Have you ever found yourself doing an internet search for questions about your money? How many times have you asked Google™ how to pay off your debt? Or how much you should be saving? Or what about the best way to allocate your 401(k) or investments? If you’re like the majority of those in their 20s-40s, the internet is probably managing your finances (and possibly raising your kids… not that I’d know anything about that though. 😉 ) The fact is, you’re not alone in your endless search (or anxiety) around how to best manage your finances. There is a TON of information out there and it can be even more stressful trying to make the right decision and determine what’s best for you. So why did I write Work Your Wealth and add more information into the mix? When I launched Workable Wealth, my desire was to help people in their 20s, 30s and 40s across the country make smarter choices with their money (that’s you!). I was tired of my generation being ignored by the personal finance industry. I was put off by the outdated information touted by people my grandparents’ ages – and, frankly, I was 100% irritated with the media’s stance that our generation “didn’t want financial advice.” I was lucky enough to actually major in money in college. Not surprisingly, however, most people have other passions to pursue. I realized early on that there’s a huge disconnect between today’s education system and financial planning firms and the availability and accessibility of financial information and guidance for this age group. Translation: There is none. After 12 years in the personal finance industry, one of the biggest things I’ve learned is that people need clear-cut guidance. It’s exhausting to sit through meetings full of fancy lingo or to spend hours digging through online articles trying to figure out where to start and which advice is the best advice or applies to your unique situation. The internet can only offer up so much information. Of the hundreds upon hundreds of conversations I’ve had with my peers and those looking to get on track financially, it all comes down to wanting and needing a set action plan of steps to take and a clue as to where to begin. I wrote Work Your Wealth to provide just that. This book cuts through the crap, shares example upon example and lays out an organized plan of attack to leave you with clarity and confidence in your financial life. Each chapter closes with a list of detailed Money Moves you need to make to get started in each area and directs you on how to proceed. This book focuses on real, actionable, and specific steps you can take now and breaks it down so that your money stress and intimidation is left behind. Work Your Wealth: 9 Steps to Making Smarter Choices With Your Money digs into the “how” behind each step and leaves you with easy-to-follow directions in applying each action to your life. At the end of each chapter, you’ll have completed a piece of your very own personal financial plan, leaving you that much closer to reaching your goals.
This Book is for You if You’re:
- Ready to figure out where your money is going and redirect it to the areas that matter most to you
- Willing to learn, do the work, and get a little uncomfortable
- Looking for clarity, confidence, and a plan around your money, but aren’t sure how to proceed
- In your 20s to 40s and are tired of feeling intimidated by fancy industry lingo, old men behind mahogany desks, and people making you feel like you need to have more money to deserve a plan to take care of it
- Experiencing any kind of life transition such as getting married, having children, changing jobs, moving cities, buying a new home, and more
- Looking to tackle your debt with a strategy to eliminate it
- Ready to start saving for your future – even with the smallest amount
- Wanting to invest and build your nest egg for retirement
This Book isn’t for You if You’re:
- Transitioning to retirement
- Looking for complicated Social Security distribution strategies
- In need of an in-depth analysis of historical stock market returns
- Not into having fun
- Looking for a quick fix for your finances and aren’t ready to be held accountable in getting your money organized
- Convinced you’ll “just figure it out” along the way
What You’ll Find in the Pages
One of the things I tell my clients is that along with crafting a financial plan and laying out the steps to get you launched on your personal money journey, I’m also going to be your coach and accountability partner. I’ll make it fun and friendly, but I’m also going to be direct. If you’re in financial trouble because of some bad decisions, lack of education, or whatever the reason, we’ll address the issue to ensure the course can be corrected going forward. From there, we’re going to move the heck on. There’s no room for dwelling in the past when it comes to money moves gone wrong. Taking control of your finances can be fun and I strive to make it so, but you also need to be prepared to show up and put forth the effort. Trust me: This. Will. Be. Work. (hence the title). I’m not saying to shut down your schedule for the next six months, but if you’re not willing to devote a few hours or an afternoon to digging into your money situation, you’re likely not ready to take control of it. I’m a big proponent of breaking down big steps into little steps, measuring progress and celebrating wins along the way. Work Your Wealth is laid out in such a way that each chapter addresses a bigger overall topic in your financial health ranging from kicking your FOMO (and your debt) to the curb, getting credit savvy, knowing what retirement plan is best for you, growing your income, and figuring out where your money should actually be going. When it comes to money, it’s important to keep in mind that “wealth” means different things to different people. Whether it’s a life of balance between work and family, the ability to travel internationally each year, buying your first home, getting that raise, being debt-free or reaching “millionaire” status, this book will lay out the steps you need to take and consider in reaching your financial goals and more. Are you ready to Work Your Wealth? Head over to Amazon to reserve your copy today and get prepared to finally control your money instead of it controlling you!
