BE Money

NFL Hall of Famer Ronnie Lott Shares Most Important Money Lessons

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(Image: Lott Auto Ventures) (Image: Lott Auto Ventures)

In 1989, NFL Hall of Famer, Ronnie Lott, hosted a group of friends for dinner with the goal of garnering support for his Bay Area community. By the end of the night the football legend—considered to this day to be one of the best safety’s to ever play the game —raised $100,000, which he distributed to several nonprofits trying to fight poverty in the South Bay.

The San Francisco 49ers legend, who already had a deep understanding of the power of money, having to learn how to use the earnings he made in his 14 season career as a foundation for financial security for life,  then serving as an analyst for NFL Fox Sunday, and creating venture capital fund HRJ Capital with former teammates Joe Montana and Harris Barton, soon realized what he considers one of his most important financial lessons: Money can mean freedom.

“When you have freedom you have the opportunity to look at and do a lot of different things,” Lott tells BE.

In order to have financial freedom however, Lott, who also owns Toyota and Mercedes Benz dealerships, says ‘the’ most important lesson he’s learned from friends, family, and life’s experience, is that you have to save, even during tough times.

“Not only do you have to save, but you have to make money work for you.”

Lott, who once told me he had to learn what he could do “through football, not just on the field, also helps others, such as former NFL defensive end Justin Tuck, and wife Lauren’s R.U.S.H. For Literacy Foundation, make money work in ways that are dear to their hearts through his All Stars Helping Kids Foundation, which helps small nonprofits improve effectiveness, through grants, mentoring, and connecting them to people and organizations that can help advance their causes.

Watch the video and hear Lott, who titled his autobiography, written with Jill Lieber, Total Impact, share insights that can help all of use our finances to have the impact we want it to have on our lives, and on the world.

 [Watch: Video Below]

Ronnie Lott- Most Important Lessons I’ve Learned About Money from Black Enterprise on Vimeo.

Wealth For Life

Should You Ever Borrow From Your 401(k)?

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Financial experts agree you should tuck money away for retirement and give it as much time as possible to grow without touching it, but knowing you have a lump sum of cash somewhere can be an attractive option to those who find themselves in a financial bind. Should you ever borrow from your 401(k)? Is tapping into your account and taking a loan ever considered a smart thing to do?

According to a 2014 study from TIAA called Borrowing Against Your Future, one in three Americans who participate in a retirement plan have taken a loan out from that savings. Digging a little deeper, more than 40% of those borrowers have taken out two or more loans. So regardless of the advice of financial experts, 30% of Americans are still raiding their retirement accounts when they are short on cash.

Borrow To Pay or Avoid Debt? YES & NO

Forty-six percent of those who borrowed from their 401(k) plans used the money to pay off debt. This can be a smart move considering the interest rate on a 401(k) loan is often much lower than a new credit card or car loan. However, the trick to not hurting your future is to keep making your regular contributions to your 401(k) while paying off the loan. If you can’t commit to both, then borrowing from your 401(k) to pay or avoid debt is probably something you shouldn’t do.

Borrow for Emergencies? NO

Another 35% used their 401(k) loan to pay for emergency expenses. Yet another reminder of why setting up an emergency fund is so important. Too many Americans are under saving and more are now using their 401(k)’s to pull double duty—as a retirement account and an emergency fund. This is not the best use of these funds and you should really move toward setting up an adequate account for all your liquid emergency fund needs.

Borrow to Invest? YES

Is it smart to use your 401(k) to purchase a home? Or start a business? These seem to be two of the most acceptable reasons to financial experts for borrowing from your 401(k), depending on your overall financial situation. It can be a smart move since the repayment period is eligible to be stretched out for up to five years, payments are automatically deducted, and the interest rate is typically low.

Other things to consider

You also don’t have to qualify for a 401(k) loan, so if your plan allows loans and you have the funds available you can borrow from it without hurting your credit score. A 401(k) loan can be one of the quickest, simplest, low-cost ways to get cash you need in hand. Lastly, if you pay back your loan on schedule and continue to make regular payroll contributions to your 401(k), you will typically see little to no impact on your retirement savings goals.

Unfamiliar with how 401(k) loans work, read more about it here. Borrowing From Your Retirement Plan.

Money

Black Investors More Optimistic Than Whites About Economy’s Future

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If you’re a middle-class African American investor, you’re likely to be more optimistic about the economy than your white middle-class counterpart.

[Related: NFL’s Dre Kirkpatrick Shares His Most Important Money Lessons]

That’s the conclusion of a survey by Ariel Investments, a Chicago-based investment company. Ariel has been conducting the Black Investor Survey since 1998. The survey has used the lens of race to examine attitudes and behaviors around saving and investing.

If survey results are sound, you’ve had to filter economic news, given the criticism of economic performance expressed in the year’s political campaign.

The criticism is of course rooted in opposition politics. “If conditions are good under a Democrat president there would be no need to elect a Republican,” says Jo-ann Rolle, dean of the School of Business at Medgar Evers College in Brooklyn, N.Y.

Ariel interviewed 500 African American and 500 Whites by phone between June 12, 2015 and July 19, 2015. The sample was drawn randomly from census exchanges that have a median income of $40,000 or more.

The data on economic optimism, part of the broader survey, shows that compared to Whites, African Americans are more likely to:

1. Feel hopeful about the current U.S. economy (75% vs. 50%).

“The pride that many African-Americans feel about President Obama is a factor in their optimism,” says Dean Rolle, an economist and expert on entrepreneurship.

