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Daddy diaper duty

by with No Comment BUDGETINGMONEYPERSONAL FINANCE

Before we had our daughter, my wife and I extensively discussed diapers. We (like most new parents) had to decide if we would do cloth or disposable diapers. Neither of us had a preference, but being a financial planner, we first had to analyze the financial impact of this decision.

We live in California, so we know the cost of living is much higher than most parts of the country. We did some research on diaper costs, and it was startling. Based on our research, the average monthly cost for disposable diapers ranges from $150-$200/month ($1,800 – $2,400/yearly). There were some lower averages, but these figures were closer to our reality since we’re in California.

My wife and I weren’t enthused about those numbers, so we turned our attention to cloth diapers. First, we have an in-unit washer and dryer, which would help us avoid making all those trips to the laundry mat. But, the trade-off is that we would have increased water usage each month, and the electric bill would increase. And, since we can’t just toss a dirty diaper into the trash, we would have to consider the time we would have to spend cleaning diapers. This time commitment would end up falling on my shoulders. (Since my wife nursed, I volunteered to handle diaper duty.)

Then, we took a look at the cost of cloth diapers. But, before we got heavy into the research, our good friend told us that she had been saving her newborn and infant (a set of 60) cloth diapers for us. And, shortly after my wife let some people know we decided to go the cloth diaper route, we were then gifted a large box of 30+ infant cloth diapers. So we didn’t have to pay anything for diapers. We are super thankful our village helped us save money.

But, since the Smith family is big on crunching numbers, here’s the breakdown of what it would have cost us for the cloth diaper brand we were initially gifted. We received a set of 30 newborn diapers and a set of 30 infant diapers. The set of newborn diapers would have cost us $568.50 ($18.95/diaper), and 30 infant diapers would have cost us $748.50 ($24.95/diaper). So, for $1,317, we had a solid stash of cloth diapers. That big box of 30+ infant diapers was just gravy on top.

What’s interesting about this diaper adventure is that many people doubted we would stick it out. When I would tell people we’re doing cloth diapers, they would say, “We’ll see how long that lasts,” or “Y’all are still doing cloth diapers?”. But that was just noise that didn’t faze us one bit. We had a plan, and we stuck to it.

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

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Credit card myth busting

by with No Comment BUDGETINGCREDITMONEYPERSONAL FINANCE

Over the years, I’ve heard a ton of bad information about credit. I’ll never know why this is, but I’ve spent a considerable amount of time on credit card myth-busting.

I should first thank my mom for giving me a dynamic credit card lesson when I was 19 years old. She laid out the credit card “game” in minutes. And because of that, I’ve always felt compelled to share my mom’s lesson with the world.

There’s one credit card myth that continues to bother me to the core. Here it goes.

The Myth: When you consider getting a credit card, you should first consider the interest rate.

Many people will have you believe the interest rate is the most important thing you should consider before getting a credit card. Unfortunately, it isn’t. My mom first explained this to me during that credit lesson. She said verbatim: “If you use your credit card each month and pay off the balance in full when you get the bill, the interest rate will never apply to you.” Simple right?

So, whether the interest rate is 19%, 28%, or some other variable rate, it’s irrelevant if you consistently pay off your balance in full. I’ve had many people challenge me on this, but again, I was trained by someone who has always had excellent credit. If someone is getting a credit card and is concerned about the interest rate, they’re already telling themselves (mentally) that they will overspend and maybe not pay off the balance in full.

Someone reading this may still want to challenge me. Interest rates do matter when it comes to debt. Just not credit cards. Interest rates should be scrutinized when considering a car or home loan. That’s a debt that you might have for a while. Credit card debt is something someone should only plan on having for a short time.

So, what is the first thing someone should consider when getting a credit card? (All of these would be acceptable answers.)

  • Does the card offer rewards?
  • Is there an annual fee?
  • Are you in a position to make the on-time payments each month?

Okay, before I finish up, another myth bothers me, and it also needs to get busted.

Myth: It isn’t good to max out your credit card during the month Nope. It’s only bad if you don’t pay off the balance (hopefully in full) when you get the bill.

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

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Granny’s investing experiment

by with No Comment BUDGETINGINVESTINGMONEYPERSONAL FINANCERETIREMENT

A few years ago, I attended a volunteer event where I spoke about the importance of having a financial plan. After my talk, a woman approached me and said she wanted to try out an experiment with her grandkids.

