Whether you hedge inflation or look for a return that outpaces inflation, here's how to prepare.
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Talking about some money matters can be very scary. It’s even more frightening when those money matters are filled with myths. Don’t let these scary money myths keep you from discussing, addressing and improving your financial situation.
MYTH #1: I HAVE TIME TO PLAN MY FINANCIAL FUTURE!
Time flies, not only when you’re having fun, but in general too and cannot be replaced, replenished or restored. Most people, especially when they are younger, believe that they have enough time and can wait on planning for retirement. Unfortunately, the importance of future financial planning (retirement planning) is sometimes realized after several precious years of savings and earning compound interest have been lost. The scariest part about late retirement planning is that there may not be time or disposable income to save up enough money at the desired retirement age, which means working longer. Instead of retiring at age 62, you may have to entertain working until age 70 or older. SCARY!
To ensure that Time is on your side, be sure to Save Something Sooner and maximize the time you have.
MYTH #2: I’M TOO OLD TO GET STARTED
It gets easier to fall for the fear factor of “getting started” when get more mature in age. Whether it is starting a business, creating a spending plan, or going back to school to get your degree; it’s never too late to start. Yes, it is scary and may be completely out of your comfort zone, but it will be totally worth it.
So, “Do It Scared!!!” – Tarra Jackson
Just remember that doing it scared doesn’t mean you have to do it alone. Connect with entrepreneurs, mentors, or professionals to help you through the process. Just get started.
MYTH #3: MORE MONEY LESS PROBLEMS
It is easy to believe that more money will solve money problems. However, the rapper Biggie Smalls said it best, Sometimes …
“More Money More Problems.”
Adding more money to a financial fiasco may just magnify the money massacre. Often it is not about how much we make; rather it is about how much we spend.
So, before wishing upon a star for more money, make sure you monitor your spending behaviors and create or modify your budget to avoid creepy cash flow issues.
MYTH #4: I CAN’T AFFORD LIFE INSURANCE
One of the scariest myths is that life insurance is too expensive. In most cases, this scary story is a fallacy that keeps people from protecting their family from financial fright during the most difficult time of their life.
“According to a Life Happens and LIMRA study from this year, 65% of households have not purchased life insurance because they think it’s too costly.” – LifeHappens.org
For example, a $250,000 10 year term life insurance policy for a healthy 30-year-old male could cost about $160 a year or about $13 a month. But, one in four people polled in that study thought it would cost more than $1,000 a year. The cost of life insurance is mainly based on a person’s age, gender, health and possibly other factors like driving record. The younger and healthier the person is, the cheaper the cost of life insurance.
Even though one size does not fit all when it comes to the cost of life insurance, connect with a licensed life insurance agent to learn how affordable it is for you or your loved ones.
MYTH #5: BUYING NEW IS BETTER
Of course the Bling of buying New is Beautiful, but it doesn’t always mean it is Better. Especially when it relates to purchasing a car.
“On average, a new car will lose as much as 19 percent of its value in its first year of ownership. That means that your $20,000 new car will be worth about $16,200 after just one year,” reports Trustedchoice.com.
The rate of depreciation, however, does not continue at this rate after year one; it actually slows down. Therefore, a used car value may be more or at least closer to it’s cost.
Instead of buying new when car shopping, consider buying pre-owned (used) with a warranty and low mileage to avoid the possible doomed depreciation of buying new.
For many Americans, the American Dream has been identified as home ownership. However, times have changed, as well as Americans’ definition of what they consider to be the “American Dream.” The American Dream now includes not living paycheck to paycheck, being able to travel, etc.
Although African Americans believe that the American Dream is possible, here are 5 things keeping us from it and what we can do to get it!
Lack of an Emergency Fund
The car breaks down, someone has a medical emergency, the HVAC system goes out in the middle of summer or winter, etc. Life Happens! Whatever the emergency, having an emergency savings fund helps to protect the family’s financial foundation from these emergency bombs.
Unfortunately …
African American Families are least likely to be prepared for financial emergencies with 33% having less than 1 month of expenses saved and just 1 in 5 setting aside enough money to cover more than 6 months of expenses.
– Massachusetts Mutual Life Insurance Company (MassMutual) Survey of American Families (2018)
Set an amount or percentage of the paycheck to be direct deposited into the savings account. Establishing a savings account in a different financial institution from your checking account will help to eliminate the temptation of transferring cash from the savings account. Also, establish a savings goal for a specific period (for example $1,000 in 12 months) and build from there targeting 3 to 6 months of salary for your emergency fund.
Not having both Short-Term and Long-Term Financial Goals
This may be a challenge if the family members have limited or no financial education.
Seeking advice from family members may seem like the right thing to do, but when it comes to financial advice, it is often best to consult with a financial professional. The financial professional has a fiduciary duty (legal responsibility to take care of the client) and can guide you through the right options for your financial situation and income while making the process less intimidating and overwhelming.