2. Feel that the economy has fully recovered or is on its way to full recovery since the recession (65% vs. 40%).

3. Feel bullish about the stock market (65% vs. 53%). In fact, African-American bullishness increased since 2005. For Whites, bullishness decreased.

4. Believe the outlook is good for the next generation to achieve the American Dream (37% vs. 21%).

In spite of the optimism, there is an underlying element of personal anxiety among African Americans:

60% of African Americans (compared to 33% of Whites) feel that racism impacts fair opportunity for all.

More African Americans than Whites (32% vs. 23%) are unsure where to turn to for impartial financial advice.

What’s the takeaway? The picture that emerges paints disparate worldviews for African Americans and Whites.

Hope and belief in the American Dream is strongly correlated with African Americans, while Whites are much more likely to feel angry and discouraged by the current economic climate; that disparity was the most surprising finding in the survey for Ariel President Mellody Hobson.

“The optimism has always been higher, especially in regard to stock market bullishness, for White investors. It flipped in the last five years,” Hobson says in an interview with Morningstar.

“That creates a strong opportunity for investment firms to convert that optimism into action, in terms of investing.”

Money

Confidence in Retirement Hangs On, But Preparations Still Lag

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No need to say the Great Recession had a crippling impact on workers’ confidence in their retirement. But since then, if you’re the typical worker, your confidence has steadily improved and is now stable.

[Related: How Investing Is Similar to Shoe Shopping]

While recovery in retirement confidence from the post-2008 economic recession is continuing to hold, preparations to save for retirement are still lagging, according to the 2016 Retirement Confidence Survey by the Employee Benefit Research Institute (EBRI) and Greenwald & Associates.

The 26th annual EBRI survey is the longest-running of its kind. It’s the gold standard of retirement surveys.

“There are many retirement surveys,” says Kerry Hannon, a nationally-recognized retirement expert and member of TIAA’s expert panel on Woman2Woman. “But the EBRI is the granddaddy. They really drill down.”

The findings on workers’ confidence about saving enough for a comfortable retirement show that:

1. The percentage of workers “very confident” leveled off at 21% in 2016. The percentage was at record lows between 2009 and 2013; it was at 22% in 2015, up from 13% in 2013.

2. The percentage “somewhat confident” rose to 42% in 2016, up from 36% in 2015.

3. The percentage “not at all confident” fell to 19% in 2016, down from 24% in 2015.

Confidence that you’re doing a good job of preparing financially for retirement continues to rebound from the low of 2013. The findings on preparation show that:

4. Percentage of workers “very confident” rose to 28% in 2016, up from 17% in 2013.

5. Percentage “somewhat confident” was 43%.

6. Combining the percentage “very confident” and “somewhat confident” shows that more than two-thirds (71%) of workers exhibit confidence in financial preparations for retirement.

7. Percentage “not at all confident” fell to 16% in 2016, down from 21% in 2013.

8. Percentage “not too confident” was 12%.

Combining the percentage “not at all confident” and “not too confident” shows that less than one-third (28%) of workers lack confidence in financial preparations for retirement. But the survey spotlights an area that shows you’re not doing all you should to prepare for retirement. The evidence:

*Less than half (48%) of workers report they have tried to calculate how much money they will need to save to live well in retirement.

*More than one-third (39%) simply guess at how much they will need, rather than doing a systematic retirement needs calculation.

If you’re smart, savvy financially and confident you can plan your retirement, you’re extraordinary.

If you’re ordinary, and approaching 60, you should hire a financial adviser to help you prepare. Expect tough questions: How long do you expect to live? Does cancer run in the family? Taking all your nest-egg income sources into account, the adviser can give you a baseline figure of your income in retirement.

BE Money

The 10 Reasons You Aren’t Rich

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As the nation turns its attention to financial wellness as we do each April for Financial Literacy Month, I can tell you from personal experience and my work and reporting in behavioral finance, that one of your biggest enemies when it comes to building wealth is your mind.

Your beliefs and mindset around money translate into behaviors and choices that lay the foundation for your financial experiences.

Steve Siebold, is the author of How Rich People Think, and a self-made multi-millionaire who has interviewed more than 1,200 of the world’s wealthiest people over the past 30 years.

He says these 10 things could be keeping you from acquiring more money:

  • You have middle-class beliefs about money

In other words, you could have all the potential in the world, but if you’re not seeing money for all the positive things like the freedom and opportunities it brings, and you focus on lack and limitation, you’re always going to be stuck in the middle class.

  • You hang around people who have no money

Money certainly doesn’t define the type of person you are. Some of the nicest people with the biggest hearts have no money at all. But if your goal is to acquire more money, you have to get around people who have money and learn from them. Consciousness is contagious. It’s the same thing if you wanted to lose weight. You’d join a gym and start hanging around fit people.

  •  You’re too comfortable

Most millionaires will tell you that especially in the beginning of the wealth-building process, you have to learn to operate in a state of regular uncertainty. The need for comfort, or knowing that you’re not taking a risk, will always hold you back. If you take the plunge you have to stay strong and keep your eye on the prize. The payoff is well worth the effort.

  •  You’re terrified of failure

If you want to succeed, you have to fail first. It’s how we learn and grow. Check your ego at the door and stop worrying about failure. Start to see yourself as a comeback artist and learn from every missed opportunity. Failure is necessary for building massive success.

  • You believe its noble to be poor

There’s nothing wrong with wanting more.  Yes you should be grateful for what you have, but it’s not being greedy to strive for more. Ambition is a natural trait among human beings and is the driving force behind every great innovation. Ambition is not a sin. It’s a virtue. Never feel guilty about wanting more money.