We set up a meeting about two weeks after that talk, and she was clear about how this experiment would go. She said, “Over the next 5 to 10 years, I want to give each of my grandchildren $2,000 every Christmas.” She had four grandchildren in total.

With this gift, she wanted each grandbaby to invest the money in the stock market. She said she wasn’t comfortable educating them about investing and would prefer they work with a professional close to their age. So, that’s where I came in.

Here’s a little background info on Granny. She was in her late seventies and doing well financially. Right before she shared this idea for the grandbabies, she came out and told me that she had more than enough money in retirement and would be good unless she lived past 110 years old. Despite her success financially, her biggest concern was leaving a lasting legacy for the grandbabies.

What this grandmother was doing was disrupting generational poverty. Many people don’t start investing early in life and, therefore, don’t have a great relationship with investments as they age. She didn’t want that for her grandbabies. She figured if she provided them with investing education and funded it along the way, there would be no way her grandbabies wouldn’t have sizeable portfolios in 10-15 years.

So here’s how things went. Granny initially hired me to do four educational sessions, with the first starting in early December before they were to receive the first $2,000. We would then do quarterly check-ins. We would reassess after year one to see if we would continue for another year.

After that first meeting, each grandbaby had to explain to me what investment they would select and why. The next three sessions involved us analyzing and discussing how that investment performed over the previous quarter.

After that first year, this grandmother’s four grandbabies had grown leaps and bounds regarding their understanding of the wild world of investments. While most hesitated to decide on what investment they would select with that first gift, it was easy for them to quickly determine what they would do for the next Christmas gift.

We made such great progress in year one that we would only have two meetings, 6-months apart, for year two. This was going to be the real test. How would the grandbabies fare without meeting with me so often? They did just fine.

All the usual fears people have around investing were removed from this group. All the analysis paralysis people get when deciding on an investment was gone. All the uncertainty and discomfort people feel when investing was no longer present because we had extensive conversations about risk. I did for this group what I do for all my clients. I make investing simple and easy.

In the end, Granny got what she wanted. She solidified her legacy by helping her grandbabies learn how to invest and showed why having ongoing conversations about investing is important. Wealthy people always talk about investing, so she figured, why not them?

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

Happy 1st Birthday, Jaslyn!

Baby in the Black

by with No Comment BUDGETINGINSURANCEINVESTINGMONEYPERSONAL FINANCE

The balance sheet is a very important financial tool I recommend everyone use. It’s a great way to measure your financial progress at a moment in time. It captures what you own (assets) and what you owe (liabilities) and produces your net worth.

Before meeting my wife, I updated my balance sheet every quarter. I started doing it because I used to obsess over reading these articles about the world’s wealthiest people. They would always report that such and such was worth x amount of billions or millions of dollars. So, I began computing my net worth to see how I progressed.

While we were dating, I figured letting her know about this balance sheet thing I was doing every three months made sense. This way, once we got married, it wouldn’t be uncomfortable for us to discuss our financial status. Fast forward a few years, and my wife and I have continued to update our balance sheets every quarter.

Then, we decided to have a kid. And this kid turned out to be a little girl. This little girl would be setup for financial greatness shortly after she was born. If you still need to read my piece called 18-year head start, you should check it out.

As of this writing, my daughter is a little over one year old and has a considerable amount of assets. Of course, she has no liabilities and probably won’t have them for at least another two decades. So, let me say that again. My daughter will grow her asset base for twenty years and has no debt. Could you please do this for your kid(s)?

Then it hit me! My daughter will have thousands of dollars in assets and no debt until she can purchase her first home. And her assets will have grown so that even when she takes out a mortgage for her home, she may still have a positive net worth. That’s crazy, right???? I thought so, too! And when I started thinking about this, I got excited.

I wanted to memorialize this since she’s young so I can look back when she’s older to see how things turn out. My wife added the cherry on top when she said this…”We are raising a baby that might always be in the Black.”

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

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17 years and counting

by with 2 Comments BUDGETINGINSURANCEINVESTINGMONEYPERSONAL FINANCE

My daughter Jaslyn was only a few months old when I wrote 18-year head start. (If you haven’t read it, please go check it out) Now, that little girl has made her first trip around the sun. My wife and I have stayed committed to making sure our daughter has the best financial head start possible. Over the past year, I’ve done numerous talks about the 18-year head start article and how I would continue to share how her financial plan progresses.

