Money Smarts for Turbulent Times
By Judtih Briles
This book is intended as a general guide to the topics discussed. It is not intended and should not be used as a substitute for professional advice (legal or otherwise). You should consult a competent financial planner, attorney or other professionals with specific issues, problems or questions you may have.
Although every precaution has been taken to verify the accuracy of the information contained herein, the author and publisher assume no responsibility for any errors or omissions. No liability is assumed for damages that may result from the use of information contained within.
Company names, and trademarks used in the book belong to the companies that own them. There is no attempt to appropriate these names and trademarks and none should be construed. Also, there is no endorsement, implied, or otherwise, of the companies listed in this book. They are used to illustrate the types of places, software or information centers where readers can find more information. The company names, phone numbers, addresses and websites may have changed since the publication of this book. Finally, Money $marts, Money Smarts and Money $marts for Turbulent Times are used interchangeably within the text. If you wish to contact Judith Briles, her website is Briles.com.
Copyright © 2009 by Judith Briles
All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the publisher.
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Contents
Part I: Assessing Your Situation-Getting Started (Days 1-7)
Day 1 Having and Using Money
Day 2 Getting Organized
Day 3 Credit . . . Friend or Foe?
Day 4 Your Net Worth
Day 5 Where Does Your Money Go?
Day 6 Income Sources
Day 7 Uncle Sam and You
Part II: Developing Your Plan (Days 8-11)
Day 8 Your Money $marts Goals
Day 9 Spending Plans that Work
Day 10 To Bank...orNottoBank
Day 11 Borrowing for Today . . . and Tomorrow
Part III: Setting Up Your Safety Net (Days 12-17)
Day 12 Insure? . . . Maybe!
Day 13 Other Insurance
Day 14 When There’s a Will, There’s a Way
Day 15 Planning a Comfortable Retirement
Day 16 Savings that Work
Day 17 Giving . . . What Goes Around, Comes Around
Part IV: Family Talks (Days 18-20)
Day 18 Credit Revisited
Day 19 Dark Clouds Can Surface
Day 20 Keeping Holidays in Perspective
Part V: Kids and Money (Days 21-23)
Day 21 Financing College Without Going Broke
Day 22 Savings, Spending, Sharing and Allowances
Day 23 The Teen Challenge
Part VI: Investing Savvy (Days 24-27)
Day 24 Your Shelter: Buying vs. Renting
Day 25 Investing ABCs
Day 26 To Market, to Market
Day 27 Investing in Yourself
Part VII: Building Your Resources (Days 28-30)
Day 28 Don’t Fall for a Bad Deal
Day 29 Hiring the Experts
Day 30 Your Money $marts Resource Center
Money $marts Month 2
Adding It All Up!
Introduction Money and You
Every woman, man and family needs a Purse/wallet of their own!
Welcome to the instant money society—just about anything you want is available and at your fingertips. If you want it, you can get it. It’s only a phone call, the Internet, a short car ride and a charge card away. It’s so easy . . . and that’s the problem. Too quick, too indulgent, too easy!
Money. Can you live without it? For that matter, can you live with it? Money is one of the many tools that you will use to get what you want and need. If you are like most, you really don’t have a full picture of how your money is spent or where it goes. All you know is that money seems to run out before the end of the month does.
The good news is—you are not alone. The bad news is—you have plenty of company.
Money $marts is your new partner. It will change the way you think, prioritize and act about money. It will not promise you an instant fix; an instant fix is part of the problem. Rebuilding and redirecting ingrained attitudes and habits about money takes more than one 30-day span.
But, I will promise you this: As you work through the next 30 days, you will see how to eliminate many of the toughest obstacles. It doesn’t matter if you are a family of one or one of multigenerations under the same roof. There are basic steps. Some, so simple that you will tell yourself, “I know this stuff.” Others, a little more complicated, but definitely doable.
I won’t tell you to do weird things with your money or suggest strategies that only someone with a very fat checkbook could accomplish. The tips and tools you will read each day are designed for anyone who is willing to do my recommended “To Do” items. Some days, just a phone call to an organization with a short letter follow-up will be that day’s activity. On others, more time is needed.
