One of the telltale signs you’re rapidly becoming an annoying elder statesman is an increasing tendency to buttonhole much younger people and dispense advice they haven’t sought, don’t want and are unlikely to take to heart.
You know the kind of guidance I’m talking about. Always eat your green vegetables. Exercise regularly. Look both ways before crossing the street. Never attempt to domesticate a bobcat.
I’ve caught myself serving up a not-dissimilar course of counsel lately. Just about any conversation I have with a decades-younger adult, whether about recent weather or the fates of local sports teams, is likely to be punctuated at some point by a sermon from me about the wisdom of starting to save early.
Little wonder. As I’ve grown older and increasingly witnessed the amazing results of depositing money early and often into tax-advantaged-investment accounts, I’ve taken on the bent of one who’s got that old-time religion.
Like the most fervent fire-and-brimstone preachers, I evangelize. In my case, it’s about the miracle of compound interest in tax-favored accounts, the need to leverage all those pre-retirement years, the comparative ease with which you can grow a hefty nest egg if you start at an early age, and so on.
People being people, and the temptations to do crazy things with money being what they are, not many of my unwilling listeners are likely to even look for a high-interest savings account or seek the best credit cards, let alone actually follow the lessons I’ve spouted.
I wish they would. And 30 years from now when facing retirement, they may wish they had. But I’m realistic. And if I keep up with the pontificating, I know I’m more likely to be viewed as the old town crank than a savior.
That’s why I’m taking a sabbatical from the personal finance pulpit for at least a fortnight and simply recommending the messages of a trio of authors who are out with new books on being smart about how you manage your moolah. It’s best to let them spread the gospel. They have much better credentials than I.
Motivate Your Money! by Mac Gardner. A two-decade veteran of the financial services industry, Gardner contends too many folks are either illiterate when it comes to personal finance or don’t have retirement plans in place.
His new book lays out “Five Steps to Financial Success,” which are plan accordingly, spend cautiously, save diligently, invest wisely and gift generously. Underpinning all is the notion that managing money is simpler than assumed.
“Personal financial planning does not need to be complicated, and it shouldn’t be an intimidating experience,” Gardner has been quoted as observing.
He notes that with corporations no longer providing pensions, the onus to provide for one’s retirement has moved to the individual. Being smart about that task is all the more important given the longer lives many of us will live, and the fact inflation will not be kept at bay forever. Motivate Your Money! should help many readers by offering straight-forward lessons on financial planning basics, budget planning, savings strategies, investment management, insurance planning, retirement planning, tax management and estate planning.
As one reader of the book has noted, many people are afraid to take control of their financial lives until it is too late for them to do so. What Gardner brings to the table is the motivation to get started way earlier than that.
Your Life, Your Money, Your Choice, by Steve Gehrmann. In his new book, consumer loan officer Gehrmann avoids the themes adopted by too many investing gurus. He doesn’t pitch the idea of getting rich quickly, or trumpet the notion of retiring a millionaire. Instead, he suggests the recipe for greater wealth, success and happiness is to make small changes to what you already do.
“Millions of people live paycheck to paycheck, fall as slaves to their checking accounts and sweat bullets at each month’s end when the numbers run dry,” Gehrmann reports. “The simple truth is that it just doesn’t have to be this way. An individual’s attitude is always the major contributing factor. And, by making small changes in both outlook and action, any life can become richer in terms of both finance and happiness . . . Life isn’t about what you have, but what you do with your time and your resources.”
The Truth About Retirement Plans and IRAs, by Ric Edelman. Novice and veteran investors alike stand to absorb an education by reading the books of this financial advisor and author, whose weekly radio show is so entertaining and enlightening, it’s ensnared me as a devoted listener for most of the past decade.
His latest book, subtitled “All the strategies you need to build savings, select the right investments, and receive the retirement income you want,” is a fun-to-read volume filled with easy-to-follow charts, graphs and tables, as well as cartoons, illustrations and amusing quotes from folks like funnyman Steve Martin.
In 26 breezy chapters, Edelman explains why retirement plans exist and how anyone can leverage them. He expounds on the fundamental concepts that must be understood before investing, and the best ways to handle money in retirement plans and IRAs. Bottom line: The steps he outlines can help readers accumulate hundreds of thousands of dollars in workplace retirement accounts and IRAs, a figure that dwarfs the approximately $25,000 the Employee Benefit Research Institute estimates the typical American owns in retirement savings.
Pick up one or all of these new books, and you may find yourself turning the page and embarking on a bright new chapter in your own financial story.