So, let’s start from the top with the updates.

Savings Account – – this account was set up because we wanted Jaslyn to have some liquid cash. But, honestly, she doesn’t need liquidity because she has no bills. It’s been the worst overall performer (and probably always will be) because rates on basic savings accounts are low. But that’s okay. This account isn’t designated for growth, so we’re not concerned with its performance.

Jaslyn has received some cash gifts and earned a little bit of income. My wife and I agreed that whenever Jaslyn receives a cash gift, we have to decide if all of it goes into savings or if we carve out a little bit and throw it in her investment account.

Life Insurance – – this was set up because my wife and I wanted to lock in Jaslyn’s future insurability. So, we checked that off the list. As a reminder, we decided on a variable universal life (VUL) insurance policy because of the potential for the policy to build cash value. (Check out Permanent Life Insurance 101 to learn more about VUL’s)

Here’s how we structured her policy:

  • The policy (to put it in force) only needed a minimum level of premium. However, we’re paying a higher premium; the remainder goes directly to helping grow the cash value. We pay the premium on an annual basis.
  • We selected an aggressive mix of mutual funds; we expect to build a ton of cash value, so we needed to pick investments that would give her the best opportunity to grow the cash value over the long haul.
  • We selected a variable death benefit. So, within the first year of her policy, the death benefit has already increased.

Uniform Transfers to Minor Act (UTMA) account – – this account was set up to serve as Jaslyn’s growth bucket. We currently have a mix of ETFs and growth mutual funds within this account. We will stay away from individual stocks for now, but we may consider adding some dividend-paying stocks or REITs in the future. 2022 wasn’t a great year for the stock market, so performance on this account wasn’t that great. However, the account balance grew because of contributions we made (primarily from cash gifts) into the account.

We initially opened the account with cash gifts to fund this account. My wife and I did nothing but collect those funds and allocate a small portion to start investing for Jaslyn. Then, we set up a small monthly recurring deposit into the account. This way, no matter what the market does each month, we constantly purchase more shares.

Authorized User – – we felt compelled to start Jaslyn’s credit history early. However, this is the only part of the plan I can’t give a full update on. I learned that to get a minor’s credit report, you must send a ton of documentation directly to each credit bureau. I didn’t make the time to do this. But I haven’t a doubt in my mind that baby girl’s credit report is stellar. We added her to a credit card we rarely use. We keep the card active, so we know all that positive reporting is trickling down to her.

I hope what TiYanna and I are doing for Jaslyn becomes the norm. There’s no reason why parents (or grandparents) can’t duplicate this plan.

We are not special. We are just two parents who are intentional about ensuring that our baby girl has a future of limitless opportunities.

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

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18-year head start

by with 7 Comments BUDGETINGDEBTINSURANCEINVESTINGMONEYPERSONAL FINANCERETIREMENT

For the longest time, I’ve been giving parents and grandparents advice on how to give their child(ren) or grandchild(ren) a great financial head start in life. After May 12, 2022, I’m no longer just giving this advice. Instead, I’m living by it. My wife and I welcomed our daughter Jaslyn into the world and immediately agreed that we would take full advantage of the 18-year head start. We weren’t going to be those parents who waited to begin setting up their child’s financial success program.

During my time in the financial services industry, I’ve heard countless stories from parents and grandparents about what they wish they would’ve done when that child or grandchild was younger. It’s always this feeling of regret that I could see in their faces and hear in their voices that scared me. And I couldn’t understand why these cycles continued to happen generation after generation.

It makes me think about all the people who struggle to save and invest as recent college graduates or adults in their early 30s because they have student loans they’re dealing with. Just think, you leave school and get a job, but you’re already digging yourself out of a hole. For the majority of people, this “hole digging” continues because before you’re really bringing in some serious income, you might have decided to purchase a home (30 more years of debt), get a new car (another 3-5 years of debt), and maybe cash flow isn’t flowing that great because you also decided to start a family. Well, just imagine what life would have been like had you graduated college with zero debt. So yeah, all that money going to your aunt Sallie could’ve been funding your investment account, retirement account, and savings account from the very first day after graduation.

