remember to take it in stride and don’t let it derail your life!

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(1) Matt Levin, “Nearly 40 Percent Of Young Adult Californians Live With Their Parents. Here’s Everything To Know About Them,” Cal Matters, August 25, 2019.

(2) Statistics Canada, “Family Matters: Adults living with their parents.” The Daily, February 15, 2019.

WFG258040-05.20

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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WFG132466-1019

Should You Give Your Child An Allowance?

Should parents give their children an allowance?

It’s a surprisingly difficult question to answer. Teaching your kids how to handle money is important. But how you go about giving them cash can set precedents that last a lifetime. Here are a few different takes on giving your kids money.

Not giving your kids money
There’s a lot to not love about this system at a glance, especially if you’re the kid. It seems like a way to simultaneously prevent your children from having fun and learn nothing about handling money. But it has some silver linings. Not paying your kids to do chores can be a way to teach them about the value of work without tying it to a monetary reward. That’s an important life lesson that can be applied to volunteer work and responsibilities with their future family. You also may be on a tight budget and handing out an allowance is just not part of your financial strategy right now.

Giving your kids an allowance (no work required)
This is a system where you give your kids a set amount of money each week or month. This is a straightforward way to get your kids some cash that they can spend, save, and use to learn about money.

But just giving your kids an allowance without requiring something in return, like doing chores, has some potential drawbacks. Most people will eventually have to get a job so they can earn money. Giving cash to your kids without tying it in some way to work may create a sense of entitlement that simply isn’t realistic.

Paying your kids commission
In this system, you pay your kids as they complete tasks. You would set up a job posting with different payments for different chores. Pay your kids when they’ve completed the work. If they get the job done quickly with a good attitude and some extra flourish? Give them a raise! It’s a great way of rewarding excellence and teaching children the monetary value of their time and hard work.

But this system also has flaws. Some of the most rewarding work we do can be for family or friends, or to serve our communities—with no reward other than appreciation and pride in a job well done. Giving the impression that one should only put in hard work or help out with the family for cash isn’t something every parent is comfortable with.

Fortunately, there are many ways to combine each of these systems. You could have non-paying chores that are duties simply because the kids are members of the family and then extra paid jobs. Or maybe offer a base allowance to teach your kids about saving, giving, and spending, and then paid chores added on. These systems can evolve over time as your kids grow. Let the needs of your family and what you want to instill in your children guide you.

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WSB257276-05.20

Healthy Financial Habits

Consistency is essential for anything, and the key to consistency is habit.

Habits are behaviors that we do so frequently that they feel second nature. So your friend who’s woken up at 5:00 AM to work out for so long that it seems normal to him? He’s unlocked the power of habit to wake up, get out of bed, and make it happen.

Healthy money habits are the same way; they open up a whole new world of financial fitness! Here are a few great habits you can start today.

Begin with a Budget
Developing a budgeting habit is foundational. Consistently seeing where your money is going gives you the power to see what needs to change. Notice in your budget that fast food is hogging your paycheck? Budgeting allows you to see how it’s holding you back and figure out a solution to the problem. The knowledge a budget gives you is the key to help you make wise money decisions.

Pay Yourself First
Once you’re budgeting regularly, you can start seeing who ends up with your money at the end of the day. Is it you? Or someone else? One of the best habits you can establish is making sure you pay yourself by saving. Instead of spending first and setting aside what’s left over, put part of your money into a savings account as soon as you get your paycheck. It’s a simple shift in mindset that can make a big difference!

Automate Everything
And what easier way to pay yourself first than by automatically depositing cash in your savings account? Making as much of your saving automatic helps make saving something that you don’t even think about. It can be much easier to have healthy financial habits if everything happens seamlessly and with as little effort as possible on your part.

Healthy financial habits may not seem big. But sometimes those little victories can make a big difference over the span of several years. Why not try working a few of these habits into your routine and see if they make a difference?

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WFG256622-05.20

The top 8 reasons to consider life insurance

Life will often seem to present signals about financial moves to make.

Starting your first job babysitting or mowing lawns? Probably a good idea to begin saving some of those earnings. Need to pay for college? You’ll want to apply for scholarships. Have a friend who’s asking you to invest in his latest business scheme? Maybe you’ll pass.

