If something unexpected were to happen, do you have enough savings to get you and your family through it and back to solid ground again?
If you’re not sure you have enough set aside, being blindsided with an emergency might leave you in the awkward position of asking family or friends for a loan to tide you over. Or would you need to rack up credit card debt to get through a crisis? Dealing with a financial emergency can be stressful enough – like an unexpected hospital visit, car repairs, or even a sudden loss of employment. But having an established Emergency Fund in place before something happens can help you focus on what you need to do to get on the other side of it.
As you begin to save money to build your Emergency Fund, use these 5 rules to grow and protect your “I did not see THAT coming” stash:
1) Separate your Emergency Fund from your primary spending account. How often does the amount of money in your primary spending account fluctuate? Trips to the grocery store, direct deposit, automatic withdrawals, spontaneous splurges – the ebb and flow in your main household account can make it hard to keep track of the actual emergency money you have available. Open a separate account for your Emergency Fund so you can avoid any doubt about whether or not you can replace the water heater that decided to break right before your in-laws are scheduled to arrive.
2) Do NOT touch this account. Even though this is listed here as Rule #2, it’s really Rule #1. Once you begin setting aside money in your Emergency Fund, “fugettaboutit”… unless there actually is an emergency! Best case scenario, that money is going to sit and wait for a long time until it’s needed. However, just because it’s an “out of sight, out of mind” situation, doesn’t mean that there aren’t some important features that need to be considered for your Emergency Fund account:
You definitely don’t want this money to be locked up and/or potentially lose value over time. Although these two qualities might prevent any significant gain to your account, that’s not the goal with these funds. Pressure’s off!
3) Know your number. You may hear a lot about making sure you’re saving enough for retirement and that you should never miss a life insurance premium. Solid advice. But don’t pause either of these important pieces of your financial plan to build your Emergency Fund. Instead, tack building your Emergency Fund onto your existing plan. The same way you know what amount you need to save each month for your retirement and the premium you need to pay for your life insurance policy, know how much you need to set aside regularly so you can build a comfortable Emergency Fund. A goal of at least $1,000 to three months of your income or more is recommended. Three months worth of your salary may sound high, but if you were to lose your job, you’d have at least three full months of breathing room to get back on track.
4) Avoid bank fees. These are Emergency Fund Public Enemy No. 1. Putting extra money aside can be challenging – maybe you’ve finally come to terms with giving up the daily latte from your local coffee shop. But if that precious money you’re sacrificing to save is being whittled away by bank fees – that’s downright tragic! Avoid feeling like you’re paying twice for an emergency (once for the emergency itself and second for the fees) by using an account that doesn’t charge fees and preferably doesn’t have a minimum account balance requirement or has a low one that’s easy to maintain. You should be able to find out what you’re in for on your bank’s website or by talking to an employee.
5) Get started immediately. There’s no better way to grow your Emergency Fund than to get started!
There’s always going to be something. That’s just life. You can avoid that dreaded phone call to your parents (or your children). There’s no need to apply for another credit card (or two). Start growing and protecting your own Emergency Fund today, and give yourself the gift of being prepared for the unexpected.
¹ “Nearly 25% of Americans have no emergency savings,” Quentin Fottrell, MarketWatch, Jun 9, 2020, https://www.marketwatch.com/story/nearly-25-of-americans-have-no-emergency-savings-and-lost-income-due-to-coronavirus-is-piling-on-even-more-debt-2020-06-03
There are plenty of extravagant solutions—a gambling spree in Vegas, buying a boat, or shopping only at designer stores would probably do the trick!
But there are less obvious ways to retire with less. There are subtle misteps that may not lead to financial trainwrecks, but may still result in retiring with less. Here are a few!
Never start saving for retirement. The same is true for every undertaking. The easiest way to torpedo your music career? Never practice. It’s unwise to expect your retirement to be financially sound if you don’t start preparing and saving for it today. Starting is the most important step in your journey!
Buy a house you can’t afford. Few things will consume your cash flow and ability to build wealth more than a house that’s out of your budget. Mortgage payments, emergency repairs, and renovations can be costly even after extensive planning and saving. These expenses can scuttle your ability to build wealth if you end up becoming “house poor”.