I also thought about Jaslyn’s future and how she might not want to go the traditional college route and instead become an entrepreneur. I think about all the stories about entrepreneurs and their struggles with funding their businesses. Some could never get the money they needed to launch their business. They couldn’t get a loan from the bank or credit union, they didn’t know any angel investors, and nobody in their family had enough in the bank to write them a check. Meanwhile, we hear other stories about entrepreneurs who have a village or community that may house numerous angel investors or an immediate family member who had no issues writing them a $250,000 check.  

So, how were my wife and I going to decide on how to take advantage of Jaslyn’s 18-year head start? First, we sat down and had a conversation. Second, we agreed on what we would do for her. And lastly, we executed the plan. I know I’m making this seem like it was easy because it actually was. It was easy because while my wife and I were dating, we talked about money. After we got married, we talked about money. After Jaslyn was born, we talked about money. See, it’s not a struggle for my wife and me to talk about money because it’s a normal part of our lives.

Now it’s time for me to share the four things we did for Jaslyn and why:

  • Savings account – – this is the easiest thing to do, and it’s safe (from a risk perspective). Plus, if she starts earning money at an early age (like modeling, doing commercials, or movies), they can cut those checks with her name on them.
  • Life Insurance policy – – we agreed that a variable universal life insurance policy would serve her best and allow for long-term slow growth (riskier than the savings account). Such a policy will produce substantial cash value, which is an asset that Jaslyn could use in the future for various purposes when she reaches 18. Also, getting her covered at such a young age locks in her future insurability. This is important because we haven’t the slightest clue what her health status might look like at 18 and beyond. So we can rest easy and know that if our daughter’s health changes and she (as an adult) is declared uninsurable, at least she has some coverage in place. Lastly, if Jaslyn predeceases us, there’s money to handle all of her final expenses. We (like ALL parents) would be crushed if this happens, but by having her covered, the financial planning my wife and I do wouldn’t get disrupted. I know this is why most people look at me strangely when I say people should get life insurance on kids, but we’ve got to get past this and take care of business.
  • Uniform Transfers to Minor Act (UTMA) account  – – we set up a UTMA investment account, which will serve as the riskiest asset Jaslyn will own. We started her off with a growth mutual fund (the initial deposit to own the fund is $250) and are doing a modest $50/month ongoing contribution. As things progress, we plan to add some ETFs and individual stocks to her portfolio. This specific account type has its pros/cons, just like with any other investment solution, but the challenge for my wife and me was deciding to do this account versus a 529 plan. We had an extensive discussion about the merits of both account types, and after doing a simple T-chart, the UTMA won the battle.
  • Added as an authorized user – – this is the thing people rarely consider doing. Why do we wait until 18 years old to build our credit? Well, when you turn 18, that’s when you can legally apply on your own to get a credit card. But nobody ever told you that you could have been building your credit history as soon as you received your social security number. So, that’s what we did for Jaslyn. I have a credit card that offers me cash back, which I use to make a recurring payment (my cell phone bill) each month. I know for sure I will never not pay off the full balance for my cell phone each month. And so, Jaslyn will have years of credit history before ever having to apply for her own card. But, the neat thing that’s going to happen is when she applies to get that first card, she will have way more access to credit (a higher limit) than most 18-year-olds start with. 

I hope this article starts a movement. Like seriously! There’s no good reason why a parent (or grandparent) couldn’t ensure that all four things I previously mentioned are put into place right away. Some people may feel that Jaslyn’s plan might be a bit extreme but tell me one parent that doesn’t want to “go hard in the paint” for their kid to ensure they have options in life. Some may think that it’s too hard to do (from a financial standpoint), but I’d challenge that because I know people spend hundreds of dollars on baby stuff that never gets used. Those funds could be applied elsewhere.

Others may want to offer various other solutions, and I’m okay with that. But, whether somebody follows my plan exactly or something close to it, my daughter will grow up and know for sure that her parents didn’t blow her 18-year head start.

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

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Are you a HENRY?

by with One Comment BUDGETINGDEBTINSURANCEINVESTINGMONEYPERSONAL FINANCERETIREMENT

When most people start their careers, they aspire to earn a base salary of six figures (or $100,000). That somehow became the barometer for professional success. Once you make that much, you can breathe or give yourself a nice pat on the back because your hard work has started to pay off. So you can only go up from there, right?