This is a guest post from J.D. Roth, who founded the blog Get Rich Slowly in 2006. Roth wrote Your Money: The Missing Manual and is the “Your Money” columnist for Entrepreneur magazine. His latest project is a year-long course on how to master your money, which explains how to slash costs and boost income so that you can pursue early retirement and other goals. This article is one piece of this course.
In nearly a decade of talking to people about personal finance, I’ve seen that one of the biggest barriers to financial success is how little attention is given to the work. The authors of The Millionaire Next Door found the same thing: In that book, they write that two-thirds of the millionaires they survey admit to spending “a lot of time” planning their financial future. People who prioritize their finances have greater success; those who ignore the job often struggle.
This isn’t surprising, of course. Whenever you dedicate time and attention to something, you get better at it. Would you expect to be able to play “Stairway to Heaven” without practicing the guitar? Could you fly an airplane without long hours of instruction? To do something well, you’ve got to work at it — and that includes money management.
At a minimum, commit to:
- Make an appointment with yourself — and keep it. Just as you’d make an appointment with a doctor or a mechanic, schedule a regular time to review your accounts and pay your bills. I recommend blocking out an hour on Saturday or Sunday morning. Keep the appointment every week. Treat it as a priority.
- Develop daily habits and routines to make things easier. Spending a few minutes every day to record transactions, for instance, can reduce the workload at your weekly appointment. Plus, this constant diligence helps you become more aware of how you’re handling your hard-earned dollars.
To make sure my financial life runs smoothly, I spend a part of every Monday morning looking over my accounts.
On the first Monday of each month, I check balances and pay bills. I also enter data into Quicken (I like to do this by hand), which allows me to generate financial statements. Most importantly, I review my spending to be sure it hasn’t strayed too far out of budget.
On other Mondays during the month, I perform an abbreviated version of this routine. I check to see whether there are any bills that need to be paid. I make sure there are no strange charges to my credit cards. I peek at my investment accounts.
Throughout the month — all day, every day — I collect receipts as I buy goods and services. If it’s unclear what the receipts are for, I jot a note to myself so that I’ll remember on Monday morning. I also make sure that I return my checkbook and wallet to the same place every time I return home.
Scheduling a weekly appointment with yourself and developing daily habits are the minimum you need to manage your affairs. These things are simple, but they’re important. Turning these actions into habits will set your mind at ease. If you don’t do them, you run the risk of losing touch with your finances.
If you’re serious about your financial future, you’ll look for ways to spend even more time taking care of business. When I became serious about saving, I made time to read about business and personal finance every evening. I know others who take online courses about getting out of debt or earning more money. Others attend seminars about couponing and home economics.
The more time you spend managing your money, the better the results you’ll achieve.
This is a modified excerpt from “Be Your Own CFO”, the 120-page guide included with the year-long “Get Rich Slowly” course. The guide includes tips for boosting revenue and cutting costs so that you can maximize profit in order to achieve your dreams, whether those are to retire early, send your kids to college, or travel the world. Want to know more? Buy it now.
Yes, I know we’re just past last year’s tax season, but good tax planning works only if we start early enough for the current year. Having last year’s tax return still fresh in memory gives us a great start for next year’s tax planning.
Understand how your income is being taxed
Do you know what your effective tax rate is? Do you have more than one income source? Do you know how each of your income sources is taxed? Income can be broadly classified as:
- Ordinary — Income from a regular job, self-employment and freelancing; interest income and non-qualified dividends.
- Capital — Qualified dividends, income from the sale of an asset (stock, real estate, etc.)
- Passive — Income from sources like real estate and business investments where participation is not required.
Each of these types of income is taxed at a different rate. A tax-savvy individual minimizes the income from the highest taxed source and moves his earnings toward the lowest taxed source. Before you dismiss this advice thinking you can’t quit your job, think of other ways you can achieve the goal.
- If you have a large amount of money sitting in a savings account that you won’t require for at least 5 years, can you move it to dividend-paying stocks?
- If you paid the higher rate for selling a stock too soon, can you plan better on when you buy and sell stocks to pay the capital gains rate instead of the ordinary rate?
- If you don’t have more than one source of income, especially if your job is your only source of income, consider diversifying by earning income on the side.
Are you leaving any money on the table?
For each deduction you took this year, is there a better way to save money?
For example, if you had dependents and paid for childcare, have you looked at your employer’s benefits to see if they offer a dependent care account? A lot of employers also offer discounts toward a variety of businesses. One of my past employers offered a discount and extended hours at a nearby day care, but no one knew about it because it was only mentioned in an online benefits brochure which didn’t get many views.
Did you contribute at least enough to your retirement plan to get the employer match?
Can you optimize your deductions?