Buy things you don’t need. Make no mistake—there’s a place for splurging and treating yourself. But there’s a point where buying more stuff simply weighs you down, both emotionally and financially. And if you’re using debt to keep shopping, you might be setting yourself up for less in retirement.
Be afraid of change. It’s incredibly difficult to pursue better opportunities if you fear change. Improving your financial situation, by definition, requires you to do something different, whether it’s spending less or changing careers. Unless you’re already on track for retirement, a fear of change can hinder your ability to reach your goals and live your dreams.
Never learn how money works. This is the easiest item on the list to avoid. Most people are never taught what their money can actually do and how to build wealth. But it can have serious consequences for your future. Not knowing how money works can prevent you from using critical tools like the Rule of 72 and the Power of Compound Interest to detect both bad deals and wealth building opportunities.
If any of these rung a bell with you, contact me. We can discuss strategies to start preparing for retirement, cut your spending, and find opportunities to increase your income!
If your family’s quality of life were suddenly threatened, you’d step in, wouldn’t you? Of course you would!
Having a well-thought-out, tailored-to-you life insurance policy is a way to preemptively and proactively protect your family’s quality of life.
Here’s an eyebrow raiser: 36% of people surveyed intended to buy life insurance at some point, but only 54% actually have coverage!¹ Despite people’s good intentions, ownership is actually decreasing.
Here’s an eyebrow lowerer: Life insurance can be thought of as a financial safety net. One that gives your family the time and space to recover and rebuild in the event of trying financial circumstances.
Odds are, you already think life insurance is a good idea. But waiting until tragedy or a sudden loss of income strikes is waiting too long to consider the benefits of life insurance.
Give me a call or shoot me an email, and together we can take your unique circumstances into consideration and put together a life insurance policy that fits your needs.
“2020 Insurance Barometer Study Reveals a Significant Decline in Life Insurance Ownership Over the Past Decade,” LIMRA, Jun 2, 2020, https://www.limra.com/en/newsroom/news-releases/2020/2020-insurance-barometer-study-reveals-a-significant-decline-in-life-insurance-ownership-over-the-past-decade/
Your degree is in your hands and the world is now your oyster. If there’s one thing you should know, it’s that life after graduation isn’t all about partying with friends and family until next summer rolls around again. No, it’s time to start building wealth!
That’s because you have a secret weapon at your disposal—time.
Your money has the potential to grow via the power of compound interest. The longer your savings accrue interest, the more potential they have to grow.
Let’s say you’re 22 and fresh out of college. You’re able to save just $160 monthly in an account earning 9% interest. After 45 years, you would have grown over $1 million!
And, as your income rises, you can increase your savings rate and level up your goals.
But how can you save $160 per month?
It’s pretty straightforward—you should at least implement a budget ASAP, and maybe even start up a side gig. These are simple ways to decrease unnecessary spending and earn more money that can go towards wealth building.
If you want to learn more about building wealth reach out to financial professional you trust and schedule an appointment! They may have the knowledge and expertise to help you start on the path towards financial indepedence.
You get to relax and do whatever you want, whenever you want, with whomever you want. But it’s important not to forget about your finances AFTER retirement; here are wise financial moves that retirees should consider once they decide to quit working for good.
Get your will in order. You’ll be ahead of the game if you do—68% of Americans have no estate plan in place!¹ The simple truth is that preparing a will can help ensure that your money goes where you want it to go and save your family a financial headache. If you’re retired and haven’t created a will, do it today!
Plan for long-term care expenses. Why? Because there’s a strong chance you’ll need it—60% of people will need some form of LTC in their lives.² And it can be costly, possibly running into the tens of thousands of dollars. If you’re about to retire or have already retired, consult with a licensed and qualified financial professional about your options for this critical line of financial defense.
Pay off your mortgage! And, if you’ve played your cards correctly, you should be close to paying off your mortgage by the time you retire. Eliminating your home payments may free up a considerable amount of cash for you to spend on your other bills and your retirement lifestyle.