You’re climbing the “corporate ladder” or building a great business, but you don’t realize that as you earn more, that comes with more responsibility. The late Notorious B.I.G. sums it up nicely in his hit track, “Mo’ Money, Mo Problems.” You feel like earning more is the mountain top, but it’s only the start of this new journey, and most aren’t prepared for what’s to come. 

At this point, you’re probably still wondering, what is a H.E.N.R.Y.? Well, it’s an acronym coined by writer Shawn Tully back in 2003 that stands for High Earner Not Rich Yet. As a millennial, I’ve noticed that many of my clients and prospective clients tend to be HENRYs. They are highly educated, high-earning professionals whose expertise spans many industries. However, despite their advanced levels of education, many HENRYs struggle financially. It sounds crazy, right? People always talk about how different or awesome their lives would be if they made more money, yet they never or rarely prepare themselves for this new lifestyle. 

Luckily for the HENRY clients that I’ve had the pleasure to serve, they have all received (and continue to receive) incredible lessons on how to play the money game like the wealthy. If it weren’t for me, many of these HENRYs (millennials like myself) would have continued going through life thinking everything was good because they had a nice paycheck. So let me share some HENRY experiences I’ve encountered over the years and how I helped them move forward with their #buildwealth plan.

  • A millennial woman shared that she had $130,000 in debt, a combination of student loans and credit cards. Having such a high amount of debt was causing her a ton of stress. Oh yeah, she had over a half-million dollars of vested stock from her tech job. She told me she was afraid (more like terrified) of paying taxes on the liquidation of her stock. So I asked her two questions. How would it make you feel if all of your debt could be paid off tomorrow? What would you do with the money (the payments she was currently making on her debt) that would now be free to use at your discretion? After our meeting, it took her a week to make the liquation and pay off her debt. The money that became free was applied to beefing up her emergency fund, maxing out her 401k, and opening up a brokerage account so she could buy ETFs each month.
  • A millennial man was becoming obsessed with getting into crypto investing. He was an engineer and had been doing a ton of research about the crypto space. But, he wasn’t doing any investing outside of his 401k. He was an avid saver and shared that he wanted to drop $15,000 into a coin he’d been tracking and hearing a ton of buzz about on the internet. However, he shared his concerns about his tax situation with me, and he didn’t feel like he was on track with his retirement plans. So I asked him one question that I thought would be a layup which was the turning point in our meeting. I said, “You earn well over $150,000/year. Are you maxing out your 401k?” He responded by saying, “Yeah, I’m doing the company match, so I’m maxing that out.” I quickly responded by sharing the difference between the company match and the maximum amount allowable in his 401k by the IRS. Plus, I explained that the more he contributes to his 401k on a pre-tax basis (his employer also offered a Roth contribution option), his taxable income for the year would decrease. So, to move forward, I recommended he max out his 401k, which would assess his top two concerns. Then he should reassess how much to put into crypto. If he doesn’t have a conversation with me, he doesn’t tackle his top two financial priorities. And, because I know the crypto markets are incredibly volatile, there was a chance that the coin he was tracking wasn’t going to “do numbers.” I recommended he find a better place for that $15,000 or maybe only put $5,000 into the coin. He decided on $10,000 and swiftly lost it all in a few weeks. He learned a valuable lesson in investing, and I’m glad to know that no matter what else he decides to invest in during his lifetime, he’ll be maxing out his 401k every single year.
  • After a speaking engagement, a millennial couple came up to me and said they needed to get their #buildwealth plan on point. We set up a meeting the following week, and right off the bat, they said, “Collectively, we make over $400,000/year but feel like we are living check to check.” In my head, I’m thinking, how the **** is this possible? I’ve read stories about these people on the internet, but here they were, in the flesh. So I asked them to tell me about their lifestyle because it was evident that this was a lifestyle inflation issue (you spend more because you’re earning more). This couple was living so far beyond their means it was ridiculous. They had two brand new luxury cars with crazy high payments because their credit wasn’t great. They only needed one car, but the second luxury car was purchased during the pandemic because the husband said, “I was jealous my wife had her dream car, so I needed mine too!” But where exactly was he planning to go? This purchase was made in April 2020, the heart of the COVID pandemic. Both LOVED designer clothes, and even their two kids were always dressed to the nines when they were out in public. They loved going out to eat at fancy restaurants for family dinners or brunch events and posting photos from those restaurants on social media. They both had student loans from undergrad and a substantial amount of credit card debt. I could continue with this laundry list of things, but I simply asked the couple, “Do you want to do better?” They both said yes, and I shared some tools to assist them with getting started transforming their financial lives. Everything was going great for about two weeks, and then the husband texted me a photo of their new puppy with the caption, “We’ve made an addition to our family, but I know this might not have been the best use of our money.” I just laughed and responded, “I don’t expect y’all to become financial rockstars overnight. This is a lifelong journey, and I’ll be there to support and guide you the best I can. It’ll still be up to y’all to do the work.”