It’s a brand new year, which makes it the perfect time to be thinking about ways to prioritize your own personal and professional development. Different than those stressful and often unfulfilled New Year’s resolutions, setting yourself up for success this year can simply mean putting yourself first in certain areas and intentionally investing in yourself. The better you are, the better you do. So why not prepare yourself for future opportunities that align with your talents and skills in a fulfilling way? It’s time to make thoughtful investments in your most valuable asset: you! Here are seven ways to invest in yourself so that you can be the best version of you yet:
1. Attend conferences that peak your passion Conferences are not only a great place to learn, but they are also a great place to network with leaders in your industry and become known. Very seldom do people bloom into their best selves by keeping themselves shut away. And while the cost of conference tickets plus airline and hotel can add up, if you are thoughtful and strategic about which conferences to attend and why, and plan ahead for the costs by stashing away each month (or getting your employer to sponsor your attendance) you can ensure you get the very most out of them.
2. Start or join a mastermind group Having been in multiple masterminds myself, I can say that the power of a mastermind group in invaluable. These groups bring people together who are passionate, excited and committed to help each other grow. They provide a ‘safe space’ where participants help each other become better versions of themselves by challenging each other to set and meet goals, sharing ideas and supporting each other with honesty and respect.
3. Discover you No matter how well you think you know yourself, going through a formal exercise of self-discovery is never a bad thing. Making the investment of time and a little money to rediscover your strengths, weaknesses and dominant personality traits is a healthy way to recalibrate in the new year and have a clear picture of where you are today versus where you might have been three years ago. The Gallup Strength Finder or Myers-Briggs Type Indicator® (MBTI) assessments are a great place to start in gaining a little more insight into what makes you tick, which can help you more effectively focus your time and attention in areas that you are more likely to succeed and enjoy.
4. Consider getting a formal mentor or coach There is pretty much a coach for whatever area of your life you are most interested in improving: life coach, professional coach, money coach, health coach and so on. What they all have in common, however, is that they will work with you on an individual basis to help you reach your goals and overcome anything that you may be struggling with.
5. Establish a personal brand and online presence Establishing your personal brand online will only serve you professionally. In a world that is connected 24/7, it’s more important than ever that you create a positive perception of who you are when someone Google’s your name. Ask yourself what people should know about you and what you want others to think of you. Between all the social media platforms, share a consistent message of who you are and what you’re all about.
6. Put some hustle in your life Tap into your passions by turning them into a money-making business on the side. Maybe you have a full time job already, but it’s not leveraging all your talents and abilities. If it’s not possible to express certain passions you have from 9am to 5pm, use your other waking hours to. You don’t have to have ambitions of starting a Fortune 500 company in order to begin something that allows you to expend energy doing something you really love and, in turn, make some extra income in the process.
7. Learn what you don’t know Whether it’s learning more about subjects that will enhance your professional growth and contributions or practical life skills, take the time to learn what you don’t know and never stop learning. There are thousands of free online college courses from accredited universities to keep your competitive knowledge of your industry sharp. Coursera.org is one such way to expand your knowledge for free. The internet is full of resources, articles, blogs and videos on just about anything you’d want to know. Of course, one of the ongoing ways to invest in yourself is to get money smart and take control of your finances. All of these ways to invest in yourself this year have the potential to lead to more opportunities and higher income. Therefore, pay special attention to the finances that support your life and do what you can, now, to maximize the returns that may come your way. Related article: Start Now to Get Financially Ahead in 2016
As a parent, you want to provide for your children. You want to give them access to higher education, so funding a college savings account is important to you. But you also know that you and your spouse have a financial future to consider, as well. You need to save for retirement.
When there’s only so much money to go around, what’s a parent to do? Should you prioritize saving for retirement or for your children’s college expenses?
The Argument for Putting Retirement First
According to a 2014 study by T. Rowe Price on family finances, 52% parents believe that it is more important to save for their kids’ college rather than their own needs. It’s understandable that parents want to provide a solid educational and financial foundation for their children. But the other 48% of respondents have it right: your retirement savings come first if you have to choose.
