5 Challenges for Entrepreneurs

August 15, 2022

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Malcolm J. Kutash

Malcolm J. Kutash

President

2731 Ardisia Lane

Naples, 34109

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August 15, 2022

5 Challenges for Entrepreneurs

5 Challenges for Entrepreneurs

Starting a business can be an exhilarating experience.

It may seem like the next logical step for someone who’s looking to grow and develop their career. But before you take that leap, it’s smart to consider the pros and cons involved with entrepreneurship. In this article we’ll explore five things that budding entrepreneurs should think about before starting a new business venture!

The first thing to consider? Startup cost.

Depending on your idea, take some time to research what equipment or things will be necessary for getting started. Every penny counts. For example, if you’re opening an ice cream shop— which may seem simple enough—you’ll need freezers, scoopers, a storefront, and, of course, ice cream. That’s a lot of upfront investment for a little ice cream shop!

The second thing to consider is competition.

It’s wise to research what types of businesses already exist in your space before jumping into entrepreneurship. For example, what if there are five dog parks within a couple of miles from where you live and you want to open up a sixth? This may be fine if there’s a large population of dog owners in your area. But unless you’ve got a unique idea or innovation that will blow your competition out of the water, you may want to consider another type of business or a different location to get started.

The third thing to consider is customer acquisition.

How will you reach your customers? Do you know your exact market, their needs, desires, and insecurities? What’s the strategy for getting them in and keeping their business over time, even if there are competitors nearby with similar products/services?

At first, you might be able to rely on your friends and family as your first customers. But eventually, you’ll need to develop a marketing and brand strategy to acquire and keep new customers.

The fourth consideration should be building product inventory.

If you’re producing goods, do your finances allow for significant inventory investment? What if it’s a service-based business—will customers need to wait weeks or months before they receive the first round of services from their purchase with no cash flow in between?

When you first open, stock your business with every service or product you can possibly offer. Then, track which ones seem most popular and how much they sell. Then, start building inventory accordingly. You may need to scrap the services or products that aren’t making you money.

Finally, think about compliance with legal standards.

Some industries are regulated in ways that you may not anticipate. Food and beverage businesses need to follow health codes. Construction contractors must be bonded for their work on public projects like schools. And the financial industry is heavily regulated to protect clients. Whatever your industry, make sure you understand the legal requirements you’ll be asked to meet as a business owner.

There’s more to starting a business than excitement and glamour. It’s hard work that requires careful research and diligent preparation. Tackle these considerations before you start so you can lay the foundation for your business’s future success.

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August 10, 2022

Four Types of Self-Made Millionaires

Four Types of Self-Made Millionaires

A 5 year study of hundreds of self-millionaires has revealed their paths to achieving wealth. The findings reveal key insights that anyone can adopt and apply.

Starting in 2004, Tom Corley interviewed 225 self-made millionaires. His goal was simple—discover strategies, habits, and qualities that unite the self-made wealthy.

Along the way, he discovered four distinct types of self-made millionaires.

These are more than abstract archetypes—they represent actionable strategies and attainable goals that you can imitate, starting today.

Here are the four types of self-made millionaires…

Saver-Investors

These wealth builders come from all walks of life. What they have in common is that they save, save, and save. Add a dash—or heaping spoonful—of compound interest, and their savings grow over the course of their career into lasting wealth.

Company Climbers

It’s simple—score a job at a large company, and climb the ladder until you reach a lucrative position. Then use your significant income, benefits, and bonuses to create wealth.

Virtuosos

Got a knack for an in-demand skill? Then you may have serious wealth building potential. That’s because businesses will gladly pay top dollar for specific talents. Just remember—the virtuoso path to wealth requires both extreme discipline and extensive training.

Dreamers

From starting a business to becoming a successful artist, these are the people who go all-out on their passions. It’s an extremely high-risk solution—often, it can lead to failure. But those who succeed can reap substantial rewards.

The types may seem intimidating—after all, not everyone is positioned to drop everything and become a successful entrepreneur. But anyone can apply the basic strategies of the self-made wealthy to their finances…

Income is of the essence

The more you earn, the more you can save. Whether it’s by developing your skills or starting a side business, every bit of extra income can make a crucial difference on your ability to build wealth.

Save, no matter what

Unless you’re set on starting a business, you must save. Corely’s research suggested that saving 20% of your income is the benchmark for the self-made wealthy. Do your homework, meet with a financial professional, and start putting away as much as you can each month.