As for life insurance, there are certain events that herald when it’s an appropriate time to think about purchasing a policy.

Following are a few of those key times…

Tying the knot or taking the plunge
Whatever you call it, if you’re getting ready to walk down the aisle, now is a good time to think about life insurance. A life insurance policy will protect your spouse by replacing your income if something were to happen to you. Many couples rely on two incomes to sustain their lifestyle. It’s important to make sure your spouse can continue to pay the bills, make a mortgage payment, and provide for any children you might have, etc.

Buying a home
If you’re in the market for a home, life insurance should also be a consideration. There are particular types of life insurance policies that will pay off the remaining mortgage if something happens to you. This type of life insurance can help provide a safety net for you and your spouse if you are planning on taking on a mortgage.

Someone becomes dependent on you financially
Another life event that signals a need for life insurance is if someone were to become dependent upon you financially. We might think our only dependents would be our children, but there are other situations to consider. Do you have a relative that depends on you for support? It could be a sibling, parent, elderly aunt. It’s prudent to help protect them with a life insurance policy.

You’ve got a business partner
Life insurance can be invaluable if you’re starting a business and have a business partner. A life insurance policy on your partner or the key leaders in your company can help protect the business if something happens to one of the main players. While the payout on a life insurance policy won’t replace the individual, it can help see the company through financial repercussions from the loss.

You have debt that you don’t want to leave behind
If you’re like most Americans – you probably have some debt. There are two problems with carrying debt. One, it costs you money and isn’t good for your financial health. Second, it can be a problem for your loved ones if you pass away unexpectedly. A life insurance policy is helpful to those who are left behind and are taking on the responsibility of your debt and estate.

You have become aware of “the someday”
Sooner or later we all have to consider our last stage of life. A life insurance policy can help you plan for those last days. A life insurance policy can help cover funeral costs and medical bills or other debts you may have at the end of your life. The payout can also help your beneficiary with any final expenses while settling your estate.

You fell in love with a cause
If you are attached to a certain charity or cause, consider a life insurance policy that can offer a payout as a charitable gift when you pass away. If you are unattached or don’t have any children, naming a charity as your life insurance beneficiary is a great way to leave a legacy.

You just got your first “grown-up” job
Cutting your teeth on your first “grown-up” job is a great time to consider your life insurance options. If you have an employer, they may offer you a small life insurance policy as a perk. But you likely will need more coverage than that. Consider purchasing a life insurance policy now. The younger you are, the less you may pay for it.

Life gives us clues about financial moves
If we know what to look for, life seems to give us clues about when to make certain financial moves. If you’re going through any of these times of life, it’s time to consider purchasing a life insurance policy.

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WSB112836-0119

So You’ve Graduated...Now What?

Graduating from college is a big deal.

It represents a transition from student to adult for millions of people. But leaving university and joining the workforce can be intimidating. Looking for a job, paying bills, commuting, and living independently are often uncharted territory for recent grads.

Here are a few tips for fresh graduates trying to get on their feet financially.

Figure out what you want
It’s one thing to leave college with an idea of what career you want to pursue. It’s something else entirely to ask yourself what kind of life you want. It’s one of those big issues that can be difficult even to wrap your head around!

However, it’s something that’s important to grapple with. It will help you answer questions like “What kind of lifestyle do I want to live” and “how much will it cost to do the things I want?” You might even find that you don’t really need some of the things that you thought were necessities, and that happiness comes from places you might not have expected.

Come up with a budget
Let’s say you’ve got a ballpark idea of your financial and lifestyle goals. It’s time to come up with a strategy. There are plenty of resources on starting a budget on this blog and the internet on the whole, but the barebones of budgeting are pretty simple. First, figure out how much you make, how much you have to spend, how much you actually spend, then subtract your total spending from how much you make. Get a positive number? Awesome! Use that leftover cash to start saving for retirement (it’s never too early!) or build up an emergency fund. Negative number? Look for places in your unnecessary spending to cut back and maybe consider a side hustle to make more money.

Looking at your spending habits can be difficult. But owning up to mistakes you might be making and coming up with a solid strategy can be far easier than the agony that spending blindly may bring. That’s why starting a budget is a post-graduation must!