Did you itemize or take the standard deduction? What is the difference in your return when choosing between itemized and standard deduction? If you donated to charity and the difference between your standard and itemized deductions was small, you might want to consider donating every other year. Here is an example to explain this better:
Let’s say you donated $12,000 to charity in 2012 and again in 2013. Let’s additionally assume that both years you opted to take itemized deductions. The total deduction for 2012 and 2013 is $24,000.
Now, instead, let’s assume you set aside $1,000 each month in 2012 and donated the entire $24,000 in 2013. You take the standard deduction for 2012 ($11,900 if you are married and filing jointly) and itemized deduction for 2013 ($24,000). This makes the total deductions for 2012 and 2013 a whopping $35,900. You can deduct an extra $11,900, which, depending on your tax bracket, can be a substantial saving.
Of course, this is an over-simplified illustration; there are other deductions like state taxes and property taxes to consider. These cannot be skipped every other year, but it is definitely worth doing the calculations both ways to determine which is more beneficial.
Are you placing your investments in a tax-smart vehicle?
Taxes should not be the only concern for any investment; you should evaluate your risk tolerance and do careful asset allocation. After you have made your investment decision, it is essential to choose the right vehicle to make it tax efficient. Should you invest in a taxable account or a tax-sheltered account? For example, if you are going to hold a stock for a very long time, it can be in a taxable account as it will be taxed as capital gains; but if you are going to be generating a lot of short-term gains, it might be better to place it in a tax-sheltered account.
Have a strategy in place
After going over your tax return with the goal of planning for next year, is there anything you can do now to make next year’s return more efficient and less time-consuming? Think of all the potential expenses this year and figure out if any of them are deductible. For example, if you are planning to send your kids to summer camp, it might be a deductible expense. Knowing what you are going to deduct this year will make it easier to save the receipts and will also make sure you won’t miss it due to last-minute lapses in memory.
Set up a system for next year’s deductions
Receipts, receipts and more receipts. Anything that can be deducted, file it. Set up a system that works for you whether it’s a folder for each month or a folder for each category or alternatively scanning the receipt and recording it in Excel. Pick a system and work on it throughout the year.
I wanted to have an accountant prepare my taxes for 2013; but I procrastinated and, by the time I contacted potential accountants, they were all too busy to take new clients. This year, I am looking for an accountant right now. Finding the right person can also be a time-consuming process. I want to get referrals, talk to the accountant, and develop a relationship. Doing it now, when the accountant is not drowning in client files, will help me find the best accountant for my situation.
What is your tax-planning strategy?
This post comes from Anna Williams at our partner site LearnVest.com.
There are dozens of factors to consider when it comes to buying a new car—everything from safety features to the length of the loan.
But if durability is high on your lists of musts, a new study might help steer you in the right direction.
Automobile website ISeeCars.com sifted through 30 million used car listings over nearly 30 years to pinpoint which models were most likely to have at least 200,000 miles clocked in—and still be on the road.
The verdict? Your best bet might be an SUV or larger pickup, USA Today reports. At the top of the list was the Ford F-250 Super Duty (4.3% of these models for sale have topped at least 200,000 miles) while SUVs like the Chevy Suburban and Toyota 4Runner also make the top five.
According to ISeeCars.com, here are the five longest-living vehicles:
- Ford F-250 Super Duty
- Chevrolet Silverado 2500HD
- Chevrolet Suburban
- Toyota 4Runner
- Ford Expedition
But if gas-guzzling heavy-duty vehicles don’t fit your style—or budget—you might want to consider the Honda Accord. According to the study, it ranks highest among long-lasting cars, with 1.6% of all listings hitting that 200,000 milestone.
ISeeCars.com C.E.O. and co-founder Phong Ly noted to CBS Money Watch that the durability of these models might be credited to an increased likeliness to receive consistent maintenance throughout their lifespan. But, he added, there has also been a general increase in manufacturing quality over the last ten years. “Car makers are making better vehicles, and that is a factor in the increasing longevity,” he said.
You can check out the complete list of durable cars on ISeeCars.com. But before you make the plunge and purchase a shiny new auto, make sure you understand the true costs of car ownership—and take a minute to find out why one financial planner insists she would never buy a new car.
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No, that’s not a typo. If you haven’t heard of “Heartbleed” yet, listen up.
Events that radically change our lives don’t come along that often. The 9/11 attacks changed not only how we travel, but how we think and act when we go out. Having your belongings searched when you go out to a ballgame was unthinkable before; now it’s routine.
Heartbleed is such an event, and over the next few years it will change how all of us do business.
What is Heartbleed?