  •  You believe you’ll have to sacrifice your family life

Despite what you may have been led to believe, it not an either/or equation. You don’t have to choose between massive success and riches and a happy family life. In fact, use your family as a motivator to strive for bigger and better things in your life. Imagine being able to spend as much time with your family as you like because you don’t have to worry about money.

  •  You don’t think you’re smart enough to be rich

Being book smart has nothing to do with your potential to make money. The way to make money is to solve a problem. Formal education is always a good thing, but never-ending self-education will make you rich. Some of the wealthiest people in the world have very little formal education.

  • You don’t believe you deserve to be rich

The average person believes being rich is a privilege awarded only to lucky people. The truth is, in a capitalistic country, you have every right to be rich if you’re willing to create massive value for others. If you want to be rich, the first step is to believe you deserve it.

  • You have a lottery mentality

The masses love the lottery because deep down they believe it’s their only chance to get rich. This instills the belief that you have to be lucky to get rich. Stop relying on luck and start expecting more. Expect to make $1 million next year. You might not make that much money, but you’ll be thinking big and in the right frame of mind to attract more money.

  • You trade time for money

Most people think the only way to make more money is to work more hours. Stop trading time for money. Start looking at making money as a non-linear process, which is about finding solutions to problems. The linear way is the obvious. The non-linear way is the nonobvious. Non-linear thinking and ideas are the way to riches.

Money

How Social Media Tools Can Make You a Smarter Investor

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For all the clear benefits of social media in your daily life, chances are very good that you don’t leverage them effectively. You should become more conversant with social media, financial blogs, and other resources that combine to make online media serious investing tools.

[Related: How Investing Is Similar to Shoe Shopping]

Social media, which some see as founts of gossip and silly photos, are crucial sources of new investment information, according to Brian D. Egger, founder of BreakingCall.com and author of Social Media Strategies for Investing.

You don’t have to be a ‘Master of the Universe’ to know which social media tools can improve your research. Egger recommends:

Twitter. It lets you put the $ symbol in front of a company’s stock symbol to perform rapid financial research on a specific firm. Twitter lets you use filter tweets by selecting the accounts you want to follow, using the search capability on Twitter’s main screen. Twitter lets you filter tweets by typing the @ (at) symbol before a Twitter address. Select the “Follow” button to join that Twitter feed.

Financial blogs. They let you showcase comments with others and vote on or share articles or posts. Popular investment blogs include Zero Hedge, Seeking Alpha, Josh Brown’s Reformed Broker, Felix Salmon’s personal blog, and FelixSalmon.com. Seeking Alpha gives you access to professional traders’ opinions and research. It lets you subscribe to stock email alerts and an exchange-traded fund (ETF), or read transcripts of conference calls listed according to stock symbols.

About 60% of financial bloggers rely on Twitter as their sole media source.

Rich site summaries or really simple syndication (RSS). You can subscribe to your favorite websites by enrolling in them. You will need an RSS reader, but some are free, such as Feedreader. RSS lets you filter your material, alphabetize it, and aggregate information in one place.

Crowdsourcing sites. You can benefit from sites such as StockTwits, Estimize and Sum Zero. They let you know public opinion about any company and information that can drive share prices. StockTwits integrates investors’ posts on its Facebook, Twitter and LinkedIn pages.

Internet financial sites. Morningstar, Yahoo Finance, Google Finance, and Daily Finance let you track the performance of stocks and screen tools for trading and financial analysis. John Waggoner, an investment news columnist, likes Morningstar, especially for its data and market commentary. Specialized sites, such as Reddit, Digg or Delicious. They let you create bookmarks of your favorite destinations based on page ranking.

If you’re a serious investor you have no choice but to become social media savvy. You don’t want to fall too far behind. A caveat: “Social media has the attention span of a gnat,” Waggoner says.

“Most of the people that post with money-making tips are not thinking about investing for retirement. They’re thinking about next Wednesday.”

Money

Simple Rules for Avoiding Havoc at Home for ‘Breadwinning’ Women

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We tend to see women as the caregiver in households. But the percentage of top breadwinner women has been growing exponentially for decades. Mothers are the sole or primary provider in 40% of households with children, according to a Pew Research Center analysis of 2010 Census data. This share, the highest on record, has quadrupled since 1960.

[Related: NFL’s Dre Kirkpatrick Shares His Most Important Money Lessons]

“Most of my divorce cases involve the man being the breadwinner, but that has been changing over the past few years,” says Curtis Boykin, a Washington, D.C., attorney whose practice includes family law.

“The breadwinner role is changing because women are now more economically viable, particularly in the black community,” he says.

Most of the ‘breadwinning moms’ are single, but 37% are married. What problems will occur for you if you earn more than your husband or partner? And what can you do as a couple to make the marriage works?

Financial expert Farnoosh Torabi, author of She Makes More, has rules for the breadwinning woman:

Face the facts: You’re likely to suffer higher rates of stress, infidelity and divorce. Men who depend on their female partners are five times more likely to cheat than men who earn equivalent salaries.

Rewrite the fairy tale: Shun the rescued-by-the-prince story and do what works for you and your family. Work-life balance is not a women’s issue. Men also feel that tug-of-war.

Level the financial playing field: Make decisions together. Keep accounts online and accessible to both of you. Don’t be possessive about money.

Cater to the male brain: To keep his dignity, your husband needs to feel he’s not isolated from the financial decisions. Make him feel appreciated for his help beyond money. You must acknowledge his non-financial contributions.

Hire domestic help: Outsource household chores to avoid stress and overwork. Your husband may help more around the house today than he did years ago, but you’re likely to bear the brunt of household duties. Let go of those responsibilities.