Meet with a financial professional
Find a qualified and licensed financial professional and schedule an appointment. Don’t let the idea of meeting with a professional intimidate you. Afterall, you trust your health, car, and legal representation to properly trained experts. Why wouldn’t you do the same with your financial future?

Being scared of starting a new chapter of life is natural. There are a lot of new experiences and unknowns to deal with that come along with leaving the familiarity of college. But the best way to overcome fear is to face it head on. These tips are a great way to start taking control of your future!

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WSB255927-04.20

3 Ways to Shift from Indulgence to Independence

On Monday mornings, we’re all faced with a difficult choice.

Get up a few minutes early to brew your own coffee, or sleep a little later and then whip through a drive-thru for your morning pick-me-up?

When that caffeine hits your bloodstream, how you got the coffee may not matter too much. But the next time you go through a drive thru for that cup o’ joe, picture your financial strategy shouting and waving its metaphorical arms to get your attention.

Why? Each and every time you indulge in a “luxury” that has a less expensive alternative, you’re potentially delaying your financial independence. Delay it too long and you might find yourself working when you should be enjoying a comfortable retirement. Sound dramatic? Alarmist? Apocalyptic? But that’s how it happens – one $5 peppermint mocha at a time. This isn’t to say that you can’t enjoy an indulgence every once in a while. You gotta “treat yourself” sometimes, right? Just be sure that you’re sticking with your overall, long-term strategy. Your future self will thank you!

Here are 3 ways to shift from indulgence to independence:

1. Make coffee at home. Reducing your expenses can start as simply as making your morning coffee at home. And you might not even have to get up earlier to do it. Why not invest in a coffee pot with a delay brewing function? It’ll start brewing at the time you preset, and what’s a better alarm clock than the scent of freshly-brewed coffee wafting from the kitchen? Or from your bedside table… (This is a judgment-free zone here – do what you need to do to get up on time in the morning.)

Get started: A quick Google search will yield numerous lists of copycat specialty drinks that you can make at home.

2. Workout at home. A couple of questions to ask yourself:

1) Will an expensive gym membership fit into your monthly budget? 2) How often have you gone to the gym in the last few months?

If your answers are somewhere between “No” and “I’d rather not say,” then maybe it’s time to ditch the membership in favor of working out at home. Or perhaps you’re a certified gym rat who faithfully wrings every dollar out of your gym membership each month. Then ask yourself if you really need all the bells and whistles that an expensive gym might offer. Elliptical, dumbbells, and machines with clearly printed how-tos? Yes, of course. But a hot tub, sauna, and an out-of-pocket juice bar? Maybe not. If you can get in a solid workout without a few of those pricey extras, your body and your wallet will thank you.

Get started: Instead of a using a treadmill inside the gym, take a walk or jog around your local park each day – it’s free! If you prefer to work out at a gym, look into month-to-month membership options instead of paying a hefty price for a year-long membership up front.

3. Ditch cable and use a video streaming service instead. Cable may give you access to more channels and more shows than ever before, but let’s be honest. Who has time to watch 80 hours of the greatest moments in sports every week? Asking yourself if you could cut the cable and wait a little longer for your favorite shows to become available on a streaming service might not be a bad idea. Plus, who doesn’t love using a 3-day weekend to binge-watch an entire series every now and then? There’s also the bonus of how easy it is to cancel/reactivate a streaming service. With cable, you may be locked into a multi-year contract, installation can be a hassle (and they may add an extra installation fee), and you can forget about knowing when the cable guy is actually going to show up.

Get started: Plenty of streaming services offer free trial periods. Go ahead and give them a try, but be careful: You may have to enter your credit card number to access the free trial. Don’t forget to cancel before your trial is over, or you will be charged.

Taking time to address the luxuries you can live without (or enjoy less often) has the potential to make a huge impact on your journey to financial independence. Cutting back here and investing in yourself there – it all adds up.

In what areas do you think you can start indulging less?

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WFG131527-0919

Morning Habits You Can Start Tomorrow

Most of our mornings aren’t very fun. We roll out of bed, maybe hit snooze a few times, and then crawl into work feeling groggy at best.