It’s a security breach, but not just any security breach. Think of the infamous Target breach as a little rowboat and Heartbleed as the Queen Mary. Some have called it the biggest data security breach in the history of the Internet, and the ripples across the digital landscape have only just begun.
When you do financial transactions online, have you noticed how the URL (web address) at the top of your browser changes from “http” to “https“? That little “s” stands for “secure.” The boffins call that feature “Secure Socket Layer” or “SSL.” It’s a method used to encrypt your information so nobody can see it. Anybody with a web business knows that, to receive payment, your payment processor will only use those safer SSL pages; and, for years, people have bought and sold on the Internet trusting that little “s” to protect their information.
Heartbleed is not a reach into one or two databases to pinch some data like at Experian or Target. It’s a leak in the very foundation of the encryption applied to all transactions sent over the Internet. Think of it not as robbing a bank, but hijacking all mail going to and from all banks and businesses. The assault is not on a particular target; it’s on the communications between all companies and people using the Internet. Crooks who understand this can simply tap into this “hole” and monitor all the secrets flying across the wires and airwaves — secrets like your passwords and login IDs.
How Does It Work?
Every transaction running on a secure server (one with “s” in its address) relies on encryption (or scrambling) of the information. In order to make sure that the encryption for a particular transaction works, the receiving server will echo it back to the sender, asking in essence, “Hey, is this what you actually meant to send?” When the sender says it’s going to send 100 kilobytes (kb) of data and sends only 1, it gets back 99kb of other data the server had lying around, marked as obsolete but still there.
Here’s a good semi-technical explanation of the bug and its fix.
It is impossible to understate the magnitude and significance of this breach. It affects literally everyone who uses the Internet. Never has a single bug had such widespread impact. Mashable surveyed the major sites and posted their exposure and responses here.
The good news is this isn’t something some bad guys cooked up for evil purposes. It’s an honest coding error which few good guys or crooks knew about. The bad news is that has now changed. You just know the publicity of this bug is like waving a red flag to a bull for evil people. Any crook worth his salt has just canceled his vacation plans and hired every hacker looking for work to figure out how and where to start tapping the lines for ID information on millions of unsuspecting people.
How bad is it? Nobody knows. It’s impossible to say when you’ve sent someone else’s information over a phone line when your logic told you it was only your customer’s. This may be like the Y2K thing, a storm in a teacup. However, all you need to mess up your life is a single identity theft, so this is definitely a prime example of better safe than sorry.
What You Need To Do … Now!
1. Change all your passwords – every single one. I know. I know. Simply keeping track of your 9,237 passwords is a pain in the patootie. So is going through security screening at an airport. Think of this as airport screening for your everyday life — an unwelcome hassle that has now become part of your Internet travels.
We’re talking all passwords, even the ones that don’t affect your money, such as, email, social media, hobby bulletin boards, airline frequent flyer sites, clubs … everything. Some of those sites may already have contacted you to do this. Now you know why. Either way, just do it.
2. Change them again two months from now. There will be a flurry as thousands of servers receive patches to their security systems. However, until those patches are in place, it’s better to be safe than than sorry. I have adopted a system that allows me to change passwords on a regular basis in a way that still allows me to keep track of them.
Keep a log somewhere of your passwords – but don’t keep it on your computer or phone. (Also, not in your wallet.) Or, if you do, encode them with a simple coding system, like writing down the next letter instead of the real one. For example, if your password is “nutso” then write “ovutp” wherever you’re keeping track of it — each letter written down is one letter after the real one. It’s a pain, that’s true. But pain has now become part of your Internet and credit card transactions.
That’s right, even your non-Internet credit card transactions are affected. How? That restaurant you eat at probably can’t afford a sophisticated-enough system. Same with the gas station, dry cleaners, and all mom-and-pop vendors you use. Each “brick and mortar” debit- or credit-card transaction is still sent over an open communication line to their credit-card processors. Secured, you thought. But now we know “secured” is not so secure after all.
3. Go old school. Use cash wherever and whenever you can, especially with mom-and-pop vendors. Is it less convenient? Sure it is. But so is going through airport screening. And just like Osama bin Laden made us all do it, someone else just made you do it. Buy a beer and cry in it or kick a hole in the wall — and then just do it.
This will give new meaning to the old saying “Cash is King.”
Do you have any tips for how to make any information anybody may have recovered on you become unusable to them? Please share.
As parents, we pick up a fair amount of information from other parents. There’s some good advice, some bad advice, and then there are opinion surveys.
Even though I tend to second-guess the way some of the questions are phrased, I like opinion surveys because they are a window into what large numbers of other people are thinking. Even if the view through that window isn’t perfect, we can get enough insight to question certain issues and think them through from a new perspective.
