Monthly Archives: May 2024

Jaslyn has made it around the sun another 365 days and is now two years old. So what does that mean?
 
This means TiYanna and I have sixteen years left to execute our plan.

It means we’ve got sixteen more years left to keep stuffing money into Jaslyn’s accounts.

It means we have sixteen years left to ask our village to support Jaslyn’s financial plan. (That isn’t totally true. We’ll definitely keep asking our village to financially support Jaslyn forever…lol)

It makes sense for me to first give a status update on each part of the plan that was laid out in the 18-year head start.

Savings account – This account will always be the worst-performing asset she possesses. However, we established this account because we wanted Jaslyn to have a relationship with a financial institution. Plus, Jaslyn was featured in a movie (Earth Mama), and we had to have a bank account to receive her earnings.
 
Here’s how my wife and I fund this portion of her plan. When she receives monetary gifts, 50% is always applied to her savings account. So, if she’s gifted $10, $5 gets added. This keeps us disciplined and focused, and it’s simple.

Life insurance policy – I’ve been pleased with the cash value performance in her life insurance policy. As a reminder, we’re doing something unique with Jaslyn’s life insurance policy. We are “over-funding” it. That means we’re putting in way more money than is required to keep the policy in force. Here’s an example of over-funding. A life insurance policy might require you to pay a $30/month premium for a $100,000 death benefit, but you decide to put in $130/month. The excess premium ($100) you put into the policy helps grow the cash value over time.
 
The thing I want you to remember is that THIS IS LIFE INSURANCE. Although this policy can build equity (the cash value), we don’t consider this an investment. But we do like that Jaslyn owns something that offers multiple benefits.

Investment account – As you may recall, from the 18 year head start article, we decided to open a Uniform Transfers to Minor Account, known as a UTMA. This would allow Jaslyn free reign when deciding what to do with “her” funds. I put her in quotes because when Jaslyn becomes the age of majority (18 in the state of California), the funds are hers by contract. My wife and I have discussed whether or not we want to remain as an overseer of the money, but we’ll have to revisit that, and ultimately, if Jaslyn feels like she needs us to maintain/manage things, we’ll continue to support her as needed.
 
We want to empower her to be a great steward of her investments from an early age but with some guardrails. Plus, I will constantly remind her about what I did with my UTMA when I graduated college. I blew that money so fast, and I don’t want her to do what her daddy did. I still jokingly blame my parents for not putting up more guardrails. I learned some expensive lessons in my early 20s.
 
As for what we invested in and overall performance, we’ve been very pleased! I initially invested in a growth-oriented mutual fund to which I contribute $50/month. With all the additional monetary gifts we’ve received, I added a REIT ETF and a Dow Jones ETF to the mix. I rarely hold any money in cash. When the money comes in, I invest it ASAP.
 
Lastly, this is where the other 50% goes when we receive a monetary gift. We’ll continue to commit to the 50/50 split, and hopefully, Jaslyn will adopt this process of making a commitment whenever she earns a dollar. She’ll have other responsibilities and bills, but for now, she can just stack!

Authorized user – Okay, this one is causing me issues. I’ve recommended that adding a child as an authorized user is a great way to begin your child’s credit journey, and I still recommend it. However, I have yet to be able to get a credit report (from any of the three bureaus) for Jaslyn. It may be because of her age.
 
Prior to giving that recommendation, I researched online which banks/credit unions would report credit activity for a minor. Based on that information, I made my selections.
 
There are some age restrictions that might prohibit a financial institution from reporting credit activity. But I made sure to select the bank where age wasn’t an issue. However, when I wrote a letter to the credit bureaus (I wanted to see what all three were reporting) requesting Jaslyn’s reports, I was disappointed with the outcome.
 
First, only one of the three bureaus called me back. And they told me they didn’t have any activity for Jaslyn. (Reminder: I added Jaslyn when she was three months old)
 
Second, I have yet to hear back from the other two bureaus, which still upsets me.
 
So, now I have to go back to the drawing board. I don’t plan to remove her as an authorized user until I see some data on her credit report. However, I will reach out directly to the bank and ask about their reporting. Once I can do some more investigating, I’ll update and share my findings.

Jaslyn’s balance sheet – this was a late addition to Jaslyn’s plan, which I still needed to report on. We update Jaslyn’s balance sheet every three months. This way, when she’s older, she’ll be able to see the growth of her assets over the years. We completed her first balance sheet in October 2022 (she was five months old) to capture her third-quarter performance. At that point, her net worth was a smidge under $4,000. 
 