HENRYs have a unique opportunity to live an extremely prosperous life. All HENRYs must be willing to take some time out of their busy lives and give real attention to their #buildwealth plans. Financial success doesn’t just happen by chance, and you have to put in the work. If you’re a HENRY and haven’t built your Money team (check out my Money Team article), you should put that at the top of your to-do list. The sooner you build your Money Team (and get clarity on everything you’re doing financially), the quicker you will graduate from high earner, not rich yet status to high earner, finally doing what it takes to live and conduct themselves as rich people do.

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

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Financial planning is like a puzzle

by with No Comment BUDGETINGDEBTINSURANCEINVESTINGMONEYPERSONAL FINANCERETIREMENT

When was the last time you assembled a puzzle? I recently spent a Saturday afternoon with family, and someone had an idea that we should spend it working on a puzzle. So we turned on some tunes, made a few drinks, ordered some grub, and got to it. 

This experience got me thinking about how putting together a puzzle is very similar to financial planning. This puzzle (a 3000-piece one) had a beautiful image on the box, which we were all excited about replicating by connecting each of the 3000 pieces.

Financial planning is kind of like a puzzle. For example, we can all “see” or visualize what financial success or achieving financial goals looks like (the image on the puzzle box). But then, we need to consider all these different products and services (the puzzle pieces) to put our financial plan together. That’s where things get tricky, and at that point, we’ve got to develop a strategy.

Many would agree that the most basic, fundamental way to start a puzzle is to separate the edge pieces. This way, you have secured the perimeter and can now begin the next phase of filling in the puzzle. The most fundamental step someone should take with financial planning is completing a balance sheet (this captures your assets and liabilities). The balance sheet helps you take inventory of where you currently stand financially. It’s like seeing your financial situation from a 5,000ft view. This is an important step because many people prefer to start purchasing financial products and services but aren’t sure how they “fit” into their overall financial strategy. 

The next phase of the puzzle typically involves segmenting out specific colors. During my puzzle experience (a nature-themed puzzle), there was a substantial portion of the sky, water, and trees. So, the best strategy was to separate all the light blue pieces (the sky), darker shades of blue pieces (the water), and the various shades of green, which would cover the trees. Eventually, we knew this was an efficient way to build our nature scene puzzle.

A similar approach can be utilized to craft a financial plan. For example, we could break it down into three primary sections; money management (cash flow/budgeting), offense (investments, retirement, real estate, running a business), and defense (life, disability, health, or any other type of insurance). By breaking down your planning efforts into those three categories, it’s easier to see where the opportunities might lie. This is a simplified way that more people should think about financial planning, but it’s hard. Why? Because the world (your family and friends, the news, social media influencers) is telling you what you should do with your money instead of being in control of your money and directing it accordingly. 

The one thing I want to highlight is that my puzzle experience included multiple people. It’s not that I’m not capable of strategizing on my own and completing a 3000-piece puzzle, but the overall experience was much more enjoyable. See, I had people assisting me with completing the puzzle, which helped save a ton of time. 

Many feel compelled to go at it alone with financial planning, which wastes time because they’re trying to become the expert in everything. Plus, it’s impossible to be an expert in everything, so why not work with a professional or team of professionals (check out my article called Your Money Team) to assist you with crafting a solid financial game plan. And, because you’re not an expert, you might not be making the financial decisions that are in your best interest, or there could be blind spots within your plan that you’ve overlooked that could be detrimental to your long-term future financial success. 

