How to Handle an Inheritance

December 7, 2022

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Bir Grewall

Bir Grewall

Sikh American, India born; Bir is a "Top Recommended" Financial Strategist, Advisor & Author



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December 7, 2022

How to Handle an Inheritance

How to Handle an Inheritance

If you’ve just come into an inheritance or another windfall like a settlement, it may be tempting to spend a little (or a lot) on some indulgences.

Even if – especially if – you’re already prudent with your budget and spending habits. You might be thinking, “I’m on top of my finances. What’s the harm of blowing a little cash on a few treats?” But read on. An inheritance or other monetary bonus – if handled wisely – has the potential to make a lifelong financial difference.

Start with these tips to help you make some lasting decisions about your newfound money.

Don’t make quick decisions

If you’ve received an inheritance from the death of a family member, you may want to take some time to grieve and start to develop a “new normal” before you make any big financial decisions.

Consider parking the money in a money market account or a high-interest rate savings account and letting it sit until you’re ready. A good rule of thumb when making a major financial decision is to give it at least 30 days. Shelve it for 30 days and then see how you feel. If you’re still not sure, put it back on the shelf for another 30 days.

Don’t feel rushed into making decisions about how to handle the money. It’s more important to take your time and make a careful decision than rushing into purchasing big-ticket items or making investments that may not be right for you.

Don’t shout it from the rooftops

Be cautious with whom you talk to about the inheritance. It’s best to discuss it with only a few trusted friends or family members. The more people you tell, the more “advice” you’re going to get about what you should do with the money. Some might even ask you to invest in one of their interests. (Which may be OK – that’s up to you!)

If you do come in to some money, one of your first calls should be to a qualified financial professional. Remember, it’s probably best to keep input minimal at this point, so tell as few people as possible.

Create a financial strategy

When you’re ready, it’s time to create a financial strategy. A financial professional can help you clarify your financial goals and offer a roadmap to get you there. No matter how much you inherited, developing a financial strategy is a must. Here are a few considerations to start:

Debt: If you have debt that is costing you money in the form of interest, this may be a good time to pay it off.

Emergency fund: If you don’t have a proper emergency fund, consider using some of the inheritance to fund one. An emergency fund should be 6-12 months of expenses put away in an easily accessible account for emergencies. An emergency is something like home or car repairs or unexpected medical bills (not a spur of the moment vacation or purchase).

Pay down your mortgage: If you have a mortgage, you may want to pay down as much as possible with some of the inheritance. The smaller your mortgage the better, because you’ll end up spending less in interest.

Saving for retirement: Saving some of your inheritance is probably never going to be a bad choice. Work with a financial professional to see what your options are.

Charitable donations: A charitable gift is always a good idea.

Have some fun

Coming into some unexpected money is exciting! You may be tempted to rush out and start spending. Make sure you do your financial decision-making first and then be sure to have some fun. Maybe give yourself 10 percent of the money to just enjoy. Maybe you want to take a cruise or buy a new high-end kayak. The point is to treat yourself to something, but only after you have a solid financial strategy in place.

An inheritance is a gift

Keep in mind that an inheritance is a gift. Somewhere along the line, someone worked for every one of those dollars. Something to keep in mind is that you can honor that person’s hard work by being a responsible steward of their gift.

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December 5, 2022

Before you have your life insurance medical exam...

Before you have your life insurance medical exam...

When you apply to purchase a life insurance policy, you may be asked to submit to a life insurance medical exam.

The insurance company requests this exam to determine your risk for certain medical conditions. They may also test for drugs in your system, including nicotine.

Depending on the insurance company, the medical exam may include blood work, a urinalysis, physical examination, and maybe even an EKG.

Also, in case you were wondering, many insurers will pay for the exam when you’re seeking a whole or term life insurance policy.

What you can expect during a life insurance medical exam

After you submit your application for life insurance, a third party company will contact you to schedule your exam. These companies are hired by the life insurance carrier to conduct exams on their behalf. They may come to your home or have you visit a medical facility.

You may be asked to refrain from having anything to eat or drink for at least 12 hours prior to your exam.

The exam typically takes less than 30 minutes and may consist of:

  • Taking your height and weight
  • Questions about your health as stated on your application
  • A blood draw
  • Urine sample

When your test is complete, and your results are ready, the company furnishes your results to the insurance carrier. You may also request a copy.

What does a life insurance medical exam test for?

A life insurance medical exam investigates three major areas:

  • Confirming the information you provided on your application
  • The condition of your health
  • Illicit drug use

The exam may test for diseases such as HIV or other sexually transmitted diseases. It also may identify indicators of heart disease such as a high cholesterol level. The test results may also point out kidney disease or diabetes.

How to prepare for your life insurance medical exam

Be honest: It’s important to complete your application completely and honestly. If the insurance carrier finds a misrepresentation on your application, they can deny coverage. Keep in mind, the application may ask about your lifestyle and if you regularly participate in dangerous activities, such as skydiving. You may also be asked about driving history and speeding tickets.

Eat a healthy diet: Be mindful of your diet in the days and weeks leading up to your exam. Lower your sodium intake as well as your consumption of fatty or sugary foods. Salt, sugar, and fat may elevate your blood pressure and cholesterol, so it may be best to avoid them to help get the best results.

Shed a few pounds: If you’re above a healthy weight for your height, try to shed some pounds before the exam. If you’re overweight, your insurance carrier may charge a higher premium on your policy. It’s best to be as close to your healthy weight as possible.

Abstain from alcohol: Refrain from drinking alcohol for at least 24 hours before your exam. This will help ensure you don’t have a high blood alcohol level.

Drink plenty of water: Hydrating properly helps to flush toxins out of your system, and it may also make the exam more comfortable. You’ll have an easier time producing a urine sample and your veins will be easier to reach for a blood draw.

Dress lightly and practice good posture: Clothing can increase your weight by a few pounds, so dress lightly. Especially if you are approaching an unhealthy weight, your clothing may push you into a higher weight class. Also, stand tall so you are measured at full height.

Keep calm and… Undergoing a life insurance medical exam can make even the healthiest person a little nervous. Stay calm and complete the application as honestly as you can.

Hint: If you can’t pass a life insurance medical exam, consider a guaranteed issue life insurance policy.

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This article is for informational purposes only. You should discuss your exam criteria with a qualified financial professional.

November 30, 2022

How to Have Your Dream Wedding Without Nightmare Spending

How to Have Your Dream Wedding Without Nightmare Spending

Planning a wedding is both exciting and stressful. There are many moving parts to coordinate – guest lists, venues, menus.

Not to mention the fact that you’re making some major financial decisions – maybe your first as a couple. Needless to say, your wedding is a huge milestone. It’s easy to get caught up in the wave of excitement. But it’s also easy to go overboard with spending. One day you get engaged and the next thing you know, you’re looking at your wedding album (along with some potentially major credit card bills).