It’s up to you to provide for your future. Unlike the aging baby boomers, many of today’s young parents can’t rely on company pensions for their retirement. Instead, self-directed savings are an important part of being able to pay your bills in retirement.
You can borrow for college; you can’t borrow for retirement. Very few banks will lend money to aging retirees who aren’t able to pay their bills. But college students have a range of options in paying for college.
Students can receive scholarships, grants, and other financial assistance. They can apply for student loans from the federal government that offer favorable interest rates, flexible payment plans, and even offer loan forgiveness in some situations. And your kids don’t need you to foot 100% of the bill — they can work with you to find affordable college options and they can pick up part-time work.
Let’s say you prioritize college over retirement, but you plan to catch up when the kids are graduated. What happens if things don’t go according to plan? If you suffer a serious illness or extended unemployment, you’ll be severely stretched for saving for retirement.
That might leave you depending on your children just as they are beginning their own financial lives. If you save for retirement and find creative ways to pay for college, you’ll allow your own investments to compound more aggressively for a larger number of years. The whole family will end up with more money to go around.
How to Fund Your Retirement
Now that we’ve established how important saving for retirement is, how do you get started? The first place to contribute is in an tax-advantaged retirement account. The exact type and name of the retirement account will depend on your employment.
For most employees, the best place to start is to begin putting away money in a tax-deferred retirement plan. Many employers will match some amount of your contributions. If they do, that’s free money!
Stay-at-home spouses can set aside money for retirement in spousal IRAs, which are IRAs where the working spouse contributes income for the stay-at-home spouse. And if you’re self-employed, look into a Simplified Employee Pension Plan (SEP IRA) or a Solo 401(k).
Another great option for all workers: a Roth Individual Retirement Account (Roth IRA). When you contribute to this account, you pay taxes on the money you put in. However, when you withdraw the money you pay no additional taxes, even on the new investment gains.
If investing for retirement seems overwhelming, remember that starting is the most important thing. Just open up the account and transfer in an initial amount to get started sooner rather than later.
Making a Plan for College Savings
Paying for college is no easy feat. Even if you aren’t able to pay for the entire cost of college, your child can emerge with a strong financial footing by planning ahead.
Let your children know that the whole family — including them! — will need to work together to make college affordable. Students can apply for grants and scholarships to cover large portions of tuition and living expenses. Also, many students benefit greatly from working part time jobs in high school and college. Some studies even show that part-time work increases student engagement.
Even if you find creative ways to cut down on the cost of college, you’d still like to put money aside when you can towards college expenses. Make the most of those dollars by saving in an educational savings account.
The 529 plan is a popular option and allows you choose mutual funds or other similar investments. Other states offer 529 plans that allow you to prepay the cost of in-state tuition. In some state plans, you can contribute over $300,000 towards a single beneficiary.
Another option is a Coverdell IRA. While the yearly contribution limit of $2,000 is low, the Coverdell IRA legislation does allow for a wider range of investment opportunities.
These educational savings accounts offer federal tax advantages similar to a Roth IRA. You pay federal tax when depositing the money, but you can withdraw all the money, including the investment gains, without any further taxes for qualified education expenses.
Some states also offer tax breaks on state income taxes for money invested in educational savings accounts. The exact specifics of the plan depend on your state and the state that runs the 529 plan, so you’ll want to do your research to find the best option for you and your student.
It’s possible to both create a secure financial future and retirement for yourself and to help your children start their adult lives with a strong financial footing. Save for your retirement first — and then get creative about paying for educational expenses.
Teaching your kids about personal finance can seem daunting, but children can understand the concepts of working for money, saving, and buying necessities from a young age. In fact, teaching your children about money as they grow up is a good way to put them on solid financial footing.
Whether your child is 7 or 17, it’s never too early — or too late — to provide financial education and lessons. Use these five ideas to help teach your kids what they need to know about money.
The earlier you start incorporating money lessons into everyday conversation with your kids, the better. Many children who don’t get to have conversations with trusted adults understand money in an abstract way. If finance isn’t a topic up for discussion and all kids see is cash coming out of the ATM machine, they’re not going to understand that you worked hard to earn that money.
Talk to your children about where your money comes from and how people work for money. It’s not given, and money itself comes at a cost — you exchange your time and effort to earn it.
The sooner you start explaining that money doesn’t come from trees, the sooner children will start to respect money and treat it as something to be conserved rather than squandered.
Get Kids Involved in Household Budgeting
One of the easiest ways to have your children understand finances is involving them in the household budget. This means involving your child when you plan your grocery list, go shopping for necessities and big ticket items, or discuss family vacations.