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

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Your Money Team

by with No Comment BUDGETINGBUSINESSDEBTINSURANCEINVESTINGMONEYPERSONAL FINANCERETIREMENT

During speaking engagements, I like to talk about financially successful people and how they are constantly focused on building their respective empires. One of my favorite examples is Beyonce and Jay-Z. This is what most might call a power couple. As a power couple, their time (like most others) is precious, and I’d assume the two of them are really busy. Busy being parents and being moguls. So when do they find the time to become experts in all the various components of financial planning? They don’t! Highly financially successful people (from my research over the years) all do the same thing regarding their financial affairs. They have a group of people they work with to keep their finances on point. This group of people is called the Money Team. 

In my opinion, EVERYONE needs a Money Team! (Yes, that includes me too) This team of professionals is comprised of the following (not in order of importance):

  1. Banking professional
  2. Tax professional
  3. Insurance professional (there are numerous you might need)
  4. Investments professional
  5. Real Estate professional
  6. Attorney (there are numerous you might need)
  7. Financial planner

I’m sure some of you reading this are saying, “I can’t afford to pay all these people.” And that may be the case now, but think about it this way. You are making an investment in these professionals to ensure that your financial house is in proper order. Remember, do you really have the time or want to devote the time to become an expert in all seven of those areas? Some may decide to go the Do-It-Yourself (DIY) route, and that’s perfectly fine. So keep at it as long as you get the results you desire. 

However, experience has taught me that many DIYers tend to lag behind in accomplishing financial goals in the time frames they initially set. Plus, because they don’t work with experts, they sometimes make or have made questionable financial decisions that weren’t in their best interest. Nobody is there to validate the decision(s) in question, so many DIY financial people don’t achieve the financial success they dream about.

When discussing the Money Team with people, one of the first questions most ask is, “Why do I need all these people?” Let me break it down for you, and I’ll tackle each team member’s importance in order.

Banking professional – Banking has changed over the years, and the industry relies heavily on conducting business virtually. However, what hasn’t changed is that people will always need to borrow money. So when you need money, looking good on paper or on the computer is one thing, but having a relationship with a lender could prove highly beneficial for your transaction. If you don’t believe me, ask a business owner who has tried to get a loan from a financial institution with no previous relationship.

Tax professional – Everyone should pay their fair share of taxes and not a cent more. And everyone should make it a point to avoid any issues with the IRS. If you’re a business owner, you should know what you can and can’t do from a tax standpoint based on how your business is structured. If you don’t work with a tax professional, you’re probably paying the government more money than you should. Having a tax professional is critical to your financial success because they pay attention to the tax laws and codes that are constantly changing, be it federal, state, or local. And, you don’t have the time (nor do you plan on making any) to do that kind of research to stay up-to-date with all the taxes changes. 

Insurance professional – There are various types of insurance you might need to consider having during your lifetime: life, disability, health, umbrella, business, and long-term care, just to name a few. This might prompt you to connect with multiple insurance professionals because particular licenses are needed to sell certain types of insurance. Thus, you must make sure the insurance professional is properly licensed. No matter what kind of insurance you’re looking to add, the process should go in this order. With the help of your insurance professional, you (1) determine how much insurance (whatever type it is) you need, then (2) explore the various options based on the need. The process should always follow those steps.

Investments professional – This team member has fallen out of favor (somewhat) because many people feel they can use technology and do their own investing, be it for general purposes or retirement. While I know this to be true, studies have shown that the average person gets better investment returns over the long haul simply because they work with an investment professional. Why? Because this professional will help you not get emotional when it comes to making investment decisions. Just ask yourself, what did you do with your investments back in 2008-2009? Did you run scared and take your money out of the market? Or did you invest more and capitalize on one of the greatest bull market runs, which started in the latter half of 2009? Having someone close to you who can help you make prudent investment decisions is why this person is so important. 

Real Estate professional – Whether you’re looking for your first home, an investment property, or working to build your commercial real estate empire, you will probably need this expert to assist you. The real estate market is like any other market, it will ebb and flow, and at times it’ll be a buyer’s market, and during others, it will be a seller’s market. So it will be easier for you to navigate the market if you have this professional by your side.