T. Rowe Price just released its 6th annual “Parents, Kids & Money Survey.” I like this survey because I think teaching good money habits is an important parental responsibility, and looking at this survey’s results is a good chance to get a feel for how other parents are handling the relationship between their kids and money. After all, though parents are expected to talk to their kids about money, it seems we rarely talk to other parents about how to talk to our kids about money.
As you’ll see below, I take some of the survey responses with a large grain of salt. Still, the following results of this survey caught my eye and made me think:
- One-in-four parents regularly carries a credit-card balance. To be clear, this is distinct from those parents who said they occasionally carried a small balance. Too much reliance on credit can become a hereditary problem. It not only burdens the parents, but it gives the children an unrealistic view of what is and isn’t affordable.
- Sixty-one percent of children shop online — including 54 percent via mobile apps. Of course it is wonderful that this generation of kids is so computer literate and has such ready access to information. However, the immediacy of online shopping worries me, especially when it comes to mobile apps which tend to prompt spontaneous spending. I think parents should have strict rules about approving all online spending — not just to make sure nothing inappropriate gets through, but to make sure the kids aren’t buying too impulsively. Perhaps there should be a cooling off period between asking for something and being allowed to buy it.
- More kids have computers, tablets, and mobile phones than have bank accounts. This may not be particularly surprising, but it is a little ominous in terms of the message kids are getting. When they have more familiarity with media for spending money than vehicles for saving it, which habit do you think will be developed more?
- Nearly half the parents use money to encourage good behavior from their kids. Actually, the way the survey was worded, 48 percent of parents say they sometimes “bribe” their kids to encourage good behavior. I think “bribe” is too harsh a word. After all, the Supreme Court (in its wisdom) ruled that money is speech, so isn’t giving our kids money just a nice way of talking to our kids? Seriously, I think there is an important line to be drawn. It is fine to offer financial incentives for achievement, from good grades to getting chores done. However, money should never be used to try to buy off bad behavior. Never negotiate with terrorists, especially when you have to live them.
- Thirty percent of parents raid their kids’ piggy banks. This is disturbing, though it may be more innocent than it sounds — the pizza guy is coming up the driveway and you realize you have no cash, so… However, if it’s done behind the kid’s back, it’s a problem; and if it’s a habit, that’s also a problem. Perhaps teaching the little tykes to charge interest will help cure you of this habit.
- Sheltering is not always the best strategy. Seventy-four percent of parents have some reluctance to talk to their kids about money, and not wanting them to worry about it is the most common reason. I understand the importance of parents not “over-sharing” with their kids, but being realistic about the family’s financial situation will help save conflict and disappointment in the long run.
- Lying about money is dangerous. Twenty-eight percent of survey respondents said they sometimes lie to their kids about money. As with the question about bribery and the question about raiding the piggy bank, I suspect this one might look worse on paper than what parents really mean. Full disclosure is not always the best strategy with kids; but when it comes to actually lying, that’s the type of thing that tends to backfire at some point.
No matter how much we teach our kids, there is a considerable amount they are going to have to learn about handling money first hand, by trial and error. Perhaps something we can do is make sure they do not accumulate too much debt at an early age because, once someone does that, many of the best lessons about personal finance become impossible to apply.
This post comes from Jessica Henderson at our partner site LearnVest.
Never miss a new episode of Shark Tank? Invented a revolutionary evaporating kitty litter that you’re itching to debut to the world?
You’re not alone.
Every month, some 543,000 new businesses are launched—but the hard truth is that only seven out of 10 survive the crucial first two years to stay in the game.
To help you get your own big idea off the ground with your expectations in check, we asked Trisha D. Scudder, founder and principal of Executive Coaching Group, Inc.—a pioneer in the field, with over 25 years of experience—to outline the unexpected sacrifices, the rookie mistakes, and yes, the perks of being the big kahuna during the tricky early years of owning your own business.
LearnVest: What’s the first bit of advice you’d give to someone who’s thinking of starting their own business?
Trisha D. Scudder: First and foremost, get the facts! From research to talking to people in your new industry, make sure that you have a real, complete view of what it will take to launch your business and be successful. Most entrepreneurs fall in love with their idea—reality and details be damned. That sets up a lot of suffering and sacrifice later, which could be avoided with an informative plan from the start.
Second, consider a business partner. The right choice in a partner–maybe someone who has different strengths than your own–will help you succeed faster, and not feel so burdened and overwhelmed in the early years.
How much money should someone have saved up before launching a business?
Enough! This question is impossible to answer in generalities. Some start with $5,000 and a great idea. Some require millions to launch. That’s why you must research and forecast what it will take to get your business up and running–plus fund your daily living expenses.
