But sometimes it might seem more convenient (or economical) to rent rather than buy. Here are two things to consider if you’re looking to buy a house instead of renting.
How long will you live in the house?. When you own a home, the hope is generally that it will increase in value and that you would be able to sell it for more than you bought it. The best way to do that is to plan to stay in your house for the long haul. So if you’re looking to remain in an area for a while and put down roots, buying a house is a strong consideration.
But let’s face it, not everyone is in that position. Maybe you’re young and hopping from opportunity to opportunity. Perhaps your job requires you to travel frequently or change locations. You might just prefer discovering new, exciting places and not being tied down. Unless you plan on renting out your property, it may not make sense for you to buy. Renting might give you more flexibility to move about as you please!
Can you afford to buy a house? So you want to settle down in a city or a certain neighborhood for the foreseeable future. Does that automatically mean you should buy a house?
Well, maybe not.
You simply may not be able to afford a house right now. Do you have significant debt in student loans or a car? Have you been able to save up enough for closing costs and a down payment? Mortgages might be cheaper than rent at certain times, but that might flip-flop before too long. Are you ready to maintain your house or pay for unexpected damages? These are all questions to ask before you decide to become a homeowner.
Still weighing your homeownership options? Let’s talk. We can review your situation and see if now is your time to buy!
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.
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!
¹Jeremy Vohwinkle, “Make a Personal Budget in 6 Steps: A Step-by-Step Guide to Make a Budget,” The Balance (March 6, 2020).
It’s in style; and it makes sense—and cents? Gigs are now just a click or tap away on most of our devices, and a little extra money never hurts! Here are a few things to consider when starting up a side hustle.
What are your side hustle goals? We typically think of a side hustle as being an easy way to score a little extra cash. But they can sometimes be gateways into bigger things. Do you have skills that you’d like to develop into a full time career? A passion that you can turn into a business? Or do you just need some serious additional income to pay down debt? These considerations can help you determine how much time and money you invest into your gig and what gigs to pursue.
What are your marketable skills? Some gigs don’t require many skills beyond a serviceable car and a driver’s license. But others can be great outlets for your hobbies and skills. Love writing? Start freelancing on your weekends. Got massive gains from hours at the gym and love the outdoors? Start doing moving jobs in your spare time. You might be surprised by the demand for your passions!
Keep it reasonable. Burnout is no joke. Some people thrive on 80 hour work weeks between jobs and side hustles, but don’t feel pressured to bite off more than you can chew. Consider how much you’re willing to commit to your gigs and don’t exceed that limit.
One great thing about side hustles is their flexibility. You choose your level of commitment, you find the work, and your success can depend on how much you put in. Consider your goals and inventory your skills to get there—and start hustling!
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.
Many of us treat it like a guilty pleasure and almost take a little pride in our extravagant purchases, even seeing it as “self-care”. But there’s also a part of us that knows we’re not being wise when we senselessly spend money.
So how do we resolve that tension between having fun and making good decisions? Here are a few ideas to help you splurge responsibly!
Budget in advance. “Responsible splurging” might seem like a contradiction, but the key to enjoying yourself once in a while and staying on track with your financial strategy is budgeting. Maintaining a budget gives you the power to see where your money is going and if you can afford to make a big/last-minute/frivolous purchase. And when you decide that you’re going to take the plunge, a budget is your compass for how much you can spend now, or if you need to wait a little longer and save a little more.
Beware of impulse purchasing. The opposite of budgeting for a splurge is impulse buying. We’ve all been there; you’re scrolling through your favorite shopping site and you see it. That thing you didn’t know you always wanted—and it’s on sale. Just a few clicks and it could be yours!
Tempting as impulse buying might be, especially when there’s a good deal, it’s often better to pause and review your finances before adding those cute shoes to your cart. Check your budget, remember your goals, and then see if that purchase is something you can really afford!
Do your research. Have you ever spent your hard-earned money on a dream item, even if you budgeted for it, only to have it break or malfunction after a few weeks? Even worse, it might have been something as significant as a car that you wound up trying to keep alive with thousands of dollars in maintenance and repairs!