Consider downsizing your home to a smaller property or RV. That is of course, unless you have a huge family you regularly plan on entertaining! But for many, retirement is a perfect opportunity to move into a smaller, easier to manage home.
And if you’re the adventurous type, why not buy an RV? It’s a great way to travel and explore the country now that you’re moving into a new phase of life.
If you’re retiring, it doesn’t mean there aren’t a few key money moves left to be made. Consider these suggestions to be the cherry on top of your years of diligent work and savvy saving!
¹ “68% of Americans do not have a will,” Reid Kress Weisbord, David Horton, The Conversation, May 19, 2020, https://theconversation.com/68-of-americans-do-not-have-a-will-137686
² “What is Long-Term Care (LTC) and Who Needs it?,” LongTermCare.gov, Jan 4, 2021, https://acl.gov/ltc
These mistakes are often avoidable. But a parent who has the best intentions and lacks the knowledge needed to properly manage their finances may not recognize these errors until the damage has been done.
Here are 5 common financial mistakes every parent should be aware of!
1. Not saving for their children’s education. You know the numbers—it seems higher education is growing more and more expensive every year. So the time to start financially preparing for your child’s university years is today. Meet with a financial professional to discuss how you can pay for college without resorting to student loans!
2. Not saving for retirement. Skimping on your long-term savings might be tempting, especially if your budget feels stretched to the breaking point by the basic expenses of providing for your family!
But saving can support your long-term financial position. It gives you a shot to pay for your own retirement, it can reduce the impact of long-term care on your family, and it might even create a financial legacy to leave to your children.
3. Spending too much on credit cards. It’s not just parents. Many Americans overuse their credit cards. But it can be a little too easy to do for parents on tight budgets. Don’t have enough in cash to buy your child a new toy? Just put it on the card!
Unfortunately, credit cards can become a significant drain on your cash flow. And the less available cash you have on hand, the less you’ll be able to save for your other financial goals!
4. Buying a house they can’t afford. Make no mistake—your family needs space. You need space! Just make sure that the house you buy is actually within your budget. Mortgage payments can chip away at your cash flow and reduce your wealth building and education funding power. And don’t forget to factor in the cost of house maintenance before you move in.
5. Buying things they don’t need to impress other parents. You love your kids and want the best for them. That’s what makes you a great parent!
But be mindful of why you buy things for your family. Are you providing for your kids? Or are you simply trying to impress your friends and neighbors? Take care that you put the wellbeing of your family first, not the opinions of others.
If you need help navigating your financial responsibilities, contact me! We can discuss strategies that might give your family the upper hand they need to thrive.
This is how it works. At the beginning of every month, you withdraw in cash all the money you plan on spending. Then, you divvy up your money into envelopes that represent different budget categories. For example, if you’ve budgeted $100 for eating at restaurants for the month, place $100 cash into an envelope labeled “restaurants.” That’s what you’ve got to dip into when you go out to eat. You don’t have to think about it. It’s that simple!
Not convinced? Here are 6 advantages of adopting the cash envelope system!
1. It’s a great way to save money. The ultimate goal of using cash envelopes is to save money. It can be an effective system because it brings your budget out into the open and makes it tangible. It can help reduce the likelihood that you’ll break your system and overspend.
2. The cash envelope system is flexible. Regardless of your age or financial situation, the cash envelope system can help you manage your spending. Barring categories for investing or emergency savings, it empowers you to accurately track and visualize your daily expenses.
3. You can easily see where you’re overspending. Every envelope that’s empty before the end of the month is a category where you’re potentially overspending. You now know exactly where you need to cut back.
4. It helps keep your budget organized. Nothing takes the wind out of your financial strategy quite like an overly complex budget. The cash envelope system takes the guesswork out of your budgeting and let’s you know exactly how much you can spend on what categories, and how much you have left over.
5. Cash envelopes help reduce the risk of impulse purchases. Why? Because they require that all transactions are planned ahead of time. That means fewer unbudgeted and out of the blue treats, toys, and trips!
6. It’s a great way to teach your kids about money management. That’s right, the envelope system is simple enough to teach to your kids. Consider setting up envelopes to help them budget their allowance. You can even make it a fun family project and help them decorate their envelopes! Start with simple categories like saving, spending, and giving, and add more categories as time goes on.
