So you just graduated! Yay! You have your cap and gown...and a mountain of student loan debt!! Wait. OK, so there is more to this whole graduating thing than you expected. But you can simplify your loans and pay them off more rapidly. Here’s how:
When dealing with debt, the best thing you can do is educate yourself about your options. Do your research and then work on paying your student loans down step by step. Soon you’ll be able to pay them off and focus on the bright future ahead of you.
Brittney Castro is not affiliated with MadeWomenMag.com. Brittney A. Castro is a registered representative with and securities offered through LPL Financial, Member FINRA/SIPC. California Insurance License #0F33895. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
You have worked hard to establish a great career--no small feat during an economic recession--and now you are ready to put your money to work for you. But where to begin? Should you hire a financial broker, or become an independent investor? Play it safe with bonds, or play the stock market? Before you resort to stuffing cash under a mattress, take these five steps toward investing…straight to the bank.
1. Get Financially Literate. Some investment terms you should know include:
Stock/ Equities - If you own a stock, you own part of the company. A stock is evidenced by a paper certificate.
Securities - Includes stocks, bonds, and bank deposits.
Bond - A bond is a debt investment in which an investor loans money to a corporate or government entity that borrows the money for a defined period of time at a fixed interest rate. The main categories of bonds are corporate bonds, municipal bonds, and U.S. Treasury bonds.
Market Capitalization - Also known as “market cap.” It is calculated by multiplying the current price per share of a stock with the number of shares outstanding.
Mutual Fund - An investment company that combines the money from a large group of investors to buy stocks and other investments.
Dividends - A portion of a company's profits that is paid out to shareholders on a quarterly or annual basis.
These are the most commonly used terms in investment and knowing what they mean will help you understand stock roundups in The Wall Street Journal, Yahoo Finance and Dow Jones. When I first tried to calculate a company’s market cap it took me two hours, simply because I didn’t know what it meant. Now that I know the lingo, I can look at an analyst report and easily follow the progress of a stock. I’m no expert, but I know enough to play the game.
After brushing up on your fiscal vocabulary, read Lois P. Frankel’s Nice Girls Don’t Get Rich: 75 Avoidable Mistakes Women Make with Money. I love the advice she offers women about diving into investment and not waiting on “Prince Charming” to take care of their finances. Use the workbooks and self-evaluations in the book to establish and monitor your progress toward financial goals.
Another great read is Douglas R. Andrew’s Millionaire by Thirty: The Quickest Path to Early Financial Independence. Andrew claims that young professionals can achieve financial independence at an early age by investing. He suggests alternatives to the traditional 401k to make the dream of early retirement a reality.
The Richest Man in Babylon uses parables and layman terms to deliver investment basics and emphasize the importance of growing your money. My dad gave it to me when I was only seven and I often revisit the principals outlined in this book. The common sense advice helps keep me in check when I’m tempted to splurge during a sale at H&M.
Also, get in the habit of scanning Investors Business Daily, The Wall Street Journal and Yahoo Finance for the latest news and market trends.
2. Do Your Research. Before you invest in anything, do your homework. Publicly traded companies want your money, so they make it easy to find pertinent information. Check out their websites to find earnings reports, mergers and acquisitions news and stock quotes. Knowing everything you can about a potential investment is crucial to making a wise decision. Supplement your research with facts from Hoover's Company Profiles. This is an invaluable web resource that offers additional material about company management and executive profiles.
3. Stay Connected. Once you have done your research and decided which companies you want to invest in, it is smart to stay in touch with an online financial community. Social media is a great tool for networking with investment pros and getting the inside scoop on smart buys. Try Stocktwit, a social networking platform where you can “share ideas and learn from passionate investors and traders.”
4. Don’t Invest What You Should be Saving. Investments should be a part of your overall financial strategy; however, it is important to establish good saving habits first. Create an emergency fund, open a retirement savings account and pay off outstanding credit card debt before playing the stock market. Pay yourself first and you should have extra money to invest in no time.
5. Diversify Your Portfolio. Once you have savings and understand your investment options, it is important not to place all your eggs in one basket. Diversification is the practice of spreading money among different investments to reduce risk. A well balanced portfolio of investments is more likely to withstand fluctuations in the volatile financial market. The U.S. Securities and Exchange Commission offers great advice on steps you can take to diversify your investments for maximum returns.