That’s why research is so important. It’s not a guarantee that your purchase will last longer, but it can help narrow your options and reduce the chance of wasting your money.
Responsible splurging is possible. Just make sure you’re financially prepared and well-researched before making those purchases!
Paying off your mortgage, car, and student loans can sometimes seem so impossible that you might not even look at the total you owe. You just keep making payments because that’s all you might think you can do. However, there is a way out! Here are 4 tips to help:
Make a Budget. Many people have a complex budget that tracks every penny that comes in and goes out. They may even make charts or graphs that show the ratio of coffee made at home to coffee purchased at a coffee shop. But it doesn’t have to be that complicated, especially if you’re new at this “budget thing”.
Start by splitting all of your spending into two categories: necessary and optional. Rent, the electric bill, and food are all examples of necessary spending, while something like a vacation or buying a third pair of black boots (even if they’re on sale) might be optional.
Figure out ways that you can cut back on your optional spending, and devote the leftover money to paying down your debt. It might mean staying in on the weekends or not buying that flashy new electronic gadget you’ve been eyeing. But reducing how much you owe will be better long-term.
Negotiate a Settlement. Creditors often negotiate with customers. After all, it stands to reason that they’d rather get a partial payment than nothing at all! But be warned; settling an account can potentially damage your credit score. Negotiating with creditors is often a last resort, not an initial strategy.
Debt Consolidation. Interest-bearing debt obligations may be negotiable. Contact a consolidation specialist for refinancing installment agreements. This debt management solution helps reduce the risk of multiple accounts becoming overdue. When fully paid, a clean credit record with an extra loan in excellent standing may be the reward if all payments are made on time.
Get a side gig. You might be in a position to work evenings or weekends to make extra cash to put towards your debt. There are a myriad of options—rideshare driving, food delivery, pet sitting, you name it! Or you might have a hobby that you could turn into a part-time business.
If you feel overwhelmed by debt, then let’s talk. We can discuss strategies that will help move you from feeling helpless to having financial control.
This post is not so much about a list of pros and cons as it is about one big pro and one big con concerning simple interest accounts. There are many fine-tooth details you could get into when looking for the best ways to use your money. But when you’re just beginning your journey to financial independence, the big YES and NO below are important to keep in mind. In a nutshell, interest will either cost you money or earn you money. Here’s how…
The Pro of Simple Interest: Paying Back Money
Credit cards, mortgages, car loans, student debt – odds are that you’re familiar with at least one of these loans at this point. When you take out a loan, look for one that lets you pay back your principal amount with simple interest. This means that the overall amount you’ll owe will be interest calculated against the principal, or initial amount, that was loaned to you. And the principle decreases as you pay back the loan. So the sooner you pay off your loan, you’re actually lowering the amount of money in interest that you’re required to pay back as part of your loan agreement.
The Con of Simple Interest: Growing Money
When you want to grow your money, an account based on simple interest is not the way to go. Setting your money aside in an account with compound interest shows infinitely better results for growing your money.
For example, if you wanted to grow $10,000 for 10 years in an account at 3% simple interest, the first few years would look like this:
In a simple interest account, the 3% interest you’ll earn is a fixed sum taken from the principal amount added to the account. And this is the amount that is added annually. After a full 10 years, the amount in the account would be $13,000. Not very impressive.
But what if you put your money in an account that was less “simple”?
If you take the same $10,000 and grow it in an account for 10 years at a 3% rate of interest that compounds, you can see the difference beginning to show in the first few years:
At the end of 10 years, this type of account will have earned more than the simple interest account, without you having to do any extra work! And that’s not even considering adding regular contributions to the account over the years! Just imagine the possibilities if you can get a higher interest rate and combine that with a solid financial plan for your future.
One final thought: Simple isn’t always the way to go, and that can be a good thing.
