Tiffany Aliche was a successful pre-school teacher with a healthy nest egg when a recession and advice from a shady advisor put her out of a job and into a huge financial hole. As she began to chart the path to her own financial rescue, the outline of her ten-step formula for attaining both financial security and peace of mind began to take shape. These principles have now helped more than one million women worldwide save and pay off millions in debt, and begin planning for a richer life.
Introduction
Budgetnista:
My dad sat me down and I had my very first, purposeful, conscious money talk. I
learned that things cost money and that the choices I make have a direct impact
on my quality of life. In other words, there is no such thing as a small
financial choice. We each must learn how to weigh our short-term desires
against our long-term goals. The question is, will you choose water or ice
cream?
I
had a condo I no longer lived in and a problematic tenant. I owed massive debt.
I had no job and no savings, and I lived at home. My parents, although awesome,
were super strict (I had a curfew even though I was almost thirty). And my
youngest sister, Lisa, was staying in my high school bedroom suite in the
basement, so I was relegated to my middle-school bed, in what was now my
mother’s second closet/guest room. And I was still single. Big surprise. I
lived this way for two years. I didn’t go out. I avoided my friends and stopped
picking up the phone when my money ran out and the bill collectors started
calling. Ultimately, the bank would foreclose on my condo.
There’s a saying that goes, “When you teach, you learn twice.” That’s what happened to me. The more I taught, the more I learned. The more I learned, the more I taught. Each person I helped exposed me to new challenges; and helping them helped me to find solutions for new and different financial
My
volunteer work caught the eye of my local United Way and they asked me to
create a curriculum and to teach a series of financial classes to the
community. My business was born, and this was my very first contract! I was
back in the classroom, but this time instead of fifteen screaming three- and
four-year-olds, I was helping adults to get and stay on financial track.
Everyone
was not able to travel to Newark, New Jersey, where my classes were held. So I
created an online version of the United Way curriculum and called it the Live Richer
Challenge, or LRC. I set myself a goal of getting ten thousand women.
Getting
good with money—whether back on track or organized for the first time—is about
mastering the fundamentals, not magic. And the point isn’t to get rich quick or
retire on a private yacht off the coast of Monaco, but rather to become what I
call financially whole.
Before We Begin: Get to Know Financial Wholeness
There
are ten lessons you need to learn, ten areas of your finances that need to be
working in sync for you to get to financial wholeness. When all ten of these
facets are in place, you’ll have a strong financial foundation—and that means
it would take a lot to knock you down.
Here
are the ten steps:
1.
Budget Building: Learn how to create and semi automate (automated transfers,
bill pay, etc.) a personal budget and open the necessary checking and savings
accounts to support your budget.
2.
Save Like a Squirrel: Calculate your savings goal number that’s needed to meet
at least three months of essential expenses for your household. Then calculate
how much you need to save in each category of savings: emergency, goals, and
investing.
Learn
how to prioritize and automate transfers to your savings accounts.
3.
Dig Out of Debt: Get a clear picture of who and what you owe by writing down
the components of your debt (i.e., amount owed, interest rate, due dates,
etc.). Then choose a debt repayment strategy and use your bank’s online bill
pay to automate your payoff plan.
4.
Score High (Credit): Request your free FICO credit report and score to see
where you stand. Make a list of the factors that are impacting your score and
come up with a game plan to increase it to 740 or higher.
5.
Learn to Earn (Increase Your Income): List all the ways you’ve contributed
value at your job in the last few years to make a good argument for a raise.
Uncover your side hustle potential by making a list of the tasks you do at
work, your education, and current skill set. Develop an action plan that lists
what you’ll do next to increase your income.
6.
Invest Like an Insider (Retirement and Wealth): Identify your retirement and
wealth goals. Create and implement your investment plans with the help of your
Human Resources representative, a certified financial planner, online tools, or
by yourself. Commit to consistent contributions toward investing, to learn to
leave it alone, and to give it opportunity to grow.
7.
Get Good with Insurance: Make sure you have proper insurance coverage. That
means understanding and calculating your needs around health, life, disability,
property, and casualty (e.g., home and auto).
8.