This step is crucial because it shows a whole host of connections, like the relationships between buying what you need versus what you want and how decision-making works in your family. It introduces children to the concept that money is not infinite, and families have to set priorities when deciding how to spend their money.
You don’t necessarily need to provide all the details, all the time. But allow kids a stake in the game: involve them in the decision-making process about where to go on your next vacation and how the cost of transportation, accommodations, and other necessities may impact the discretionary money you can spend on the trip.
For children today, technology is a huge part of their lives and shapes how they understand money. Money may not necessarily be represented by tangible paper bills and coins for your kids, but rather debit and credit cards. If you use digital tools to help you manage money, introduce your kids to the same thing.
Apps such as Kids Money will teach children to save for large purchases by entering how much they need for the item, how much money the child brings in (allowance, gift money, etc.), and how long it will take to save that amount. This is a great way to help children understand long-term savings plans. It can also help introduce the concept of delayed gratification.
P2K Money is another free app you can download that introduces concepts like budgeting, savings, and having a “wish list” to track savings goals. P2K is a much simpler app, which makes it easier for younger children to understand.
If your kids are constantly asking for more money or want an “advance” on their allowance, it’s time to introduce them to side jobs. Tell your kids that working extra will allow them to make more money on their own terms so they can buy what they value.
Depending on the age of your children, direct them to things they can actually do. If you have a younger child, maybe they can help a neighbor pull weeds or do additional chores around the house.
A middle school or high school aged child can babysit or walk dogs for extra cash. Teenagers have even more flexibility, including the ability to start their own business (based on their talents and interests) or picking up a part-time job in the summer.
While not every child will be interested in this step, it’s a good way to show your children that they can change their financial situation by working harder or developing their talents and skills.
Help Them Understand Credit
“Teenagers and credit cards” can sound like the opening line to a horror movie for parents, but it doesn’t have to be that way. Even if you’re only getting started teaching your teen about money now, it’s still possible to teach them how to use a credit card responsibly.
This step requires a little more discussion with your older kids, as you’ll want to go over interest rates, credit scores, and not living beyond their means. One of the best ways to help your teenager understand credit is to give them a secured or prepaid credit card to use.
Continue teaching budgeting skills, but allow your teenager to potentially make and learn from their mistakes. Teaching your child about credit before they go off to college will provide them with the an informed and practical knowledge they’ll need as young adults managing finances on their own.
When teaching your kids about money, it is crucial to let them direct the conversation. Pay attention to questions your child asks about money, the household budget, or investing. Keeping the conversation open and honest means that if your kids have more questions, they’ll understand they can come to you for information.
Raising financially-literate children doesn’t have to be difficult if you follow a logical progression that allows your kids to gradually build their understanding. By starting early with the basics, you’re building a financial platform for your kids to build on to their teenage years and beyond.
Being saddled with student loan debt can feel like an enormous burden. Many millennials are holding themselves back in life because they’re struggling to afford their minimum payments along with trying to save for everything else in life.
If you’re in this situation, there’s a way out. While plenty of young adults are dealing with student loan debt, many more are successfully paying them off. Not sure how to create a plan to pay down your student loans? Start here.
Saving vs Paying Off Debt
Chances are you know saving your money is just as important as paying off your debt. But how do you know how much to save? Or what you should be saving for? Or how to save and pay off your debt? It can be difficult to prioritize.
You should put creating a cash cushion of about $1000 at the top of your financial to-do list. A small emergency fund can help you get through unexpected situations without pushing you further into debt.
What if you have bigger goals? Look at the big picture. The standard repayment period on student loans is 10 years — you probably don’t want to wait that long to save for a house or for a wedding.
You need to find a way to balance paying off your student loans with saving, if that’s the case. You can re-evaluate your budget to see if you can cut any costs or lessen some expenses. Be critical about what’s truly a need, and what falls under the “wants” category.
If you have multiple goals along with paying down student debt, you can also start earning extra money to fund savings with a separate income stream. This allows you to make progress in a number of areas, instead of being limited to just one financial priority.
(And yes, you can earn more money! You can start by negotiating for what you’re worth at your current job — or even consider looking for new positions that pay better. You can also take the initiative to start a side gig in your free time to earn a little extra.)
What Are Your Interest Rates?
Your interest rate is a percentage charged when you borrow money. The higher your interest rate, the more money you’re paying to borrow money. Additionally, the longer your repayment term (again, the standard is 10 years for student loans), the more you’ll end up paying over the life of the loan.