Just don’t ask Judy Marretta, formerly Judy Hillman, about it! When her ex-husband, Warren Hillman, passed away after a battle with a rare form of leukemia, she was the one who got the life insurance check. Warren’s widow didn’t see a penny of it–even the Supreme Court ruled in Marretta’s favor!
Why? When Warren remarried, he never changed the beneficiary designation on his life insurance policy.
All that time and money wasted on legal battles could have been avoided by changing a name on a form! Speaking of which… When’s the last time you reviewed your own life insurance policy? After reading this, you may already be scrambling through your files to find it!
Let’s check up on your policy together. Contact me today, and we can get the ball rolling on:
Discover the full story here… Forbes: “Supreme Court Favors Ex-Wife Over Widow In Battle For Life Insurance Proceeds.” 6.3.2013
It might not feel like it, but getting paid hourly can limit your professional growth and your income potential. Here’s how…
If you’re earning an hourly wage, you’re quite literally getting paid for your time. That’s why it’s so common for shift jobs like security guards, restaurant workers, and retail employees to be paid by the hour. And it makes sense—they’re literally paid to be present (to get work done) at their place of employment for a limited number of hours each week.
But there are two ceilings you’ll hit with this system. First, you only have so many hours you can work. Let’s say you earn $15 an hour. If you could somehow work 24 hours a day, 7 days a week for a full year, the maximum you could earn is $131,040.
But if we’re realistic, earning $15 per hour, working 40 hours per week with no time off, would get you less than a fourth of that, roughly $31,200.
Is that $31,200 worth it to you? With an hourly system, that type of trade-off is unavoidable.
Second, hourly wages don’t encourage efficiency. The more hours you punch in, the more you get paid. If you’re working in a project or sales-oriented field, that means you’re incentivized to drag your feet. Even worse, you’re actually punished for increasing your speed and ability!
What if you got paid by the project or sale? Getting paid this way, once you’ve finished one project or made a sale, you could move on to the next. The faster you complete your work, the more money you can potentially earn. Your income scales as your ability improves!
Hourly wages are acceptable if you’re starting out. But there will come a point where you’ll need a better compensation structure to grow your income. Either seek salaried work, or consider starting a business that pays by the job or by retainer. You may be surprised by the difference it makes for your cash flow.
Parents, you may be better positioned to build a legacy for your children than you think. That’s because if you leverage basic financial concepts and strategies, you might be surprised by how attainable a sizable inheritance is! Here are four ways you can help your child build wealth.
Save a nest egg for your child’s retirement. Do you have a million dollars lying around to give to your child? Probably not. But you have something that’s even more valuable—time.
What if the moment your child was born you put $13,000 in an account earning 6.5% interest? By the time they turn 67—even if you don’t add anything else to that account—it would be worth $1,000,000. That cash could make all the difference for your child’s financial future. To make the most of this strategy, meet with a licensed and qualified financial professional before your child is born. They can help you make the preparations to put it into place.
Start saving for college. A college education is a huge expense, and it’s one that will only increase in cost. So what should you do to prepare for this future burden?
Start saving as soon as your child is born! The same principle applies—the sooner you start saving, the greater your potential for growth. Once again, collaborate with a financial professional before your child is born to maximize this strategy.
Adjust your emergency fund. Nothing can derail well-laid financial plans quite like an unforeseen emergency. And nobody seems to attract unforeseen emergencies quite like kids!
That’s why it’s important to create an emergency fund to cover 3-6 months of income. It’s a time-proven line of defense that can protect you from dipping into your savings or going into debt to cover home repairs or midnight ER visits!
Create a will. Finally, it’s important to consider estate planning. Why? Because it ensures that your wealth and assets are passed down to your children. It’s a final and meaningful way to provide for your family, even if you’re not with them physically. Proper planning can also help shield them from the complexity of estate taxes and the burden of the probate system.
Leaving a financial legacy is far more doable than you may have imagined, and the time to start preparing is NOW. Collaborate with a licensed and qualified financial professional as soon as possible. They’ll point you towards practical steps you can take to start building wealth for your children today.