Excessive Debt
Living life without using credit is ideal but not always realistic. Sometimes using credit is a useful financial tool, like buying a car or a new home.
This excessive debt is limiting the ability to save more for emergencies and opportunities, as well as invest more for retirement.
Focus on paying down debt using the snowball method, paying off credit cards and loans with the smallest balances or highest interest rates first. Once those debts are paid, apply the amounts of those payments towards the next debts to be paid.
Not prepared for the Unexpected
The unexpected can’t be controlled and is not something people want to think about. However, being prepared for the unexpected will help protect the family’s financial stability. The unexpected not only includes “death;” it also includes illness and accidents that result in a disability. What if a relied upon income suddenly stops? How will the family maintain household expenses, like rent/mortgage, utilities, food, etc.?
For most people, their single most valuable asset is their ability to earn an income.
Although 84% of African American families prioritize having a stable source of income for their family in case of the unexpected, most people solely rely on disability income and life insurance provided by their employer or do not own disability income or life insurance at all.
Consult with a financial professional to determine the “appropriate amounts of disability income and life insurance to protect your family’s financial stability should the unthinkable happen.”
Living Paycheck to Paycheck
For 75% of African Americans, not living paycheck to paycheck is part of the American dream. Having more month than money adds more stress to what family life may already create and living paycheck to paycheck also makes it hard to save and invest as well.
REALITY CHECK:
Create a budget or spending plan to determine required and unnecessary expenses, income gaps and ways to save more money and pay down debt. A budget will give you the power to make informed decisions to reach your financial goals.
By focusing on the simple strategies states above, attaining the American Dream can be attained faster towards building generational wealth.
We are in the 4th quarter, known as the last stretch of the year! Can you believe it? If you haven’t started already, this is the time to put things in place for your business success next year. So, here a some BOSS Investments that you should make in the fourth quarter.
Invest Time in Creating Your Plan
Image you want to go on vacation. After you determine where you want to go and taking into consideration of your current location, you probably create a plan of how to get to your destination successfully. This planning process is the same when creating a plan for your business success for the new year. Also, writing down your goals and action plan increases your chances of execution and accomplishment. Invest time in writing down your business goals and action plans, including resources required to be successful. Think about the following:
- How much revenue do you want to make next year?
- What products or services do you want to introduce, update or sell?
- What is your business mission for the new year?
- What do you need to reach your business goals and execute your plan of action?
- Who do you need to reach out to as a center of influence or ambassadors for your business?
These are just a few questions to ask yourself to get started on creating your plan for the new year.
Invest in Your Professional Development
Profitable business owners never stop learning. Professional development is essential to being a successful business owner. Invest in professional development events like, webinars, seminars, certifications, coaching, conferences like Women Entrepreneurs Rock in November or networking events like BOSS Brunch. Attending these types of events will be the best investment in your professional development, which will yield the highest return as a business owner.
Invest in Your Self Care
Business owners spend so much time building their business and taking care of their families that they forget or neglect to take care of themselves. As stated in article, “5 Kick A$$ Biz Tips I Learn from the Women and Money Event at #FinCon16,” there is a reason why the first instruction when we fly a plane is to “put your oxygen mask on first.” Taking care of yourself is crucial to your business and personal success. Make sure to invest in your self-care so that you can rejuvenate, repair and replenish our mind, body, and soul so you can reach your business goals.
Invest in Your Business
It’s time to step up your game for the new year! Invest or reinvest a portion of your earnings back into your business. Whether it is to create or update your website and marketing materials or to revamp your brand or build your business reverses (savings), investing in your business is the key to business longevity.
Invest in Building Relationships
It’s not only about prospecting and finding customers or clients. It is about building relationships with people that will refer your products or services to people they know. These awesome people are called “Centers of Influence.” These people may never buy your products or services, but they like, know and trust you enough to refer you to their family, friends, colleagues or customers. Begin the process of building relationships with centers of influence so that you can create an endless stream of referrals.
Invest in Your Future
Most business owners spend most if not all of their business income in building their business that they forget to create an exit strategy. During the next ninety days, speak with a financial professional to discuss how to invest in your future and plan for the longest vacation of your life, retirement. Putting a little something away for your future will put you in a better position than doing nothing at all.
Invest in Your Family
Motivational Speaker and Business Owner, Cheryl Wood, shares her story about how she spent all day giving her job and customers the best of her, but when she got home, she gave her family the worst of her. They got the tired, irritable, impatient, grumpy, hate-my-job, miserable side of her. I’m sure that most of us can relate to what Cheryl was going through because we are probably doing the same thing. We love our families, but sometimes they get the worst part of us. Make time for and spend time with your family. Schedule a family game or movie night, picnic in the park, mini staycation or just dinner together at the dinner table. It’s all about quality! Invest in your family because they are your support system and your biggest cheerleaders. And in this business owner game, we need all of the cheerleaders we can get.
What are some other BOSS Investments we should execute in 4th quarter? Comment below.
This post was proofread by Grammarly
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