Grow Richish (Increase Your Net Worth): Learn how to calculate your net worth
(owning more than you owe) and how to achieve, increase, and maintain a
positive net worth. Create a net worth goal and define actions you’re going to
take each month to achieve your goal.
9.
Pick Your Money Team (Financial Professionals): Find reliable and trustworthy
financial professionals (i.e., certified financial planner, insurance broker,
estate planning attorney, certified public accountant, etc.) and identify
accountability partners.
10.
Leave a Legacy (Estate Planning): Create and implement a plan for what will
happen to your estate (cash, real estate, jewelry, and other assets) after you
pass. This is important no matter the size of your bank account and portfolio
(i.e., investments, home, stocks, bonds, etc.).
The
first five steps cover the fundamentals. Their purpose is to help you create
financial stability. Think of these steps as your foundation. The trick is to
get to a point that budgeting, saving, debt, credit, and earning become second
nature so you can focus most of your energy on the next five steps.
Steps
six through ten cover growing and protecting your wealth. They are presented in
order to show you how to invest, align your insurance, grow your net worth,
seek professional help, and protect your legacy.
Keep
this lesson in mind as you use this book to work toward financial wholeness.
There’s no reason to beat yourself up over spilled milk (or dark, staining
juice in this case!); just wipe it up and move on. Focus on the solution. Be a
paper towel person.
Whether
we’re aware of it or not, we internalize those advertising messages about
status and power and happiness and that sometimes changes our behavior in
unhappy ways. After all, those new shoes might make you walk tall and feel
confident, but the credit card bill is gonna hurt!
If
you identify any behaviors that are not serving your pursuit of financial
wholeness, it’s time for them to go.
You
want to get in the habit of hitting pause and asking yourself:
- What would this purchase, change, or financial decision do for me now?
- What will it do for me a month from now, when the bill comes?
- What will I do when the bill comes and the money that was supposed to go toward one thing has to go to this other thing?
Looking
for an accountability partner? Visit www.getgoodwithmoney.com to join our
virtual community and connect with someone (fellow Dream Catchers) today. Think
of us as mindset mentors and offer the same support in return.
Budget Building
A
budget is your Say Yes plan. It can allow you to say yes to your wildest
dreams: going on vacation, going back to school, starting a business—you can
say yes to all these things if you’re willing to make the necessary changes.
Know
that by actively taking charge of your budget you are laying out the path
toward your fabulous future.
Your
money can no longer be just an acquaintance. You’ve got to make it your bestie.
You’re all about the knowledge. And knowledge is power. Lean into that power!
I
like to think of starting a budget like going to a doctor when you’re feeling a
little off but you’re not sure why.
Keep
in mind that budgets don’t grow money, they manage money.
To
start, we’re going to do two simple things, observe and document the life of
your money. Then we’ll take some steps to keep better track of it all.
Here
are the eight Do’s to help you get good with budgeting:
1.
Make a Money-In list.
2.
Make a Money-Out list.
3.
Calculate how much each expense (Money-Out) costs monthly.
4.
Calculate your beginning monthly savings (aka Tears & Tissues Time).
5.
Assign control categories to your expenses.
6.
Reduce your expenses as needed and look for ways to increase your income. Then
RECALCULATE savings!
7.
Separate your funds.
8.
Get automated.
Get
as detailed as you can and be honest with yourself.
Bottom
line: If you try to get sneaky and not list little side expenses (your guilty
pleasures), you are only cheating on yourself. And you deserve the best budget
possible.
First
things first, I need you to learn how to exert control over your money. To do
that, let’s return to your Money List of expenses (Money Out). This time we’re
going to categorize what’s on that list, tagging each entry with one of three
new labels. Then you’ll get a chance to consider which tag you might have the
most (or more) control over.
The
three new labels are:
B:
As in Bill. These are both recurring and sporadic bills; that is, expenses like
rent, mortgage, car payments, student loans, utilities, credit card, insurance,
etc. You’d get a call from a collection agent if you didn’t pay these bills.