To keep your wedding costs as reasonable as possible, consider a fresh perspective. Read on for a few pointers to keep in mind as you embark on this new adventure.

Take the time to get your mind in the game

When you first commit to walk down the aisle together, it may be tempting to rush right out and buy your fantasy dress, secure the location where you’ll exchange your vows, and get your order in for your dream wedding cake. But slowing down a little and thinking about what would really make your day special can help corral your wedding costs (so you’ll have that much more for a down payment on your first home, for example).

Set a budget and stick to it

The average cost of a wedding in the United States is more than $34,000.¹ But don’t panic. You don’t have to spend $34,000 to have an unforgettable day. You’ve probably been to wonderful weddings that cost less than $1,000 as well as huge ballroom style weddings that can approach six figures.

Spend as much or as little as you can afford. The important point is to set a budget and stick to it. So sit down with your partner and create a budget you can live with, not just for the day itself, but for your future together. Decide on your most important elements, set the costs for them, and get started checking items off your list!

Spend only on what’s important to you

One thing to keep in mind is that this is your day. Your wedding doesn’t have to be all things to all people. What is most important to you and your fiancé? Love gourmet food? Maybe you splurge a bit on your menu. Into fashion? Maybe your attire is the big ticket item. Don’t care much for alcohol? Skip it and budget more money toward the DJ.

Call in favors and use your friends’ talents

Enlisting help from your friends not only can save money on wedding costs, but it can also make your wedding feel more personal and special. Gather up your talented friends and ask for their help.

Ask close friends to participate in the wedding prep instead of purchasing gifts. Acquaintances? Ask them if they will share their expertise for a minimal fee.

Hint: If your style is more casual, skip the professional photographer and ask your guests to take pictures with their smartphones. You can save a ton of money and end up with great true-to-life photos of your wedding (instead of professional portraits that might look a bit stuffy).

Stay calm and plan on

If you begin planning without a clear vision for how you want your day to unfold, you can quickly get caught up in the frenzy. Vendors and party planners will be happy to sell you lots of extras you may not want or need. So, think carefully about your plan, know it well, and stick to it as execution gets underway.

In short, the best way to save money on your wedding isn’t about cutting corners and limiting your guest list. Like any financial matter, it’s about knowing what’s important to you, setting a budget, and getting creative. Not only can this help save money on your wedding, but it also ensures a wedding that is uniquely yours. And the best news? Having some money left over for the honeymoon!

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¹ “This Was the Average Cost of a Wedding in 2021,” Kim Forrest The Knot, Feb 15, 2022, https://www.theknot.com/content/average-wedding-cost

November 28, 2022

Understanding Compounding in Investments

Understanding Compounding in Investments

Successful investors like Warren Buffett didn’t just hit a home run on a stock pick.

Warren Buffett hit lots of home runs, but compounding turned those home runs into history-making investment achievements.

Compounding doesn’t have to be a big mystery. It just means that the annual increase is added to the previous year’s balance, which, on average, gives each year a larger base for the next year’s increase. The concept of compounding applies to any interest-bearing savings or investments or to average percentage gains.

Here’s a quick example:

Starting investment: $10,000 Interest rate: 7%

Screen Shot 2018-11-06 at 1.32.35 PM

The rule of 7 & 10

There’s a reason a 7 percent return was chosen for this example. You can see that the total interest return over 10 years is about double the original investment. This is an example of the “Rule of 7 & 10”, which says that money doubles in 10 years at 7 percent return and that it doubles in 7 years at 10 percent interest. It’s not an exact rule, but it’s close enough so you can quickly estimate without a spreadsheet or calculator.

The simple interest example above only begins to show the power of compounding. It doesn’t include any additional investments after year one. In investing, compounding can come from more places than one, particularly if the stocks you own pay dividends. (A dividend is a share of the profit that is distributed to shareholders.)

Compounding in investing

Investing in stocks or mutual funds may provide an average annual return in line with the simple interest example, assuming investments are well diversified to mimic the broad market performance. For example, the S&P 500 return over the past 10 years is just over 7 percent annualized.[i] When you adjust for dividends, the annualized return is close to 10 percent. If those numbers sound familiar – like the rule of 7 & 10 – it’s a coincidence, but the past 10 years of S&P returns are very close to historical averages. Knowing what we now know, it’s easy to figure out that $10,000 will double in 7 years, assuming that market performance is aligned with historical averages. In reality, market performance may be higher or lower than past averages – but over a longer time line, short term peaks and valleys usually blend into an overall trend in direction.

If you’re concerned that you don’t know as much about investing as Warren Buffett, don’t think you need to be an oracle to be a successful investor. Many times, the best stock to pick for individual investors may be no stock at all. There are a myriad of investment options from which to choose without buying stocks directly. Talk to your financial professional about what choices may be available for you.

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¹ “S&P 500 Return Calculator, with Dividend Reinvestment” DQYDJ, Sep 24th, 2022, https://dqydj.com/sp-500-return-calculator/

This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies for saving and/or investing that may be available to you. Market performance is based on many factors and cannot be predicted. Before investing or enacting a retirement strategy, seek the advice of a financial professional, accountant, and/or tax expert to discuss your options.

November 23, 2022

You're Not Too Young for Life Insurance

You're Not Too Young for Life Insurance

If you’re young, you may not be thinking you need life insurance yet, but life insurance isn’t something only for your parents or grandparents.

Even if you have a free life insurance policy through your employer, you may not have as much coverage as you need.

There are many great reasons to buy life insurance – and a lot of those great reasons are even better reasons for young people.

So, read on for a little illumination about why you are not too young for life insurance.

If you have dependents, life insurance is a must.

Take a moment and think about who depends on you and your income for their well-being. You may be surprised. Most of us think immediately of children, but dependents can include your parents, siblings, a relative with a disability, or even a significant other. A solid life insurance policy can protect the people that count on you.

What would they do without your financial help? A life insurance policy can ensure they are protected if something were to happen to you.

The older you get, the more life insurance costs.

From a simple, cost/benefit perspective, the best time to buy life insurance is when you are young. That’s when it’s the most affordable. As you age (i.e., become more likely to suffer from accident or illness), the cost of the policy will most likely go up. So buying a life insurance policy while you’re young may save you money over the long term.

Your employer-provided life insurance may be problematic.

Getting life insurance through your employer is a great benefit (you should take advantage of it if it’s free).

But it may present some problems. One of the drawbacks is that this type of life insurance policy doesn’t go with you when you leave the company. That may be a challenge for young people who are moving from company to company as they climb the career ladder.

Second, employer-sponsored life insurance may simply not be enough. Even dual-income couples with no dependents should consider purchasing individual policies. Keep in mind that if one of you passed away, would the other afford to maintain your current lifestyle on a single income? Those “what if?” scenarios may be uncomfortable, but they are the best way to determine how much life insurance you need.