It’s worth noting some people believe in paying the minimum if your interest rates are around 2.2% or lower. This is because saving and investing your money will get you a better return on your money. (That’s assuming you actually save it, though!)
If your interest rates are on the higher end — around 5% or more — you might want to prioritize paying them off. You don’t want to pay more money toward interest if you don’t have to.
Making Extra Payments
That’s where making extra payments comes into play. The more you can pay toward your student loans, the less you’ll be paying toward interest. This allows you to chip away at the principal balance of your loan.
You don’t necessarily have to pay extra all the time, or only during your regular payment, either. Pay more when you can, even if it’s just once or twice a year.
Options Available If You Can’t Afford Payments
There are several thousand graduates out there with six-figures in student loan debt with no way to repay it. If you’re stressing about affording your student loan payments, there are a few options to consider.
If you have federal loans, there are many flexible income-based repayment options available to you. Call up your loan servicer and explain the situation you’re in. They might be able to recommend a specific repayment plan to look into.
Federal Student Aid has a guide on what repayment plans are available, and what it takes to qualify for them. Additionally, you may qualify for deferment or forbearance if you’re experiencing financial hardship.
If you’re struggling to make payments on your loans, you may be eligible for deferment, which is a temporary period where you don’t have to make payments, and interest doesn’t accrue on subsidized loans. Interest does accrue on unsubsidized loans. Forbearance is similar to deferment, except interest continues accruing on all of your loans during the time you don’t have to make payments.
Not having to make payments gives you a chance to get back on your feet and to begin managing your cashflow better.
Getting your loans forgiven, discharged, or canceled is possible, but only in select circumstances. (Again, see Federal Student Aid for an overview of those circumstances.) These options mean you no longer owe anything on your student loans.
What if you have private loans? They don’t come with the variety of repayment plans federal loans do, but many lenders are willing to work with borrowers by granting them forbearance periods. If you need help, pick up the phone and call your loan servicer and see what they can do for you.
Refinancing or consolidating are two options to look into as well. The purpose of refinancing your student loans is to improve your terms (to lower your interest rate, for example). The purpose of consolidating your loans is to make it easier to pay them. If you owe money to 7 different lenders, consolidating them rolls them all into one easy payment. You can do both with federal loans, too.
Steps to Paying Down Student Loans
Now that you’re armed with some essential knowledge on student loans, it’s time to talk about how to get rid of them.
Look at Your Entire Financial Situation: Do you have any other debt? What’s your salary? How much can you afford to pay toward your student loans? These are all things you need to get clear on to formulate a plan of attack on your loans.
Start Budgeting and Tracking Your Expenses: That’s where budgeting and tracking your expenses comes in. You need to know where your money is going, and how you’re using it. This is especially true if you’re finding you don’t have enough money to last you a month.
Evaluate Your Expenses: After you’ve established your budget and have an idea of how much you’ve been spending and where, go back and evaluate your expenses. Question how much value you’re getting out of things. If paying down your student loans is your top priority, you need to make room for extra payments in your budget.
Focus on Earning More Money: If you’ve cut back on all your expenses, and are still struggling to make payments or find room in your budget for basic needs, try earning more money. You can work overtime at your job, take on additional shifts, or get a second job.
Having trouble finding employment? Many individuals are making their own jobs based off of hobbies or skills they have. Do you enjoy pet-sitting, babysitting, crafting, consulting, freelancing, or organizing? Advertise your services and get the word out.
Have a Plan and Follow It: Paying your student loans off is going to be a long journey. It’s important to have a plan to refer back to when times get tough. Choose exactly how you’re going to pay off your debt. Pick one loan out from the rest and singularly focus on paying it down, while paying the minimum on the rest. This one loan might be the loan with the highest interest rate, the lowest balance, or one you just want to see gone.
Stay Hopeful: Remember, paying off debt can be a difficult journey filled with ups and downs. It’s important to build a support system and stay hopeful when you hit a roadblock. Surround yourself with friends who can relate to what you’re going through, and stick with people who help you achieve your goals.
By following these six steps, you’ll be on a clearer path to paying down your student loans. Don’t get discouraged; there are plenty of options available to you if you’re experiencing difficulty paying your loans back. The worst thing you can do is not make any payments. Always reach out to your loan servicer to see if they can help you out.
Stay focused, determined, and hold yourself accountable. Don’t let your student loans own you — own them instead.