How to Use This Book
In Money $marts for Turbulent Times: Personal Financial Success in 30 Days!, you will find that it is designed to be read on a daily basis: one reading per day for the next 30 days. Each daily reading will provide you with a brief introduction to a specific topic (To Think About) and work space for you to respond either in writing or action (To Do). At the end, you will receive one final recommendation (Money $marts Tip).
This chapter and the next are intended to be read as “warmups” and not counted in the 30-day total. We’ll be looking for attitudes and fears about money.
Acquiring Money $marts takes commitment and time. Some days will have a few hours of work; others, a quick read. Some days include strategies for working with kids. If you have none or yours have grown and gone, then you pick up a few days “off.”
0,000 days making money. Surely, 30 days in figuring out what to do and how to do it is a drop in the bucket of life—and a critical drop it is.
Your 30-Day project is divided into the following areas:
• Face Your Money Fears (Read before you start the month—this will be a primer to cross over the money resistant barriers.)
• Assessing Your Situation-Getting Started (Days 1-7)
• Developing Your Plan (Days 8-11)
• Setting Up Your Safety Net (Days 12-17)
• Family Talks (Days 18-20)
• Kids, Money and College (Days 21-23)
• Investing Savvy (Days 24-27)
• Building Your Resources (Days 28-30)
• Month 2-Review
As you work through the daily readings and activities, realize that the day-by-day strategies, suggestions and actions are presented in a general format. Some of them may not be relevant to you and your family, others you may want, and need, more indepth. Building Your Resources (Days 28-30) is designed for just that purpose. Since some of the days will take more time than others, it may be better to schedule them when you have a day off or a weekend.
In the end, some will be fun and some a quasi-pain-in-theneck—usually because you are forced to look in the mirror and acknowledge that your money habits have gotten a tad out of hand. Money $marts will become your guidebook through the money maze, a maze that is full of detours, potholes and barriers.
Many of the activities will take time to complete. The use, and misuse, of money will impact you and your family for the rest of your lives. What’s a few hours, even days, when you are implementing Money $marts for the rest of your life?
The Money Fiasco of 2008
No one could have come through 2008 without feeling some form of financial squeeze. For some, it was an unbelievable financial disaster that caught so many off guard.
People I knew lost their jobs, their homes, their life savingshere yesterday, gone today. Poof . . . it felt like it was an overnight happening.
Fat 401(k) accounts were slashed to a fraction of what they were just months earlier; homes that many counted on to yield a hefty part of their retirement seed plummeted in value; and the credit markets turned venomous. The perfect storm. Financial scandals, scams and corruption fermented everywhere.
In the late fall of 2008, I was speaking in Grand Rapids, North Dakota. One of the participants approached me afterward and told me that she had bought the original version of Money $marts in 2004 and immediately implemented its game plan. Now, this version, Money $marts for Turbulent Times is not “heavy” or “deep” . . . it's not complicated. It's old-fashioned, basic . . . and that's what my reader was telling me. She was financially fine, thank you . . . she felt that her copy of Money $marts had saved her financial life.
Money $marts Tip: The bottom line? Simply this: get
started. Today. Stay focused. Learn from whatever mistakes you make. Reevaluate what you are doing on an annual basis. Don’t let anyone (including yourself) get you derailed. Finally, celebrate your new commitment to financial independence.
With the redirection of your moneys, present and future, any “Will I have to eat cat food?” fears are not forecast for you. Are all the Money $mart Moves I shared with you doable? You bet. Just do it!
Face Your Money Fears
You aren’t born with a fear or attitude about money, but guaranteed, you’ve got a few.
To Think About: Fears and attitudes—be they good, bad or ugly—have been developed over a period of time. No doubt, your upbringing is a major contributing factor. Past experiences— successes and failures—create an umbrella or flooring. Then there’s the current culture norm—always ready to jump in and give its two bits worth via the media, your circle of friends, even the government.