Put it another way: If you’d have a legal problem if you didn’t cover this
expense, it’s a B! Go through your Money List now and assign the B’s. Level of
control: Low
UB:
As in Utility Bills. These are also bills, but their amounts are determined by
your usage, like your gas bill, electric bill, water bill. UB’s ARE B’s—they
just fluctuate more than regular bills. You’d have a problem if you neglected
these expenses (i.e., your power might get shut off) but because your usage
goes up and down with UB’s, we’re going to differentiate them from the B’s on
your list. On your
Money
List go ahead and add a U in front of the Bs that are also utilities. Level of
control: Medium
C:
As in Cash Expenses. Cash in this context doesn’t necessarily mean something
for which you’ve actually paid cash. Instead we’re using this label to describe
expenses that are not obligations that someone has made for you based upon a
prior agreement of payment, but obligations you’ve made for yourself. This
includes expenses like groceries, haircuts, spa treatments, entertainment, eating
out, etc. An easier way to differentiate? After you’ve assigned the B’s and the
UB’s, everything else is going to be a C. Level of control: High
How
many of each tag do you have?
Why
you don’t have the money you need or want, it’s impossible to identify the
steps you need to take to get the money you need or want.
If
you spend too much, your first task is to look at your C’s to see where you can
reduce your expenses. Get out your magnifying glass—you’re going to scrutinize
the list like nobody’s business! Look at every expense one by one. Keep a list
of the areas where you could maybe cut costs, and think of these as your
projected cuts. Here are some ideas and ways that I’ve seen people make
meaningful cuts:
Skip
online shopping for at least a week…or two…or three.
Cancel
unused subscriptions (i.e., the gym, cable, subscription boxes).
Bring
your lunch to work every other day.
Rein
in eating-out costs.
Make
a menu and a list before you grocery shop—this’ll cut down on impulse buys.
Ask
yourself the following question: “If I don’t pay this thing, am I going to be
unhealthy or unsafe?” Your answers will tell you what you need to keep paying
for.
Save
Like a Squirrel
In
your financial life, you’re driving a car that can transport you between two
homes—one on the mainland of regular life and the other on a private island
we’ll call Wealth Island. Connecting these two locales is a bridge built by
investing. If you want to get over that bridge, however, you need gas to power
your car—and your car only takes a special type of gas, called savings.
The
more savings you create, the more you can invest, and through investing you
build that all-important bridge.
Here
are five Do’s to get good with savings:
1.
Be like the squirrel.
2.
Identify and calculate your savings goals.
3.
Drop down and get your noodle on.
4.
Practice mindful spending.
5.
Set up and automate.
If
you haven’t prepared for this “winter,” and you have to go out searching and
scrambling for money in the middle of it—when the wind is blowing, the temperature
is chilling, and the snow is piling up—you might be surprised how hard it is to
find. Just like the (very rare) squirrel who has to go out into the snow to
look for a nut, you will have to work harder to find what you need. This will
be especially true if it’s a markedly long, cold winter, that is, a recession.
In this case, you’ll not only be working harder for less, you’ll also be
competing with everyone else who’s out there scrambling for nuts—and that’s no
fun at all.
Saving
like a squirrel starts with your mindset. You want to shift your perspective to
see that the money that you are making now is what will sustain you through
both the good and the bad, the abundant and lean years. What you make right now
is never just for right now.
It’s
important to have specific savings goals. Otherwise, you risk not saving enough
or not saving for the right reasons.
There
are two saving categories:
1.
Emergency savings
2.
Goal savings (emphasis on investing)
You
can adjust your thinking and set new goals anytime you like, but decide where
you want your goal savings to go now so we can make a plan for something
specific.
Next,
think through the timing on this desired purchase—do you want it now or is this
something you can save for over a little time?
If
you truly want to get good with your money, investing has to be a part of your
plan. Unfortunately, most of us have a consumer mindset and it leaves us with
less, time after time. If you prioritize saving to invest, one day you’ll not
only have enough to get the things you want, you’ll have more than enough left
over. Cha-ching!
When
you have a goal in mind, you can identify how much you want to set aside for it
each month, and nothing more.
It’s
also possible to have too much money saved.
Think
of your money as a tree—if it’s not growing, it’s dying. So save for specific
goals and save the amount of money you’ve identified for emergencies. Any
excess money should be invested.