If you need a budget that’s simple and can help save you money, cash envelopes may be for you! Identify your top spending categories, buy a few envelopes and label them, and then start filling them with cash. Let me know what results you see!
In fact, it can be a straightforward—and profoundly enlightening—exercise that reveals your available cash flow and where you can reduce spending.
Here’s your step by step guide to creating a simple budget!
Get a pen and paper (or laptop). You’ll need a place to write and crunch a few simple numbers. If you’re “old school”, a pen, piece of paper, and a calculator will work perfectly. But you can also use a text document or spreadsheet if you’d rather!
Also, consider using a budgeting app. They’re simple tools right on your phone that you can use to track your income and outgo.
Make a list of all your monthly expenses, including housing, utilities, groceries, and transportation. Then, log in to your online banking account. You should be able to determine your average monthly spending in all of your expense categories. Write down those numbers in your budget.
Add up how much you spend in each category. That’s your total average monthly spending!
Then, subtract that number from your income to calculate your average available cash flow. That’s how much money you have leftover each month to tackle debt, save for emergencies, or use to start building wealth.
If it’s a smaller number than you expected, it’s ok. You’ve taken a very important step to face reality and move forward financially! You now know what you’re spending each month, and on what. Look at categories like entertainment and dining out. Can you reduce your monthly spending in these areas?
If your budget is tight and cash still isn’t flowing as freely as you’d like, you may need to consider starting a side hustle or part-time business to help make up the difference.
Ask me if you need help constructing your budget. It’s a simple process that can seriously improve your financial wellness.
But when your budget is already tight, they might be hard to find! Read on for 5 simple strategies to save money that may surprise you…
Cook your own food instead of eating out. Eating at a restuarant is about 300% more expensive than cooking at home. For instance, a $12 dollar burger at your favorite spot would cost $4 to prepare in your kitchen.¹
The takeaway is clear—whenever possible, prep your own food. Search the internet for recipes you love, recruit friends and family, and start creating… and saving!
Use coupons and promo codes. There are two ways to take advantage of online coupons and offers.
First, download your favorite grocery store’s app. Look for the savings section and start clipping coupons to your phone. Simply scan the app the next time you buy groceries for some potentially serious savings.
Second, install a plugin, like Honey, onto your browser. It will seek out coupons and promo codes and automatically apply them to your online purchases!
Walk and bike whenever possible. Any opportunity you have to replace your car with your feet or pedals, take it. Doing this has the potential to save you money on both gas and repairs over the long haul. Taking public transportation can also be a wise move—it’s been shown to save $10,000 per household.²
Make your own coffee at home to save money on daily expenses. Making your coffee in a traditional coffee pot can potentially save you over $1,900 annually.³ There’s nothing wrong with splurging on a coffee shop drink every now and then. But try to incorporate brewing your own coffee into your daily routine and see how it impacts your savings.
Find free entertainment. It’s not impossible! Organize a group of friends to throw a frisbee or play tag football in a park. Visit a museum with your family on a free-entry day. Go for a long walk with your partner. You might be surprised by how much fun you can have for free.
Apply these tips and let me know how much you save! What are some money saving ideas you use when you’re on a tight budget?
¹ “The True Cost Of Eating Out (And How To Save),” Amy Bergen, Money Under 30, Feb 11, 2021, https://www.moneyunder30.com/the-true-cost-of-eating-in-restaurants-and-how-to-save#:~:text=By%20contrast%2C%20the%20average%20meal,%244%20meal%20you%20prepare%20yourself.
² “Public Transportation Facts,” American Public Transportation Association, https://www.apta.com/news-publications/public-transportation-facts/#:~:text=Public%20Transportation%20Saves%20Money&text=A%20household%20can%20save%20nearly,living%20with%20one%20less%20car
³ “Here’s How Much Money You Really Save by Making Coffee at Home,” Samantha Rosen, NextAdvisor, February 3, 2021, https://time.com/nextadvisor/banking/savings/save-money-by-making-coffee-at-home/
That’s why it’s crucial to learn how credit cards work before deciding whether or not to get one. Here are three important truths that everyone should know about credit cards.