But it doesn’t have to be like this. The morning hours can be times of relaxation, focus, and self-improvement. Here are a few practical habits that can take your mornings from pointless to productive!

Go to bed early
Stayed up too late watching just one more episode of your favorite show? Don’t expect to wake up feeling motivated. A productive morning starts the night before. Try to stay away from screens before going to bed (at least one hour) and make sure you turn in at a reasonable time. You may also want to dial back when you wake up. Having a quiet hour or two before everyone else wakes up is a great way of freeing up time to invest in things you care about. Just remember that your new sleep schedule will take some time to adjust to!

Exercise first thing
One of the best habits to fill your new-found morning hours is exercise. It’s a great way to get your blood flowing and boost your energy. Plus, the feeling that you’ve accomplished something can help carry you through the day and boost your confidence.

Prioritize your tasks
But let’s say you’ve started getting up an hour and a half earlier and you work out for 30 minutes. How are you going to spend the next hour before you start getting ready for work? One great habit is to start planning out your day and prioritizing your tasks. Write down what specifically you want to accomplish and when. You might be amazed by how empowering it is to make a plan and to see your goals on a piece of paper. Start off with your biggest task. The morning is when you’re at your peak brain power, so commit your best efforts to the hardest work. The feeling of accomplishment from knocking out the task will carry you through the smaller things!

Mornings don’t have to be rough. Incorporating these tips and habits into your daily routine can help make the first hours of the day a time you look forward to. Start inching your alarm closer towards sunrise and use that extra time to absolutely crush your day!

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How to Budget for Beginners

Everybody needs a budget.

But that doesn’t stop “budget” from being an intimidating word to many people. Some folks may think it means scrimping on everything and never going out for a night on the town. It doesn’t! Budgeting simply means that you know where your money is going and you have a way to track it.

The aim with budgeting is to be aware of your spending, plan for your expenses1, and make sure you have enough saved to pursue your goals.

Without a budget, it can be easy for expenses to climb beyond your ability to pay for them. You break out the plastic and before you know it you’ve spent fifty bucks on drinks and appetizers with the gang after work. These habits might leave you with a lot of accumulated debt. Plus, without a budget, you may not be saving for a rainy day, vacation, or your retirement. A budget allows you to enact a strategy to help pursue your goals. But what if you’ve never had a budget? Where should you start? Here’s a quick step-by-step guide on how to get your budgeting habit off the ground!

Track your expenses every day
Start by tracking your expenses. Write down everything you buy, including memberships, online streaming services, and subscriptions. It’s not complicated to do with popular mobile and web applications. You can also buy a small notebook to keep track of each purchase. Even if it’s a small pack of gum from the gas station or a quick coffee at the corner shop, jot it down. Keep track of the big stuff too, like your rent and bill payments.

Add up expenses every week and develop categories
Once you’ve collected enough data, it’s time to figure out where exactly your paycheck is going. Start with adding up your expenses every week. How much are you spending? What are you spending money on? As you add your spending up, start developing categories. The goal is to organize all your expenses so you can see what you’re spending money on. For example, if you eat out a few times per week, group those expenses under a category called “Eating Out”. Get as general or as specific as you wish. Maybe throwing all your food purchases into one bucket is all you need, or you may want to break it down by location - grocery store, big box store, restaurants, etc.

Create a monthly list of expenses
Once you’ve recorded your expenses for a full month, it’s time to create a monthly list. Now you might also have more clarity on how you want to set up your categories. Next, total each category for the month.

Adjust your spending as necessary
Compare your total expenses with your income. There are two possible outcomes. You may be spending within your income or spending outside your income. If you’re spending within your income, create a category for savings if you don’t have one. It’s a good idea to create a separate savings category for large future purchases too, like a home or a vacation. If you find you’re spending too much, you may need to cut back spending in some categories. The beauty of a budget is that once you see how much you’re spending, and on what, you’ll be able to strategize where you need to cut back.

Keep going
Once you develop the habit of budgeting, it should become part of your routine. You can look forward to working on your savings and developing a retirement strategy, but don’t forget to budget in a little fun too!