It takes time to build a business, set up a location, hire staff and attract a client and customer base. And during all of this, money is going out, not coming in. In most cases, you should double whatever you project you will need in time and money to start your business. The world isn’t waiting for your idea or business—it is doing just fine, thank you, without it. So it takes great persistence and resilience to have the world finally see you–and want to work with you.
What about quitting a day job to launch a business—good or bad idea?
Many entrepreneurs jump into a new business without first laying a strong foundation, and as a result, those businesses fail within the first year. Before you quit your current job, make sure to spend nights and weekends researching your market and competitors, and developing a solid business plan.
Next, line up funding, and begin to build your team. At the same time, make sure you’re operating with integrity and at full value to your current employer. When you can’t do both, that’s when you have a decision to make.
What’s the most common misperception people have about being business owners?
That they will be their own boss. They think, “Wow, I’ll be free and not have to answer to anyone!” Yes, being a business owner gives you flexibility, and over time, a sense of designing your own life. But until you reach that point, you’ll actually have many bosses: Your clients and customers, the bank, your investors, even partners.
Let’s talk skill sets: What’s crucial for a budding entrepreneur?
There are so many: resilience, imagination, being unstoppable, integrity, the ability to create relationships easily, the courage to ask for help and make big requests, a commitment to face the financial facts, and the ability to excite others about your dream just as you are excited. Need help? Find mentors who know the industry–who are themselves entrepreneurs–and consult people who will hold you accountable, like a business coach.
Can a hobby ever translate into a business?
The two are distinct. A hobby is an interest, or even a passion. And that can sometimes blind you. Your business should exist to help fund a great life for you (and your family), including professional fulfillment and financial peace of mind. But often people who turn their hobbies or causes into a business overly sacrifice. For example, they don’t charge enough for their service because they love what they do so much. In those cases, they end up giving so much to the business, but the business doesn’t give enough back to survive.
If you’ve never managed people before, how do you build a valuable team?
Starting a business quickly transforms you. You must learn to be and do what you’ve never been or done before–or your business will fail. If you’ve never hired or managed teams before, you will learn by failing several times.
Surprisingly, first time business owners often make these mistakes while interviewing: Talking more about their plans for the business than asking challenging questions of the candidate; getting inspired by the interviewee vs. checking references and experience; hiring friends and family who need jobs and then not holding them as accountable as they would a qualified stranger they hired.
What’s an unexpected way to grow your clientele?
Give it away by offering a free consultation, sample or trial coupon. You must make people aware of you early in your business, and get them talking about your product or service. That’s more important than charging full price–but just in the first few months. This can also work to grow existing businesses that have stalled.
So what’s the key to happy clients?
Integrity. That means honoring your word, delivering on what you promise and when–and even cleaning up quickly when you or a member of your team messes up. You have to take 100% responsibility for all aspects of your customer’s experience with you, your product and your company representatives.
Why is the risk of starting your own business worth it—no matter the outcome?
Having your own business is to be coached by a master–yourself! If you aren’t committed, you will fail. If you don’t listen to what your customers and the industry is telling you, you will fail. If you are arrogant, you will fail. If you don’t face facts–financial and otherwise–you will fail. If you are stingy and selfish, you will fail. If you don’t talk straight with your customers or your employees, you will fail. And if you can’t bounce back, you will fail.
In short, what an amazing journey of self-discovery and re-invention this will be!
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This is the time of year when I annually confer with my financial adviser. As I drove to meet him in his office a couple weeks ago, I had reason to expect we’d both be in jovial moods. The stock market’s performance over the past year has been stellar, after all, and my account has tallied corresponding gains.
But as we talked, I was quickly reacquainted with reality. His role is not to be jovial or complacent. A big part of his role, as far as I can discern, is to remind me to stay on the straight and narrow with my financial goals. So after noting I’ve done a good job accumulating a nest egg, he figuratively splashed ice water in my face. “Consider what would happen if you had to retire today on what you’ve got,” he noted with admirable sternness. “You wouldn’t be living very lavishly.”
Ouch. That hurt. But then, what could I have expected him to say? “You’ve got a nice chunk of change there, so withdraw all of it, jet off to Monte Carlo and bet it all on black at the glittering casino’s spinning roulette wheel”?
From bad to worst
The advice I’ve garnered from my adviser since Day One has been along the same strict, flinty and severe lines. All words of wisdom are geared to reminding me of the worst-case scenario, and enabling me to ride out such a circumstance.
Disability insurance, long-term-care insurance, powers of attorney for health care and finances and a complete estate plan have all been advanced. And those have merely been the warm-up acts for the headliner, a disciplined, tax-advantaged retirement savings plan. That’s what a financial adviser is for.