Credit cards are NOT free money. You read that correctly. Every time you make a purchase with your credit card, you’re actually borrowing money. Lenders want you to pay that money back—and then some. Using your card for purchases outside of your budget or to buy expensive toys beyond your means can result in a stunning level of debt. But that’s not all…
Credit card debt can take years to eliminate. Credit cards are notorious for high interest rates, averaging 16.43% in the third quarter of 2020.¹ That makes paying down credit card debt especially difficult. In fact, it might take years to pay off some cards if you made the minimum payments alone. Limiting your usage and paying your bill on time every month is an absolute must if you’re going to use a credit card.
Credit cards can be a great way to build credit. But credit cards aren’t all bad! Consistently paying your bill on time and limiting your credit usage can indicate to future lenders that you ll be trustworthy with a loan. They may offer you more favorable interest rates and terms if you have a great credit score!
Credit card usage has the potential to make or break your financial wellness. Recognizing the risks—and benefits—that easily accessible credit can bring should inspire you to navigate your finances with care and intention.
¹ “What Is a Good APR for a Credit Card?,” Melissa Lambarena, Nerdwallet, Mar 4, 2021, https://www.nerdwallet.com/article/credit-cards/what-is-a-good-apr-for-a-credit-card
So the best way to deal with one is to prepare for it in advance. Below are two extremely effective and relatively easy steps that can help you prepare so that when something does happen, your financial strategy isn’t thrown into disarray because of unplanned expenses.
Start an emergency fund.
Your first goal will be to save up enough money to cover six months of expenses. Then when a small emergency crops up, you’ll be able to dip into this fund. But beware! You’ll need to discern what counts as an emergency—going out to eat because you don’t feel like making dinner or going shopping because there’s a great sale going on doesn’t count!
Make sure you have the right insurance.
Not every issue can be solved with a simple emergency fund; serious medical issues, disability, or death can all cause financial trouble that may fall well beyond the scope of an emergency fund.
There are three things that you need to consider: health insurance, disability insurance, and life insurance. They can help provide protection for your family if you become unable to work or if hospital bills threaten your cash flow.
If you feel unprepared for a financial emergency, contact a licensed and qualified financial professional. They’ll have insights into how you can create an emergency fund, and help you evaluate your options for financial protection.
Why? Because trust and communication form the bedrock of healthy relationships. Keeping secrets of any type and size can shatter faith in your partner. It’s especially true of financial decisions—finding out your spouse has been spending money “behind your back” can cause a rift that may be difficult to repair.
To help avoid trouble and misunderstandings, make it a practice to regularly discuss the family finances with your partner. Set a weekly time to grab coffee and review your budget, your goals, and any changes you need to make moving forward.
It may feel awkward at first. You may learn there are surprise expenses that your partner hasn’t shared until now. That’s perfectly normal! Be sure to create an atmosphere of trust and openness that makes your partner feel comfortable sharing. If they reveal a spending secret, don’t lose your temper. Thank them for their honesty and then work towards a solution for the future!
Once you’ve learned how to navigate open and honest financial conversations, apply your new conversation skills to other topics in your relationship. You might just find that your relationship drastically improves!
It may not be as daunting as you might think. In fact, there are simple steps you can take today that can help position you to retire with the wealth you desire.
Pay yourself first. It’s simple—schedule a recurring transfer to your retirement savings account when you get your paycheck. This transforms building wealth for your future into an effortless process that occurs without your even thinking about it.
Save your bonuses. Unexpected windfalls are exciting! But don’t forget to pause for a moment before you take off for the Bahamas. If you hadn’t gotten that bonus, would your life and your current financial strategy still be the same as it was last week? Consider putting (most of) that extra money away for later, and using a fraction of it for fun!
Reduce your debt. Credit cards and any high interest loans are the first priority when retiring debt—so that you can retire too someday! Do you really know how much you’re paying in interest each month? (Once you know this number, you can’t “unknow” it.) But take heart! Use this as a powerful incentive to pay those balances off as quickly as you can.