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¹Jeremy Vohwinkle, “Make a Personal Budget in 6 Steps: A Step-by-Step Guide to Make a Budget,” The Balance (March 6, 2020).

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Are You Prepared For a Rainy Day?

It’s never a bad idea to prepare for a financial emergency.

Unexpected expenses, market fluctuations, or a sudden job loss could leave you financially vulnerable. Here are some tips to help you get ready for your bank account’s rainy days!

Know the difference between a rainy day fund and an emergency fund … but have both!
People often use the terms interchangeably, but there are some big differences between a rainy day fund and an emergency fund. A rainy day fund is typically designed to cover a relatively small unexpected cost, like a car repair or minor medical bills. Emergency funds are supposed to help cover expenses that might accumulate during a long period of unemployment or if you experience serious health complications. Both funds are important for preparing for your financial future—it’s never too early to start building them.

Tackle your debt now
Just because you can manage your debt now doesn’t mean you’ll be able to in the future. Prioritizing debt reduction, especially if you have student loans or credit card debit, can go a long way toward helping you prepare for an unexpected financial emergency. It never hurts to come up with a budget that includes paying down debt and to set a date for when you want to be debt-free!

Learn skills to bolster your employability
One of the worst things that can blindside you is unemployment. That’s why taking steps now to help with a potential future job search can be so important. Look into free online educational resources and classes, and investigate certifications. Those can go a long way towards diversifying your skillset (and can look great on a resume).

None of these tips will do you much good unless you get the ball rolling on them now. The best time to prepare for an emergency is before the shock and stress set in!

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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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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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Do I Need Life Insurance?

It might be uncomfortable to think about the need for life insurance, but it’s an important part of your family’s financial strategy.

It helps protect your family during the grieving process, gives them time to figure out their next steps, and can provide income to cover normal bills, your mortgage, and other unforeseen expenses.

Here are some guidelines to help you figure out how much is enough to help keep your family’s future safe.

Who needs life insurance?
A good rule of thumb is that you should get life insurance if you have financial dependents. That can range from children to spouses to retired parents. It’s worth remembering that you might provide financial support to loved ones in unexpected ways. A stay-at-home parent, for instance, may cover childcare or education costs. Be sure to take careful consideration when deciding who should get coverage!

What does life insurance cover?
Life insurance can be used to cover a variety of unexpected expenses. Funeral costs or debts can potentially be financial and emotional strains, as can the loss of a steady income and employer-provided benefits. Think of life insurance as a buffer in these situations. It can give you a line of defense from financial concerns while you process your loss and plan for the future.

How much life insurance do you need?
Everyone’s situation is different, so consider who would be financially impacted in your absence and what their needs would be.

If you’re single with no children, you may only need enough insurance to cover funeral costs and pay off any debts.

If you’re married with children, consider how long it might take your spouse to get back on their feet and be able to support your family, how much childcare and living expenses might be, and how much your children would need to attend college and start a life of their own. A rule of thumb is to purchase 10 times as much life insurance as income you would make in a year. For instance, you would probably buy a $500,000 life insurance policy if you make $50,000 a year. (Note: Be sure to talk with a qualified and licensed life insurance professional before you make any decisions.)

An older person with no kids at home may want to leave behind an inheritance for their children and grandchildren, or ensure that their spouse is cared for in their golden years.

A business owner will need a solid strategy for what would happen to the business in the event of their death, as well as enough life insurance to help ensure that employees are paid and the business can either be transferred or closed with costs covered.

Life insurance may not be anyone’s favorite topic, but it can be a lifeline to your family in the event that you are taken from them too soon. With a well thought out life insurance policy for you and your situation, you can rest knowing that your family’s future has been prepared for.

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Should You Get Rid Of Your Credit Cards?

There’s no doubt that credit card debt is a huge financial burden for many Americans.

On average, each household that has revolving credit card debt owes $7,104 (1). It might be tempting to see those numbers and decide to throw out your credit cards entirely. After all, why hang on to a source of temptation when you could make do with cash or a debit card? However, keeping a credit card around has some serious benefits that you should consider before you decide to free yourself from plastic’s grasp.