But most Americans don’t have financial advisers. And that may be part of the reason many dwell on too rosy a vision of the future instead of a more realistic view, the kind that usually leads to more conscientious money management.
Want an example? I happen to have one right here. Thirty years ago I worked down the hall at an advertising agency from a petite young art director. Then in her late 20s, she was all about capturing creative awards and blowing her pay at as many dazzling new nightspots as she could fit into her schedule.
She wasn’t the type to dwell much on preparing for her financial future. Why should she? She was young, talented, had a track record of success, and could assume many facets of the classic American Dream would be hers in time.
Eventually, she honed a bit of financial discipline, landed a high-yield savings account and a few of the best credit cards and started banking some savings. Over time, her cash reserves surged into the low six-figure range, and she bought a condo. But by then, she was in her 40s, and the advertising industry isn’t always kind to those who’ve piled up birthdays. She lost her job.
She was able to freelance for a while, which kept her nest egg from being pared too severely. But then the freelance dried up. So she invested in courses to become a pastry chef. That turned out to be not nearly as lucrative as ad work, and the job security was just as dicey. She lost her job, or quit, and went back to freelance art direction. That proved as elusive as before.
Today, as she hurtles headlong toward 60, her savings are gone, as are her prospects of landing another advertising job. She works part-time in food service for near minimum wage, for a boss about the same age as she was when first I met her. It also looks like she will have to sell her home. The future? I hear she may move back to her East Coast hometown and settle in with her surviving parent at the old house she grew up in, before she embarked on a 40-year journey of discovery only to find that worst-case scenarios can actually occur.
Not enough dough
It’s a story as sad as it is true, but it’s hardly unique. I’ve heard a number of tales that followed similar plot lines. Starring in all of them were people who were once young, earning the kind of large salaries youth-oriented employers bestow and anticipating bright futures. Today, they are old or nearly so, and have no money. The years when they could have really built savings are behind them. All of them were folks who, like my ex-colleague the would-be pastry chef, used too much sugar and not enough dough in their flaky recipes for the future.
So what I’m urging is that if you’re just starting out in a career, forget about silver linings and start assembling what I call a “worst-case scenario playbook.” Here are some questions to ponder as you create that book.
- Will Social Security and Medicare exist when you are eligible for them?
- Will the taxes you face become larger, to fund spending on the large voting bloc of Boomers?
- Will climate change’s impact on aging infrastructure hike your taxes?
- What will swift technological change do to your job security?
- Are you sure you won’t be supporting your parents in their old age?
- Are you sure you won’t be supporting your children in their 20s and 30s?
- What if your child is a special-needs child?
- Are you covered in case of a medical crisis?
- If you don’t marry, how will that affect your finances?
- If you do marry and end up divorced, how will that affect your finances?
I’m not suggesting young folks become depressed about the future. By all means hope for blue skies. But plan for grey and overcast heavens, with a chance of a couple funnel clouds emerging and possibly even touching down.
When it comes to the size of your late-life finances, spending your career anticipating the worst can actually be for the best.
The Consumer Financial Protection Bureau estimated, in 2013, that outstanding student loans have swelled to over $1.2 trillion. Seven in ten college seniors who graduated in 2012 had student loan debt, at an average of $29,400. Scary! It is extremely important for kids to have a good handle on personal finance before they enter college. Personal finance is now becoming a part of the K-12 curriculum in many school districts, but the best education can only come from parents and habits developed at home. So how can we raise money smart kids?
How do you teach your kids about money?
- Educate yourself: You can’t teach something you don’t know yourself. If you are not great with money, it is time you change for the sake of your kids. Learn as much as possible about budgeting, getting out of debt, saving and investing. Once you have a good grip of your own finances, you can be an example.
- Teach them by example and be honest: What you say doesn’t matter, kids learn by observing what we do. You have to practice what you preach. Lead by example. Be open about your financial decisions. Do not make them feel they have access to unlimited amounts of money. If you do not have money to get something they want, have an honest conversation. Kids understand more than we give them credit for.
- Teach them the principles, not just the techniques: It is easy to get bogged down by the minutiae of personal finance. Cultivate good spending habits: Teach them to set up goals, prioritize and encourage them to share. Techniques to implement things will always change but good principles will stay with them for life.
- Teach them to take responsibility: Personal responsibility has the highest impact on one’s finances. Instead of feeling entitled and blaming others, we need to accept the fact that no one cares more about our money than we do. This will automatically lead us to find ways to get out of debt and save for our future.