Every month you chip away at your debt, you’ll owe less and pay less in interest. (You’ll feel better too.) And you know what to do with the leftover money since you knocked out that debt. Hint: Save it.
But keep this in mind—life is about balance. It’s okay to treat yourself once in a while. Just make sure to pay yourself first now, so you can REALLY treat yourself later in retirement.
All parents must contend with the cost of childcare, education, housing, and food. But there are some unexpected expenses that can blindside you if you’re not prepared for them. Here are some hidden costs that every parent should anticipate in advance!
The newborn utility bill spike When your baby first arrives home from the hospital (yay!), expect your utility bills to seriously increase. Chances are, your newest family member will require a cozy temperature all day to maintain their mood and sleep schedule. Plus, you’ll probably run a few extra loads of laundry and dishes every week! Before your child comes home, budget in some extra cash specifically for utility bills.
Birthday parties for preschoolers Nobody loves birthday parties more than preschoolers. If you’re not careful, you may end up paying far more than you ever expected on decorations, party favors, and gifts.
Come up with a budget-friendly gift giving strategy for your family early and stick with it. That might be placing a cost limit on what you give, or developing creative and heartfelt ways to make gifts from scratch.
Date nights will temporarily increase in cost Until your kids are old enough to look after themselves, you’ll need to hire a babysitter before you go on a date night.
There are responsible ways to save money on this often unexpected expense. If possible, have a family member look after your kids while you enjoy your romantic dinner. Also, consider swapping babysitting duties with a friend—you look after their kids on their date nights, they look after your kids on your date nights!
Extracurricular activities Music lessons, sports teams, and driver’s ed are sometimes far more expensive than parents realize. In addition to the upfront costs, you’ll also need to buy instruments, cleats, jerseys, and more to empower your kids to enjoy their favorite hobbies.
Create an extracurricular activities fund and start building it now. Then, decide how much you can pay each month for lessons and coaching.
What’s a parenting expense that caught you by surprise? I’d love to hear what it was and how you overcame it!
By now, you’ve probably noticed that there’s a lot that goes into caring for your newest family member. Between the diaper changes, sleepless nights, and feedings, take a few moments to make these critical financial moves. They may bring you the peace of mind and financial security your family needs!
Add your child to your health insurance coverage. Once your child is born, you have between 30 and 60 days to enroll your newborn in your health insurance plan.¹ Fortunately, it’s not a difficult task. Have your child’s birth certificate and social security number handy, and then call your health insurance provider. Share the good news that you’ve had a child and would like to add them to your plan. If your health insurance plan is through work, you’ll need to contact your HR department and go through the same process.
Find the right childcare for your family. Childcare can be pricey, ranging from $9,100 to $9,600 annually.² If both you and your spouse work, you’ll need to find a way to budget in this significant expense.
Review the costs of local daycare centers. Nannies are worth investigating, but can be more expensive than other forms of childcare. Consider asking your stay-at-home friends or family if they can tend to your children while you’re away from home. You might land a sweetheart deal that builds relationships and saves you money!
Protect your family with life insurance. There is no better time to consider life insurance than after the birth of your child. Raising a kid is expensive! Food, education, and clothing can require significant financial resources. The right life insurance policy can protect your family’s financial stability even if you pass away or if you get sick or injured and can no longer earn an income. Now’s the time to provide the financial security that your loved ones may need in the future.
The first few months of a baby’s life are crazy—they depend on you for everything! Just be sure to take some time between caring for their physical and developmental needs to tend to your financial concerns. It’s one of the greatest services you can offer them!
¹ “How do I sign my new baby up for health insurance?,” Nikki Davis, Bernard Benefits, Sept 2, 2020, https://blog.bernardbenefits.com/how-do-i-sign-my-new-baby-up-for-health-insurance
² “Child Care Costs by State 2020,” Procare Solutions, Jun 24, 2020, https://www.procaresoftware.com/child-care-costs-by-state-2020/
As you’re probably aware by now, growing a baby comes with serious financial responsibility. Here are a few expenses to anticipate and start planning for as soon as possible!