Invest in your skills Your skills dictate what you can earn. Take a note from the virtuosos—get really good at something that businesses need, and reap the benefits.

What type of self-millionaire could you become?

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¹ “I spent 5 years interviewing 225 millionaires. Here are the 4 types of rich people and their top habits,” Tom Corley, CNBC Make It, Aug 1 2022, https://www.cnbc.com/2022/07/31/i-spent-5-years-interviewing-225-millionaires-3-money-habits-that-helped-them-get-rich.html

August 8, 2022

Moves to Make Before Maxing Your 401(k)

Moves to Make Before Maxing Your 401(k)

Maxing out your 401(k) is boilerplate financial advice.

That’s because so few Americans are on track to retire with wealth—as of 2017, workers age 55-64 had saved only $107,000 for retirement.¹

With such bleak numbers, it’s no wonder financial professionals encourage 401(k) maxing. When possible, it’s a simple strategy that can help you reach your retirement goals and avoid a post-career catastrophe.

But consider this—the 401(k) contribution maximum as of 2022 is $20,500. For a single professional making over $100,000, that’s no big deal.

But what if you earn $60,000? Or have a family? Or have medical bills?

Suddenly, $20,500 seems like a much larger pill to swallow!

The simple fact is that saving shouldn’t be your first financial priority.

Before you save, you should create an emergency fund with 3-6 months worth of expenses.

Before you save, you should secure financial protection for your income in the form of life insurance.

Before you save, you should eliminate your debt to maximize your saving power.

Even then, you may not have the financial firepower to max out your 401(k) and make ends meet. It may take a side hustle to supplement your incomes to increase your contribution ability.

A helpful rule of thumb is to at least match your employer’s contribution. It’s a simple way to get the most out of your 401(k) without overextending your finances.

And above all, consult with a financial professional. They can help evaluate your retirement goals, your cash flow, and steps you can take to make the most of your 401(k).

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¹ “Jaw-Dropping Stats About the State of Retirement in America,” Jordan Rosenfeld, GOBankingRates, May 13, 2022, https://www.gobankingrates.com/retirement/planning/jaw-dropping-stats-state-retirement-america/#:~:text=According%20to%20a%20TransAmerica%20Center,saving%20 for%20 retirement%20is%2027.

August 3, 2022

Now's The Time for Future Financial Planning

Now's The Time for Future Financial Planning

What happened to the days of the $10 lawn mowing job or the $7-an-hour babysitting gig every Saturday night?

Not a penny withheld. No taxes to file. No stress about saving a million dollars for retirement. As a kid, doing household chores or helping out friends and neighbors for a little spending money is extremely different from the adult reality of giving money to both the state and federal government and/or retiring. Years ago, did those concepts feel so far away that they might as well have been camped out on Easter Island?

What happened to the carefree attitude surrounding our finances? It’s simple: we got older. As the years go by, finances can get more complicated. Knowing where your money is going and whether or not it’s working for you when it gets there is a question that’s better asked sooner rather than later.

When author of Financially Fearless Alexa von Tobel was asked what she wishes she’d known about money in her 20s, her answer was pretty interesting:

Not having a financial plan is a plan — just a really bad one! Given what I see as a general lack of personal-finance education, it can be all too easy to wing it with your money… I was lucky enough to learn this lesson while still in my 20s, so I had time to put a financial plan into place for myself.

A strategy for your money is essential, starting early is better, and talking to a financial professional is a solid way to get going. No message in a bottle sent from a more-prepared version of yourself is going to drift your way from Easter Island, chock-full of all the answers about your money. But sitting down with me is a great place to start. Contact me anytime.

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August 1, 2022

3 Critical Questions for Newlyweds

3 Critical Questions for Newlyweds

Congratulations, newlyweds!

“To have and to hold, from this day forward…”

At a time like this, there are 3 more “I dos” for you to consider:

1. Do you have life insurance?

Any discussion about life insurance is going to start with this question, so let’s get it out of the way! As invigorated as people feel after finding the love of their life…let’s face it – they’re not invincible. The benefits of life insurance include protecting against loss of income, covering funeral expenses, gaining tax advantages, and having early access to money. Many of these benefits can depend on what kind of life insurance you have. Bottom line: having life insurance is a great way to show your love for years to come – for better OR worse.