Let’s explore some situations where using your credit card makes sense…and what pitfalls to avoid.
You’re strategically leveraging rewards. It’s perfectly possible to reap the benefits of cash back rewards without going into debt to earn them. How? Try using your credit card just for everyday purchases like gas and groceries. If you don’t overspend, you’re essentially getting paid for using your card.
But that’s the trick. Those rewards can make it tempting to buy things you don’t need. It’s easy to justify excess purchases if you’re earning those extra points! But in the long-term, the rewards won’t outweigh the costs and risks of overusing a credit card. So if you think you can thread the needle of responsibly using a credit card to leverage points without overspending, go for it!
You’re making significant online purchases. The simple fact is that there are serious rewards—and protections—when you use your card for online purchases. This is especially true for travel. Some cards offer specific rewards for booking hotels or plane tickets that you should certainly take advantage of. There are also some protections for online purchases that credit cards offer. Once again, don’t plan a fancy vacation just to take advantage of rewards. But if you need to travel, you might as well get any benefits coming to you!
Wisely using credit cards is a matter of self-control. If you can take advantage of rewards and protections without overspending, good for you! For others, however, it may be wise to avoid cards altogether while they pay down their debt.
Not sure which strategy is best for you? Contact a licensed and qualified financial professional. They can help evaluate your situation and make a recommendation.
The older Gen Zers have just come out of college, but this group’s imprint on society is already clear. You might be surprised by their attitude towards money and wealth! Let’s explore how these digital natives interact with money and why their financial habits might be influencing your business strategy.
Social media is an integral part of their world. They spend more time on their phones, tablets, and laptops than any other generation. The iPhone was old news by the time younger Gen Zers were born. This generation needs a whole new set of rules for how they shop and find financial advice.
For instance, Gen Zers are 72% more likely to buy from brands they follow on social media.¹ And there’s been an explosion of financial advice–not all of it good–on TikTok—#personalfinance has 3.5 billion views on the platform.² So if you’re interested in not just understanding Gen Zers, but also getting their attention, it pays to keep up with social media trends.
Gen Zers have yet to accrue massive debt. Gen Zers have thus far avoided the traps of credit card and student loan debt that have burdened every generation before. The numbers aren’t stellar–on average, Gen Zers have over $10,000 in non-mortgage debt–but that’s just a fraction of the debt carried by the typical Millennial or Gen Xer.
Of course, Gen Zers haven’t had as much time to accrue debt. It could well be that in 10 years they have just as many student loans and high credit card balances as older generations. But there is hope! Why?
Gen Zers are avid budgeters. 68% of Gen Zers use some form of budgeting system.³ Only 41% of the general population can say the same.⁴ That’s a massive improvement! If Gen Zers can use their budgets to avoid massive debt, they could find themselves well positioned financially.
In other words, Gen Z is hungry to learn how money really works. They’re already taking steps to avoid the missteps of past generations. The real question is who will teach them what it takes to become wealthy?
¹ “Generation Z Spending Habits for 2021,” Lexington Law, Feb 8, 2021, https://www.lexingtonlaw.com/blog/credit-cards/generation-z-spending-habits.html
² “Viral or vicious? Financial advice blows up on TikTok,” Nicole Casperson, InvestmentNews Feb 15, 2021, https://www.investmentnews.com/financial-advice-blows-up-on-tiktok-but-at-what-cost-202260#:~:text=That%27s%20what%20financial%20advice%20is,form%20of%2060%2Dsecond%20videos.
³ “Generation Z Spending Habits for 2021,” Lexington Law, Feb 8, 2021, https://www.lexingtonlaw.com/blog/credit-cards/generation-z-spending-habits.html
⁴ “What Is a Budget and Why Should I Use One?,” Tim Stobierski, acorns, Sep 6, 2019, https://www.acorns.com/money-basics/saving-and-budgeting/budget-meaning/#:~:text=While%20many%20factors%20likely%20contribute,budget%2C%20according%20to%20U.S.%20Bank.