Investing is key to financial independence. You want the freedom to travel, buy a home or retire early, but savings alone won’t get you there. The average annual percentage gain for a high-yield savings account is one percent. Compare this to the average 10 percent earned on stocks. When you save, your money doesn’t work for you and you will only have as much money as you set aside from your salary. When you invest, your money grows by earning interest. So, determine your financial goals, study up and take your first steps toward a wealthy future.
Insurance is used as a way to protect ourselves, our loved ones and the things we own against unexpected events that happen in life. It would be lovely if you could set it up and forget about it, but as you work on building your financial foundation, your insurance coverage just becomes another area that you should review on a regular basis.
While there are many types of insurances you may need as you progress through different life stages, here are a few you need to know about now:
1. Disability Insurance
Simply stated, disability insurance protects your income. According to the Social Security Administration, just over 1 in 4 of today’s 20 year-olds will become disabled before reaching age 67!1 And 67% of the private sector workforce has no long-term disability insurance. Most people think of disability insurance as a waste of money because they think nothing bad will happen to them to keep them out of work but the reality is…it happens. You go skiing and break your leg or (God forbid) you get seriously sick. What happens then?
As you move toward financial independence it is crucial that you protect one of your most significant financial assets: YOU! Your ability to earn an income is what funds your life and allows you to save for your goals. Without it, you may lose everything you have worked so hard to build and save. Disability insurance is what pays you an income if you become too sick or injured to go to work. In general, disability insurance policies usually replace about 60 percent of your annual earnings for a specific period of time (2 years, 5 years, to age 65). If you are lucky, you may have an employer that offers a group disability insurance coverage as a benefit. If not, you should look into individual disability insurance, which on average should cost between 1 and 3 percent of your annual income.
2. Life Insurance
My motto: If you love someone or owe someone, you need life insurance. Why? Because your debts don’t die when you do and you’re going to want to make sure your loved ones are taken care of financially should something happen to you. It makes sense to review your life insurance needs on a regular basis to ensure that you are adequately covered for your current financial situation and goals you’re saving for. Usually you will want to get enough in life insurance to leave your family with enough money to cover the bills and replace your income if you were no longer here. If you have kids or other dependents, life insurance will provide your survivors with an income stream or lump sum to replace your income.
Parents who stay home and care for the children also need life insurance. If something happens to you, who is going to stay home and take care of the kids? Your surviving spouse can stop working to care for the kids or hire childcare. Both require money. Since there are many types of life insurance out there, it is wise to do your homework and understand the basics of the different types of life insurance. For more information on the different types of life insurance, check out this article on Investopedia, Intro to Insurance: Types of Life Insurance.2
3. Long term care insurance
In 1940, the life expectancy of a 65-year-old was almost 14 years; today it's almost 20 years.1 With life expectancies rising, more and more people will find themselves needing some sort of long term care. Long term care insurance provides assistance to people who are in need of either in-home care or a long term care facility. The average cost of a private room in a nursing home facility in California for 2011 is about $91,250 per year!3 With the costs of long term care increasing at about 7% annually, you can see why individuals of all ages are starting to heavily consider this type of insurance. Keep in mind that while some think Medicare covers long term care costs, Medicare only pays a portion of the first 100 in a skilled nursing home, the rest is paid by you. For more information on Medicare, visit their website at www.medicare.gov.4 If you have parents who are in their 50s and 60s, you may want to look into long-term care insurance with them. If they need care later in life, you may be the one who has to care for them. This is an emotional, physical and financial responsibility.
Financially Wise Women Quick Tip:
Here are some quick tips to help you get some of your insurance needs in shape:
1. Review your insurance coverage today. Protection planning is a key part of your financial plan, as you want to protect yourself against unexpected events. Buying insurance helps shift some of the risk to an insurance company and helps protect your financial foundation.
2. Make sure to take advantage of the insurances offered through your employer. These are usually easier to qualify for and cheaper to you since the policies underwrite a large group of people, helping the insurance company minimize its risk and therefore keep the cost down.
3. Make sure you understand the types of insurance policies you currently have and what your insurance needs are. Work with an insurance professional to identify any gaps in your insurance policies.
4. Review your insurance policies regularly. just like any financial strategy, you’ll want to make sure you review on a regular basis and make any necessary changes or amendments to your coverage as you progress through life stages.