Let’s face it. You are the steward of your money—however big or small your pocketbook or stash, you are in charge of its destiny . . . at least during its initial leg of the money journey.
The Fear of Being Poor
The number one fear that has been shared during the past year in my Money $marts workshop is the fear of being poor—will I have to eat cat food when I stop working?
Years ago, a client had asked me if I would take the time to go visit his mother. He told me that she had some investments, lived mostly off the dividends, interest and her monthly Social Security. He asked that I just check in with her to see if she was getting a decent return on her portfolio. From his brief synopsis of her situation, nothing seemed unusual.
I made the appointment and spent a pleasant two hours getting to know Martha. She was in her early sixties at the time and healthy. She believed that she was a good steward of her money. With financial data filled out, I promised to get back to her within the week with an update on several stocks and suggestions for any changes to her portfolio. As I got up to leave, Martha said, “What about my stash?”
“Stash,” I responded, “what stash?”
She pointed to the corner of her living room. All I saw was a big green, over-stuffed chair. “My stash . . . in the chair. . . and drapes.” This was a first for me. A whole new stash, rainy day, liquidity fund (more on that later) vehicle!
My new client had stashed in excess of $30,000 over the years in her over-stuffed green chair with matching draperies. She had lived through the Depression—never again would she, or her family, be without food if bad times hit again. It took me over a year to convince her to move her moneys to a money market fund that would earn her interest.
Did she move the entire amount? Nope—at least not initially. Her bottom line number was that she insisted on a stash of $5,000 in the house, money that she could tap into for a movie, food, play, repairs, anything. The good news is that she did move the rest to interest bearing accounts. She signed on for check writing privileges and after two years, finally accepted the fact that she really could access her moneys by writing a check and depositing it into her regular checking account.
The reality is that whether you are rich, poor, or in-between, the person that you are going to have to rely the most on to keep you from the poorhouse is you . . . your creativity, your imagination, your intuition, your smarts.
The Fear of Losing Money
At some point, everyone loses money. It can be from a bad investment, misplacing moneys, inflation erosion, failure to act or make a decision on your investments, fear of making the wrong decision, or fear of losing a job or other resource of funds.
In many cases, men make more money in the workplace than women do (if money is lost in a bad investment, a common male attitude is that it can simply be replaced). Women are less likely to take the financial positions and risks that men often do. A lot of it has to do with familiarity. Men, as boys, still get the majority of money messages from their families, friends and peers.
Working with, and investing money does not have to start in giant steps. In fact, it’s wise to avoid them. Start with small steps. Whether it’s putting money in a mutual fund (many will allow you to start with as little as $100, if you commit to putting in a minimal amount on a monthly basis), a money fund, or a fund for the kids (or yourself), small amounts can build into fortunes.
Starting small allows you to learn along the way. A little here, a little there. If some of the “little” doesn’t work out—the investment fails, or never grows in value (also a failure), you and your net worth won’t be destroyed.
The Fear of Talking About Money
Your upbringing will most likely be the primary factor that shapes your money practices. Most adults “wish” that they had had training and guidance about money and investing as they grew up.
If you came from one of those families that actively discussed money and its many facets, good for you. But, you need to realize that you are in the minority. Not all of your friends will be on the same wave length as you are in money matters. Your awareness, and possibly non-intimidation to the topic, may actually intimidate them!
The Fear of Making Mistakes and Failing
Everyone makes mistakes. I wished I had $10 for each one I’ve made over the past 50 years plus. There’s no question that if you do make a mistake with your money you aren’t going to be happy about it.
Mistakes happen. You get to choose—will they handicap and paralyze you? Or will you look at them as a learning and growth experience?
What you have to guard against is the reaction that the fear of failure and making mistakes can generate paralysis . . . getting stuck mentally. Making money mistakes and experiencing failures won’t destroy you. Your key to resurrecting yourself is determining—
What happened?
What factors could you control, influence or alter?
What factors could you not control?
What did you learn, the pros and cons?