Do you ever feel like no matter how much money you make, it never seems like enough? You’re not alone. A recent survey found that more than half of middle-income families didn’t have three months of expenses saved.¹ Debt and spending can be out of control for many reasons—the economy, our upbringing, or even because we’re hardwired to want more. This article explores three bad habits that may be hurting your financial situation. You might be surprised by what they are!
Treating credit cards like free money. When you’re tempted to buy something and don’t have the cash, it’s easy to just use credit. But instant gratification can have serious consequences. Little by little, you may find yourself racking up more and more debt. Paying your monthly credit card bill can start requiring all of your cash flow… and maybe more. Yikes.
The solution? Limit your credit card usage as much as possible. Make a habit of only using your credit card for certain low-dollar items, like gas. If you can’t buy your impulse purchase in cash, go home!
Trying to buy happiness. It’s tempting to think that you’re going to be happy if you buy one thing or another. But what happens when the newness wears off? Suddenly, you have a closet full of clothes and shoes that really aren’t making you any happier! The same is true of houses, cars, gadgets, anything you can think of. Buying things to keep up appearances or just because you think they’ll make you fulfilled is a recipe for overspending on things that, ultimately, don’t matter.
The key is to find happiness beyond your material possessions. That’s no small task, and there’s no set road map for it. But it’s absolutely critical to find a source of meaning that isn’t tied to stuff and things. You could be happier—and more financially stable—for it.
Ignoring your financial situation. Let’s face it—finances can be scary! Overwhelming debt, paying for college, and feeling out of your depth are uncomfortable emotions. And ignoring and denying uncomfortable feelings is often a first line of defense.
But it’s a dangerous game. Ignoring what the numbers tell you can lead you deeper and deeper into financial instability. You could be setting up a much harder path for yourself in the future than if you tackled your financial situation now.
Tackling your financial fears isn’t always easy. It might require serious soul searching. Just know these three things…
Acknowledging the problem is the first step. Once you can admit that your finances need help, you’re ready to start making positive changes.
Seeking help is always wise. Whether it’s a friend, spouse, qualified counselor, or financial professional, enlisting help can give you the courage you need to face your fears.
You can do this! It might not feel like it, but you have what it takes to confront this challenge… and win! Don’t lose hope, and start moving forward.
Managing your money wisely requires more than knowing different techniques and strategies. It takes maturity. The more you invest in making improvements to your life overall, the better emotionally equipped you’ll be to navigate the world of personal finances.
¹ “A year after COVID, personal finances are not so grim for millions of Americans,” Jessica Menton, USA TODAY, Apr 9, 2021, https://www.usatoday.com/in-depth/money/2021/04/09/irs-stimulus-check-2021-third-covid-payment-unemployment-benefits/7015277002/
You know, one where you felt as if all your energy was being drained from the moment you walked in until the moment they kicked you out. Maybe it was a bad boss, or just something about the industry or type of work.
This article will help you evaluate whether or not your current career path is worth pursuing by considering the opportunity cost of staying where you are versus leaving to pursue your dreams.
First off, what is opportunity cost? It’s an economic term which refers to the benefit that a person must give up in order to attain something else. Typically, it’s calculated in dollars. For instance, career A might pay you $50,000 while career B may pay only $30,000. The opportunity cost of choosing career B would be $20,000.
But here’s the catch—there are factors beyond pay that you must consider when choosing a career.
What if earning boatloads in your career requires dedicating all your waking hours to that endeavor? Are you sacrificing your joy, freedom, or even mental health just for a paycheck? The opportunity cost of your career and salary might be your joy, your freedom, your family, and your state of mind!
So when considering a job or a career, weigh ALL the costs. Will your career consume your time, distract you from your true passions, and impair your mental health, all in exchange for a fat paycheck? Or will it enrich your life, use your time wisely, and allow you to make enough money without sacrificing the joys of family and friends?
