By Coaches Corner | February 13, 2011 at 11:25 AM EST | No Comments
Engaged? Thinking about getting married? Confilict over money is one of the top reasons couples divorce. Having a frank discussion about the following 9 areas will help you start your marriage on the right foot and foster a happy life together.
1. Debt
Be upfront and honest with each other about any debt you carry, be it credit card balances, student loans or car loans. Hiding debt from your partner has disastrous effects on a relationship because ultimately your partner will find out and will not only affect the level of trust in your relationship but also affects the monthly cash flow you have.
2. Assets.
Disclose your assets. Chances are you’ve accumulated significant savings in your retirement and investment accounts, and potentially a little real estate. Will pre-marital assets remain separate or be combined? Ok....I know you are in love.....and people in love often times think that every thing should be placed in a joint account. But what happens if things do not work out and you eventually divorce ( I know, what an unromantic notion....and on Valentine's Day no less!) Perhaps a better approach is to keep all pre-marital assets in a separate account and co-mingle any new assets accumulated as a couple.
3. Will You Have Children?
Ok....you've been married for a number of years....you've worked hard and have done an awesome job growing your relationship. Whats next? Kids! Uh oh...children are expensive and are likely to dominate your disposable income and eat into your nest egg, especially if one of you stops working to raise them. This all needs to be planned for so you don’t spend more on a house, car or other fixed expenses than you can afford on one income.
4. Who Will Pay The Bills?
In most marriages, the job of paying monthly bills falls to one person, usually the person with better fiscal discipline. Ideally though, this should be done together. At the very least the process of developing a spending plan and setting goals should be a joint effort. That way you are communicating and both on the same page when it comes to money management.
5. Will You Keep Separate Accounts?
It might seem easier to just have a joint account with all the money stored there. A better approach though is to use the "you, me and we" system of banking. Keep a joint account for shared expenses, such as housing, utilities and groceries and separate accounts for fun money.
6. Who's A Saver Or Spender?
What is your money personality? Discovering your attitude towards money and communicating these with your partner will facilitate understanding and growth in your relationship. It will also help you to manage your money more effectively as a couple.
7. What's Your Risk Tolerance?
Rare is the couple that agrees entirely on asset allocation for retirement accounts.Those on the conservative side might prefer dividend-paying, blue-chip stocks that typically produce a steady return, but slow growth.Aggressive investors, meanwhile, might be willing to roll the dice on start-ups, tech firms and energy stocks that are more volatile, but hold the potential for hefty returns.
Find out the risk tolerance of your other half, be honest about your own, and develop a plan for investing joint assets.
8. What Are Your Goals?
You should share your financial priorities, and set goals to achieve them. Do you wish to purchase a home, retire by 55, buy a boat? For any agreed goals, you should start saving a percentage of your monthly income in a separate account.
If you have different goals...then it is time to compromise. A good way to start is to ask your fiance to rank his/her priorities in order of importance and you do the same.Next, decide which are attainable, which need to be downsized and which should be cast aside.
Talking with your partner about the above items does not guarantee that you will avoid arguing over money matters altogether. It can, however help you develop a mutual trust that will allow your relationship to thrive. For the full article check out "9 Money Mistakes That Can Derail Your Marriage" at www.cnbc.com
By Coaches Corner | September 28, 2010 at 06:31 PM EDT | No Comments
It may not be a surprise to you….with the recession and high unemployment….but 1.5 million people went bankrupt last year.This is up 20% from the year before.Want to avoid bankruptcy?Staying away from these five practices can help.From the CNBC article:Five Quick Ways to Bankrupt Yourself.
1. Doing The Plastic Shuffle.We all know that having too much credit card debt is a surefire way of getting into problems financially.People who have high credit card balances will often do what we call “the plastic shuffle”— the practice of transferring outstanding balances to credit cards that offer a promotional interest rate of 0% for 6 or 12 months.Watch out for these offers though.A lot of times they come with a big fee, that may not make it worthwhile to transfer your balance, especially if the balance is small.Also, if you are late with a payment one time, this promotional offer can end and the interest rate reverts back to a higher one more typical for your individual credit situation.Then you have paid the fee AND you now do not have the 0% financing you were hoping for.Not a good deal!The reality is, doing “the plastic shuffle” is only helpful when it is combined with a concrete plan to pay off the debt.Chronic transferring of balances to take advantage of a lower interest rate often just masks a bigger problem.