Here’s a breakdown of her asset’s overall performance from Q3 2022 through Q1 2024**
 
Bank Account (worst performer): 119% increase
 
Cash Value in her life insurance policy: 171% increase
 
Investment account (best performer): 266% increase
 
 
I expect this trend to continue over the years. Her bank account will continue to grow because of the deposits made, but the interest she’ll earn will be minimal. Thus, it will lag in performance compared to her cash value and investment account. But during a down market, the bank account might be the best performer.
 
I also expect her investment account to continue to lead the way in performance over the long haul. However, because it’s the riskiest asset she owns, I’m aware that her quarterly performance might not be positive during a down market. But, as a reminder, investing gets better with time, so I’m not too worried about down markets.
 
 
**Going forward, I’ll report the year-over-year performance of her net worth on these annual updates

The #BuildWealth Movement® works tirelessly to Disrupt Generational Poverty® for everyone so their kids, kids, kids can live a life of privilege.

I was speaking at a workshop about a year ago, and during the question-and-answer period, a gentleman sitting in the back of the room asked me this question: “What’s your thing? Like, what makes you different from every other financial planner who does these educational sessions?”

Generally, I’ve heard financial experts give canned responses to a question like that. It almost sounds like it came from some company script. That always bothered me because I hate being fake. I wouldn’t say I like giving generic responses, and those types of responses don’t move people to act. My job, as a member of someone’s money team (click here to read more about the money team), is to get them to make a decision that will improve their future financial success. So, right there on the spot, I blurted out something off the cuff, eventually becoming my credo.

Here was my response to that gentleman:

“Sir, I’m not much different from other financial experts you might have encountered. I’m a licensed professional, and I can assist my clients with various insurance, investment, retirement, and financial planning-related matters. I also do coaching or consulting because sometimes, people need to talk about what they’re doing and see if they’re going in the right direction. 

But here’s something I think about when I’m engaging with someone. There are four primary things that I’m looking to discuss with anyone I sit down with. Now, they might not need to care about all four, but if everyone addressed them, more people could and would be living more comfortably.

#1  When someone in your family (or you) goes off to glory, a crowdfunding campaign should NEVER be necessary. 

We should never rely on strangers to help us out when a loved one passes away. If we took life insurance planning more seriously, we wouldn’t need to set up a crowdfunding campaign. Plus, even if you post a campaign and have some success, more money is needed. And you only get some of the money because there’s a fee involved. Can we have an honest discussion about life insurance and make sure you have the right amount? That’s something I want to know. Whether someone likes insurance or not, it’s a vital wealth-building tool.

#2 You should be crystal clear on your investment strategy (risk, what you’re invested in, DIY vs advisor-assisted)

Too many people are clueless when it comes to their investment strategy. How do I know this? Because I’ve asked, and they’ve told me, “Jasper, I don’t know what the hell I’m doing” or “Jasper, I’ve got this account, but I couldn’t tell you what I’m invested in.” That doesn’t sit well with me. So, whether someone is a do-it-yourself investor, partners with an advisor like me, or does a combination, I need people to be clear about what they’re doing on the investment front. 

#3 Retirement is coming. Prepare accordingly

I don’t need to elaborate much on this one. I just hope that when you’re ready to retire, you’ll have enough money to last you the rest of your life. If you don’t, we should probably have a conversation.

#4 Set up your babies for a successful financial future (your babies or your grandbabies)

Whether you have kids of your own, grandkids, nieces, nephews, or some other kid that’s not blood-related, what are you doing to set them up for a financially successful future? Think about kids who grow up in wealthy families; they tend to have more options in life because there isn’t a financial strain. Things can happen because somebody can fund it. I know that’s not a reality for everyone, but I challenge people to devote some of their money to financial planning for the babies. Too many people spend too much money on things that aren’t going to get their kids far in life. But what if every kid (shortly after birth) was set up with a bank account, an investment account, and a life insurance policy? (My daughter was already here, and I told him about the 18-year head start)

If everyone took these four things to heart and did some serious planning around each one, we’d see a lot more wealth being built and sustained by people from all walks of life in this country. All four of the things I listed are connected. I’ll stop there because hopefully I’ve share enough to help you understand what makes me different and what I’m about.”

In case you were curious, after that long explanation of my credo, that gentleman booked a meeting with me the next week. And he ended up becoming a client by the end of that first meeting.

The #BuildWealth Movement® works tirelessly to Disrupt Generational Poverty® for everyone so their kids, kids, kids can live a life of privilege.

I occasionally encounter parents who have a high school-aged child or children, and they’ll say something like, “I don’t know how we’re going to pay for college.”