You’re never too young to think about your legacy.

It’s not too soon to think about this. Did you know a life insurance policy can provide a lump sum to an organization you select, not just to a family member or other beneficiary? A life insurance policy can allow you to leave a meaningful legacy for the people or causes you care about. When it comes to buying life insurance, generally the younger you are when you start your policy, the better off you’re going to be.

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November 21, 2022

Understanding life insurance living benefits

Understanding life insurance living benefits

Most of us think of life insurance as something that only pays off once you die.

Once upon a time, that’s all life insurance did – the basics. However, today’s life insurance policies can be simple (if that’s what you’re looking for), or feature-packed and customized to your needs. Life insurance policies now can even pay living benefits. Yes, that means what you think it means: A policy can pay benefits even if you are still alive.

Term life insurance living benefits

Usually, a term life policy is among the most basic of policies, providing a fixed death benefit. It can provide coverage for a limited time at a guaranteed rate. But many companies are now offering a rider (that is, an add-on feature) that can provide living benefits with your term policy.

Living benefits can allow you to access the value of your policy under certain conditions:

  • Critical illness
  • Chronic illness
  • Terminal illness

Terminal illness is a commonly offered living benefit as an accelerated death benefit. Any amount withdrawn from the policy would be deducted from the policy’s face value. For example, if your term policy provides coverage for $250,000 but $100,000 is paid as an accelerated death benefit, your policy would still provide $150,000 as a death benefit to your beneficiaries.

Living benefits may also provide access to money from your policy in the case of chronic illness or critical illness.

Chronic illness can be a little confusing. Insurers usually look at the six activities of daily living (ADL): eating, bathing, transferring (walking), dressing, toileting, and continence. If your chronic illness prevents you from performing these activities, you may be eligible to receive a portion of your death benefit in advance.

Critical illness such as a heart attack, stroke, cancer, and some other illnesses may also make you eligible for an advance payment of your death benefit.

Not all term policies offer living benefits for chronic illness or critical illness, but an increasing number are offering this option as a rider, and a handful are offering this expanded coverage as a built-in benefit of the policy.

As always, speak with me or your financial professional about what living benefit policy options may be right for you and your family.

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November 16, 2022

Renter or Owner: What type of insurance do you need?

Renter or Owner: What type of insurance do you need?

Whether you’re renting or you own your home, there are various insurance options you may want to consider.

Like any insurance, they’ll help provide financial coverage in the event of an unexpected disaster. There are also varying levels of insurance that you may choose.

For Homeowners

There’s a general category known as “homeowner’s insurance”, which usually covers four categories: interior and exterior damage, damage to or loss of possessions on the property, and personal liability coverage that will help cover the cost of injuries sustained while on the property (such as if a guest slips and falls down the steps to the front door). The damages section of the policy usually won’t cover acts of war or nature, the latter including things like volcanic eruptions or floods. However, many policies will cover lodging and meals while the property is under construction and not able to be inhabited for the duration, such as if an exterior wall is destroyed by fire.

For geographical areas prone to certain disasters, a separate, specialized insurance policy may need to be purchased in order to cover damages or loss caused by such disasters. For example, for areas that are low-lying and near rivers where frequent heavy storms occur, general insurance may not cover damage to the property. Conversely, properties in mountainous areas are unlikely to need flood insurance but may need earthquake and/or landslide insurance if such events are more common there.

For Renters

While homeowner insurance will cover damage to the property – which is a major concern for those with a financial stake in the property – renter’s insurance usually covers damage to and loss of possessions, and also offers coverage for personal liability for injuries sustained on the property. The landlord likely has an insurance policy on the property to help protect against financial loss in the event of physical damage, but their insurance unlikely will extend to the tenant’s possessions or guests’ injuries. Thus, those who rent the property will need to consider insurance policies for these events.

Which Policies to Choose

As with any insurance policy, there may be deductibles, liability limits, covered and noncovered events and assets, and premiums. Generally the higher the limits and the broader the group of included incidents or assets, the higher the premium will be.

Some issues to consider:

  • If you choose a high deductible you may have a lower premium.
  • If you have guests over regularly, greater coverage for personal liability may be worthwhile.
  • If you travel often, an extension to protection may be a good idea. This is because many insurance policies may not cover theft or certain damages (like those arising from fire) for “vacant” homes, since these can be a greater risk when no one is living there for an extended period.
  • Many companies and policies may offer discounts to the premium if you have certain protections, like an alarm system, if you regularly perform maintenance, or opt for fire-retardant materials.
  • Some companies offer premium discounts if you have for example, both your car insurance and your renter’s or homeowener’s insurance with them.

The bottom line is that you should shop around for the best rates and coverage. Each individual will need to find the best fit. Make sure you have coverage for any specific circumstances that may be common in your area. And most importantly, make sure you thoroughly read and understand your policies, and the situations they cover, and don’t cover.

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November 16, 2022

Should You Listen To Music While You Work?

Should You Listen To Music While You Work?

There are some workplace distractions that we all know torpedo our productivity.

We don’t need an article to tell us that social media and break room chatter hinder us from getting things done. But what about music? Afterall, that’s what we use to block out distractions and get in the zone. Do our favorite tunes actually make us productive or do they slow us down? It turns out that the answer to that question depends on why you listen, how easily you get bored, and what you’re playing.

The goal: avoid multitasking

The golden rule of music and productivity is that you must avoid multitasking at all costs. There’s no better way to hamstring your productivity, torpedo your IQ, and potentially damage your brain than by trying to divide your focus between two tasks.¹ So if you’re listening to music to drown out your talkative co-workers or that weird noise the AC makes, you’re on the right track. If you’re jamming out to tracks that make you think about highschool crushes and epic concerts, you might be doing yourself more harm than good.

Complexity and distraction

But it gets more complicated. Some people respond better to working while listening to music than others. A study discovered that boredom-prone individuals performed both simple and complex tasks better in silence, while the opposite was true for the less boredom-prone.² The researchers hypothesized that the jobs at hand were engaging enough to keep the easily bored occupied. The music was unnecessary external stimulation that dragged their attention away.

This means that there isn’t a one size fits all solution for using music for productivity. If you’re easily bored and distracted, you might want to avoid music while you work altogether. Noise cancelling headphones might come in handy, but be sure not to pump music through them. By contrast, more naturally focused individuals might find soft background music helps them zone out the noise and laser in on what they need to do.

What makes good focus music?

So let’s say you’re not distraction prone and you like working to some tunes. What music should you listen to? Despite what your uncle in the orchestra would have you believe, there isn’t a single best genre of music to stimulate your brain (sorry, Mozart). What you’re looking for is music with certain qualities.