Attorney – When it comes to legal matters, you will need assistance from a legal professional. Like the insurance expert, you might find yourself enlisting the services of multiple attorneys depending on your specific need and making sure your attorney is properly licensed. So, for example, if you have an estate planning need and want to make sure your family will be good long after you’re gone, you’ll probably be better served by an estate planning attorney instead of a divorce attorney. 

Financial planner – This member could serve as your team’s quarterback. They aren’t trying to sell you any particular product, but they work with you to give you clarity about your financial situation. Essentially, this team member helps you see your entire financial situation from a 5,000ft view. Plus, as they work through the planning process with you, they will probably ask to coordinate their efforts with your other team members. For example, if your financial planner is having a retirement conversation and trying to figure out if a Pre-tax or a Roth contribution is better within your 401k, they will want to consult with your CPA or accountant. Lastly, you may meet with your financial planner at some agreed-upon frequency, like quarterly, twice a year, or annually. This will ensure that everything is going…as planned. 

The key takeaway here is time. You don’t have enough time in the day to become an expert in everything. Let the experts do their job because their sole purpose is to help you do the heavy lifting. Becoming a financial rockstar isn’t easy when you go at it alone. But, having your Money Team in place will allow you to get back to living life with a lot less stress.

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

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Financial literacy efforts in the U.S. need some work

by with No Comment BUDGETINGDEBTINVESTINGMONEYPERSONAL FINANCE

Please visit The Nation’s Report Card on Financial Literacy and see what grade your state has earned for its financial literacy efforts when you have a few minutes. I want to spotlight two states near and dear to my heart, North Carolina and California. North Carolina is my home state (born and raised in Durham), and they received an A. I currently reside in Oakland, CA and California received a D. That grade doesn’t sit too well with me.

John F. Kennedy famously said, “One person can make a difference and everyone should try.” After learning of this report card website, I decided I would try to make a difference. So I set out on a data-gathering and outreach adventure that would keep me occupied for a few months. I compiled a list of about 250 School Board Members and high school Administrative leaders, like Principals, Vice Principals, Deans of Students, etc., and various teachers. If you’re curious about why I targeted high schools, here’s why.  

I’ve spent countless hours volunteering at elementary, middle, and high schools (through my work with the Urban Financial Services Coalition), conducting financial literacy sessions. While some have professed that earlier is better, I’ve seen the biggest and most immediate impact happen at the high school level. Thus, I decided to focus my efforts there.

What would I offer these high schools to help improve financial literacy? A free, 6-part high school financial planning curriculum courtesy of the National Endowment of Financial Education (NEFE). This curriculum was legit! It came equipped with the lesson, a teacher’s guide to the lesson, and supporting materials for the lesson. Literally, anyone could pick up this curriculum and teach any one of the six lessons. In my mind, I knew this curriculum would be a huge hit!

I curated a series of emails that I would send to giveaway this free high school financial planning curriculum. To make sure I didn’t seem like a scammer, I was completely transparent about why they were receiving this email and what I expected to gain from it. There were no ulterior motives. Just say you wanted the curriculum, and I will send it over. 

Well, this experiment didn’t go like I thought it would. I sent over 1000 emails (over those few months), and the response rate was abysmal. Of the few who responded to at least one email, here are my favorite responses:

  • “Not interested!”
  • “I’m too busy to include financial literacy into my lesson plan” (this was from a math teacher)
  • “I’m not confident in my personal financial skills to teach such a robust curriculum.” (No experience was required to teach the lesson plan. It was all laid out, so you could “fake it til you make it”)
  • “We don’t have the budget to pay you” (I didn’t ask for any money. I was volunteering to donate a curriculum)

I can’t say that I’m completely shocked by the lack of response because most of the country doesn’t teach financial literacy in school. But I was hoping for a few outliers who might have truly understood that my efforts were pure. Plus, my experience over the years taught me that the faculty/staff at schools are uncomfortable with administering any financial literacy program because of their personal relationship with money.

So what now? If you’re reading this and you are a high school teacher, high school administrator, or school board member and would like to discuss the financial literacy curriculum in more detail, send an email to info@ready2buildwealth.com. In the subject line, write FinLit Kids. Or, if you have a good relationship with a high school teacher, high school administrator, or school board member, please share this article and encourage them to reach out so we can have a discussion about we can leverage this 6-part financial literacy curriculum to educate our youth.

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