- Teach them to give: This is something I want to teach my kids, but don’t yet have any good ways to teach them. Right now my idea is to take them volunteering with me to help them see what a difference a small act of kindness can make in someone else’s life. If you have any ideas on how to encourage kids to give, I would love to hear from you.
- Help them earn money early on: In an interview with NBC, Warren Buffett quoted a study that tried to find predictors for business success later in life. Turns out the age you start your first business impacts how successful you are later in life. Case in point — Warren Buffett started his first business when he was six. You can help your kids succeed by helping them start their first business. Set up a lemonade stand or throw a garage sale and make it kid centric — let them help set up, choose what to sell, value the goods, sell, and do the books at the end of it. Make them realize that earning more money will get them closer to their goals. When kids learn how to make their own money, they will also learn the value of money; how to be careful with what they earned and how investing money will help them make more money.
- Talk to them about consumerism, impulse-buying and advertisements: Most of us don’t realize how much advertisements affect us. Ads are created based on years of research into human psychology and are created with one goal — to make us buy what the advertiser wants us to buy. We might think we are rational beings, but we are not. It is better to accept that we are vulnerable and do something about it. Talk to your kids about consumerism, clutter, and impulse-buying; then teach them to have a “cool-off” period before they buy anything big.
- Teach them to distinguish between a want and a need: If they demand something, is it really a need or a want? For the most part, parents buy what a kid needs, so it is probably a want. Encourage them to evaluate their purchases in this way. If it is a want, is it an impulse buy? Can they wait for 30 days to get it?
- Let them have control of some money: Let them budget their money, pay bills, save for their needs and wants. Sit with them and draw up a budget. Keep it simple so that they don’t associate budgets with something that is hard and unpleasant.
They should learn that money is not something to be afraid of or obsessed over. It is just a tool, which, if used skillfully, can promote a happy life.
There are plenty of resources to help parents teach their kids about money. Here are some that I found extremely useful and interesting:
- H.I.P. Pocket Change
- Practical Money Skills Games
- The Mint
- Choose to Save
- Secret Millionaire Club (Entrepreneurship)
- Fraud Scene Investigator
If you have kids, when did you start teaching them about money? How are you teaching them? Do you think teaching personal finance should be the responsibility of the school or parents?
This article comes from Nate Segall from the Quicken Loans Zing! blog.
Traffic – we despise it, we can’t stand it and we’ll do anything to avoid it. You can catch the morning news before you head out to work, tune in to the traffic updates on the radio – or you can download a traffic application on your smartphone. These apps are here to help you elude bumper-to-bumper driving, accidents and any other annoying traffic hazards. Some of these apps may be better than the rest, but each app has its own advantages, so it’s worth trying them out to see which one you like best. Below are a few of the best apps out there to help you evade that pesky traffic.
Waze is more than just a traffic app; Waze is a traffic community. The idea behind Waze is to outsmart traffic by allowing millions of drivers to work together to report traffic jams, police traps, accident reports, cheapest gas prices and more. This free app is “killing” the traffic app game, with over 10,000 reviews and a four and half star rating. As you continue to use Waze, it picks up on your frequent destinations, commute time and preferred routes, but will always offer alternate routes based on the current traffic conditions. Waze also lets you connect with your Facebook friends, allowing you to interact and coordinate drives. In my opinion, Waze is definitely the number one choice when it comes to free traffic apps.
You might be familiar with TomTom as a GPS, but instead of adding clutter to your car with a separate navigation deice, download, or should I say buy, TomTom for your smartphone. For $50, you can relive all of the magic of this navigation pioneer right on your phone. The app works online and offline, which can save you big money on data charges. A trusted, well-known brand, TomTom won’t steer you wrong, as long as if you’re willing to spend a few dollars.
BEST OF THE REST
There are a number of other traffic apps available for both iOS and Android systems. Alothough non of these apps None truly compare to the functionality and effectiveness of Waze or TomTom, apps like Sigalert.com, INRIX Traffic and Twist all feature bits and pieces of what Waze offers.
- INRIX Traffic allows you to look at live camera shots from high traffic areas. It also lists incidents reported around your area, along with the delay time and backup distance.
- Sigalert.com has a very cool feature where you can look up any freeways/highways and it will show you the speed of the traffic at each of the exits and cross streets.
- Twist allows you to communicate with your friends, family and co-workers, and share your ETA.
- SNL said it best: “Google Maps is the best,” so if that’s what you’re familiar with, keep using it.
My personal choice? Waze. This app has truly has changed the way I drive to and from work. It has allowed me to use quicker, alternative routes, and drastically decreased my commute time. Try some of our suggestions above and see which one you like!
Do you have any other applications that you use to dodge traffic? Share in the comments section below!
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