For further information I invite you to check out my blog www.Financiallywisewomen.com or email directly at This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Brittney Castro is not affiliated with MadeWomenMag.com. Brittney A. Castro is a registered representative with and securities offered through LPL Financial, Member FINRA/SIPC. California Insurance License #0F33895.
Sources and Links:
We all see them. The graphic images on Pinterest and Facebook like this one. Food porn. They lure you in and trick you into thinking you really can squeeze a gourmet lunch or breakfast everyday into your budget. But when was the last time you actually calculated the cost of your breakfast? I calculated the cost of mine the other day just out of curiosity and was pleasantly surprised that it was only a whopping $1.96 every day!
Breakfast Breakdown
Grand total= $1.96
Not too bad right? Great way to start the morning and not bad on my wallet either.
Now if you know me, you will know I am a creature of habit when it comes to food and don’t mind eating the same thing every day. My breakfast is the same every morning; oatmeal, a banana, and coffee with soy milk. As routine as this may sound, I plan my meals like this mainly because I want to eat something healthy and filling in the morning. Because I stay so busy, I also appreciate not having to think about what to eat every morning– which saves me lots of time and money.
Get Control
When working with clients on their cash flow, I usually see their food costs as the expenses that can really get out of control. They save and skimp in other areas but often times dining out is the one place where money falls through the cracks. A lunch here, a dinner there, drinks here… and there– all of these things really add up. Planning ahead and prepping your meals for the week can ultimately become a more cost efficient route. Think of it as portion control for your finances.
Iron Lady Chef
As tempting as it may be to call up your girl friends for a fancy dinner out, a good way to keep your food costs in control is simply by eating at home. I try to go grocery shopping every weekend to stock up for the week ahead. Yes, there are occasions where I do eat out during the week (i.e. business meetings, client meetings/events or to celebrate a special occasion), but for the most part I usually eat my prepared, planned out meals and it frees up some time and spending cash. Get a jump on breakfast this week and cook a batch of these. Your tastes buds and your wallet will thank you.
One Bite At A Time
Another tip (one I learned from my parents), is to save money by not buying drinks while eating out. Think about it. You’ll end up drinking more water, saving cash, and possibly losing a few pounds by cutting back on sodas. I still follow this same philosophy today. If you have to have your diet Coke with dinner maybe skip the appetizers and/or dessert. Life without dessert may seem extreme, but deciding ahead of time what to cut will help you stay in control.
Now, I know what you may be thinking. Going out to eat is part of what you enjoy most and part of your social life too. I completely understand this. But I’ll let you in on a little secret, I still see my friends, family, attend networking events and go out for social gatherings all the time and usually do all while sticking to my food budget. Instead of business lunch meetings, I opt for coffee meetings (saves time and money). Instead of always going out to eat with friends, we opt for potlucks at someone’s house. We love this idea because everyone can bring their favorite signature dish to share, which is usually a great conversation starter and a less expensive route too.
If you just simply enjoy going out to eat and don’t want to give it up– don’t. Instead, make sure you adjust your spending plan accordingly to ensure you are still in control of your food costs. Remember, financial planning is not about cutting the fun out of your life. Rather, it is simply planning how you want to use your money to support your current lifestyle, while being able to save for your future one.
For further information I invite you to check out my blog www.Financiallywisewomen.com or email directly at This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Brittney Castro is not affiliated with MadeWomenMag.com. Brittney A. Castro is a registered representative with and securities offered through LPL Financial, Member FINRA/SIPC. California Insurance License #0F33895.
You go to work, spend your money how you see fit, and live your life each day never thinking about how all that came to be. Not so long ago, women in this country couldn’t enjoy the financial freedom we take for granted today. The story of women and money is an interesting one and it is only when you take a look at the big picture that you can begin to appreciate how far we’ve come. In honor of Women’s History Month, I thought it would be a good idea to highlight some cool facts about women both to celebrate our successes thus far and make sure we continue to work on our own financial future.
We spend, save, and earn money differently than men. Looking at these facts makes it clear that we need financial plans tailored to us and our habits. For more information on how to do this visit my website, FinanciallyWiseWomen.com. Happy Women’s History month!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Sources:
Brittney Castro is not affiliated with MadeWomenMag.com. Brittney A. Castro is a registered representative with and securities offered through LPL Financial, Member FINRA/SIPC. California Insurance License #0F33895.