Before
you spend any money, take a few moments to ask yourself four simple questions
in this specific order of priority:
- Do I need it?
- Do I love it?
- Do I like it?
- Do I want it?
Once
you’ve established your savings goals, it’s time to set up a specific
account(s) for savings, and then automate a monthly contribution.
Let’s
talk about the best kind of account first. The ideal savings account is one
that earns as high an interest as possible, prevents instant access, and keeps
your money safe. The type that checks all these boxes is an online savings
account.
Getting
good with savings means stashing your money in a safe,
not-immediately-accessible place; it means preventing impulse buys by securing
your money in an online account.
Once
you find and fund your online savings account, you’re ready to take one more
important step: Set up your automated monthly deposit. This is usually a super
simple step that just requires you to put in your checking account info (the
one from which the money will be pulled—I suggest your deposit/spending
account) and your desired deposit amount. That’s it. Then, click done! Set it,
forget it, and save.
Dig
Out of Debt
Keep
in mind that being debt-free should be a goal, but not the goal. The main
purpose of reducing your debt is so you have excess money to go toward growing
wealth, which should be the ultimate goal.
The
bottom line is that paying off debt is part of achieving financial wholeness,
but it is indeed just one part of a whole. If you put all your energy into
paying off your debts, you could miss out on investing in your retirement and
your long-term wealth.
Here
are the four Do’s you’ll need to dig out of debt:
1.
Identify your debt.
2.
Restructure your debt.
3.
Choose a paydown plan.
4.
Automate the paydown plan.
When
you restructure your debt, you are basically looking for ways to reorganize
what you owe in a way that lowers the amount of interest you pay and therefore
saves you money. You might think of this like you would organizing your
pantry—you’re going to evaluate all your goods and determine where you can
consolidate and eliminate.
There
are two ways that people often talk about paying down debt—one is the Snowball
Method and the other is the Avalanche Method. Both methods will have you focus
on paying the minimum payments on some of your debts but in slightly different
ways, as their names suggest.
The
Snowball Method prioritizes paying off your debts from smallest to largest (the
way a snowball gains momentum when rolling down a hill in cartoons), regardless
of the interest rates for each of your balances.
The
biggest benefit of the Snowball Method is the way it sets you up with early
success. Since you start by paying off your smallest debt first, you get rid of
an entire account balance sooner than with any alternative paydown approach.
This gives you the confidence to keep going. Wow, you think. Maybe I really can
do this!
Here’s
how to implement the Snowball Method in seven steps:
1.
List all your debts in order from the smallest current balance to the largest current
balance. You can use the Debt List worksheet to create your list.
2.
Figure out how much money you can squeeze from your budget to repay debt.
3.
Except for the smallest debt on your list, make the minimum payment on all your
debts.
4.
Automate all your minimum payments.
5.
Put the savings you’ve identified and set aside for debt repayment (the $100
from the example), as well as the minimum payment required to the first debt
(the lowest balance debt from your Debt List). Pay this combined amount to this
debt monthly until it’s paid off. Automate this payment to ensure it happens.
6.
After the first debt is paid off, apply all the money you were putting toward
your first debt to your second debt. This means the second debt will now get
three payments in one; the first debt’s minimum, its minimum, and the extra
money from your budget ($100).
FYI:
Some of your lenders (mortgage lenders, car companies) will apply extra amounts
you send them toward the next payment instead of toward the principal of the
debt or, even worse, toward interest. That’s not what we want. For the Snowball
Method to work, you’ll need to contact your lender and tell them to put the
extra payments toward reducing your principal (balance of what you actually
owe). Typically credit cards will apply the whole payment during the month you
send it in.
7.
Once you pay off the second debt, roll over all those payments to the
third-lowest debt on your list. Keep going until you are debt-free like me and
Roman (my four-year-old nephew). Woot, woot!
The
key to success with this method is to always transfer the minimums plus the
original, additional savings you’ve found in your budget toward the next debt
you are going to pay down.