Prenatal care costs. Keeping both the mother and baby healthy throughout the pregnancy is a top priority. That means regular checkups and ultrasounds to make sure everything is progressing safely and normally.
Investigate what’s covered and what you’re expected to pay for beforehand. Health insurance policies will often cover prenatal care, but it’s best to find out what your expenses will be ahead of time. Out of pocket, prenatal care costs on average $2,000, so start preparing now!¹
Maternity clothes. Pregnancy requires a wardrobe overhaul for women that, on average, costs about $500.² Fortunately, there are commonsense strategies to cut back on this expense. Check local thrift stores for maternity options, and even consider buying flowy dresses or tops that are a size–or three–larger than your normal size. Also, ask family members if you can borrow their spare maternity clothes. Try to avoid designer maternity clothes which can come with a hefty price tag.
Delivery expenses. The cost of giving birth varies greatly—from $4,000 to $20,000 depending on your state and health insurance coverage.³ Again, it’s critical to consult with your healthcare and insurance providers to see what you’ll be expected to cover. The earlier you discover this information, the better—it gives you time to start saving for the hospital bill!
Budgeting for doctor visits, the delivery, and the hospital stay positions you to cover those expenses without having to borrow money. And that means you can provide your child a financially stable environment in which to grow, without the stress caused by unexpected medical expenses.
¹ “How Much Does it Cost to Have a Baby?,” Rickie Houston, SmartAsset, Oct 01, 2020, https://smartasset.com/financial-advisor/cost-of-having-a-baby#:~:text=The%20average%20price%20of%20having,and%20the%20hospital%20care%20fee.
² “Dressing for Two,” Stephie Grob Plante, Vox, Jan 30, 2018, https://www.vox.com/2018/1/30/16928328/maternity-clothes-pregnancy-miscarriage
³ “What It Costs to Have a Baby,” Heather Hatfield, WebMD, https://www.webmd.com/baby/features/cost-of-having-a-baby#1
Here’s how that works. Items are typically cheaper in thrift stores and flea markets than they are online. That means there’s potential to make a handsome profit if you buy something at a thrift store and then sell it on a digital marketplace.
Let’s look at an example…
You notice an item at your local thrift store that you’re certain sells online for about $60. You check the price tag—it’s only $5. You buy it and make a listing on your favorite digital marketplace. It sells! Let’s say shipping costs and selling fees are also $5 each. Your net profit is $45. You’ve made back triple the cost of your initial investment and business expenses.
It’s a simple, elegant, and fun business model that can potentially generate extra cash flow.
If you decide to start a thrifting business, consider these tips to maximize your profits!
Start at home. Before you send something to a landfill or thrift store, search for it on an online marketplace. You might be surprised how much of your “trash” is actually treasure! Make no mistake—some items aren’t worth your time salvaging and selling. But if you have clothes, toys, and books that are in good condition, consider listing them online and see what happens!
Scout out the right locations. Whenever possible, shop at thrift stores in wealthier neighborhoods. They’ll typically have higher-end products that fetch better prices. Also, consider using an app like Nextdoor to monitor local garage and estate sales—those are where you’ll find the real treasures at potentially deep discounts.
Prioritize the right items. Not all resale items are created equal. Books, textbooks, picture frames, and designer clothes tend to have strong returns. But always check the price of an item on eBay or another online marketplace before you buy it.
Buff up what you buy. Before you buy anything from a second-hand vendor, check it for damage or blemishes, but don’t be put off by surface-level issues. You might be surprised at how many items are simple to repair, fix, or clean. Putting in a little elbow grease may substantially boost the selling price.
Remember to have fun while you’re thrifting. The beauty of the reselling business is that it allows you to make money and enjoy a hobby at the same time. It’s perfectly fine if you don’t walk out with an incredible find. Embrace the process, see what’s out there, and make some extra cash while you’re at it!
A recent set of studies demonstrated that enjoying experiences created more anticipation, in-the-moment excitement, and longer-term satisfaction than purchasing items.¹ The results held true regardless of how much money was spent.
Why? Because an experience creates memories that last a lifetime. Possessions, however, can quickly become boring.