2. Do you have the right type and amount of life insurance?

Life insurance policies are not “one size fits all.” There are different types of policies with different kinds of coverage, benefits, and uses. Having the right policy with adequate coverage is the key to protecting your new spouse in the event of a traumatic event – not just loss of life. Adequate life insurance coverage can help keep you and your spouse afloat in the case of an unexpected disabling injury, or if you’re in need of long term care. Your life with your spouse isn’t going to be one size fits all, and your life insurance policy won’t be either – for richer or poorer.

3. Do you have the right beneficiaries listed on your policy?

This question is particularly important if you had an existing policy before marriage. Most newlyweds opt for listing each other as their primary beneficiary, and with good reason: listing the correct beneficiary will ensure that any insurance payout will get delivered to them – in sickness and in health.

If you couldn’t say “I do” to any or all of these questions, contact me. It would be my pleasure to assist you newlyweds – or not-so-newlyweds – with a whole NEW way to care for each other: effective life insurance coverage – ’til death do you part!

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July 27, 2022

Two Rules That Could Save Your Financial Life

Two Rules That Could Save Your Financial Life

Almost 70% of Americans have less than $1,000 saved.¹

That means most Americans couldn’t cover unplanned car repairs, home maintenance, or medical bills without selling something or going into debt. They’re constantly living on the edge of financial ruin.

That’s where your emergency fund comes in. It’s a stash of cash that you can easily access in a pinch. You’ll be able to pay for that blown transmission without visiting a payday lender or selling your grandma’s silverware!

But here’s the catch: Your emergency savings account won’t help you much if it’s under-funded.

Follow these two rules to ensure that your rainy day savings can withstand the storms of life.

Rule #1: Only use your emergency fund for real emergencies.

I get it. Your emergency fund is an easily accessible chunk of money. Of course it’s going to be tempting to tap into it when you’re buying a new car or planning a dream vacation.

But your rainy day savings shouldn’t fund your lifestyle. They should protect it.

Think of it like this. Your vacation fund pays for your annual beach trip. Your emergency fund covers the bill when your car breaks down on the drive home. Only touch your emergency fund for unexpected expenses and enjoy the peace that comes from being prepared.

Rule #2: Always refill your emergency fund when it’s low

Ideally, your emergency fund should be stocked with 3 to 6 months of your income at all times. That should be enough to cover the gambit from small unexpected costs to a month or two of unemployment.

Don’t be afraid to tap into your emergency savings when you face unforeseen financial hiccups. Just remember to refresh your fund when the emergency has passed. The last thing you need is to be caught in the crosshairs of another crisis without a buffer.

Don’t let a financial storm blow you off course. Prepare for your future, and start building an emergency fund now. If you follow these rules, it can help financially protect you from the challenges life will inevitably send your way.

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July 25, 2022

Dollar Cost Averaging Explained

Dollar Cost Averaging Explained

Most of us understand the meanings of “dollar” and “cost”, and we know what averages are…

But when you put those three words together – dollar cost averaging – the meaning may not be quite as clear.

Dollar cost averaging refers to the concept of investing on a fixed schedule and with a fixed amount of money. For example, after a careful budget review, you might determine you can afford $200 per month to invest. With dollar cost averaging, you would invest that $200 without regard to what the market is doing, without regard to price, and without regard to news that might impact the market temporarily. You become the investment equivalent of the tortoise from the fable of the tortoise and the hare. You just keep going steadily.

When the market goes up, you buy. When the market goes down, you can buy more.

The gist of dollar cost averaging is that you don’t need to be a stock-picking prodigy to potentially succeed at investing. Over time, as your investment grows, the goal is to profit from all the shares you purchased, both low and high, because your average cost for shares would be below the market price.

Hypothetically, let’s say you invest your first $200 in an index fund that’s trading at $10 per share. You can buy 20 shares. But the next month, the market drops because of some news that said the sky was falling somewhere else in the world. The price of your shares goes down to $9.

You might be thinking that doesn’t seem so great. But pause for a moment. You’re not selling yet because you’re employing dollar cost averaging. Now, with the next month’s $200, you can buy 22 shares. That’s 2 extra shares compared to your earlier buy. Now your average cost for all 42 shares is approximately $9.52. If your index fund reaches $10 again, you’ll be profitable on all those shares. If it reaches $12, or $15, or $20, now we’re talking. To sum up, if your average cost goes up, it means your investment is doing well. If the price dips, you can buy more shares.

Using dollar cost averaging means that you don’t have to know everything (no one does) and that you don’t know for certain what the market will do in the next day, week, or month (no one does). But over the long term, we have faith that the market will go up. Because dollar cost averaging removes the guesswork involved with deciding when to buy, you’re always putting money to work, money that may provide a solid return in time.