2. Assuming Insurance Will Cover Your Medical Bills.Did you know that the #1 cause for bankruptcy is medical bills?Indeed, researchers at Harvard found that 62 percent of all bankruptcies are caused by medical bills.Even more disturbing is the fact that 78 percent of those were people who had health insurance!!What to do?Eat well, live a healthy active lifestyle and live a healthy fiscal lifestyle as well.Make sure you are saving every month and building a cushion for the unexpected.
3. Taking Out Advances On Your Paycheck.This practice can cost you dearly!Do you know that for most payday loan services the interest rate is 911 percent for a one week loan and 456 percent for a two week loan?Wow that is incredibly expensive.If you are having trouble making ends meet develop a spending plan and stick to it.It might mean you are eating rice and beans for a couple of days until your next paycheck….but at least you will not be paying 911 percent interest.
4. Keeping Up With The Joneses.How can your neighbor afford that luxury car or that new in-ground swimming pool?Chances are he/she can’t.There are approximately 181 million people with credit cards in this country and more than half of them carry a balance.Its okay to buy luxury items if your budget allows.If not, maybe you can find some solace in the fact that you are not in hoc for the cost of that new luxury car.
5. Overestimating The Value of an Expensive Degree.The more education the higher your pay…right?Not necessarily.Don’t get me wrong here…education is important and can make the difference between getting a job or not.Certainly one should strive to earn a bachelors degree.Just remember there are a lot of educational institutions with incredibly large advertising budgets that promise you the career of a lifetime.I am not against education or institutions that advertise.All I am saying is do your homework before you enroll in a program.Check out what the average salary is for the profession you wish to enter.Then check out how much tuition is for the entire program at the school of your choice.Make sure you can break even on your investment within a reasonable timeframe.
By Coaches Corner | September 10, 2010 at 09:05 PM EDT | No Comments
There is a good article in the Wall Street Journal today entitled "Ten Ways to Save Money by Going Green". These ten ways will not only help save the earth but also your wallet. Here they are in a nutshell:
1. Stop energy leaks in your home. According to the Dept. of Energy (DOE), just over a fifth of U.S. energy consumption happens in people’s homes. That costs the average homeowner $2,400 per year. Much of that goes to heating and cooling.
What do to? Insulate ceilings and walls. Seal cracks and gaps. You will save a lot!
2. Change your light bulbs. Again, according to the DOE the average household has 46 light bulbs. Wow, that’s a lot! Most of these are not energy efficient.
What to do? Buy energy-efficient compact fluorescents. These bulbs can cut light bills by 75%. Or, try the new LEDs, they cut energy use by 95%!
3. Stop heating an empty house. This drains a lot of energy needlessly.
What to do? Get a programmable thermostat. They only cost $50 and pay for themselves within a couple of months and cut your heating and cooling bills by 10%.
4. Rethink your appliances. Replace the old ones with newer, energy efficient models. Look for the EnergyStar seal. These appliances typically use 30% less power than a model without the seal.
What to do? Go to www.energystar.gov. This government website will give you all the details on energy efficient appliances.
5. Stop leaving your computers and home entertainment systems on stanby overnight. They continue to suck power even though you are not using them.
What to do? Purchase the new "Smart Power Strips". These devices make it easier to power down your computer or television. Or you can just use the old time power strips and click the switch off each night.
6. Make the most of your green taxpayer incentives. Uncle Sam is offering to pay up to $1,500 of your costs on things like insulation or better-insulated windows. But hurry, the program expires at the end of the year. Your state government may also provide incentives.
What to do? Go to DSIRE, the Database of State Incentives for Renewables and Efficiency.
7. Tackle your hot water heater. It is one of the biggest energy users.
What to do? Have a qualified professional put insulation around the heater and the pipes. Dial down the thermostat. Most are set at 140 degrees which is way too high. The Energy Department suggests turning it down to 115 to 120 degrees instead.
8. Drive a more efficient car. Hummers are out. Fuel efficient cars are in.
What to do? When purchasing a new car look for fuel efficient ones. Hybrids can be pricey. But you don’t have to buy a hybrid. Some economy cars can get 29-32 miles a gallon. Shop around before you buy.
9. Get a home energy audit. Sure, they cost a few hundred bucks but experts using high tech gadgetry will analyze your home and work out in detail all the ways it’s wasting energy. They will then tell you what you can do to remedy the situation.
What to do? Check for firms accredited by the trade body, the Building Performance Institute.
10. Buy an e-book reader. For avid readers, these things are very green. Traditional books, newspapers and magazines do a lot of environmental damage.