The Fear of Creating and Sticking to a Plan
How many incredibly lucky people do you know who win money—lots of it? I bet very few, if any. None of my friends, acquaintances, colleagues or the 30,000 plus people I speak to on an annual basis have ever told me that they have won big money. In fact, no one has ever told me that they have won more than a few hundred dollars playing blackjack or the slots in Las Vegas.
Creating a plan means making a commitment. To yourself. And, that’s where the fear factor enters. If it is in writing, it means that you are supposed to do it versus just talk about doing it. And granted, that can be scary.
Once “it” is in writing, it is easier to track, measure and evaluate the author’s progress—yours. Financial plans are guide tools that start you on a path that will lead you to your stated money goals, if followed. They are not, though, set in granite. Times and circumstances change. So do investments and investment opportunities. That means that you don’t create it and then stick it in the drawer. It means the plan needs to be reviewed, at least once a year. Financial plans should be flexible. Life changes. You change.
You can create a financial plan in one of two ways—do it yourself, or hire a professional. I opt for the professional, preferably a Certified Financial PlannerTM Professional. If you do it yourself, you may do fine, but you could easily stumble along the path; if you hire a planner, a road map will be created that is designed for you. The next step is that it’s up to you to put your foot on the gas and get going. The commitment part.
The Fear of Borrowing Money
Ideally, you would like to pay cash for everything. “Ideally” and what’s “practical” are not always on the same track. Sometimes, it makes sense to borrow money. Unless you have a big savings account, borrowing money to buy a home is a necessity for most. But, over-borrowing and too much credit is quite common. Borrowing too much should be feared. It’s easy to get out of control.
Weekly, your mail box probably has offers of new credit cards— the deal of the week! Should you sign on?—it depends. Ask—
• Do you need the credit card? (It makes sense to have at least one.)
• If you carry a balance, is the interest rate lower than the one(s) you presently have?
• If you don’t carry a balance, what’s the incentive for you to switch?
If you are contemplating borrowing money for a large item, or already have—a home or an education loan—increase your pay back amount by 10%. Why? Simply this—you will reduce the time your loan payoff paid by approximately one-third. That means you save big dollars and limit the time you “owe” someone. In the case of a credit card, use it by only charging the amount you will pay back within the grace period in the month when you get your bill. That way, no interest will be charged.
In determining whether you should borrow or not, ask yourself if you need the item or do you want it. If you want it and can’t (or aren’t sure) you can pay off the amount over the designated time, don’t purchase it. If you “need” the item, and can pay it off over the determined payoff time, purchase it. In reality, most people get in trouble when they let their “wants” dictate how money is used.
The Fear of Investing
Anyone who was half-awake as the new Millennium drew near in 2000 knew that the stock market was hot—it seemed as though everyone and anybody was making money. So, which way should you go? Stocks, bonds, mutual funds, real estate, business opportunities—the list of possibilities is long.
One of the scary things about investing is that there are no guarantees. Any money that you invest can increase in value, maintain its original value, or decline in value.
Sometimes, too many options can confuse you. Should you throw in the towel and give up? Absolutely not. Over time, which means you start investing now, investments, especially the stock market, have outperformed other investments. One of the Momisms of life is “Be patient, your turn will come.” Investing takes time and patience. When it comes to investing, don’t focus on what your investment is worth this week or even this month. Concentrate on the long haul—what are the projects you are saving for five, ten years from now?
The Fear of Not Trusting Yourself and Keeping the Wrong Advisors For women, it is not uncommon to be more loyal to money advisors—bankers, lawyers, accountants, Realtors, insurance agents, stock brokers and financial planners—than to their own money. It’s also common to defer to others any action and recommendations of what to do with their money.
Two key differences exist between men and women when it comes to money advisors.
• Women tend to form a type of friendship with their advisors, not wanting to terminate the relationship even if there are signs of poor advice or management.
• Women are more inclined to abdicate financial decisions to someone else. They rarely follow up on what is suggested or done to their financial accounts. This is a direct result of upbringing influences.
In the 15 years I advised women and men about their money, my goal was to get them involved and to not advocate giving their investment and money strategy decisions to me or to any other advisor. It takes time to work through the maze of options. Advisors can help . . . but, so can you.