The
Avalanche Method would have you pay off the debt with the highest interest rate
first, regardless of balance. The reason why you do this is that you would be
paying off the more expensive debt first. This is the most logical approach,
but that doesn’t make it necessarily the best approach.
Here’s
how the Avalanche Method works: List your debts in order of highest to lowest
interest rate. Then, pay the minimum payment toward each of them except the
account with the highest interest rate. To this account, you would apply any
additional money you could dedicate toward debt repayment each month (i.e.,
that same $100).
The best strategy for you depends a little on your personality—do small, quick wins give you a big boost of motivation? Or do you prefer the long game, one that requires an investment of effort over time, but will lead to a
bigger win?
Score High (Credit)
A
higher credit score means that you are considered a lower-risk borrower who is
likely to repay debt. A low credit score means that you are a higher-risk
borrower who may not be able to repay debt.
Remember,
using high school grade terminology, your credit score, just like your GPA, is
an average of your grades/financial choices. If you have a lot of F’s on your
report card—that is, a lot of late or missed payments—you’re going to need a
lot of A’s—that is, a lot of on-time or in-full payments—to bring your average
up. Shifting your average can take some time.
The
trick with credit is to stay ready so you don’t have to get ready. Meaning: Get
your credit fixed now so that it’s there when you really need it. That dream
house won’t wait for you to get your credit repaired!
It’s
time to get proactive with the five components that make up your credit score
so that they work in your favor. The five components of your credit report
correspond to the following five Do’s:
1.
Check payment history (35% of your score).
2.
Reduce your amounts owed and improve credit utilization (30% of your score).
3.
Protect your credit inquiries (10% of your score).
4.
Build the length of your credit history/hack your age (15% of your score).
5.
Manage your credit mix (10% of your score).
Payment
history has the biggest impact on your credit. Payment history is mostly about
your ability to pay your bills on time. If you’ve consistently paid your bills
on time in the past, this is seen as a good indicator of whether you’ll be able
to pay bills in the future. But in addition to whether you pay on time, the
credit bureaus are also looking to see how you pay, and how much you pay (in
full or just the minimum?). It’s your job to ensure that there are no
inaccuracies that would make your otherwise positive information appear
negative.
I’m
not saying that you have to use your credit cards—please don’t go out and use
them because you think I think that’s a great idea! But remember this is a
little bit of a game. If you want to boost your score, some use is required.
Usage is also essential if you want to keep a credit card. When banks are
looking to reduce risk, they will look to closing unused accounts; there’s no
standard, it could be after six, twelve, or twenty-four months of nonuse (exact
time frame depends on the bank). The crazy thing is, they are not required to
give any notice!
Here’s
how to figure out if you should close or keep a credit card.
List
all your credit cards.
Add
up your credit limits.
Add
up your current balances.
Divide
your balance by your credit limit and multiply by 100. (For example, if your
balances equal up to $2,300 and your credit limits equal up to $10,000, your
calculation would be $2,300/$10,000 = 0.23 x 100 = 23%. This number is your
credit utilization rate.)
If
your current credit utilization ratio is between 20% and 30% or higher, then
you should not close any of your credit card accounts. Doing so will make your
credit card utilization rate even higher and your credit score lower.
If
your ratio is below 30%, recalculate your ratio, but do so without the card you
want to close. Redo your math without factoring in that card. What’s your
credit utilization score now? If it’s still under 30%, you’re good. You can
close that card. If your utilization is now above 30% without that card, you
should probably keep it.
When
you’re putting a lot on your cards and maintaining a higher percentage of use,
it looks like you’re leaning on them to keep your lifestyle up. And the scoring
models don’t like that
Learn
to Earn (Increase Your Income)
There
are just four Do’s to increase additional income in your life:
1.
Maximize your earning potential at work.
2.
Assess your skills.
3.
Decide which of these skills you can monetize.
4.
Put a number on it: What’s the income potential?
Shine
a light on anything positive. You especially want to quantify what you bring to
the table with numbers. Ask yourself: How much has the action I’ve taken on
behalf of the company made or saved them? Money, not emotions, will help you
get more from your boss.
This
is especially important if you have a mundane job and it doesn’t bring a lot of
variety during each day. You can still pull out your wins and create your own
highlight reel. Even if you have to spin it or get creative.