Relationships can be hard enough to manage without the added stress of the almighty dollar. So, what do you do when someone you care about owes you money? Siblings drift apart, best friends become enemies and working relationships become hostile if borrowing money isn’t handled properly. Here we examine three ways to talk to your friends, family, and even coworkers about cash in a respectful way.
Scenario: Your Little Sister Becomes a Big Freeloader
Most of us have either lent or borrowed money from a family member before. It’s natural to want to help those who are closest to us, but when does loaning money go from being helpful to harmful to your relationship? For example, there’s nothing wrong with loaning your little sister who’s in college some cash to buy books for next semester. But what happens when she’s hitting you up when she wants a new dress for homecoming, a plane ticket for spring break, or for you to pay her phone bill?
How to deal:
In situations like this, loaning out money is actually harmful…to your sister. Instead of learning to manage her funds wisely--which is part of becoming a responsible adult--little sis’ is being careless with her money and expecting you to foot the bill. It’s best to have a frank conversation that goes something like, “I love you and I don’t mind helping you with the occasional school expense. However, I want you to be independent and learn how to manage your money responsibly. Why don’t we sit down next week and create a budget that works for you?”
This lets her know that you care about her and want to help, but that you are drawing boundaries in your relationship. She’ll thank you for it in the long run and you eliminate an unhealthy pattern of co-dependence that can lead to resentment in the future.
Scenario: Your B.F.F. thinks you are a B.A.N.K.
It’s easy to lose track of money with friends in a social setting. Spotting someone at the movies and picking up the tab at dinner are part of reciprocally altruistic relationships. But what happens when you always pay for dinner, buy the concert tickets, and loan cash without ever being paid back? How do you approach the situation without coming off as a penny pinching miser?
How to deal:
I’ve found one of the best ways to deal with this situation is to establish boundaries in a fun way. One option is to take turns treating each other when you go out. That way there’s no awkward conversation about who owes who money. So the next time your mooching friend asks you to pick up the tab, try saying, “Sure. This one’s on me. Next time, it’s your treat.” If you keep it light and smile, you’ll establish a boundary without embarrassing your friend, who might not even realize she’s taking you for granted.
Scenario: Mixing Business with Money
The same approach can also work well in a professional situation as well. However, it’s best to avoid borrowing and lending cash to co-workers altogether. You don’t want to go from being best buddies with Becky in accounting to thinking, “B*&%! better have my money!” every time you pass her desk. If you can’t afford to give it without them paying you back, then you really can’t afford to help.
“Bank of You” User Agreement
When someone hits you up for some cash, it’s best to talk about it, set boundaries, and avoid large sums. My experience has taught me that it’s best to avoid lending money altogether, but if you must here are a few tips I recommend to keep your relationship intact:
1. Make sure you can afford it! If you can give the loan from extra money you have saved up, that would be best. The last thing you want to do is go into debt trying to help someone else.
2. Evaluate the relationship. Make sure that you—and your relationship with this person—will be just fine if you are never repaid one penny.
3. Make it legal. For only $8, you can download a promissory note from Nolo.com and have your friend or relative agree to sign a simple loan document. It should detail the amount borrowed, when repayment will start, and the interest you will be paid.
True friends will understand and respect your financial boundaries. If not, then they probably are not great friends to begin with. #LoanDenied
Have you been struggling with your finances lately? Come on, be honest… Are you ready to make a change in your personal financial situation in 2012? Well, the good news is you are not alone. If you are like most people, one of your New Year’s resolutions is to get your finances in order and finally take control of your financial life. And we applaud you. As a woman, it is really important that you start becoming more focused on your personal finances to help you plan for a more secure financial future. Here are some tips to help you manage your personal finances in the New Year:
1. Understand some basic financial planning principles
As tedious as it may sound, much of financial planning is staying disciplined and practicing the same financial habits over and over: spending less than you earn, saving for the future, paying off your credit cards each month, etc. Straightforward stuff. And while we know it usually comes down to remembering the basics, most of us still get so overwhelmed with all that we want to achieve financially that we often end up doing nothing at all toward achieving our goals. Call it “sticking-your-head-in-sand syndrome.” The important thing to remember is that these basic financial planning principles actually do work over time and the best thing you can do to ensure your future success is understand them and follow them throughout your financial life.