And – perhaps the most difﬁcult to believe of them all – the world hotdog eating record stands at 75 dogs in 10 minutes.⁴ I apologize ahead, but just visualize that. Seven hotdogs down the hatch every minute.
Here’s another number that’s almost beyond comprehension: 64% of Americans have less than $10,000 in retirement savings.⁵ You read that correctly. Substantially over half of Americans will reach what should be the finish line of their careers and have almost nothing to show for it. They’ll be forced to either downsize their dreams or trade a retirement on a beach for more hours in a cubicle.
Why share these hard to believe numbers? To motivate you – at whatever age you are today – that you can start saving more right now. If you want to have a million dollars at the age of 65, how much do you need to start saving every month? That depends on your current age. If you’re 25, you’ll need to save a minimum of $158.12 per month. At 35, the amount jumps to $442.00 per month. At 45, it’s $1,317 monthly. At 55, you’ll have to save $4,882.00 per month. And at 60, you’d have to save $12,913.00 every month.
How much do you need to save to hit your goals? What’s the right ﬁnancial vehicle to help you do it? Getting the answers to these questions right is absolutely critical. Don’t wait to ﬁnd the answers. Contact me, and let’s get to work on a strong insurance strategy.
¹ “The Top 20 Valuable Facebook Statistics – Updated October 2020,” Dan Noyes, Zephoria, https://zephoria.com/top-15-valuable-facebook-statistics/
² “How Many iPhones Have Been Sold Worldwide? – iPhone Sales Analyzed,” Damjan Jugovic Spajic, Kammando Tech, February 11, 2020, https://kommandotech.com/statistics/how-many-iphones-have-been-sold-worldwide/#:~:text=The%20latest%20data%20shows%20that,have%20been%20sold%20so%20far.
³ “Marketing Metrics: Daily Searches on Google and Useful Search Metrics for Marketers,” Kenshoo, Feb 25, 2019, https://kenshoo.com/monday-morning-metrics-daily-searches-on-google-and-other-google-facts/#:~:text=Although%20Google%20does%20not%20share,That’s%20a%20lot%20of%20searches!
⁴ “Hall of Fame,” Nathan’s Famous, https://nathansfamous.com/hot-dog-eating-contest/hall-of-fame/
⁵ “21+ American Savings Statistics to Know in 2021,” Milan Urosevic, SpendMeNot, Mar 25, 2021, https://spendmenot.com/blog/american-savings-statistics/
It can help you save money, stay on top of your finances and even reach financial goals. But how do you know if your budget will work for you? To help determine that, you’ll need to consider two things: if category groupings make sense for your family, and whether the amounts allotted for those categories are reasonable.
For instance, is your entertainment category too inclusive and/or is the amount too high? Does it include money to cover gifts for friends’ birthdays or other events, or just what’s needed for your own entertainment, like streaming services or concerts? Having categories that are too inclusive or vague may tempt you to overspend on certain items.
And there’s another danger—maybe the amount assigned to your entertainment category is too low and you’ve budgeted all the fun out of your life! If your budget is too strict, you may not feel like you can enjoy going out to eat or buying something special for the kids once in a while. You may feel like you’re always saying “no” to your friends and family.
But if you have too many “nitpicky” categories, you may feel overwhelmed and frustrated trying to keep up with all of them each month.
It’s important that your budget is realistic and works for you and your family’s unique situation. If it doesn’t, you may find yourself getting discouraged and giving up!
So when you’re creating your budget, keep in mind there are other alternatives to spending a lot of money. For entertainment for example, explore creative and cheap ways to have fun with your family. Organize a park day, go on a hike, or visit a free museum.
It’s also important to be flexible. If you’re going out with friends, don’t feel like you have to buy the cheapest item on the menu! And when someone suggests doing something that isn’t on budget but sounds fun, don’t say no right off the bat—see if you can work within your limitations or cut back somewhere else.
In conclusion, definitely budget! Just don’t make your budget a chore or painful to stick with.
You have a chance to make your life even better with this gift. However, it’s important to handle it wisely so you don’t create any regrets down the line!