Invest
Like an Insider (Retirement and Wealth)
Investing
is all about taking steps today to take care of yourself in the future; it’s
really the greatest act of self-care you can practice. And the bonus is that
investing will help you (now and in the future) even if you are getting a late
start or you make a moderate income and save small amounts—yes, you can still
live the good life!
Money
is like a plant. It needs to grow to stay alive. Investing is the way your
money not only survives, but thrives.
Putting
money away for a date in the future (maybe far in the future) is the long game
and it’s sometimes not so easy to be disciplined for something so intangible.
The way I make this easier for myself is by imagining the version of me that
I’m saving for.
If
you are not taking advantage of the vehicles for retirement, you are losing
money. This happens all the time and for lots of reasons.
If
you plant your money into a retirement investing account, it can grow into more
money. Simple as that.
Here
are the four Do’s necessary to get started on investing for retirement:
1.
Determine how much you need to save for retirement.
2.
Decide where to put your money.
3.
Choose your investment mix/asset allocation.
4.
Set up automation and limit your withdrawals and loans as much as humanly
possible.
I
just want to make it super clear that while compound interest is a miracle for
the person who is earning it, it’s essentially the opposite for anyone having
to pay on it, which is what happens with debt.
Compound
interest is when your money is making you money and the money your money made
(interest) is making you money.
Basically,
your interest earns interest. This is the acorns growing into oak trees. You
don’t have to save one million acorns if you plant some of those acorns and let
them grow into trees that produce even more acorns. In other words, you’re not
going to save your way to retirement, you’re going to grow your way to
retirement. Compound interest is what helps create this growth.
The
Rule of 72 lets you figure out the approximate number of years required to
double your money at a specific interest rate by simply dividing the interest
rate into 72. It looks like this:
72
÷ the interest rate you’re earning = years it will take for your money to
double
If
you wanted to know how long it would take to double your money at six percent
interest, you would divide six into 72 and get twelve years.
Of
course, there’s a big difference between knowing how long it will take you to
double your money, and knowing how long it would take you to save and grow your
money to 25 times your income. I used the calculator at networthify.com to
figure out how long it would take to get 25 times your income if you invested
20% of it (assuming a conservative 5% average annual return), and…
Every
time you have an important life change—have a child, get married, get
divorced—you need to update your beneficiaries on your retirement accounts.
Don’t delay; do it today.
Let’s
say the bike is the vehicle you’re going to ride on your path to financial
wholeness. Well, stocks are like the pedals—if you don’t have stocks, you’re
not going to go anywhere, right? Now the bonds are like your brakes. If you have
all pedals and no brakes, you can crash, which is what happened in 2008 for
people who didn’t have the right mix. Likewise, if you have all brakes and no
pedals, you’ll be stuck. You want to figure out how fast you want to go and
then create the right investment mix of pedals and brakes.
One
general rule of thumb, called the Rule of 110, suggests that you subtract your
age from 110, and use the bigger number as your stock percentage, and the
smaller number as your bond percentage.
For
example, if you’re 30: that’s 110 − 30 = 80. That means you should invest 80%
in stocks and 20% in bonds. Next year, when you’re 31, your percentages would
be 79% (stocks) and 21% (bonds).
Reducing
your stock percentage as you age is seen as a strategic way to reduce risk as
you get closer to retirement.
Grow
Richish (Increase Your Net Worth)
THE
PURPOSE OF WORK
I
was listening to a podcast recently and I heard Dame Dash, rapper Jay-Z’s
former business partner, say something that stopped me in my tracks. He said,
“I wish more people understood the real purpose for working. The purpose of
work is to own. And one day for the things that you own to grow and be able to
put you out of work.”
Wow!
That was profound for me. So many of us see work as a means to just pay bills,
have a little fun, and to save for a rainy day. The truth is, if you shifted
your mindset, you’d shift your net worth and your ability to achieve financial
wholeness.
Work
and pay your bills, enjoy some of your money and save for emergencies, but
never forget that you’re working toward ownership…aka assets. And that when
done right, you can eventually live off the assets you’ve worked for.