You may use dollar cost averaging with funds, ETFs, or individual stocks, but diversified investments are potentially best. An individual stock may go down to zero, while the broad stock market may continue to climb over time.

Dollar cost averaging is an important concept to understand. It may save you time and it may prevent costly investment mistakes. You don’t have to try to be an expert. Once you understand the basics of dollar cost averaging, you may start to feel like an investment genius!

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Market performance is based on many factors and cannot be predicted. 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. Examples used in this article are hypothetical. Before investing or enacting a savings or retirement strategy, seek the advice of a licensed financial professional, accountant, and/or tax expert to discuss your options.

July 21, 2022

Mental Health And Money

Mental Health And Money

There is a deep yet often unconsidered connection between mental health and money.

The data is clear as day. The Money and Mental Health Institute discovered that…

  • 46% of people__ with debt have a diagnosed mental health condition
  • 86% of people with__ mental health issues and debt say that debt exacerbates their mental health issues
  • People with depression and debt are 4x more likely to still have debt after 18 months compared to their counterparts
  • Those with debt are 3x more likely to contemplate suicide due to that debt¹

What these statistics don’t reveal, however, is what comes first. Do mental health issues spark financial woes? Or do financial woes spark mental health issues?

The answer, of course, is yes.

The connection between mental health and money can’t be reduced to simple causation. Instead, it’s a spiral where both factors can feed off of each other.

Consider the following pattern…

  • A financial crisis ramps up stress levels.
  • Ramped up stress levels activate negative self-talk.
  • Negative self-talk sparks unhealthy coping mechanisms.
  • Unhealthy coping mechanisms wreak havoc on the financial situation. And repeat.

This is an example of a financial crisis sparking mental health issues. But notice that a financial crisis isn’t the only situation that can cause the cycle. For instance…

  • An unhealthy relationship ramps up stress levels.
  • Ramped up stress levels activate negative self-talk.
  • Negative self-talk sparks unhealthy coping mechanisms.
  • Unhealthy coping mechanisms wreak havoc on the financial situation. And repeat.

In short, there’s a two-way relationship between mental health and money. If you’re seeking to start building wealth and changing your life, you must address both. Practically speaking, that means steps like…

  • Reducing financial stress by building an emergency fund
  • Increasing financial flexibility by reducing debt
  • Unlearning toxic self-talk habits that spark anxiety and depression
  • Developing healthy coping skills to alleviate stress

These can be daunting steps if you’re going it alone. That’s why it’s always best to seek the help of both mental health and financial professionals. They’ll have the insights and strategies you need to blaze a different path for your future.

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¹ “Data Shows Strong Link Between Financial Wellness and Mental Health,” Enrich, Mar 24, 2021, https://www.enrich.org/blog/data-shows-strong-link-between-financial-wellness-and-mental-health

July 18, 2022

A Pocket Guide to Homeowners Insurance

A Pocket Guide to Homeowners Insurance

Homeowners insurance should bring peace of mind.

The right policy is there to help protect you if something happens to your home. Since a home may be the most significant investment many of us make in our lives, the proper homeowners insurance should be a major consideration.

Getting the right homeowners insurance is essential, but doesn’t have to be difficult. Still, how do you know if you’re selecting the right type of insurance policy for your house? Read on for answers to some common questions you might have.

What is the purpose of a homeowners insurance policy

A homeowners insurance policy is a contract by which an insurance company agrees to pay for repairs or to replace your home or property if it is involved in a covered loss, such as a fire. A home insurance policy may also offer you liability protection in case someone is injured on your property and files a lawsuit.

Do I have to have homeowners insurance?

Your mortgage company will probably require a homeowners insurance policy. A lender wants to make sure their investment is protected should a catastrophe strike. The mortgage company would need you to insure your home for the cost to replace it if it were to be destroyed in a covered accident.

How do I know how much insurance to buy for my home?

The limit – or amount of insurance you place on your home – is determined by several factors. The construction of your home is typically going to be the largest determinant of the cost to replace it. So consider what your home is made of. Construction types include concrete block, masonry, and wood frame. Also, consider the size of your home.

Personal property is another consideration when determining how much insurance to purchase for your home. A typical homeowners insurance policy usually offers a personal property limit equal to half the replacement cost of your home. So if your home is insured for $100,000, your policy may automatically assign a personal property limit of $50,000.

What is the best deductible for a homeowners insurance policy?