What does that mean for your budget?
Try shifting your discretionary spending from items to experiences for a month. Instead of spending your weekend at the mall, take your family on a day trip. Cut back on visiting designer stores and opt to walk through the park with a friend. Spend your time online planning exciting vacations instead of scrolling through store websites.
Then, take stock of how you feel. Has your quality of life–and cash flow–improved? Let me know how this simple shift makes a difference for your family and your budget!
¹ “Spending on experiences rather than things is associated with greater immediate happiness, study finds,” Susan Perry, MinnPost, Mar 12, 2020, https://www.minnpost.com/second-opinion/2020/03/spending-on-experiences-rather-than-things-is-associated-with-greater-immediate-happiness-study-finds/#:~:text=coverage%3B%20learn%20why.-,Spending%20on%20experiences%20rather%20than%20things%20is,greater%20immediate%20happiness%2C%20study%20finds&text=Plenty%20of%20recent%20research%20has,such%20as%20clothing%20and%20gadgets
A recent survey revealed that 83% of respondents underestimated their subscription spending by a wide margin.¹ On average, they thought subscriptions only cost them $80 per month. In reality, it was over $230.
That was back in 2018. Since the COVID-19 Pandemic started in 2020, that number has dramatically increased. A 2020 survey discovered that, on average, consumers added $192 in new subscriptions after lock downs started.²
The takeaway? Subscriptions might be consuming more of your cash flow than you realize.
Scroll through the apps on your phone. Are there streaming, dating, or wellness subscriptions that you pay for but never use? Unsubscribe and uninstall them!
If you and your family regularly use a streaming service, consider cancelling your cable subscription. They’re expensive, and your streaming services probably carry your favorite shows as it is.
It’s also worth investigating the value of any subscription boxes you receive. Is a monthly shipment of makeup or comic books significantly improving your life? Or do most of the items go unused? If the latter is true, consider cancelling your subscription.
Once you’ve cleared out unnecessary subscriptions, you might be surprised by how much cash flow you’ve freed up for reducing debt or building wealth.
¹ “You probably spend more on subscriptions than you realize,” Angela Moscaritolo, Mashable, Feb 20, 2019, https://mashable.com/article/you-probably-spend-more-on-subscriptions-that-you-realize/
² “Americans More Than Tripled Subscription Service Spending Amid Social Distancing,” David Dykes, Greenville Business Magazine, May 14, 2020, http://www.greenvillebusinessmag.com/2020/05/14/308970/americans-more-than-tripled-subscription-service-spending-amid-social-distancing
If you’re like many, that sounds exactly like what you and your family need! Who wouldn’t want some extra money coming in? It might seem like pie in the sky, but it’s not a fantasy.
Earning a passive income is more achievable than you might realize. Read on to discover how passive incomes work, what makes them so advantageous, and common ways to create them.
In general, a passive income is cash flow that requires little to no regular effort to create and maintain.
That’s not to say that they don’t require work. But the labor involved in opening a passive income stream is normally upfront—you spend time and/or money in the beginning to set up the income stream, then sit back and reap the rewards as time goes on.
It’s an advantageous model because it can potentially free up your time—which is the most valuable resource you have.
But be warned—not all opportunities to create passive income are created equal. Here are a few proven strategies for you to consider!
Create digital products. EBooks, online courses, stock photos, and stock music are all passive income generators. They require initial time investments to create and publish, but then earn you money as users buy them over time.
Rent out property. Renting is a classic source of passive income. It requires money upfront to buy the property—and maybe time and more money for renovations. But once rent starts coming in, they’re income sources that don’t require your daily attention. (Note: Becoming a landlord may have other costs involved, like repairs or replacing old equipment or appliances.)
Build a team of sales professionals. This is the hidden gem of passive income. There’s a starting commitment of time to learn about your market and how to close sales. Then you’ll need to create a team of salespeople. Every time they make a sale, you earn a portion of the profit. Once you’ve mastered the basics, the sky’s the limit for how much passive income you can potentially earn!
If having a passive income stirs your interest, let me know. We can review your financial position, skills, and the opportunities available and see which one might work best for you!