Plan parenthood: Having children changes everything. Strategize all aspects of your child’s future, college and beyond.

Grow a thicker skin: Ignore rude comments about your situation. Do not fall prey to overheated emotions at home, at work or at social events.

Remember to breathe: Avoid burnout by giving yourself one hour of ‘me time’ every day. Women experience more stress-related physical symptoms, including headaches, fatigue, depression and irritability than men. If you’re thinking about marriage and you’re highly-paid with considerable assets, attorney Boykin has some advice: seek a pre-nuptial agreement.

“I see cases now where women are seeking pre-nups so they can protect the money they’re bringing into the relationship,” he says.

Money

3 Simple Steps To Scrubbing Your Budget

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Staying on budget is not easy.

It can be very difficult to stay committed to a bunch of numbers on a piece of paper or spreadsheet, but budgets are actually quite helpful. They are a snapshot of your financial situation at a given time, a road map that tells your money where to go.

Budgets shouldn’t feel super restrictive — like a diet that takes away all the foods you love with any taste. Deprivation always leads to overindulgence, so don’t take away everything you enjoy. Give yourself some leeway. Restrictive budgets are the fastest way to blow a budget. Here are 3 steps you can take to set a budget and make it much more realistic.

Step 1: Write it out

Start by writing your saving goals, then listing your monthly expenses and lastly anticipating how much you’ll need for spending money. Yes, I said spending money. If you like to buy coffee at the breakfast cart every morning there needs to be a line item in your spending money; if you are a smoker, your cigarette habit should be there as well. Addicted to shoes? Add a line item for how much you think you’ll spend per month on shopping.

The goal is to account for every possible place your money could potentially go.

Step 2: Review Actual Spending

Now this is where things get interesting. To see if the new budget you created is realistic you will need to assess your previous spending patterns. Download your bank statements for the last three months and go through them in detail. Assign each spend to a budget category and add it up. Did you spend close to what you think your coffee budget is or did you spend more? Are there items you spent on repeatedly that don’t have a line item in your budget? Maybe it should.

Step 3: Make Adjustments and Trade-offs

Now that you have what you think you spend and what you actually spent side by side, it’s time to make some adjustments and trade-offs. Were you shocked by any of the actual spending numbers, like your monthly coffee or shoe spend?  Consider giving yourself an allowance for that line item in cash so you don’t go over.

Are there items that you missed completely? What are you willing to reduce to accommodate for that addition to your budget?

Following these 3 steps will help you get your finances in order, while also giving you space to live. Would you be more willing to stick to a budget that accommodates for lifestyle?

Let us know in the comments below.

Money

How Investing Is Similar to Shoe Shopping

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What woman doesn’t love a good shoe? What if I told you that investing was similar to going to the mall?

[Related: Biggest Money Mistakes for Millenials]

With so much information out there, even the thought of investing can feel overwhelming. However investing is the key to making your money grow over the long term, so you need to feel equipped enough to get started. It doesn’t have to be so complicated. If you have been looking for some place that breaks down the information in a language you understand, your search is over.

When you go to the mall there are lots of stores, and department stores typically anchor the mall. For our purposes today, those department stores are going to represent brokerage houses.

Picking a Brokerage is Like Picking Your Favorite Department Store

A brokerage house is where you go when you want to set up an account to invest in the market. Picking a brokerage is like picking your favorite department store. They all offer similar products, but the brand offered and price point may vary greatly. Each brokerage house has its own characteristics similar to how department stores do. A department store target customer may be working families who need affordable quality products that last long term. Another department store may be geared towards young hip professionals, who are looking for trendy items straight off the runway and another department store may only offer high end luxury brands. True, all carry shirts, pants, dresses, and shoes, the same way all brokerages will carry stocks, bonds, mutual funds, and etfs, but the type of offerings and prices that they charge will all be different.

A Stockbroker is Like Your Personal Shopper

If you have a lot on money to invest and want to be assigned a stockbroker, you would first find a brokerage house that offers this service. This person would be similar to a personal shopper in a department store.  They will recommend a variety of products and then actually take your money, invest it and manage it for you, for a fee of course.

Do you want to Self Park or Valet?

To get started each brokerage house has its own minimum account balances you need to get started. Some have no minimums, sort of like self-parking, others require a minimum balance in the thousands, more like valet.

Private Label

Individual stocks can be purchased at any brokerage, but there are certain mutual funds and index funds that are exclusive to a particular brokerage house. Think of it as the brokerage houses private label. Similar to how department stores have their exclusive brands that you can only buy from them.

(Of course you should always talk to a financial advisor before getting started. I am not a financial advisor and this post should not serve as a substitute for professional financial advice.)

Money

NFL’s Dre Kirkpatrick Shares His Most Important Money Lessons

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(Image: Chad Griffith)

When you consider that Cincinnati Bengals Cornerback D’Andre “Dre” Kirkpatrick will earn a base salary of more than $7.5 million in 2016 alone, it’s hard to believe the 26-year-old is so humble when it comes to money.

[Related: Soulful Sax Sensation Marcus Miller Shares Most Important Money Lessons]

In addition to dealing with the tough streets of the Oakleigh Estates section of Gadsden, Alabama, growing up, Kirkpatrick had to deal with a rough start to his career in 2012 due to injuries, which prompted many critics to speculate that the first-round draft pick was a “first-round bust.”

But Kirkpatrick persevered, and by 2014 the world learned why his nickname is “Swag” when he intercepted future Hall of Fame quarterback Peyton Manning twice, clinching the Bengals a playoff berth.