First, find music that’s the right tempo. You’re shooting for around 60 beats per minute to minimize stress and promote focus. No dance music or break-neck metal! Second, avoid words. You’re probably listening to music in an attempt to cancel out conversation, not distract you with lyrics chock full of hidden meaning and symbolism that may catch your curiosity. Choose instrumental music over your favorite lyrical genius next time you need to work. A third option is to find something to listen to that’s not even music: nature sounds. Weirdly enough, trickling streams and the soft fall of rain are all random enough sounds that your brain doesn’t even bother with attempting pattern recognition. It’s a great way to mask office noise if music just isn’t working for you.

Ultimately, you’re looking for music (or nature sounds or white noise) that reduces diversions without becoming a diversion itself. Make this an opportunity to explore new kinds of music and try listening to them next time you need to focus on a project. And let me know if you find any hidden gems of slow classical music being performed in front of a gurgling mountain stream!

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¹ “Multitasking Damages Your Brain And Career, New Studies Suggest,” Travis Bradberry, Forbes, Oct 8, 2014, https://www.forbes.com/sites/travisbradberry/2014/10/08/multitasking-damages-your-brain-and-career-new-studies-suggest/#22ceaf9956ee

² “Does Classical Music Help Our Productivity?,” Adi Gaskell, Forbes, Mar 11, 2019, https://www.forbes.com/sites/adigaskell/2019/03/11/does-classical-music-help-our-productivity/#89f9fc411bba

November 14, 2022

How much home can you afford?

How much home can you afford?

For most households, buying a home means getting a mortgage, which means lenders play a big role in declaring how much house you can “afford”.

Many people take that calculation as a guide in choosing which house they want to buy, but after you’ve signed the papers and moved in, the lender might not be much help in working out the details of your family budget or making ends meet.

Let’s take a look behind the curtain. What is it that lenders look at when determining how large of a mortgage payment you can feasibly make?

The 28-36 Rule

Lenders look closely at income and debt when qualifying you for a certain mortgage amount. One of the rules of thumb at play is that housing expenses shouldn’t run more than 28% of your total gross income.¹ You also may hear this referred to as the “housing ratio” or the “front-end ratio”. The 28% rule is a good guideline – even for renters – and has been a common way to budget for household expenses over many generations. Using this rule of thumb, if your monthly income is $4,000, the average person would probably be able to afford up to $1,120 for a mortgage payment.

Lenders also check your total debt, which they call debt-to-income (DTI). Ideally, this should be below 36% of your income. You can calculate this on your own by dividing your monthly debt payments by your monthly income. For example, if your car loans, credit cards, and other debt payments add up to $2,000 per month and your gross income is $4,000 per month, it’s unlikely that you’ll qualify for a loan. Most likely you would need to get your monthly debt payments down to $1,440 (36% of $4,000) or under, or find a way to make more money to try to qualify.

Buying less home than you can afford

While the 28% and 36% rules are there to help provide safeguards for lenders – and for you, by extension – buying a home at the top end of your budget can still be risky business. If you purchase a home with a payment equal to the maximum amount your lender has determined, you may not be leaving much room for error, such as an unexpected job loss or other financial emergency. If something expensive breaks – like your furnace or the central air unit – that one event could be enough to bring down the whole house of cards. Consider buying a home with a mortgage payment below your maximum budget and think about upsizing later or if your income grows.

A home as an investment?

A lot of people will always think of their home as an investment in an asset – and in many cases it is – but it’s also an investment in your family’s comfort, safety, and well-being. In reality, homes usually don’t appreciate much more than the rate of inflation and – as the past decade has shown – they can even go down in value. Your home, as a financial tool, isn’t likely to make you rich. In fact, it may do the opposite, if your mortgage payment takes up so great a percentage of your monthly budget that there’s nothing left over to invest, pay down debt, save for a rainy day, or enjoy.

Homes are one of those areas where many discover that less can be more. Whether it’s your first home or you’re trading in the old house for a new one, you might be better served by looking at how big of a mortgage payment you can afford within your current budget, rather than setting your sights on the house your lender says you can afford.

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¹ “How Much House Can I Afford?” David McMillin, Bankrate, https://www.bankrate.com/real-estate/new-house-calculator/

November 9, 2022

How to expect the unexpected

How to expect the unexpected

Unexpected expenses can put a damper on your financial life.

You never know what may come up – vet bills, car repairs, unplanned travel expenses. Life is nothing if not full of surprises.

So, how do you pay for unexpected expenses when they arise? Borrow? Use your credit card? Take out a payday loan?

There is a better way. Wouldn’t it be nice to have some cash stored away to help you out when those emergencies pop up? Well, you can! It’s called an emergency fund. That’s what it’s for!

What is an emergency fund?

An emergency fund is a designated amount of cash – easily accessible – to prevent you from going into debt in case of a financial emergency. But how much should you put aside? Most experts agree a suitable amount for an emergency fund is 6 months’ worth of expenses.¹

Sound like a lot of money? It is, but don’t let that stop you. An emergency fund can help make the difference between getting through a single emergency with merely a hiccup or spiraling down the financial rabbit hole of debt. Or it may help you ride through a few months if you lose your source of income.

It’s okay to start small

The thought of saving six months’ worth of income might make most of us throw up our hands in defeat before we even start.

Don’t let that get you down, though. The point is to start, even if it’s small. Just don’t give up. Begin with a goal of saving $500. Once you’ve achieved that, celebrate it! And then work on the next $500.

Slowly, over time, your emergency fund will increase and hopefully, so will your peace of mind.

Take advantage of “found money”

Found money is extra money that comes your way, that isn’t part of your normal income. It can include things like bonuses, inheritances, gifts, or cash from selling personal items.

When you find yourself with some found money, keep the 50/50 rule in mind. Put half the money toward your emergency fund, and put half toward whatever you like – your retirement, making this holiday season a little extra special, or add it to the college fund.

Let’s say you earned a bonus of $500 at your job. You worked hard and want to reward yourself. Go for it! Use half the bonus to buy the new shoes or the basketball game tickets, but put the other half in your emergency fund. It’ll be a win-win for you.

Take advantage of direct deposit

One of the best ways to help build your emergency fund is to make your deposits automatic. Siphon off a percentage of your paycheck into your emergency fund. Again, it’s key to start small here.

Know what an emergency is and what it is not

One of the fundamentals of building and maintaining an emergency fund is knowing what an emergency is and what it’s not. Unexpected expenses that require a dip into your emergency fund will happen – that’s what it’s for. But tapping in to your emergency fund on a regular basis shouldn’t be the norm. (If it is, you might need to take a look at your overall budget.)

Unexpected expenses your emergency fund may help cover:

  • Car repairs
  • Unexpected medical bills
  • Emergency home repairs
  • Unplanned travel for a death in the family

Some expenses that are not really emergencies:

  • A great sale on a cute winter coat
  • A spur of the moment weekend getaway
  • A spa day – no matter how much you need it!