Think of all the times you have said, “I knew it was the right thing to do,” or “I knew it was going to happen . . .” Trust yourself. Get involved.
So, What Are Your Fears?
Everyone has at least one. It’s time to confront your deepest financial fears and get them out in the open. Is it becoming a bag lady, dining on cat food or having to rely on others to put food on the table and shelter over your head? The fear of making a mistake that is financially catastrophic can inhibit you from action. Start identifying your fears. Write them down. Just the mere fact that they are on paper opens the door for you to commit and confront them head-on.
To Do: As you process through the money maze with this book, you will learn new things—about yourself and others, and how you, and they, relate to money. Learning new things enables you to look at your backpack of fears and do some assessing.
• Are my fears realistic in today’s environment?
• Are they relevant to what I currently do?
• Do they hinder me from moving on?
• Are they life threatening (to my spouse, partner, kids or job, my friends, me)?
By identifying your fears, you are doing something quite positive. It’s a big plus for you to acknowledge and eventually confront the fears of your upbringing and societal influences—producing a new you. By writing down your fears, you can create their opposites. Write yours down now.
Put them in “reminder” letters or notes you write to yourself. Get some Post-it® notes, use them and put these sticky reminders in places where you normally look throughout the day—the mirror in your bathroom, the refrigerator door, your desk or work area, on the telephone handle. By writing down the old, and creating the new, you birth a new script for your life.
My money fears are:
To Do: Ways to Remove Money Fears
from Your Life
The suggestions below are meant to be done over a period of a few months—not all today; you’d never complete them!
1. Enroll in a mini or short class taught at your local community college by a financial professional.
Be aware that most of these classes are presented by individuals as part of their marketing efforts—they hope to get you as a new client. Your initial goal in attending the class is to learn— the jargon, strategies and what your investment options are. You are never under any obligation to become a client.
2. Start an investment club with some of your friends.
It’s a great way to learn about stocks with a minimal dollar commitment (starting at $25 a month) and have fun. Contact the NAIC (National Association of Investors Corporation) at 877-2756242 for an information packet or go online at better-investing.org. As a member, you will receive their magazine, Better Investing.
3. Find out where your money goes.
Did you spend any money where you now feel you made a mistake in doing so or determined that you really could have waited? Did you feel stupid . . . or did you learn something—as in, “I won’t waste money this way again.” You’ll be doing this exercise within the first week of the Money $marts program. Ideally, this is something you should monitor for a full three months—keep track of where every dime lands. Don’t forget the frozen yogurt, magazines and the three dollars you misplaced.
4. If you have kids over 6, plan a monthly money powwow and talk about what items your family “needs” versus “wants” and how much they cost.
Your objective is to create (and uncover) topics, issues or concerns about money that can be talked about. Make sure the discussion level is when that connects and is understood by the ages present.
5. Host a potluck dinner at your house with your friends.
Tell them that it will be a “can you top this” tale about the goofiest or stupidest thing that they have done with money. The objective is to show that no matter how bad it looked or seemed at the time, each survived.
6. Trust your instincts. Do a little mental probing—when was there a time(s) that you didn’t follow your own beliefs or “gut feelings” and you were right in the first place? Once you commit to learning about and using money more effectively, you’ll find that “your” feelings and gut reactions are often right on target.
7. Find out what your money is really earning.
Call your bank and ask your representative or someone in customer service how much money would you have in 20 years if you put $100 in a savings account that earned 3% per month every month during that period of time. Many of the banks that offer online services have financial calculators available on their websites—if they do, use them.
Now, call a brokerage company, such as Charles Schwab & Co (800-724-7526 or go online at schwab.com) and ask the same thing, but change the percent you will receive to what the average growth rate of a growth mutual fund in a top 20% ranking has been the past five years as the percent of growth you will receive for the next 20 years. Go to the Internet, morningstar.com and identify a fund from the ones identified under growth. Which yields more—the 3% bank account or the nonguaranteed mutual fund?