The
key is to remember there’s no need to judge yourself for wherever your net
worth is right now. Know your number, create goals to get where you want, and
remember that you are in charge, sis! Your activities are directly related to
what your net worth is. Learn to save, learn to lower your debt, learn to
invest, and learn to earn. You’re well on your way!
Last,
be sure to track and check in on your net worth every six to twelve months.
Pick
Your Money Team (Financial Professionals)
Just
to reiterate: If you are going to hire a financial advisor (preferably a CFP),
I suggest a fee-only CFP because there are a wide range of ways to pay them and
they don’t sell products (i.e., insurance). This means that their focus is
truly on advice, and as fiduciaries there are fewer conflicts of interest.
As
my father would say, “He who pays the piper determines the tune.” Translation:
Whoever pays the DJ gets to pick the songs. So when you choose a fee-only
advisor, you are paying the DJ (the advisor), so they have to play what you
want. They are obligated to do what’s best for you.
There’s
an African proverb that says, “If you want to go fast, go alone. If you want to
go far, go with others.” I want to go far, and I want you to do that as well.
Budgetnista
Boost: Your Money Team should not play an underrated or undervalued role in
your path to financial wholeness. The fastest way to achieve your goals is with
support, expert guidance, and advice. The more you make or want to make, the
more you’ll need assistance.
Leave
a Legacy (Estate Planning)
If
you’ve taken your time and worked through this book you accomplished the ten
steps of financial wholeness.
1.
Budget Building: You have a written, and at least partially automated (i.e.,
transfers, savings, bill pay, etc.), personal budget. And have the necessary
checking and savings accounts to support your budget.
2.
Save Like a Squirrel: You have accumulated at least three months of necessary,
bare-bones expenses (Noodle Budget) for emergencies saved in an online-only
savings account.
3.
Dig Out of Debt: You are either debt-free or have a clear picture of who and
what you owe and have written down the components of each debt (amount owed,
interest rates, due date, etc.). You’ve also identified and use a debt paydown
plan (e.g., Snowball Method), and use your bank's online bill pay tool to (at
least partially) automate payments.
4.
Score High (Credit): You have requested and received a copy of your free FICO
credit report and score within the last twelve months. You have a 740 FICO
credit score or higher, or you've identified the factors that are impacting
your score and have come up with a game plan to increase it to 740+.
5.
Learn to Earn (Increase Income): You've identified ways you contribute value to
your job and feel confident you can leverage them to ask for a raise or
promotion. Or, you already have multiple streams of income and/or know how to
increase your income by monetizing your existing skill set and education. You
also have a plan of action if you desire to make more money.
6.
Invest Like an Insider (Retirement and Wealth): You have identified your
retirement and wealth goals. You've created and implemented your investment
plans with the help of your Human Resources representative, a certified financial
planner, online tools, or by yourself. You’re committed to consistent
contributions toward investing. You've learned to largely leave your
investments alone and give them the opportunity to grow. You put in place a
clear investment plan for both retirement and wealth building.
7.
Get Good with Insurance: You know that you have adequate insurance coverage
because you understand and have calculated your needs around health, life,
disability, and property and casualty (e.g., home and auto) insurance.
8.
Grow Richish (Increase Your Net Worth): You know how to calculate your net
worth (what you own minus what you owe). You have a positive net worth and/or
you know how to achieve, increase, and maintain a positive net worth. You have
a net worth goal and have defined the specific actions you’re going to take
each month to achieve your goal.
9.
Pick Your Money Team (Financial Professionals): You found, vetted, and
assembled a money team of financial professionals and accountability partners
that will help you reach your financial goals (i.e., certified financial
planner, insurance broker, estate planning attorney, or certified public
accountant, etc.).
10.
Leave a Legacy (Estate Planning): You have identified and completed the
applicable components of your estate plan (e.g., a will, trust, beneficiaries
on accounts, etc.) and have executed (signed) and funded it. This means you
have a plan for what will happen to your estate (cash, real estate, jewelry,
and other assets) after you pass no matter the size of your bank account and
portfolio (i.e., investments, home, stocks, bonds, etc.).
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