Although he’s riding high, Kirkpatrick has learned that the road to success in all aspects of life is not a straight line to the top. He shared with BE’s senior editor of personal finance, Stacey Tisdale, the three most important things he has learned about money.

BE.com: What would you consider to be the three most important lessons you’ve learned about money?

Kirkpatrick: First, that it comes quick and goes quick. If you lose sight of why and how you earned the money in the first place, you’ll more than likely always be chasing a dollar instead of stackin’ them. Two, money doesn’t change people. It only enhances the person you really are. If you have a generous and giving heart, you’ll use those resources to make a positive influence in some kind of way. Three, know your worth. We’ve all got bosses and someone who signs our checks. It’s just up to you and your team to squeeze the best value out of your product, services, skill, or whatever you get paid for.

BE.com: How did you learn those lessons?

Coming from a small town, then playing for a big school like University of Alabama, it’s a big jump in everything that goes on day to day in life. Having a hardworking mother and father to watch growing up was key.

When I was a very young kid in middle school, I got into a little trouble trying to make some quick money. I learned real fast there is no such thing as quick money.

You gotta work your tail off for everything. I’m just fortunate my talent and skill brought me to the NFL, where we get paid a lot of money to play. But with that, you know what they say: more money, more problems.

I’m learning a whole new set of skills now that I’m the business and my brand.

Kirkpatrick adds that every day he can provide for his son is a blessing, and that he’s lucky to have a mother and father who still keep him grounded.

Money

Spendthrift Kids Can Dig Deep Debt Hole with Credit Cards

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Bernie Sanders is onto something. One of the strong headwinds handicapping U.S. economic growth is student debt. A gale it may be, but student debt is laudable debt, unlike the credit card variety.

[Related: Beauty Industry Experts Talk Navigating Your Niche]

Layering credit card debt on top of student debt will put your child in a deep hole.

The next course your child takes should be one that you teach: how to use credit cards with care. Make sure you add Curtis E. Arnold’s book, How You Can Profit from Credit Cards, to the syllabus.

Modern life requires credit. Try booking a hotel room or renting a car without it. Mundane uses are fine. It’s using a credit card to make impulsive, high-end purchases that can pile up debt. Your son doesn’t need a pricey Italian suit for his first interview, or your daughter a Louis Vuitton handbag.

“By limiting your use of credit cards at a young age, you will not have to worry about carrying a heavy debt load or about making unnecessary interest payments in the years ahead,” says Dwight A. Clark, senior retirement financial planner at TIAA.

Arnold argues that credit card companies work hard to hook students like your undergraduate. How hard? They’ll dangle a bonus to get your child to sign up a buddy.

Arnold states plainly that credit card companies are profit-driven. He asserts:

*Credit card companies benefit if you make maximum charges and minimum payments; they hope you won’t fully pay balance each month.

*Credit cards are great if you know how to use them, but they will murder you if you don’t.

You can help your child by:

  • Coaching them on maintaining a monthly budget and sticking to it, Clark says. They must avoid incidental purchases that tiptoe onto the card and break the budget.
  • Making sure they understand the importance of their credit rating: that the lower it is, the more they pay in interest, and that a 700 FICO score is the threshold between average and good credit.
  • Urging them to seek a lower rate, especially if they have good credit.

Since companies change rates periodically and without much notice, Arnold says, watch what the company is charging by always checking the statement.

  • Insisting that your children carry one card in their wallet or purse and use it sparingly.

“Keeping your use of credit cards to a minimum has multiple benefits. It will be easier for you to stay debt-free and put more of those hard-earned dollars into a retirement savings account,” Clark says.

  • Insisting they make payments early.

Credit card companies base interest rates on average daily balance, Arnold says. If your child pays early, the balance is reduced, which cuts the total interest payments.

  • Insisting they avoid cash advances.

The interest rates can be stratospheric, often annualized at more than 200 percent interest.

  • Insisting they reject extra services such as credit insurance and card monitoring programs.

Never stop giving advice. As your children get older and move out, they’ll acquire more cards. Tell them to keep cards separate. Use a card for little purchases, Internet purchases, travel, and emergencies such as repairing an auto or replacing home appliances.

Money

Don’t Delay Your Retirement Savings Another Minute

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If you’re new to the workforce, retirement is far from your mind. You’re thinking about buying a car, stocking a wardrobe, or furnishing an apartment. When you’re young, spending is much easier than saving.

[Related: Working With the Government: 4 Tips for Business Owners]

According to a 2015 study from the Employee Benefit Research Institute, 28 percent of workers age 25-34 had savings of less than $1,000, excluding their primary residence and company pension.

Retirement is expensive. If you let years tick away before taking action, you’re reducing your retirement income a bit more each year.

“The sooner you can start, the better, even if you have to start at a small percentage,” says retirement expert Kerry Hannon, a member of TIAA’s expert panel on Woman2Woman. “If it feels like it’s too much, you can automatically increase it 1 percent; pump it up until you get to the maximum amount.”

If you live a long life, an unplanned retirement can mean years of anxiety. Why?

*You can’t depend on a corporate pension. They’re being dumped at warp speed.

*Rising health-care costs will leech away retirement income.

*It’s doubtful that Social Security will be enough keep your head above water.

“A substantial gap has opened up between the resources we need for a secure retirement and income we can currently expect from our nation’s retirement programs,” say Charles D. Ellis, Alicia H. Munnell. and Andrew D. Eschtruth in Falling Short: The Coming Retirement Crisis and What to Do About It.