2. Visualize where you want to be financially on December 31, 2012
Let’s get down to business. Start by listing out all areas of your financial life, including your income, savings, debt, retirement accounts, insurance policies, etc. Then write down where you currently stand within each of these areas and where you would like stand by the end of 2012. (It will be here before you know it.) Be as specific as possible and aim for realistic yet high goals. For example, let’s say you currently have $5,000 in savings and want to have $10,000 in savings by December 31, 2012. This means you have to save $600 per month. After reviewing your cash flow you decide that this is a doable goal, but it will require a game plan to ensure you are saving the amount needed every month. You can do it!
3. Create a Game Plan
Once you map out where you would like to be financially by December 31, 2012, develop a specific game plan to help you get there. In the example above, if you know you need to save $600 a month, setting up an automatic contribution to your savings account every month is a good idea. If this requires you to cut back on shopping or going out to eat, make sure you calculate how much money you can actually spend in these areas without jeopardizing your goal.
4. Just Do It
Seems basic enough, yet many women get so overwhelmed by their finances that they end up disregarding the game plan they set out for themselves. Don’t let this happen to you. Maybe this means scheduling an hour a week to make sure you are on track. Just take action on the game plan and start working toward your financial goals. Whatever the action is, any action is better than none.
5. Check back in on your goals every month
As you work toward the December 31, 2012 vision you have for yourself financially, remember to check back in on your game plan every month to track your progress toward your goals. This will help you stay motivated and adjust the game plan as needed. Going back to the example above, if one month you are unable to save the $600, you need to decide on a new game plan to get back on track toward the goal. Tracking your goals may not be that fun or sexy but it is a necessary step in helping you reach them.
Remember, no one is in charge of your financial future other than you, so take the time to understand and manage your personal finances to help you plan for a better financial future!
Brittney Castro is not affiliated with Madewomanmag.com. Brittney A. Castro is a registered representative with and securities offered through LPL Financial, Member FINRA/SIPC.
This article was part of our series "30 Days of Made: Love Yourself".
Each day we released updates of videos, poetry, images, and
original content, all based on the theme of loving yourself. Click the link to read more!
It's there, in the back of your mind. And it's growing every day. It's the desire to have something to call your own. To walk into your own house every night, to remodel it to your liking, to feel the sense of accomplishment that comes with buying a home. But if you've been alive during the past couple of years, you've heard that there's more to buying a house than signing on the dotted line. Lenders are stricter than ever, buyers are expected to come to the table with a stack of cash, and banks are now property owners. All of this madness can be daunting, especially if you're among the rising number of single, female first-time home-buyers. But the best way to combat fear and uncertainty is always with knowledge. You can enter this new market--and without regret. You'll just have to do your research. And, of course, weve consulted a few good women to help you on your way. These ladies agreed to share their experiences to help us all navigate this new housing market, and avoid the pitfalls that trip up many of us first-timers. So whether you're planning on buying a house this year or further down the line; whether you're going it alone or buying with your man, you need to read this!
Why Buy Now?
As Made Women, most of us would rather pay our own mortgage than someone else's. Yet according to Rosetta Broomfield, that's precisely what we're doing when we rent. Rosetta, an independent broker, has also been a financial consultant for over twenty years, hosting financial freedom seminars and helping her clients create short- and long-term financial plans. So why does she suggest to buy now? "Simply put, real estate is at a discount. Everywhere. I always like to use the analogy of going shoe- or dress -shopping. The best time is always to buy when things are on sale." Makes perfect sense to me!
But what about those who have watched what's gone on over the past few years, and are a little freaked out about this home-buying thing? "If you're renting, you're giving someone else your money. The sooner you can build up equity for yourself and gain the tax benefits of owning a home, the better." Rosetta goes on to share how she and her husband decided to buy back when interest rates were an astronomical 14 percent (they're now as low as 4 and 5 percent). "Even though interest rates were high, we knew that if we rented, we weren't going to keep any money ourselves." They went on to pay the house off and she cites home ownership as the reason for her current financial position. "It has really been the foundation of our wealth." In her opinion, there's no reason to be wary if you avoid the traps that many homeowners succumb to.