Keep financial safety in mind

So the next time you see a gorgeous pair of shoes that you just “have to have” – ask yourself if they’ll be worth it if your 10-year-old dishwasher fails and your next dishwasher has to be you!

Don’t forget – start small. An emergency fund is about helping put a financial safety net in place. Don’t find yourself potentially compounding the difficulty of a true emergency by not having the funds to deal with it.

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¹ “Emergency Fund: What It Is and Why It Matters,” Margarette Burnette, Nerdwallet, Dec 21, 2021, https://www.nerdwallet.com/blog/banking/banking-basics/life-build-emergency-fund/

November 7, 2022

Are you stressed about saving for retirement?

Are you stressed about saving for retirement?

Most of us might feel at least a little anxiety when the subject of preparing for retirement comes up.

Many Americans feel like they haven’t saved enough. In the face of inflation, 40% of American workers plan on working longer to make up for what they haven’t saved.¹

But anticipating staying in the workforce may not be the best strategy when it comes to funding your golden years. Why? Because there are many unforeseen events that can affect your ability (or desire) to work – health problems, caretaking, loss of opportunity in your field… or just wanting to spend time with your grandkids or travel with your partner.

With so much uncertainty, it’s no wonder many Americans feel stressed, burdened, and unprepared when it comes to saving for retirement.

But don’t let retirement worries steal your joy. When it comes to saving for retirement there are a lot of choices you can make to help you prepare. Read on for some principles and tips that may help lessen your stress about the future.

Small changes add up

Retirement saving may seem like an insurmountable task when faced with the high cost of daily life. It’s easy to think we can’t afford to save for retirement and get stuck in a pattern of defeat. But small changes over time can add up to big results.

Shake off despair by implementing small strategies. Consistent saving adds up over time, and it can help build your finance muscle. Read on for some more easy tips.

Direct deposit

Set up a portion of your direct deposit to go straight into a savings account. This is a “set it and forget it” savings strategy, and you’ll be amazed how quickly it can build.

Save found money

Found money is extra cash that comes your way outside of your normal income. It can be from bonuses, gifts, or even a side gig. You weren’t planning on receiving that money anyway, so throw it right into your savings.

Practice frugality

Instead of becoming stressed out and hyper-focused on saving every possible penny, practice frugality. Frugal living can put your energy into something positive – creating a new habit and lifestyle. Also, frugal habits may help prepare you for living on a fixed income during retirement. Try these tips for starters:

Consider downsizing your home

Cut back or eliminate “extras” such as dining out, movies, and concerts When making a purchase, use any available coupons or discount codes Seek sources of free entertainment such as community festivals or neighborhood gatherings

Hire a financial professional

If no matter what you do you still can’t help feeling unprepared and stressed about your retirement, consider hiring a financial professional.

A financial professional may be able to help you change your perspective on preparing for retirement and help empower you with strategies custom made for you.

Remember, financial professionals work with people of all income levels, so don’t hesitate if you need help to get a handle on your retirement. They may assist with:

  • Creating a budget
  • Setting up savings accounts
  • Clarifying your retirement goals
  • Strategies for eliminating debt

Change your perspective on preparing for retirement

If you’re anxious about having enough money for your retirement, try changing your perspective. Focus on small goals and lifestyle habits. Frugality, consistent savings, and solid financial strategies may help take the stress out of retirement planning.

Consistency over time is the name of the game with retirement savings. So implement a few strategies that you can live with now.

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¹ “What Happens When 40% of Workers Postpone Retirement? We’re About to Find Out,” Mary Ellen Cagnassola, Money, Oct 3, 2022, https://money.com/40-percent-older-americans-delay-retirement-inflation-effect-on-younger-workers/#:~:text=Forty%20percent%20of%20American%20workers,Institute%2C%20a%20retirement%20insights%20group.

November 2, 2022

Budget Like a Rock Star with Your First Job

Budget Like a Rock Star with Your First Job

Congratulations! Landing your first full-time job is exciting, especially if you’ve been dreaming of that moment throughout college.

Now you can loosen your belt a little and not spend so much brain power on creative ways to make ramen noodles. But before you go and start spending on the things you’ve had to skimp on in school, it’ll be worth it to take a breath, do some self-examination, and create a budget first.

This is probably the absolute best time in your life to start a habit of budgeting that will last you a lifetime – before life gets more complicated with a family, mortgage, etc. If you become a whiz at your personal financial strategy, tackling all the things that life will bring your way may (hopefully) go a lot smoother.

So here are a few tips on setting up your budget with your first job:

1. Think about why you want a budget

It may sound silly, but knowing why you’re putting yourself on a budget will help you stick to it when temptations to overspend flare up. Beginning a budget early in life when you start your first job will help lay the foundation for responsible financial management.

Think about your goals here. Having a budget will help you (when the time is right) to acquire things like a home, new car, or a family vacation to the islands. Budgeting can also help you enjoy more immediate wants, like a designer handbag or new flat screen TV.

2. Get familiar with your spending

You can’t create a budget without knowing your expenses. Take a good, hard look at not just your income but also your “outgo”. Include all your major expenses of course – rent, insurance, retirement savings, emergency funds. But don’t forget about miscellaneous expenses – even the small ones. That coffee on the way to work – it counts. So does the $3.99 booster pack in your favorite phone game.

Track your expenses over the course of a couple of weeks to a month. This will give you insight into your spending, so your budget is accurate.

3. Count your riches

Now that you have your first job, add up your income. This means the money you take home in your paycheck – not your salary before taxes. Income can also include earnings from side jobs, regular bonuses, or income investment. Whatever money you have coming in counts as income.

4. Set your budget goals

Give yourself permission to dream big here and own it! Set some financial goals for yourself – and make them specific and personal. For example, don’t make “save up for a house” your goal because it’s not specific or personal. Think about the details. What type of house do you want, and where? When do you see yourself purchasing it?

For example, your budget goal may look something like this: “Save $20,000 by the time I’m 27 for a down payment on an industrial loft downtown.“ A good budget goal includes an amount, a deadline, and a specific and detailed outcome.

5. Use a tracker

A budget tracker is simply a tool to create your budget and help you maintain it. It can be as simple as a pen and paper. A budget tracker can also be an elaborate spreadsheet, or you can use an online tool or application.

The best budget tracker is the one you’ll stick to, so don’t be afraid to try a few different methods. It may take some trial and error to find the one that’s right for you.

6. Put it to the test

Test your budget and tracking system to see if it’s working for you. Try to recognize where your pitfalls are and adjust to overcome them, but don’t give up! It’s something your future self will thank you for.

7. Stick to it

Creating a budget that works is a process. Take your time and think it through. You’re probably going to need to tweak it along the way. It’s ok!

The best way to think about a budget is as an ongoing part of your life. Make it your own so that it works for your needs. And as you change – like when you get that promotion – your budget can change with you.