In the past, retirees could live comfortably on pensions and monthly Social Security checks. Not anymore. You’re on your own when it comes to saving enough to stay afloat in retirement. It’s up to you to find the funds. Your options:

*401(k) savings plan sponsored by your employer;

*Individual retirement account (IRA), which lets you put pretax income in investments that can grow tax-deferred;

*Roth IRA, which differs from a traditional IRA in that contributions are not tax deductible and qualified withdrawals are tax free.

“Early participation in your employer-sponsored retirement savings plan is critical,” says Dwight A. Clark, senior retirement financial planner at TIAA. “If you think you cannot afford to contribute to your employer plan, remember that increasing your retirement plan contributions may help lower your overall taxable income.”

It behooves you to start saving now. TIAA’s Clark illustrates why. Two investors save for retirement. The first investor, Cathy, starts saving at age 25 and saves $5,000 per year. The second investor, Steve, doesn’t start saving until age 40, but saves $10,000 per year. Overall, Steve contributes $50,000 more than Cathy but started 15 years later. At age 65, Cathy has $232,418 more than Steve.

Moral of the story: Time is on your side, so start today.

Money

Biggest Money Mistakes for Millenials

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Being a 20-something can be some of the best years of your life. There is a great feeling of accomplishment that comes as you reach your first milestones after college—enjoying graduation, getting your first full-time job, and finding your first postcollege apartment all top the list. However it’s also a time that can bring immense feelings of anxiety, questions like: Can I manage paying my student debt and saving? How will I afford health insurance and do I really need to start planning for retirement this early?

[Related: New Mobile App to Harness Capacity of $1.3 Trillion Collective Buying Power of the Black Community]

These crucial decisions millennials encounter can be overwhelming, and many will defer making these choices until later when they are closer to 30, but being too conservative or hasty with money and continuing to delay these critical decisions can have long-term financial consequences that significantly reduce your bottom line. Financial Advisors from TIAA recommend millenials steering clear of the following financial pitfalls.

Running up huge amounts of debt: Remember, your income at this age is not strong. Adding credit card debt or car loans, in addition to student loans, can get you in over your head fast—especially when you add on interest! One rule of thumb: credit is not income, it has to be repaid. Don’t fall for one of the biggest money mistakes by using credit or loans to offset a low starting salary; and your student loans shouldn’t total more than your expected entry-level salary.

Not planning for the near future: Emergencies happen, so you have to be prepared.A good emergency fund should cover three to six months of living expenses. You should also have separate savings accounts for things such as car replacement and job loss. So set yourself up accordingly because being unprepared can set millennials back quite a ways.

Grad School or No Grad School: It’s important for millennials to be strategic about graduate education. Weigh the job placement rates and average starting salaries against cost of financing and student aid options to see if the math works. Pursue options that help you avoid more student loans, such as working part time or being a teaching assistant.

Skipping health insurance: Whatever you do don’t skip the health insurance! Many millennials avoid purchasing health insurance altogether with the idea that they’re young and don’t need it yet. But the truth is, unexpected illness or injury can be so expensive, that the prices of premiums are totally worth it.

Being Afraid to Invest: Time is on your side, the earlier you start investing, the more time your money has to grow. Being well diversified is also important; don’t go all stocks or all bonds. Both can result in investment disaster by being too risky or too conservative which equal less profit for you over the long term. Assess your risk tolerance.

What are your biggest financial fears as you prepare for graduation this spring?

Money

Health: The New Wealth

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Nothing is more valuable than good health. There is no price tag you can put on it and no amount of money that can fix it if it’s deteriorated. Maintaining good health is priceless and is, also, a considerable portion of our wealth.

[Related: The 3 Things You Need to Live Your Best Life at Any Age]

How are health and wealth related? Here are a few examples of how our choices can impact our health, the new wealth.

Don’t Stress

Stress can be a major contributor to health problems over the long term. It has been tied to the onset of chronic illness such as heart disease and hypertension. Therefore if you are consistently stressing over your finances you are simultaneously impacting your health negatively, no matter how much you jog or how many laps you can swim. Implementing improvements to your fitness regime and your financial picture will positively affect your health, reduce stress levels, and increase your confidence regarding your financial future.

Curb Eating Out

Not only is fast food loaded with empty calories, it’s also full of fat and sodium.  Restaurants may not tip the obesity scale as much as fast food, but they do a great job draining your wallet. By planning meals in advance, going grocery shopping, and cooking meals at home you will save money and eat healthier, which is a win for your waistline and your wallet.

Stop Smoking

Don’t let your savings go up in smoke. Rutgers University did a campaign called Small Steps to Heath and Wealth, that showed by cutting out half a pack of cigarettes a day and saving the difference, you would have $25,000 in 20 years if you earned a return of only 5%.Additionally, quitting smoking reduces your chances of lung cancer and heart attack almost immediately. Smoking kills more Americans per year than HIV, drug overdoses, alcohol, car crashes and shootings, according to the CDC.

Give Yourself More Time

Small changes like those mentioned above can positively impact your health, wellness, well-being, and confidence in your financial future, but you also don’t want to forget to make time for those around you. Taking time alone for yourself, spending quality time with your children, grandchildren and friends improves your overall quality of life and doesn’t have to cost you a thing, which is also good for your emotional health and your bottom line.

Can you see the correlation between your wealth and your health? Are you ready to implement small changes that can extend your life and give you the resources you need to enjoy it?

Money

Teaching Your Children Good Money Habits

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As parents, we are our children’s first teachers. Before they ever set foot in a school they learn values like honesty, sharing and fairness from us. Teaching kids good money habits is also a life skill we shouldn’t want them to be without, like swimming and learning CPR. Here’s a few financial habits we should all want to impart on our children before they grow up and head off to college.