Pay down debt. Receiving a sudden windfall is the perfect opportunity to take a chunk out of any credit card debt or student loans that are hanging over you. You may even be able to pay off your car or house!
The simple fact is that debt wears down your ability to build wealth. Using your inheritance to help pay off your loans can position you to start building wealth sooner rather than later.
Build your emergency fund. Having cash on hand can be a game-changer. It empowers you to tackle emergencies like a child’s broken arm, an unexpected car repair, or even short-term unemployment—without turning to debt.
If you don’t have three months of expenses saved, consider using your inheritance to create some financial peace of mind for your family by setting up an emergency fund.
Save for retirement. Now that you’ve covered your bases, you can start using your inheritance to start building wealth for the future. As soon as you can, meet with a licensed and qualified financial professional to start developing a strategy that will make your money work for your future!
Fund your kids’ college education. College is pricey. Whether your children are very young or almost at university age, now is a good time to start saving for college. Once again, it’s best to meet with a financial professional to decide the best way to go about funding your child’s education.
Finally, have fun! You’ve done the hard work of getting rid of debt and building your emergency fund. Now that you have a college education and/or your retirement savings strategies in place, there’s no reason not to splurge on something fun with your inheritance! Just be sure that your fun doesn’t send you back into debt or dip into your emergency fund!
And that’s normally when your emergency fund would kick in. But what if you don’t have an emergency fund? Or what if there isn’t enough money in it to cover your current catastrophe? If you find yourself in this situation, you might consider applying for a personal loan to close the gap—but should you?
The simple answer? Probably not.
Starting with the basics—what is a personal loan? A personal loan is an unsecured debt that allows people or companies in need of money to borrow funds from lenders for any reason including but not limited to…
- Home improvements - Medical expenses - Debt consolidation
These loans are often set up for a short period of time with fixed monthly payments.
There are pros and cons to any form of debt. Personal loans are no different—they have their own set of benefits and drawbacks.
Personal loans can offer lower interest rates than credit cards, which can help you save money on interest payments. That can make them useful for consolidating other high interest rate loans.
However, personal loans can come with higher fees and significant interest rates. And for most financial emergencies, personal loans simply aren’t your best option. For instance, if you’re struggling with medical debt, you should first consider negotiating with your doctor’s office for more favorable payment terms first.
It’s not advisable to use a personal loan to make a large purchase, like a new TV, either. If you’re using the money for anything other than a last resort for emergencies or debt consolidation, it’s probably not worth it and could end up costing you more in interest payments down the road.
In conclusion, personal loans can be useful in specific circumstances or if you’re at the end of your financial rope. But they shouldn’t be your first option. Making sure you’ve got a sufficient emergency fund in place, a well-thought-out budget, and a solid savings strategy set up as soon as possible may help avoid the need for a loan and create more debt.
It’s a natural instinct to avoid tasks that seem overwhelming. But not preparing adequately for retirement can have serious consequences—you may find yourself rapidly approaching that time in your life with little saved!
Here are two simple, actionable steps that can help you overcome the intimidation of saving and move you closer towards your financial goals.
Save 15% of your income. This is a good rule to follow for the long term, but it may not be realistic all the time. Elderly parents living with you? A child going through college? If saving 15% feels impossible or overwhelming, start by setting aside something more manageable. Saving 1% of your income may not feel like much, but it’s far better than putting away nothing! And once you get used to saving, you might be surprised by how eager you are to increase that percentage.
Automate savings so they happen without any effort on your part. Set up an automatic monthly transfer from your checking into your savings accounts. This way, you’ll never have to worry about forgetting or neglecting your savings. It’s helpful to schedule the transfer right after you get paid. This technique, called “paying yourself first”, results in your paycheck helping to build wealth for you, and not someone else!
It’s never too early–or too late–to start saving for retirement. The earlier you begin, the more time your money has to grow and compound over a lifetime. And even starting closer to retirement is still better than never starting at all! Begin with these two techniques, and develop your strategy from there.