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October 26, 2022

Personal Finance: Hire a Professional or DIY?

Personal Finance: Hire a Professional or DIY?

Contrary to popular belief, professional financial planning can potentially benefit people of all income levels.

So the question you may want to ask is not if you make enough money to need professional help, but rather, is your money working to create the life you want?

If your answer is “I don’t know” – no worries. There’s help!

A professional financial planner is, well, a professional

It’s true that personal finance is personal, but for many of us, it can be complicated too. Plus, it’s not something we usually learn about in school. So for many – even for those on the lower end of the income scale – a financial planner may have a lot to offer.

Even though there are some people who do just fine with financial planning on their own, many of us need help to connect the dots. Having a solid financial strategy often isn’t just coming up with a monthly budget and sticking to it. Many Americans don’t seem to have a grip on how personal finance intersects with their lives. In fact, about one-third of Americans haven’t even written down a financial plan at all.¹ (Are you one of them?)

Maybe you know exactly what you want – let’s say to retire by 60. But you don’t know how to get there. This is where a financial planner may help.

Maybe you don’t know what you want, even though you’re already a disciplined budgeter. You may still need a good financial planner who can help you imagine and create a strategy for the future of your dreams.

A financial planner can foster accountability

One of the most difficult things about creating and living by a financial strategy is accountability. Let’s be real. It can be difficult to find the discipline to consistently stick to a budget, save for retirement, and live within our means.

If you’re coming up short in the discipline department, hiring a financial planner may help create some accountability for you. This isn’t to say they’re going to wag their finger if you splurge on a spontaneous girls’ weekend in Cozumel, but they may help create a sense of accountability by checking in with you regularly to see if you’re on the right track. You might decide that girls’ weekend could be planned a little closer to home instead…

A financial planner offers expertise at every life stage

A financial strategy isn’t something you create and then forget about. A wise financial strategy changes as your life changes, so it must be revisited. A good time to take a fresh look at your financial strategy is during life events such as: • Getting a new job • Making a major purchase, such as a home • Starting a business • Getting married • Having a child

Every one of these milestones signals a time to revisit your finances. A professional financial advisor can help ease these transitions by taking the pulse of your financial health at every life change.

What a financial planner can’t do

If you’re not ready to deal with your personal finances, a financial planner won’t be much help to you. In other words, they can’t make you take initiative when it comes to your financial life. But if you’re ready to explore the world of personal finance, they may help make the difference between a dream and a reality!

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¹ “5 Ways Financial Planning Can Help,” Rob Williams, Charles Schwab, Jan 14, 2022, https://www.schwab.com/learn/story/5-ways-financial-planning-can-help

October 24, 2022

The Birds Have Flown the Coop!

The Birds Have Flown the Coop!

The kids (finally) moved out!

Now you can plan those vacations for just the two of you, delve into new hobbies you’ve always wanted to explore… and decide whether or not you should keep your life insurance as empty nesters.

The answer is YES!

Why? Even though you and your spouse are empty nesters now, life insurance still has real benefits for both of you. One of the biggest benefits is your life insurance policy’s death benefit. Should either you or your spouse pass away, the death benefit can pay for final expenses and replace the loss of income, both of which can keep you or your spouse on track for retirement in the case of an unexpected tragedy.

What’s another reason to keep your life insurance policy? The cash value of your policy. Now that the kids have moved out and are financially stable on their own, the cash value of your life insurance policy can be used for retirement or an emergency fund. If your retirement savings took a hit while you helped your children finance their college educations, your life insurance policy might have you covered. Utilizing the cash value has multiple factors you should be aware of before making any decision.

Contact me today, and together we’ll check up on your policy to make sure you have coverage where you want it - and review all the benefits that you can use as empty nesters.

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October 19, 2022

Retirement planning tips you can use right now

Retirement planning tips you can use right now

The sooner you start planning for retirement, the better off you’re going to be.

That’s hard to argue with. But no matter where you are on your retirement planning journey, there are always great financial planning steps you can take to help you get and stay on the road to a happy retirement.

Time is money

When it comes to retirement savings, the old expression, “Time is Money” means more than ever. It makes sense that the sooner you start saving, the more you’ll have when your retirement comes. But there’s a phenomenon you can take advantage of that can help your money grow while you’re saving.

It’s called compound interest. This is basically earning interest on the interest. This is how it works: Your principal investment earns interest. The following year, your principal plus last year’s interest earns interest. You could stuff the same amount of cash under your mattress – and you might be able to store away a hefty sum over the years that way – but with compound interest, your money can “grow”. Taking advantage of compound interest can be one of the best ways to build your retirement savings.

Starting to save in your 20s and 30s: Set yourself up

If you’re in your 20s or 30s and you’re already thinking about retirement – give yourself a pat on the back. This is the best time to begin planning for your golden years. At this age, a retirement strategy is probably going to be the most flexible, and it’s more likely that your retirement dream can become a reality.

One of the best tools to take advantage of during this time is an employer-sponsored 401(k) plan. Make sure you’re taking full advantage of it. There are two major benefits:

  1. Time: Remember compound interest? The more you invest now in a retirement savings plan, the more you’ll have come retirement time.
  2. Company match: This is the money your employer puts in your 401(k) plan for you. Most employers will match your contributions up to a certain percentage. It’s like free money. Be sure you don’t leave it on the table.

Starting in middle age: Maximize your retirement savings

If you’re in your middle years, you still have some advantages when it comes to a retirement strategy. First, retirement should feel a little less like a fantasy and more like reality at this age – it’s not too far beyond the horizon! Use this reality check as motivation to start some serious planning and saving.

Second, your earnings may be higher on the career curve than they were when you were just starting out. If so, this is a great time to go all out with your savings plan. Try these tips for starters:

  1. Consider an IRA: An IRA can function as a savings tool when you’ve maxed out your 401(k). The savings are pre-tax as well.
  2. Professional financial planning: If you’re having a hard time getting your head around retirement planning, seek financial planning expertise. A financial professional can help make sense of your particular retirement picture. This way you can better identify needs and create strategies to fill them.

Your 50s and 60s: Getting real about retirement income

This is the age when retirement planning gets real. You’re thinking may now shift from savings to distributions. The question that arises is how you’ll replace that paycheck you’ve been earning with another source of income, if you’re not willing or able to work beyond a certain age.

  1. Social security benefits: You become eligible to tap into your social security benefits at 60. You can collect full benefits at around 65, but if you wait until you’re 70, you’ll get the largest possible payout from social security.
  2. Distributions: When you’re 59 ½ you can take distributions from your retirement accounts without a penalty. But keep in mind those distributions may count as taxable income.

A good retirement favors the prepared

No matter where you are on the road to retirement, wise financial planning is the key to a happy and healthy retirement. Start today!