8. Think—have you ever put money into an investment and had it decline in value?
Why did it decline—was the stock market down in general; was the industry you’re investing in experiencing negative publicity;
was the company losing money or reporting poor earnings? Did the loss cost you anything besides money (loss of sleep, mistrust of the person who recommended you invest the money, negative feeling about investing in general, etc.)?
9. Remember a time that you were afraid to do an activity (any activity will do) because you didn’t understand how to do it or how it worked . . . and you did it anyway, and it worked out well?
What did you learn—that you were just lucky . . . or that sometimes you don’t need to know everything there is to know to move ahead?
Money $marts Tip: There will always be some type of
fear. Cartoon character Pogo said it best, “I have seen the enemy and the enemy is us.” By bringing up your awareness level, identifying which fears influence your money decisions, you will achieve the first level of smart money
Money $marts . . . 30-Day Overview
.
Assessing the Situation —Getting Started
(Days 1 – 7)
1 Having and Using Money
The problem for most is not that they don’t have money; it’s what they do with the money they have.
To Think About: Can money buy happiness? Yours—or a close friend or loved one? Most think so, especially the young and those who have received lump sums that usually come as gifts or through inheritances. Truth be told, it doesn’t last long for many. It’s easy to say, “If I only had more income (savings, investments, real estate, etc.), I would be more happy (comfortable, satisfied, joyful, generous, etc.).” Really? Let’s find out.
To Do: Read the columns below. Circle or underline all
the words that most sound like where you are or how you feel today.
Money $marts Attitude Scale
1
Unhappy
Insecure
Angry
Lonely
Need
Love
Inhibited
Unfinished
Uncomfortable
Disappointed
Fatigued
Low self-esteem
2
Unproductive
Barely Coping
Not good enough
Not having enough
Improving Searching
Making do
Struggling
Need assurance
Tense
Relationships need improving
3
Steady
Average
Ordinary
OK
Accepted
Satisfied
Common
Worthy
Likable
Agreeable
Relationship OK
4
Happy
Tension
Free
Aspiring
Secure
Fun
Pleased
Peaceful
Competent
Prepared
Capable
Productive
5
Joyful
Accomplished
Acknowledged
Valued
Powerful
Confident
Exhilarated
Blissful
Excited
Passionate
Making a difference
Source: © The Briles Group, Inc. 1995
Now, how much income do you have per month— $0 to $1000, $1001 to $2000, $2001 to $3000, $3001 to $4000 or over $4000? If you compared your income and column number with a hundred, even a thousand other people, the result may surprise you. In real life, most people, no matter how much they make, will be to the left of the “Average/Normal” column #3! Are you?
If you are like most, average, it does not mean, “Why bother?” As in, “Why bother to learn or do anything about money if it doesn’t impact your comfort level?” Instead, it means there is more to money; money is just a means, not an end in itself. Money $marts is about creating and using money, not loving it. Money can conceive the security and freedom your family desires to pursue its values and plan for the future. How it grows is up to you. Your money future is the palette from which you choose to paint—as brilliant and diverse or as simple and neutral as you want.
Think of money as a tool. If used and cared for, you have almost unlimited years of service. If neglected or ignored, it rusts and rots away. You are the key ingredient in your money tool kit. How?— by becoming astute as to what makes and what does not make good money smarts. Savings; investing; credit; housing; retirement planning; getting good, solid advice along the way; and everything in between, are all factors in enhancing your money confidence. Without them, you are hampered in your quest to get control of your family finances. The tools you put together will be your magic carpet to financial self-reliance.
Below, write about how you would like finances to be— think in 5to 10-year periods.
I/We want our money palette to look like:
How important is money to you? How much do you think you need? Write a few sentences about the importance of money to you, and your family, if appropriate. List what you would be willing to give up, as well as what you would not be willing to give up to have “enough” money.
Give Up:
Not Give Up:
To Do: Identify your Money $marts Persona
You may ask, “What motivates me with my money decisions and habits?” To find out, take the Money $marts Per-
sona Quiz below. Instructions for scoring and determining your style follow.