Pitfalls to Avoid
The number one pitfall of first time homebuyers? "Overextending yourself," Rosetta states. Think of buying a car or a new dress. You see it in the store, it's all sparkly and beautiful--you just have to take it home with you. But then maintenance repairs come up on the car, you realize you have to get the dress dry cleaned all the time, and, "what seemed like a blessing can truly become a curse." A few hundred thousand dollar curse, at that.
She also says the best approach is to take your time, figure out what you can truly afford and to find a realtor that you trust. "You have to be comfortable sharing the most intimate details of your life. If for any reason you're feeling uncomfortable with your agent, you should not go forward. Move on!" Got it!
Pamela Watkins, a homeowner twice-over (go ahead, Made Woman!), agrees. "You should never be rushed; you've got to feel comfortable with your realtor and you have to do your homework. This applies to everybody, but for young women in particular, you're so susceptible because you're striking out on your own and you don't always know what you should question. It can be easy to be pushed the wrong way." Rosetta also cites emotions as something that can trip women up. She urges us to remember that home-buying is not an emotional decision, but a financial investment. So now that we know what to avoid, how do we get started?
Tips and Resources
If you don't happen to have $200,000-$400,000 in cash at the moment, chances are you'll have to borrow a few bucks. Rosetta says that all of the major lenders (Wells Fargo, Bank of America, Chase, etc.) have free online tools where you can enter your financial info and see what you can afford today. Free financial advice? I'll take it! Once you know where you stand, you can create a plan to get where you want to be. Whether you need to improve your credit or save more money for a down payment, this is a good place to start. When you're ready financially, she recommends being pre-approved (not pre-qualified--there's a difference) by three major institutions and "to use them against each other to negotiate for the best terms. If you cant qualify, you shouldnt be looking for a home." Well put.
Another good idea Rosetta offers is to use an online calculator to "figure out what your mortgage payment would be, and live that way a few months. See if that's something you can live with." She sees this as a very powerful way to find out what fits your lifestyle and what you're truly ready for. Most major banks offer mortgage calculators on their websites, but she personally recommends Wells Fargo's online tool. I also like Richdadworld.com's in-depth, free tool; just register for the site to access it.
Pamela recommends a unique source of education--HGTV. Shows like Property Virgins and House Hunters have exposed her to tactics she didn't know were even possible: "I didn't know you could ask [the seller to pay] closing costs or to fix things. When I bought my house I paid a down payment and closing costs. I think that young buyers need to realize that negotiation is possible." Who knew TV could help you make smart financial decisions?
Overall, what we should learn from these ladies is that with a little bit of research, time and negotiation, real estate can be attainable for all of us. Rosetta puts it simply: "be patient and buy what you can afford." Hmmm...what a novel idea.
Being a financial planner, I can spend all day and night talking about money, income taxes and the economy. My boyfriend on the other hand, while he has a great understanding of money, finances, and stays interested because he loves me, would rather not have 99% of our conversations focused around these topics. With money issues still being the number one reason why couples end up in divorce, you can understand why it is so important to learn how to talk about money with your love earlier rather than later.
So to help us out with our money communications skills, my boyfriend and I started doing weekly Team Huddles--specific time in our calendar to discuss topics such as:
o Money
o Short Term personal and financial goals
o Long term personal and financial goals
o Anything else going on within our relationship
Instead of me bombarding Brandon nightly about financial topics, we now table those more detailed conversations for our Team Huddles where we can commit our full attention to the discussions at hand.
Since we have been doing the Team Huddles, we have found that our communication has gotten even stronger around the things that we value most. It does not mean we always agree, but at least we both feel we can dedicate 100% to communicating our various opinions and thoughts on each topic. Brandon has indicated several times now that he loves the Team Huddles, feels less ambushed with money talks, and it allows him time to get on the same playing field as me (I am a Type A personality and can be quite aggressive sometimes). For me, the main value has come from the fact that I know we are communicating about these important topics in an effective manner on a very regular basis.
I encourage you to schedule your first Team Huddle with your significant other if you aren’t doing it already. Here are some examples of what you might talk about in your first Team Huddle:
• Your money personality- The Money Couple offers a great money personality quiz, click here quiz.
• Money Values- what is important to you about money
• Your short term financial goals- i.e. paying off debt, saving for a home down payment, etc.