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This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies for saving and/or investing that may be available to you. Market performance is based on many factors and cannot be predicted. Before investing or enacting a retirement strategy, seek the advice of a financial professional, accountant, and/or tax expert to discuss your options.

October 17, 2022

Consumer Debt: How It Helps And How It Hurts

Consumer Debt: How It Helps And How It Hurts

What exactly is consumer debt? It’s “We the People” debt, as opposed to government or business debt.

Consumer debt is our debt. And we, the people, have a lot of it – it’s record-breaking in fact. In May of 2018, U.S. consumer debt was projected to exceed $16.5 trillion in 2022.¹

That’s a lot of zeros. So, in case you’re wondering, what makes up consumer debt?

Consumer debt consists of credit card debt and non-revolving loans – like automobile financing or a student loan. (Mortgages aren’t considered consumer debt – they’re classified under real estate investments.)

So, how did we get buried under all this debt?

There are a few reasons consumer debt is so high – some of them not entirely in our control.

The rise of student loan debt: Much consumer debt consists of school loans. During the recession, many Americans returned to school to re-train or to pursue graduate degrees to increase their competitiveness in a tough job market.

Auto loan rates: The number of auto loans has skyrocketed due to attractive interest rates. After the recession, the federal government lowered interest rates to spur spending and help lift the country out of the recession. Americans responded by financing more automobiles, which added to the consumer debt total.

Is all this consumer debt a bad thing?

Not all consumer debt is bad debt. And there are ways that it helps the economy – both personal and shared. A student loan for example – particularly a government-backed student loan – can offer a borrower a low-interest rate, deferred repayment, and of course, the benefit of gaining a higher education which may bring a higher salary. A college graduate earns 56 percent more than a high school graduate over their lifetime, according to the Economic Policy Institute. So, getting a student loan may make good economic sense.

Credit card debt that won’t go away

Credit card debt is a different story. According one survey, 55% of people have revolving credit card debt.² Nearly two in five carry debt from month-to-month.

Still, the amount of credit card debt Americans carry has been on the decline, with the average carried per adult a little more than $3,000.

Credit card debt won’t hurt you with interest charges if you pay off the balance monthly. Some households prefer to conduct their spending this way to take advantage of cashback purchases or airline points. As always, make sure spending with credit works within your budget.

If you’re carrying a balance from month to month on your credit cards, however, there is going to be a negative impact in the form of interest payments. Avoid doing this whenever possible.

Stay on the good side of consumer debt

Consumer debt is a mixed bag. Staying on the good side of consumer debt may pay off for you in the long run if you’re conscientious about borrowing money, plan your budget carefully, and always seek to live within your means.

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¹ “Average American Household Debt in 2022: Facts and Figures,” Jack Caporal and Dann Albright, The Ascent, Sep 20, 2022, https://www.fool.com/the-ascent/research/average-american-household-debt/#:~:text=Data%20source%3A%20Federal%20Reserve%20Bank,the%20second%20quarter%20of%202022.

² “Jaw-Dropping Stats About the State of Debt in America,” Gabrielle Olya, Yahoo, Oct 11, 2022, https://www.yahoo.com/video/jaw-dropping-stats-state-credit-130022967.html#:~:text=A%20separate%20survey%20conducted%20by,balance%20from%20month%20to%20month.

October 12, 2022

Can you actually retire?

Can you actually retire?

Retirement is as much a part of the American Dream as owning a home, owning a small business, or just owning your time.

It’s built into the American psyche.

Many while away their working lives dreaming of the day they won’t have to wake up to a jarring alarm clock, fight rush hour traffic, and spend their days trapped behind a desk.

No matter your retirement dream – endless golf, exciting travel, or just hanging out with the grandkids – will you actually be able to pull it off? Will you actually be able to retire?

Sadly, about 59% of Americans say no, according to a poll by MagnifyMoney.¹

It turns out there are some reliable indicators that you may not be ready for retirement. It’s time for a reality check (and some tough love). So roll up your sleeves and let’s get honest. If you regularly practice any of the following financial habits, you may not be able to retire.

You spend without a budget

Do you have a budget? Are you spending indiscriminately on anything that tickles your fancy? Living day to day without a budget – especially if you are approaching your middle years or later – can wreck your chances of retirement. Commit to creating a budget and stick to it. Overspending now can turn your retirement daydream into a nightmare.

You’re not dealing with your credit card debt

If you struggle with credit card debt, you must have a plan to attack it. Credit card debt can cost you money in interest payments that could be funding your retirement instead. If you’re carrying credit card debt, get rid of it as soon as possible. Stick to a payment plan, be patient, and remain diligent. With time you’ll knock out that debt and start funding your retirement.

You’re not creating passive income

Being able to retire depends on whether you can generate income for yourself during your retirement years. You should be setting up your passive income streams now. Your financial advisor can inform you about options you might have, such as retirement investment accounts, real estate assets, stocks, or even life insurance and annuities. Make it a goal to formulate a strategy about how you can generate income later or you might not be able to retire.

You’re pipe dreaming

Ouch. Here’s some really tough love. If your retirement plan includes so-called “get rich quick” scenarios such as investment fads, lottery winnings, or pyramid schemes, your retirement could be in jeopardy. The way to retirement is through tried and true financial planning and implementing solid strategies over time. Try putting the 20 dollars you might spend each week on lottery tickets toward your retirement strategy instead.

A great retirement life isn’t guaranteed to anyone. It takes planning, sacrifice, and discipline. If you’re coming up short, make some changes now so you’ll be ready for your retirement life.

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This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies for saving and/or investing that may be available to you. Market performance is based on many factors and cannot be predicted. Before investing, talk with a financial professional to discuss your options.


¹ “59% of Americans Don’t Believe They Will Have Enough to Retire,” Deanna Ritchie, Due, Jun 1, 2022 https://due.com/blog/americans-dont-believe-they-will-have-enough-to-retire/#:~:text=Unfortunately%2C%20a%20majority%20of%20Americans,to%20save%20enough%20for%20retirement.

October 10, 2022

A Surprising Help After Buying a House

A Surprising Help After Buying a House

When I say “buying a house,” what kind of insurance do you think of?

Homeowners insurance. Obvious, right? But there’s another type of insurance you should consider with a few amazing-yet-unexpected benefits for new homeowners. Give up? It’s… life insurance.

Why? Because mortgage payments and the cost of upkeep won’t stop with an untimely passing.

Life insurance is a significant tool for homeowners because it’s a great way to help protect your loved ones from a sudden and unexpected financial burden.

Your family wouldn’t have to lose their home because of missed payments, and if you co-signed a mortgage with someone outside your nuclear family, the benefits of life insurance have the potential to cover your contribution for a time, not leaving that friend or business partner in a financial bind.

As for the upkeep of your home, a general rule of thumb is to set aside 1% annually of the purchase price of the house for routine repairs and/or maintenance.