What to do? Check out the Nook from Barnes and Noble or the Kindle from Amazon.
By Coaches Corner | August 24, 2010 at 08:20 PM EDT | No Comments
Ok….so you are working faithfully with a money coach, you have developed your goals and constructed a spending plan. You are implementing your money management program when you suddenly find yourself having trouble staying within your weekly budget. What to do? Here is a tip to help you get on the right track:
Ditch your debit card!
No, don’t throw it in the trash. Just take it out of your wallet for a couple of weeks. Next, begin to operate on a cash-only basis for your day to day purchases.
You see, during a busy week it is easy to swipe a debit card and forget to record the transaction in your registry or notebook. Do this once or twice and all of the sudden you have busted your budget for the week.
But on a cash-only basis, you take the money budgeted for day to day living out of the bank each week. Once you have the cash in your wallet you can visually see and count how much money you have remaining until the end of the week. This can make it easier to plan your spending so that it falls in line with your budget. Plus, there is nothing like watching your money dwindle to make you think twice about a purchase!
This technique is especially helpful when you begin to implement your spending plan but it can also be used later whenever you find yourself having difficulties staying within your budget. Look at it this way, you have concrete goals and a concrete spending plan. Why not use a concrete method of making purchases until you get accustomed to your budget.
Try it….its amazing how well this simple little technique works!
By Coaches Corner | August 22, 2010 at 01:09 PM EDT | No Comments
Shopping online can be convenient and cheaper than going to a bricks and mortar store. Watch out though, here are 5 things you should not buy online. Here is a summary of the article from Wallet Pop.
1. Luxury Goods: Rolex, Coach, Prada. Think you are getting an incredible deal? Maybe not so good. Counterfeit goods account for 13% of internet purchases. Also, many luxury brands don't allow online transactions, period. When in doubt, go to the company's website and look for the authorized retailers. Remember the old adage: "If it sounds too good to be true.....it probably is."
2. Prescription Medications: Counterfeit prescription meds are as common online as the luxury items discussed above. However, with meds, there is a lot more danger. At best you are buying sugar pills....at worst, you can be risking your life. If you do order your scripts online, head to a reliable source. There are plenty of legitimate places. Your state board of pharmacy must liscense a website to sell prescriptions. A quick phone call to the board will tell you who is on the up and up.
3. Fragile Electronics: From flat screen televisions to digital cameras, electronics can be 30% cheaper online. Watch out though...you are making these purchases sight unseen. A lot of online stores will charge large fees for returns. Some online stores do not allow returns at all. If you still want to buy that tv online. Visit your local retailers. Check out the tv in the physical store. Find one you like? Write down the make and model of the item. You might also ask if the physical store will match the online price. In some instances they will.
4. Groceries: Purely for convenience shopping online for groceries will come with a $5 - $15 order fee. Plus, you dont get to tap the melons or squeeze the tomatoes. You also miss out on in-store specials and coupons. But hey, if the convenience outweighs the cost Peapod.com and ShopRite.com. These offer free delivery and also accept some coupons.
5. Intimate Clothing: Swimsuits? Lingerie? Make sure you know your size for each style. Online retailers can charge you an additional shipping fee to return clothes and tack on a 15% restocking fee. Safest way to shop for clothes online? Go to a physical store and try on the brand you see online. This way you can be sure of your size and reduce the risk of having to ship back an article of clothing that does not fit you.
By Coaches Corner | August 15, 2010 at 10:54 AM EDT | No Comments
Over the last couple of weeks I have looked at the use of SMART goals to help you attain your financial goals. As you will recall, SMART is an acronym for Specific, Measurable, Attainable, Relevant and Time based. I’ve talked about the first three characteristics of an effective goal. Today I will discuss the final two characteristics: relevancy and time based.
Relevancy is an important characteristic of an effective goal. Each statement should be related to the work at hand. It is good to have short-term, intermediate and long-term plans. You should work on the short-term goals first as they will be the building blocks for achieving the intermediate and long-term goals.
Goals should also be Time-Based. The person setting the goal should be able to track progress by specified target dates and predetermined timeframes. An example of this would be “Will save $6,000 to purchase a used car by taking $500 out of each paycheck and depositing it into a savings account for the next 12 months.” This goal clearly states that funds will be available after a year of saving.