That statement always causes me to react in a shocking way. That will never not happen because I’m a financial planner. That response happens because I’ll never understand why people decide to wait. Like seriously. If you knew that you wanted your child to attend college (because most don’t just randomly decide that when they get to high school), what stopped you from starting the planning process shortly after they came out of the womb?

I understand that as a parent (because I am one), you have a ton of competing priorities. However, I’m not saying you have to have it all figured out from the beginning, but you have to start. I recommend starting something (financial) for your child soon after their birth. That’s why I generally remind people to read a piece I wrote called 18-year head start.

Some people reading this might feel like I’m being critical, and it’s because I am. And it’s not that I want to make you feel bad, but from my experiences as a financial planner, I’ve heard countless horror stories that have prompted me to do more. I’m constantly working to educate parents, grandparents, aunties, uncles, and anyone concerned about getting these babies off to college and ensuring they don’t graduate with hundreds of thousands of dollars of debt.

And, for those parents who have waited, know that you’ll need help getting your kid to college. Student loans will always be an option, but let’s do more to avoid those. Speaking of things to avoid, I researched the top mistakes parents make when applying for college funding. Parents made more than 30 different mistakes (from various experts), but I boiled things down to the top ten.

Top 10 mistakes parents make when applying for college funding:

1. Not doing research to understand financial aid and merit scholarship formulas
2. Procrastinating to start the process until your student’s senior year
3. Assuming the cost and process of college admissions are the same as when you went to college
4. Having your student take the lead without you being involved in the process
5. Relying solely on your high school guidance counselor
6. Waiting to apply for college at the deadline
7. Saying you’re “too busy” to attend college fairs
8. Having your student concentrate on their major instead of their career
9. Assuming you won’t be eligible for financial aid because you earn too much money
10. Going through the financial aid process alone because it’s more affordable

Please share this list of mistakes with a parent who has a high school-aged child or children. If we can avoid these mistakes, our babies will be much better off in the long run.

The #BuildWealth Movement® works tirelessly to Disrupt Generational Poverty® for everyone so their kids, kids, kids can live a life of privilege.

My best clients don’t stick to a budget! 

You may wonder how they can be my best clients if they don’t stick to a budget. Here’s the secret: They can’t avoid making a budget because it is a critical step in the financial planning process. But once they’ve done it one good time, they don’t necessarily need to revisit (or stick to) it every month. That’s the difference.

Some months will be better than others, and most people with a decent income can typically cover their bills, save a little, invest some, and have a little fun here and there. That’s normally how life goes.

But millions of people still can’t do what I just described. They aren’t paying their bills on time, they aren’t saving and investing, and they may be having too much fun, living it up, and spending money they don’t have.  

Budgeting isn’t fun and exciting for those people and will never be. It will always make them feel restricted in some way. If you’re in this camp, here’s what I propose: Try to find a budgeting strategy that you can commit to doing. Once you commit, give it a few months until you’ve built this habit of spending awareness.

As soon as you hear the word budget, it can drastically change your mood. That’s because when you say the B-word, it makes you think about spending cuts you have to make in your life. So, if you’re in this camp (that hates budgeting), here are a few strategies that might assist you with your money management skills.

The Highlighter challenge [ This has by far produced the best results with my clients. ]

Pull up your bank account (or credit card) statements for the previous (3) months online. Print them out. Grab a highlighter and mark all the expenses that were not essential to living. In other words, you will be highlighting the “wants” in your life. Typically, when I have clients do this, it’s easy to find an extra $75-$100 spent on something they “wanted” to do. That extra money could be applied to something essential in your life or might go towards saving, investing, or paying down debt. 

50/20/30 plan 

This simplified framework will help you prioritize the various expenses in your life. It’s a “quick and dirty” way to budget. It doesn’t necessarily cover everything, but if you need an easy way to start budgeting, this might do the trick. Click here to check out my version of the 50/20/30.

Bank/Credit Union 

Many financial institutions offer an online money management tool. Have you given it a try? This is another easy option since they already track your activity each month. 

There are tons of other apps that can assist you with improving your money management skills. I don’t endorse anyone in particular because they can all help you if you commit to using them. Plus, I’m not big on giving out free marketing to apps in which I have no equity stake.

And if using an app isn’t for you, a good old Excel spreadsheet (there are hundreds out there) will never let you down.

You may never become a fan of budgeting, but it’s crucial if you want to be a better steward of your money. And this last gem might be what the entire world needs to hear – – find the budgeting strategy that works for you and stick to it the best you can.  

The #BuildWealth Movement® works tirelessly to Disrupt Generational Poverty® for everyone so their kids, kids, kids can live a life of privilege.