[Related: [WATCH] B.E.’s Stacey Tisdale Talks ‘Kids and Money’ on NBC’s “Positively Black”]

Make Savings A Priority

The younger you start teaching kids about savings the more likely they will continue the habit as they get older. Take a portion of birthday or holiday cash gifts and put them aside to save at least 30% or more. As the child gets older consider starting a savings account where they are able to go with you to the bank to make deposits and watch their balance grow.

Teach Them The Value Of A Dollar

When you’re out running errands and your child has a case of the ‘gimme’s,’ consider giving them an opportunity to work for what they are asking for. It’s been my experience that kids are less likely to spend money they had to work really hard for.

Don’t Hide The Bills

Not really suggesting you let your 6 year old sit in on your budget meetings with your spouse, but showing kids how much things cost like electricity or water cost and how its tied to their habits of leaving the lights on or leaving the water running when brushing their teeth may help give them some context, and put into perspective that things cost money.

Wet their Palette for Investing

In addition to gifts that add to their doll or car collection on their next birthday, consider adding a stock certificate from their favorite company as well. This will be a perfect opportunity to start the conversation of what a stock is and how it works when you hold the certificate for the long term.

Teach Them About Opportunity Costs

With the birthday money that isn’t put away in the bank, teach your child about opportunity costs. Maybe they want to buy new outfits for their dolls, but also want a new car to push them around in. Teaching them that the same money can’t be spent twice will help them better understand choices and how to analyze which spending opportunities will give them more bang for their buck!

Model Good Financial Behavior

Kids learn more from what we do than what we say, so practice what you preach to them. Keeping your own finances in order and setting a good example for them will be the ultimate factor to keeping them inspired to do the same.

Money

Setting Financial Boundaries in Marriage

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So many major decisions need to be made once you get married, and whether or not you will combine your finances should definitely be one of them. Married couples fall into one of three categories when it comes to financial co-mingling:

  • Joint accounts for bills and savings only
  • Joint accounts for bills, savings, and personal spending
  • Separate accounts for bills, savings and spending

Living with the decision to completely combine finances is not easy. It requires a strong financial plan that both parties can agree and stick to. It also requires an extreme amount of trust and financial intimacy between both parties. That means both of you need to agree to how money should be used, for things like spending and saving.

[Related: You’re Contributing To Your 401(K), Now What?]

You also have to create a system of checks and balances. Who is better at managing money?  Even if you are the better financial manager, it’s important to sit together when you do the bills and show your partner exactly what is going on. It may take more time than if you did it on your own, but it will help both of you stay on the same page.

Sometimes the best way to help your partner be better financially is by setting clear financial boundaries in marriage for yourself. Especially if you make more, it may seem easier to just pay for any financial flubs, but that can cause more harm than its worth. If allowed to become a habit this creates a system of enablement  which can snowball breeding resentment, breaking down communication, intimacy and eventually the entire marriage.

The #1 reason 50% of marriages end in divorce are typically financial. Kiss Your Money Fights Good-bye by setting clear financial boundaries to safeguard your marriage from financial ruin.

  • Decide on your mutually agreed upon values and set collective goals.
  • Set a date and time every month to review your bills and finances.
  • Checking in with each other regularly to make sure each of you are following your plan or can make adjustments if necessary.
  • Share information regarding all financial accounts (checking, savings, investments, and insurance) there should be no secrets on how much each person has. It’s a recipe for conflict.
  • Be comfortable saying No. When your partner has a financial flub because of poor choices or overspending don’t feel obligated to bail them out. Show them how to make adjustments over the next few pay periods to make up for their flub.

This approach will be much more beneficial and long lasting and it can be done without yelling, arguing or without telling them how irresponsible they are. The goal is to teach them to manage their money better even if that means you have to suffer through a few missed episodes of Scandal because the cable is off. 

Money

Save For Your Kids’ Education Without Panicking

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The following was written by Gary Rawlins:

If you’re failing to sock away money for the kids education, you’re not alone.

Only about half of parents with kids under 18 are saving for college. And even those with college funds are saving less than in the past, according to the How America Saves for College survey done for lender Sallie Mae.

Parents who are saving for college earmarked 10 percent of total savings for college in 2015. But the amounts overall declined to a three-year low. Average amount:  $10,040.

The rising cost of college education can feel incredibly daunting and intimidating. But, as with most financial goals, starting to save today is the best way to cope with the costs of the future.

Here are several ways to start making progress toward a college fund for your children’s future:

Commit to start saving now: To reduce anxiety, use a financial adviser, preferably one with the Certified Financial Planner designation.

The national groups of financial planners that offer searchable databases: the National Association of Personal Financial  Advisors, The Garrett Planning Network, the Financial Planning Association and the Certified Financial Planner Board of Standards.

Use an online calculator to set a realistic savings goal: There are several to choose from, including Choosetosave.org and The Ballpark E$timate online calculator from the Employee Benefit Research Institute site.

Start a tax-sheltered 529 college-savings plan: You can open a tax-sheltered 529 account with a child as beneficiary for as little as $25 in many state.

“The ’best’ 529 plan is dependent on an individual’s specific needs. In order to determine which education savings vehicles are best suited to your needs, speak with a financial advisor to map out your plan, set goals and establish the necessary steps to get there,” says Sean Wilson, director of Integrated Product Solutions at TIAA.

Make your savings automatic: You can ease the pain by having cash automatically and regularly deposited into your college savings plans from paychecks, says Kerry Hannon, a personal finance expert and member of TIAA’s expert panel on Woman2Woman.  Most employer plans and 529 providers let you set up this automatic approach.