Setting effective goals is both an art and a science. The whole process of developing goals can be a daunting task, at least initially. But having well-constructed goals is crucial to a person’s success. For those who feel overwhelmed by the process of writing goals there are resources available. One resource is a Money Coach. Money Coaches are trained to assist clients in writing solid financial goals and will also hold clients accountable for attaining the goals. As priorities shift or change, a Money Coach can help “reframe” the issues at hand and can help a client rework the goals.
Evidence suggests a person has a 95 percent chance of achieving goals if they are written down in a SMART manner and there is someone holding them accountable for attaining the goals. Wow! Lets get working on those goals!
By Coaches Corner | August 10, 2010 at 07:23 PM EDT | No Comments
Yesterday I discussed the importance of goals being written in a Specific manner. Today I want to look at the M and the A in SMART goals.
An effective goal is Measurable. You are held accountable when your progress can be measured. Instead of a goal to “Save some money from each paycheck for vacation,” A measurable goal would be “Will put $200 from each paycheck in a savings account entitled ‘vacation fund’ every month for a period of 10 months.” You can track this goal each pay period to measure progress and make any adjustments needed to attain the goal. The ongoing feedback that you receive when measuring your progress provides positive reinforcement for a job well done or gentle encouragement if you fell short of your savings goal for this pay period.
Likewise, a goal needs to be realistic or Attainable. You should ask, “Is this a goal over which I have control?” For example a goal to buy a million dollar beachfront house when you have an annual salary of $65,000 is not realistic but putting aside money each month for a $150,000 house would be.
Stay tuned for an explanation of the final two components of SMART Goals. Until then…..enjoy a beautiful summer evening.
By Coaches Corner | August 09, 2010 at 09:54 PM EDT | No Comments
Your chances of achieving financial success decrease tremendously if you do not set goals. I am not talking about just any goals. In order for a goal to be effective it must be written in a “SMART” manner. SMART is an acronym for Specific, Measurable, Attainable, Relevant and Time-based. Today I will focus on the “Specific” aspect of effective goals.
Goals should be specific. In fact, many people never attain their goals because they are vaguely written. A vaguely stated task would be “Will keep track of money.” A clearer statement would be “Will write down every penny spent in a notebook for a period of four weeks.” This second goal clearly describes the behavior required to achieve the goal. For goals to be of any value, they must be clearly expressed and defined. Think about your financial goals. Are they vague and unclear? If so, strive to make them clearer and and more specific. A clearly defined goal is a powerful goal that fuels action!
Come back tomorrow to learn about the “Measurable” aspect of SMART Goals.
By Coaches Corner | July 24, 2010 at 09:03 AM EDT | No Comments
Wow, what a fun week working with clients who are learning to manage their money. So empowering for them, so rewarding for me! One of the key things financially successful people do is develop goals. Not just any goals, but SMART goals.
SMART is an acronym for:
Specific
Measurable
Attainable
Relevant
Time-based
Over the next week I will talk more about SMART goals and how they can help you manage your money more effectively. But for now….sit back, relax and enjoy your weekend!
By Coaches Corner | July 19, 2010 at 06:14 PM EDT | No Comments
I’m often asked by potential clients about the difference between coaching and counseling. So I think this is a good time to explain my views on the two.
At its core, coaching focuses on personal and professional growth, while counseling focuses on diagnosing and treating a mental health issue. A money coach will help you understand what’s going on in your financial life and then will work with you to address any concerns you have about the state of your finances.
While counseling focuses on the past and early childhood traumas as they relate to current day functioning, a coach focuses primarily on the present and the future. The past is only explored as it relates to certain money scripts that might be acting as barriers to your financial growth and success.
A money coach will help you:
– Identify realistic financial goals
– Help you develop an action plan to achieve your goals
- Work with you to identify barriers that prevent you from reaching your goals
– Provide ongoing support as you work to achieve your goals
Ok you say, that seems clear enough, so then what is the difference between a money coach and a financial advisor? Well, a money coach is not an advisor as much as an educator. An advisor will tell you what you should be doing with your money, where you should be investing, etc. A coach, on the other hand, will encourage you to look at your financial situation from many different angles, help you set goals based on YOUR priorities and then encourage, motivate and support your efforts to achieve your goals. This is what makes the coaching relationship so empowering. The client has the control over what is being worked on in the client-coach relationship.
According to the American Society of Training and Development, you have a 25 percent chance of achieving your goals if they are written down in a clear and focused manner. When you have someone holding you accountable for attaining your goals that skyrockets to a 95 percent success rate! WOW…can you really afford NOT to work with a money coach?