For instance, if you paid $400,000 for your home, set aside $4,000 each year.

So if you’ve already had to convince yourself that the hole in the roof is almost, sorta, kind of the same as that skylight you always wanted to put in, just imagine what your family might experience if the income you or your spouse provides was no longer available.

Not sure if you have the right policy to help out with your new home in the event of a sudden death? Be sure to talk with a financial professional to make sure you’re financing the future you want – and that you’re doing everything in your power to help your family stay in the house that you’re all working to make a home!

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October 5, 2022

Getting the Most Bang for Your Savings Buck

Getting the Most Bang for Your Savings Buck

Savvy savers know that if they look after their pennies, the dollars will take care of themselves.

So, if you’re looking for places to gain a few extra pennies, why not start by maximizing your savings account?

Granted, a savings account might not be a flashy investment opportunity with a high return. But most of us use one as a place to park our emergency fund or the dream car fund. So, if you’re going to put your money somewhere other than under your mattress, why not put it in the place that gets the best return? Here are some tips for getting the most out of your savings account.

Try an Online-only Account

Your corner bank branch isn’t the only option for a savings account. Why not try an online account? As of May 2022, some banks are offering online checking accounts with rates of 1.25% (some even higher).¹

With the help of technology, you can link one of these high-interest savings accounts directly to your checking account, making moving money a breeze. Say goodbye to the brick and mortar bank, and hello to some extra cash in your pocket!

Check Out Your Local Credit Union

A credit union offers savers some unique benefits. They differ from a traditional bank as they are usually not for profit. They function more like a cooperative – even paying dividends back to members periodically.

A credit union can also be beneficial as they typically offer a higher interest rate than your everyday bank. Membership in a credit union may also have other perks, such as low-interest rates on personal loans as well as exceptional customer service.

Money Market Accounts

A money market account is like a savings account except it’s tied to bonds and other low-risk investments. A money market can deliver the goods by giving you more for your savings, but there are often account minimums and fees. Before putting your savings into a money market account, check the fees and account minimums to make sure they’ll coincide with your needs.

Don’t Use a Parking Place When You Need a Garage

A savings account is a like a good parking place for cash. Its usefulness is in its ease of access and flexibility.

This makes it a great place to keep savings that you may need to access in the short term – say, within the next 12 months.

For long-term saving (like for retirement), it’s generally not a good idea to rely on a savings account alone. Retirement savings doesn’t belong in a parking place. For that, you need a garage. Talk to your financial professional today about a savings strategy for retirement, and the options that are available for you.

Shopping for a Savings Account

Just because a savings account doesn’t offer high yields, doesn’t mean you shouldn’t consider it carefully. To get the most bang for your savings buck, search out the highest interest possible (which might be online), be aware of fees and penalties, and remember – any saving is better than not saving at all!

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¹ “10 Best Online Checking Accounts of 2022,” Chanelle Bessette, Nerdwallet, May 26, 2022, https://www.nerdwallet.com/best/banking/online-checking-accounts

October 3, 2022

5 Things to Consider When Starting Your Own Business

5 Things to Consider When Starting Your Own Business

Does anything sound better than being your own boss?

Well, maybe a brand new sports car or free ice cream for life. But even a state-of-the-art fully-decked-out sports car will eventually need routine maintenance, and the taste of mint chocolate chip can get old after a while.

The same kinds of things can happen when you start your own business. There are many details to consider and seemingly endless tasks to keep organized after the initial excitement of being your own boss and keeping your own hours has faded. Circumstances are bound to arise that no one ever prepared you for!

Although this list is not exhaustive, here are 5 things to get you started when creating a business of your own:

1. Startup cost

The startup cost of your business depends heavily on the type of business you want to have. To estimate the startup cost, make a list of anything and everything you’ll need to finance in the first 6 months. Then take each expense and ask:

  • Is this cost fixed or variable?
  • Essential or optional?
  • One-time or recurring?

Once you’ve determined the frequency and necessity of each cost for the first 6 months, add it all together. Then you’ll have a ballpark idea of what your startup costs might be.

(Hint: Don’t forget to add a line item for those unplanned, miscellaneous expenses!)

2. Competitors

“Find a need, and fill it” is general advice for starting a successful business. But if the need is apparent, how many other businesses will be going after the same space to fill? And how do you create a business that can compete? After all, keeping your doors open and your business frequented is priority #1.

The simplest and most effective solution? Be great at what you do. Take the time to learn your business and the need you’re trying to fill – inside and out. Take a step back and think like a customer. Try to imagine how your competitors are failing at meeting customers’ needs. What can you do to solve those issues? Overcoming these hurdles can’t guarantee that your doors will stay open, but your knowledge, talent, and work ethic can set you apart from competitors from the start. This is what builds life-long relationships with customers – the kind of customers that will follow you wherever your business goes.

(Hint: The cost of your product or service should not be the main differentiator from your competition.)

3. Customer acquisition
The key to acquiring customers goes back to the need you’re trying to fill by running your business. If the demand for your product is high, customer acquisition may be easier. And there are always methods to bring in more. First and foremost, be aware of your brand and what your business offers. This will make identifying your target audience more accurate. Then market to them with a varied strategy on multiple fronts: content, email, and social media; search engine optimization; effective copywriting; and the use of analytics.

(Hint: The amount of money you spend on marketing – e.g., Google & Facebook ads – is not as important as who you are targeting.)

4. Building product inventory

This step points directly back to your startup cost. At the beginning, do as much research as you can, then stock your literal (or virtual) shelves with a bit of everything feasible you think your target audience may want or need. Track which products (or services) customers are gravitating towards – what items in your inventory disappear the most quickly? What services in your repertoire are the most requested? After a few weeks or months you’ll have real data to analyse. Then always keep the bestsellers on hand, followed closely by seasonal offerings. And don’t forget to consider making a couple of out-of-the-ordinary offerings available, just in case. Don’t underestimate the power of trying new things from time to time; you never know what could turn into a success!

(Hint: Try to let go of what your favorite items or services might be, if customers are not biting.)

5. Compliance with legal standards

Depending on what type of business you’re in, there may be standards and regulations that you must adhere to. For example, hiring employees falls under the jurisdiction of the Department of Labor and Federal Employment Laws. There are also State Labor Laws to consider.

(Hint: Be absolutely sure to do your research on the legal matters that can arise when beginning your own business. Not many judges are very accepting of “But, Your Honor, I didn’t know that was illegal!”)

Starting your own business is not an impossible task, especially when you’re prepared. And what makes preparing yourself even easier is becoming your own boss with an established company like mine.

The need for financial professionals exists – everyone needs to know how money works, and many people need help in pursuing financial independence. My company works with well-known and respected companies to provide a broad range of products for our customers. We take pride in equipping families with products that meet their financial needs.

Anytime you’re ready, I’d be happy to share my own experience with you – as well as many other things to consider.

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