Financial Independence Hokey-Pokey

 

financial freedomI didn’t focus on being financially independent until about three years ago.  I had an idea what my net worth was, but wasn’t fully clear on the exact number.   The lack of a plan made it a nebulous target.

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In my 20s at the start of my career, retirement seemed so far away.  I relied heavily on my accounting career to give me financial security.  After all, I chose the career knowing that I’d always have a job.  Consequently, every ounce of my energy went into working.  There were summers that I never saw the light of day. I never knew when I was getting home and I made many sacrifices.  Believe it or not, it was exciting and I enjoyed it.  I latched onto an upward trajectory of promotions and raises.  When I had full autonomy over my position, I liked being relied upon and the responsibilities that went with it.

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5 Things Small Business Owners Need To Know – Money Learning Checklist 6

 

business-management

If you’re a small business owner, congratulations.  You’re your own boss and no one tells you what to do, create, or produce.  That’s the upside.  The downside is that you’re in charge of everything, and that means everything.  Sometimes you get what you ask for.

In addition to your main talent, you need to be talented at these other activities as well.

Take some time out to focus your attention on these very important elements.  Get help if you can’t handle it.

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Keep good records

Get organized.  This is the key to any financial activity.  Maintaining good records for accounting and tax purposes is essential not only for tax purposes but also for banking purposes.  Being organized lends credibility to your activity.  Make sure you can identify the sources of your income, reasons for expenses, and documents related to purchases of business property.  Even if you’re not an accountant, you can keep separate folders for each type of expense.  Drop receipts right into the folder and organize them later.  That’s something that anyone can handle.

Prepare financial statements on a regular basis.  When you need to apply for a loan, the bank will ask for them.

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5 Ways Your Life Is Impacted By An Interest Rate Increase

 interest rate

Interest rates do not make for the most exciting chat topic. You won’t find it in the conversation starter game that you unwrapped for Christmas.  It’s probably easier to clear a room by yelling ‘Interest Rates!’ than FIRE!  Watch your friends and family run from you as you broach the topic of how the Federal Open Market Committee voted to keep the Federal Funds Target Rate at 1.00% – 1.25%.  Fed Prime Rate Info

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Build A Credit History, Not A Credit Mystery

credit

During my latest financial planning workshop, I had the pleasure of meeting a few millennials.  It was refreshing to see their hunger for financial knowledge.  As we talked, some problematic issues of their generation surfaced, one being how to build a credit history.  They conveyed that friends wanting to rent their own apartment were turned down because they didn’t have a credit history.  Here’s one of life’s ambiguities.  Like applying for jobs that require experience when you can’t get a job to gain experience, how do you build credit when you’re just starting on the path to financial adulthood?

Related Post:  Your Life Partner, Your Credit Score

 

To start building credit:

Start out with a store card or gas card.

Bank money in advance before making purchases.

Pay your bills on time.

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End of Year Money Moves

money management

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Now’s the time to be anticipating money moves for next year.  To avoid losing valuable compounding time or growth, you want to be able to pull the trigger on January 1st.  Check into what your accounts and plans offer and ask questions in advance.

With year-end bonuses and raises coming up, certain accounts require tweaking.  For example, with each year’s payroll increase, my retirement plan contribution percentages can be adjusted.  I examine every payroll deduction and determine if I am gleaning the maximum benefit from each.  See below where I will fund my 2018 Health Savings Account contribution using an IRA transfer.  Because I won’t need a payroll deduction for that account, I can adjust my Flexible Spending Account contribution and reinstate my vision benefits.  I don’t pay for vision benefits each year, only the years that I plan on buying glasses.

In the financial planning workshop I conducted over the past three weeks, someone posed a question as to how to manage changes in the economy and the tax code.

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How Money Plays a Role in Our Lives

financial control

I see everything through a money lens.  I realize most people don’t.  The notion of excluding money from everyday thinking is unrealistic to me.  Unless we live off the grid and grow our own food, then money may be considered trivial.  In the real world, money is the medium through which we manage our standard of living.  Ignoring the role it plays in life is downright naïve.  We exchange money for everything: food, shelter, clothing, electricity, heat, transportation.  Most people shun money topics, or think it’s too boring to talk about.   Reality is, money is the undercurrent of life.  People say they don’t care about money.  They say they want to ski all day or go fishing but they still have to buy the skiing gear and fishing rods.

This post is about how money is intimately interlaced into every area of life and why it’s critical to pay attention to monetary affairs.

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Acknowledge Your Money Behavior

financial management

I’m trying to get to the root of money behaviors. This topic is becoming an annoying bug buzzing around the inside of my head.  Because I spend so much time reading and researching money issues, it’s outside of my faculties to conceive that others don’t make responsible money decisions.  I am constantly reading that more than 50% of pre-retirement workers have little or nothing saved for retirement, and I can’t wrap my mind around it.

Money scripts, just like any other psychological scripts, are clearly the driver, but it’s also about education, or the willingness to learn.  Most adults are struggling to manage their finances, and many concede that they don’t know the basics.  For young adults, there’s no formal education for personal finance, and high school graduates have no idea what to do regarding self-support.  College graduates are burdened with student loans without any idea how they’re going to manage the payments.  Many don’t know how to anticipate real-life expenses and get quickly overwhelmed.  They get blindsided by the multitude of costs, using credit cards to pay for necessities, and enter the danger zone of perpetual debt.

By not knowing the first step, or knowing how to manage all the pieces that make up a comprehensive, effective financial playbook, individuals retreat into ignorance.  That’s never good.  Those that choose not to address their financial issues too often find that eventually their money issues are running them, not the other way around.  Credit that’s not managed properly, spending money that one does not have, letting emotions control money decisions.  These are just a few.  Some money issues are so extreme that they upend a person’s life, leaving the individual with lifelong debt or substantial losses of savings.

Money Scripts

In conjunction with education, the money script of the individual deserves acknowledgement.  If you’ve read any of my previous material, I’m a huge fan of Dr. Brad Klontz, the psychologist responsible for coining the phrase.  All the education in the world will get thrown to the wind if the person possesses a destructive money script.  The money script will collide with the education, and will win in the end.  That’s because the money script is generated from subconscious beliefs.  The person may not even realize they’re displaying certain behaviors.  The human brain works that way, it’s part of survival.  We learn things that work for us and there’s always a payoff for doing what we do.

I intend to be a teacher of the elements that result in a sound financial setting.  Once the elements are part of everyday awareness, it becomes easier to process the combination working together.  Starting out may not be easy, but a strong goal with small rewards along the way will result in an increase in quality of life and overall contentment.  By chipping away at understanding one aspect at a time, it all comes together.  The sum is truly greater than the parts and financial harmony can materialize.

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4 Super Easy Ways to Start Investing – Today

easy investing

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Start Investing Now

I continue to hear that people are confused about how to start investing.  Honestly, I don’t understand such bewilderment.  If you ask me, investing has never been easier.  Maybe before the Internet, but not now.  There is so much information out there, no one should be at a loss. However, money mentalities are responsible for this.  Everyone has their priorities and if managing their money is not near the top of the list, it gets forgotten.  If someone is immersed in their career or other priorities, their money mentality takes a back seat.  Totally understandable.

Learning how to invest can be a lifetime endeavor, and a confusing one.  With the number of available investments, it can be dizzying to even attempt to understand it all.  Dizziness leads to zone-out, and ultimately, non-action.

Here are a few remedies to ensure that you are participating in the world of investments.

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