You might have bigger debts to deal with
On average, credit card debt is low compared to auto loans ($27,934), student loans ($46,679), and mortgages ($192,618) (2). Simply put, you might be dealing with debts that cost you a lot more than your credit card. That leaves you with a few options. You can either start with paying down your biggest debts (a debt avalanche) or get the smaller ones out of the way and move up (a debt snowball). That means you’ll either tackle credit card debt first or wait while you deal with a mortgage payment or student loans. Figure out where to start and see where your credit card fits in!

Ditching credit cards can lower your credit score
Credit utilization and availability play a big role in determining your credit score (3). The less credit you use and the more you have available, the better your score will likely be. Closing down a credit card account may drastically lower the amount of credit you have available, which then could reduce your score. Even freezing your card in a block of ice can have negative effects; credit card companies will sometimes lower your available credit or just close the account if they see inactivity for too long (4). This may not be the end of the world if you have another line of credit (like a mortgage) but it’s typically better for your credit score to keep a credit card around and only use it for smaller purchases.

It’s often wiser to limit credit card usage than to ditch them entirely. Figure out which debts are costing you the most, and focus your efforts on paying them down before you cut up your cards. While you’re at it, try limiting your credit card usage to a few small monthly purchases to protect your credit score and free up some extra funds to work on your other debts.

Need help coming up with a strategy? Give me a call and we can get started on your journey toward financial freedom!

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(1) Erin El Issa, “Nerdwallet’s 2019 American Household Credit Card Debt Study,” Nerdwallet, December 2, 2019

(2) Erin El Issa, “Nerdwallet’s 2019 American Household Credit Card Debt Study,” Nerdwallet, December 2, 2019

(3) Latoya Irby, “Understanding Credit Utilization: How Your Usage Affects Your Credit Score,” The Balance, February 20, 2020

(4) Lance Cothern, “Will My Credit Score Go Down If A Credit Card Company Closes My Account For Non-Use?” March 2, 2020


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7 Tips for Talking to Your Partner About Money

Dealing with finances is a big part of any committed relationship and one that can affect many aspects of your life together.

The good news is, you don’t need a perfect relationship or perfect finances to have productive conversations with your partner about money, so here are some tips for handling those tricky conversations like a pro!

Be respectful
Respect should be the basis for any conversation with your significant other, but especially when dealing with potentially touchy issues like money. Be mindful to keep your tone neutral and try not to heap blame on your partner for any issues. Remember that you’re here to solve problems together.

Take responsibility
It’s perfectly normal if one person in a couple handles the finances more than the other. Just be sure to take responsibility for the decisions that you make and remember that it affects both people. You might want to establish a monthly money meeting to make sure you’re both on the same page and in the loop. Hint: Make it fun! Maybe order in, or enjoy a steak dinner while you chat.

Take a team approach
Instead of saying to your partner, “you need to do this or that,” try to frame things in a way that lets your partner know you see yourself on the same team as they are. Saying “we need to take a look at our combined spending habits” will probably be better received than “you need to stop spending so much money.”

Be positive
It can be tempting to feel defeated and hopeless that things will never get better if you’re trying to move a mountain. But this kind of thinking can be contagious and negativity may further poison your finances and your relationship. Try to focus on what you can both do to make things better and what small steps to take to get where you want to be, rather than focusing on past mistakes and problems.

Don’t ignore the negative
It’s important to stay positive, but it’s also important to face and conquer the specific problems. It gives you and your partner focused issues to work on and will help you make a game plan. Speaking of which…

Set common goals, and work toward them together
Whether it’s saving for a big vacation, your child’s college fund, getting out of debt, or making a big purchase like a car, money management and budgeting may be easier if you are both working toward a common purpose with a shared reward. Figure out your shared goals and then make a plan to accomplish them!

Accept that your partner may have a different background and approach to money
We all have our strengths, weaknesses, and different perspectives. Just because yours differs from your partner’s doesn’t mean either of you are wrong. Chances are you make allowances and balance each other out in other areas of your relationship, and you can do the same with money if you try to see things from your partner’s point of view.

Discussing and managing your finances together can be a great opportunity for growth in a relationship. Go into it with a positive attitude, respect for your partner, and a sense of your common values and priorities. Having an open, honest, and trust-based approach to money in a relationship may be challenging, but it is definitely worth it.

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