Money $marts Persona Quiz
1. Your Aunt Martha dies, leaving you her prized pearls and stocks that have a current market value of $50,000. You—
A. Immediately take the stocks to a broker and sell them so that you can buy the things you really want, especially a new wardrobe to go with the pearls.
B. Get the stock certificates and place them and the pearls in a safe deposit box.
C. Do nothing.
D. Sell the stocks and buy shares in companies that you think will double in value within the next few years.
E. Donate the shares to the Girl Scouts, your favorite non-
profit organization.
2. Your best friend has just filed for bankruptcy. You—
A. Advised your friend to charge everything she could on her credit cards before she filed for the bankruptcy.
B. Know that you don’t want it to ever happen to you, that’s why you save a lot of everything you get.
C. Know that no money problem will ever force you to do that.
D. Worry that it could someday happen to you.
E. Decide that you don’t want to be around her as much as you have in the past.
3. The bonus you were counting on is only half what you expected. You—
A. Decide that a shopping spree is in order.
B. Take back the new outfit you purchased the previous week.
C. Can’t tell your spouse how much it is.
D. Call and see if you can get the deposit back on the new car you wanted.
E. Withdraw, from yourself, and your friends.
4. To be financially comfortable, you—
A. Have enough money coming in, therefore comfort is just a matter of going to work and doing what you love.
B. Need to increase your salary and have at least a million dollars in savings.
C. Are not really sure what you need.
D. Need to pay for everything in cash, including a new car
and house.
E. Want to increase your donations to charity.
5. You’ve just got a credit card offer in the mail. You—
A. Apply for anything that comes along, knowing that you can meet your monthly payments.
B. Consider it only if it has no annual fee.
C. Toss it in the trash.
D. Put it in a pile of mail to be looked at a later time.
E. Would only consider applying for it if it supports one of
your causes.
6. The stock market keeps going up. You—
A. Borrow money to invest.
B. Call your broker to cash out.
C. Don’t have a clue what “up” means.
D. Sell half of your holdings.
E. You endow a chair at your alma mater with the increased value of your investments.
7. You are one of the winners in a Power Ball lottery. Your share of the prize is $10,000,000. You—
A. Quit your job, order a great new chair to watch your new 60-inch flat screen TV, invite 20 of your friends for two weeks in Hawaii on your nickel, and order your dream car.
B. Select the annuity option for the rest of your life.
C. Are shell-shocked and eventually decide to hire a money manager to take over.
D. Tell each member of your immediate family that they can select a special “something,” then invest the rest.
E. Change your name so no one will know of your good fortune.
8. Your accountant has advised you to get your financial records in order. You—
A. Have always used the shoebox approach and can think of no reason to take the time to transfer everything onto a software program for your computer.
B. Are in your glory. The challenge of the new computer program fits you to a tee!
C. Know you will get to it, that’s why you save everything in a box somewhere in the basement.
D. Like to keep track of all the guarantees you have received over the years, including the tags you tear off merchandise you buy.
E. Ignore your accountant . . . that’s his job to keep track of stuff.
9. When I think about a budget, my response is—
A. Budget, what’s a budget?
B. It’s a good thing.
C. It’s never been a topic of conversation in my household.
D. I like to tinker with them, especially on the computer.
E. I take great pride in always living within my means.
10. I worry about money when—
A. I don’t, I’d rather think of ways to spend it.
B. I’m awake, it’s constantly on my mind.
C. Ever I read or hear about financial bad news or I’m in a crisis.
D. I’m not involved in other things that take my mind off of it.
E. Not often, there are other, more important things to worry about.
Scoring: The greatest number of a given letter will indicate your money persona. There are pros and cons to each style.
Who You Are
A Spender If you have mostly A’s, your attitude is “what I have, I will spend.” Budgets aren’t in your vocabulary; you freely spend money on your friends and you’re likely to have credit card debt, which can get you into trouble. The plus is that you aren’t held back by money worries and that you are generous, sometimes overly generous. A Spender is likely to be the one that reaches for the tab when dining out with friends, much to the chagrin of a partner or spouse.