Remember, the first Team Huddle might not be easy, especially if you have never really discussed money with one another, but the more you do them, the easier they become. Cheers to your first Team Huddle!
For more information on Team Huddles, check out my blog post about it here.
You have worked hard to establish a great career--no small feat during an economic recession--and now you are ready to put your money to work for you. But where to begin? Should you hire a financial broker, or become an independent investor? Play it safe with bonds, or play the stock market? Before you resort to stuffing cash under a mattress, take these five steps toward investing…straight to the bank.
1. Get Financially Literate. Some investment terms you should know include:
Stock/ Equities - If you own a stock, you own part of the company. A stock is evidenced by a paper certificate.
Securities - Includes stocks, bonds, and bank deposits.
Bond - A bond is a debt investment in which an investor loans money to a corporate or government entity that borrows the money for a defined period of time at a fixed interest rate. The main categories of bonds are corporate bonds, municipal bonds, and U.S. Treasury bonds.
Market Capitalization - Also known as “market cap.” It is calculated by multiplying the current price per share of a stock with the number of shares outstanding.
Mutual Fund - An investment company that combines the money from a large group of investors to buy stocks and other investments.
Dividends - A portion of a company's profits that is paid out to shareholders on a quarterly or annual basis.
These are the most commonly used terms in investment and knowing what they mean will help you understand stock roundups in The Wall Street Journal, Yahoo Finance and Dow Jones. When I first tried to calculate a company’s market cap it took me two hours, simply because I didn’t know what it meant. Now that I know the lingo, I can look at an analyst report and easily follow the progress of a stock. I’m no expert, but I know enough to play the game.
After brushing up on your fiscal vocabulary, read Lois P. Frankel’s Nice Girls Don’t Get Rich: 75 Avoidable Mistakes Women Make with Money. I love the advice she offers women about diving into investment and not waiting on “Prince Charming” to take care of their finances. Use the workbooks and self-evaluations in the book to establish and monitor your progress toward financial goals.
Another great read is Douglas R. Andrew’s Millionaire by Thirty: The Quickest Path to Early Financial Independence. Andrew claims that young professionals can achieve financial independence at an early age by investing. He suggests alternatives to the traditional 401k to make the dream of early retirement a reality.
The Richest Man in Babylon uses parables and layman terms to deliver investment basics and emphasize the importance of growing your money. My dad gave it to me when I was only seven and I often revisit the principals outlined in this book. The common sense advice helps keep me in check when I’m tempted to splurge during a sale at H&M.
Also, get in the habit of scanning Investors Business Daily, The Wall Street Journal and Yahoo Finance for the latest news and market trends.
2. Do Your Research. Before you invest in anything, do your homework. Publicly traded companies want your money, so they make it easy to find pertinent information. Check out their websites to find earnings reports, mergers and acquisitions news and stock quotes. Knowing everything you can about a potential investment is crucial to making a wise decision. Supplement your research with facts from Hoover's Company Profiles. This is an invaluable web resource that offers additional material about company management and executive profiles.
3. Stay Connected. Once you have done your research and decided which companies you want to invest in, it is smart to stay in touch with an online financial community. Social media is a great tool for networking with investment pros and getting the inside scoop on smart buys. Try Stocktwit, a social networking platform where you can “share ideas and learn from passionate investors and traders.”
4. Don’t Invest What You Should be Saving. Investments should be a part of your overall financial strategy; however, it is important to establish good saving habits first. Create an emergency fund, open a retirement savings account and pay off outstanding credit card debt before playing the stock market. Pay yourself first and you should have extra money to invest in no time.
5. Diversify Your Portfolio. Once you have savings and understand your investment options, it is important not to place all your eggs in one basket. Diversification is the practice of spreading money among different investments to reduce risk. A well balanced portfolio of investments is more likely to withstand fluctuations in the volatile financial market. The U.S. Securities and Exchange Commission offers great advice on steps you can take to diversify your investments for maximum returns.
Investing is key to financial independence. You want the freedom to travel, buy a home or retire early, but savings alone won’t get you there. The average annual percentage gain for a high-yield savings account is one percent. Compare this to the average 10 percent earned on stocks. When you save, your money doesn’t work for you and you will only have as much money as you set aside from your salary. When you invest, your money grows by earning interest. So, determine your financial goals, study up and take your first steps toward a wealthy future.
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