Check out the Savingforcollege.com site for more information on 529 plans.

Put your raises into your college savings plans.

Investigate college financial aid options: Check out sites such as FastWeb and FinAid to find what’s available.

Whatever you do, do not raid your 401(k) retirement plan, Hannon warns.

“True, we all want the very best for our children, but … it is far more important to save for your own retirement. Your child can take out loans for college, but no one is going to lend you money to fund your retirement.”

Billboard

You’re Contributing To Your 401(K), Now What?

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With the eradication of pension plans for the majority of Americans, contributing to an employer-based retirement plan is important now more than ever. Especially if there is a company match available, no one should leave free money on the table. But what about your other financial goals? If you’re contributing to your 401(k) and ready to invest for the future, here’s how you can get started.

[Related: Soulful Sax Sensation Marcus Miller Shares Most Important Money Lessons]

Make a list of things you’re saving for, rank them in order of priority then put a dollar value on each. Do you want to travel the world, pay for your children’s education, or start a side business? With an idea of your goals, priorities, and the related costs, you can better assess the options available to help you get there.

For parents, being able to help your kids pay for college may be a non-negotiable, however retirement savings should continue to come first. Only after you are saving enough percentage wise to build a sizeable retirement account that will ensure a steady stream of income should you add college savings as a priority. If you decide to open a 529 account consider letting friends and family members contribute as well, as an alternative to birthday or holiday gifts. Unsure as to how much you need for a secure retirement? Try this retirement calculator from TIAA or speak with a financial adviser.

Want to build an investment portfolio to help pay for that dream trip to Fiji five years from now, but have no experience investing outside of your 401(k)? Start by doing your research. Sean Wilson, director, Integrated Product Solutions at TIAA shares “financial service providers and financial-focused news sites provide information that individuals can use to learn more about investing.” This will help you become familiar with terms such as stock, bond, mutual fund, index fund, and ETF, as well as what steps you need to take to meet your financial goals. “Individuals are better equipped to meet with a financial adviser if they come prepared with more specific, personalized questions about investing. Make sure you also have a sound understanding of the fees, taxes, and penalties associated with each option.”

Lastly if you have a hobby or talent you love and think you can capitalize on, consider socking some cash away to set up shop. Whether online through a sales platform or your own website you can find a market for almost any creative product. Having a lump sum of cash set aside for supplies and inventory will take that hobby to side hustle in no time.

Billboard

Advice to Women: Do Your Homework Before Seeking a Raise, and Ask Boldly

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The following was written by Gary Rawlins:

For women in the workplace, negotiating pay can be a daunting task. But there are ways to navigate the process.

Overcome your fear of asking: Ask nicely if you have to, but ask. If you don’t ask, your career might stall. “I never heard of anyone getting canned for asking for a raise,” says Kerry Hannon, a personal finance and retirement expert.

Schedule a meeting: Let your boss know that you would like to sit down to discuss your career. Be positive, diplomatic and assertive. Bring the case you’ve compiled, along with industry research to help defend your case.

“Don’t wait until your annual review,” says Hannon, a member of TIAA’s expert panel on Woman2Woman. “The money for the year has already been assigned. Your boss can’t ramp up your pay without taking away from someone else.”

Create a case: Be your own best advocate. Keep track of all your accomplishments and contributions. When you sit down with your boss to review performance, be able to cite specific examples and reasons why you deserve a raise.

“Tell your story,” says Selena Rezvani, author and co-owner of the leadership policy firm, Women’s Roadmap. “Start with a compelling lead or hook, the way journalists do. Present your evidence. Weave any potential objections into your story.”

Make your boss prove with specific examples why you don’t deserve a raise.

Do your research: Check out websites such as salary.com, pays cale.com and glassdoor.com for national averages and pay ranges in your industry, city and region. The Economic Research Institute site can show you what a particular position pays where you live.

Consider timing: Don’t ask for a raise a week after a broad layoff or when your boss is in the middle of a particularly stressful project or season.

Be patient: A salary adjustment usually takes some time to get the necessary approvals. If the raise  does not go into effect after a paycheck cycle or two, consider asking casually for a timing update.

 Don’t take rejection personally: When you hear “no,” take it as “not yet.” Don’t become bitter and resentful or develop a bad reputation because you didn’t get the raise you sought. Try again when the timing is better. There may be factors in play beyond the control of your boss.

Be assertive early in your career. If you don’t, it will cost you money later. Pay inequality is real. The sooner you close the pay gap the faster your retirement nest egg grows.

The power of compounding can turn a small sum into a very significant amount over the course of a career. A salary differential as little as $5,000 annually on your first job can add up to a wealth difference of $500,000 or more by retirement.

Money

Delaying Parenthood Is Not Always A Financial Slam Dunk

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You may have personally delayed having children yourself or may know couples who are delaying parenthood into their late 30s or early 40s due to financial reasons, but the implications of starting later can be even greater because there is less time left on the horizon until retirement. Can you financially manage to keep your retirement goals on track while starting a family?

[Related: Best Cities For Black Women To Launch and Operate a Thriving Business]

The No. 1 thing you want to do is continue to keep retirement funding as a priority. Remember there are no loan programs for retirement, so whatever you do, don’t sacrifice saving in this category!

Assess where you are currently

Take a clear look at your financial picture and assess it before having a baby. Understand where you are. Pull out your budget and see how much income you will have available for things such as diapers, formula, and childcare. Assess your savings and if you will be able to maintain that savings rate once a baby arrives. Do you have any debts you want to knock out beforehand to free up income for the ongoing cost that comes with parenthood?

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