B Keeper B’s indicate that you fit the common perception of a hoarder. It’s very difficult for you to spend anything on anybody, from yourself to the ones you love. The plus is that when money chaos hits the general population, you don’t have to worry about taking care of your family. The negative is that Keepers often hold back more if times look tough, even when they have what most would view as, plenty of money.
C Dodger A preference for C statements means that you will do just about anything to avoid a discussion about money, even if it is good news. Deep inside, you feel that you just don’t have the skills to handle it. The plus is that you are not obsessed about what money is doing.
D Postponer When it comes to money, anyone with mostly D statements is inclined to put off spending money whenever possible, no matter how small the amount. Money concerns envelop your thoughts to the point that you can be obsessed with what you perceive as the lack of money even when you have substantial savings. A Postponer is not necessarily a Keeper, although there are similarities. Postponers are willing to spend money, as long as there is backup in savings and investments. Keepers don’t want to spend, period.
E Atoner A high number of E responses indicates that you may be embarrassed about the money you have, you make or that you come from. Most Atoners live fairly uncomplicated and luxury-free lives. If unexpected money is received, it is not uncommon for an Atoner to pass it on to a cause. A common attitude is that “I didn’t have it before and all was fine, I don’t need it now.” Atoners will rarely replace household items and cars with newer models until they absolutely have to be replaced. Money is rarely wasted.
No matter what your Money $marts Persona is, it doesn’t mean that one style is any better than any other, although each impacts what you do with money now and what you will do with it in the future. In reality, a little bit of each makes sense at different times of your money life.
Money $marts Tip: Abraham Lincoln wrote, “Most
people are just about as happy as they make up their minds to be.” Part of your money journey will be to discover what you really need for your foundation. When I was a Certified Financial PlannerTM Professional, I consistently observed that my most successful clients were not the high earners—they made average incomes. They created plans that fit their life styles and goals. Those who made significant amounts of money usually kept a money banana dangling in front of them—always needing and wanting more.
In the end, it was my school teacher and nurse clients who really did sock money away for their future. A little bit every month—that’s how they got started, and it paid off big. By creating a habit that extended over many years, many of them have investments and savings exceeding $1,000,000!
2 Getting Organized
Planning for your money future begins with planning today. It also includes planning for the unexpected.
To Think About: We are not a paperless society. Most families have junk drawers—the place where you throw all the warranties and miscellaneous documents that you will file “someday.” From the time you were a little kid, you probably gathered stuff. I bet you have a report card that is several decades old (I do)! Hard to believe, but that’s good news. Out of all that paper buried in drawers, boxes and bags are the makings for building your money file system.
Getting organized means that you will know exactly where your old tax returns, mortgage papers, loan applications and payoffs, credit reports, retirement accounts, any investment and bank accounts, car documents, various insurance policies, improvements to your home, warranties, even bills to be paid are! This is one of the major areas where a money cloud can shade a household. It just seems like so much stuff to keep track of.
It is. But, you have to. If you don’t, chaos continues to be your partner. For you to complete our 30-day “get-our-act-together” program, you need to process through this step. What you find will fill in the blanks in several other spots in this guide. It’s the beginning of a true measurement of where you presently are and where you want to arrive.
To Do: You need a place to put the documents you are
gathering. Ideally, a small filing cabinet can work wonders, especially when it is accompanied with real files. Manila ones are fine—you may even want to stretch and do a little color coding, either with labels or the actual file (try red for your ActionProblem To Do file). If you don’t have a file (or don’t want to purchase one), a heavy duty cardboard box from the stationery store works well. The point is to have a receptacle and a regular spot that you will unload your treasures and financial data to. Here’s a starting point:
Money $marts Quick File Method
Household Files:
Appliances Info-Warranties
Electronic Info-Warranties
Garage and Outdoor Tools Info-Warranties
Home Furnishings
Other
Other
Financial Files-Use One for Each Separate Item or Company:
Automobiles
Bank Accounts
Canceled Checks
Credit Cards
Insurance
Investments
Home Improvements & Repairs
Home Purchase & Sale
Loans
Mortgage
Medical
Real Estate