When it comes to deductibles, consider selecting one that you can easily and quickly come up with out of pocket, just in case. Homeowners insurance policy deductibles may range from $500 to $10,000. Some policies offer percentage deductibles for certain damages, such as windstorm damage. For example, a coastal resident may have a windstorm deductible of two percent of the dwelling limit and a $1,000 deductible for all other perils.

There may be some cost savings features when you select a higher deductible on your homeowners insurance. Talk with a licensed insurance professional about your deductible options and premium savings.

Know the policy exclusions

All homeowners insurance policies typically contain exclusions for accidents and damages they don’t cover. For example, your policy likely does not cover damage to your home caused by an ongoing maintenance problem. Also, most homeowners insurance policies don’t automatically cover losses resulting from a flood.

Exclusions are important because they drive coverage. Talk to your insurance professional about your policy’s exclusions.

Know the basics and talk to a professional

As far as homeowners insurance policies are concerned, it’s crucial for homeowners to know the basics – limits, coverages, deductibles, and special exclusions. If you have specific concerns about your homeowners insurance, seek guidance from a licensed insurance professional.

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This article is for informational purposes only and is not intended to promote any certain products, plans, or strategies that may be available to you. Before taking out any loan or enacting a funding strategy, seek the advice of a licensed financial professional, realtor, accountant, and/or tax expert to discuss your options.

July 13, 2022

Leaders: “Emotional Intelligence” Is Not Enough

Leaders: “Emotional Intelligence” Is Not Enough

Have you read an article about emotional intelligence and leadership recently? There’s a strong chance it’s misleading you.

That’s because there’s been serious confusion about how emotional intelligence works, especially among business leaders.

Often, there’s an unstated assumption that emotional intelligence measures the grasp you have on how others feel.

It’s become common to see emotional speeches, sincere apologies, and leadership styles all bathed with the label “Emotionally Intelligent” since they all employ basic human emotions to be effective.

But there’s one problem—having high emotional intelligence is a far more nuanced state of awareness than merely understanding how emotions work.

Daniel Goleman, the guy who literally wrote the book on emotional intelligence, gives emotional intelligence four dimensions:

  1. Self-awareness
  2. Self-management
  3. Social awareness
  4. Relationship management

But, as Goleman explains here, those qualities require empathy to cohere. In fact, sans empathy, they can become toxic.

It’s easy to see why, when you think about it.

How do you categorize a leader who’s aware of how others feel, but exploits those emotions to their own ends?

At best, they’re skilled at what the ancient Greeks called Rhetoric, the art of persuasion.

At worst, they’re garden variety psychopaths…

Here are two takeaways for you:

  1. Beware headlines that peddle examples of emotional intelligence. Plenty of publications will try to get your click with articles about emotional intelligence in action. Maybe they’re worthwhile. But maybe they’re using a buzzword to grab your attention.

  2. Develop your empathy along with your charisma. Without empathy, you’ll find yourself manipulating others with little concern for their wellbeing. Not only is it wrong, but it can have disastrous outcomes over the long haul.

And here’s a bonus takeaway, just because I care (see the rhetoric at work?)…

Just because someone speaks to your emotions doesn’t mean they care about you.

In fact, those emotional appeals can be indicators that a bad actor is exploiting you.

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July 11, 2022

The Real Reason You Aren't Saving

The Real Reason You Aren't Saving

“I’ll start saving when I turn 30.”

“I’m too old to save.”

“I’m in too much debt to save.”

“Why do I need to save? I don’t have any debt!”

You may have heard your friends and loved ones say things like this before. You may have even said them yourself!

It doesn’t take much sleuthing to recognize these statements for what they are—excuses. And excuses always suck.

But the fact that people feel compelled to make excuses reveals the truth…

People are afraid of saving.

In one sense, it’s easy to see why. Everyone knows saving is critical. But no one knows the “right way” to go about it. And that ignorance makes building wealth seem mysterious, or even dangerous.

An excuse serves as a justification for avoiding that great unknown. It makes not saving feel like the safer option… for now.

But never saving can have disastrous consequences like…

  • Running out of money in retirement
  • Struggling to cover medical emergencies
  • Constant stress about affording the basics

The choice is simple…

Risk a financial disaster.

OR

Face your fears and start saving.

Here’s the good news—you don’t have to face that fear alone.

Having mentors and companions to aid you on your journey can mean the difference between success and financial shipwreck.

In fact, that’s what I’m here for—to offer insight, tips, and support as you start building wealth and financial security for your family.

So if you’re ready to face your fears and to start saving, let’s chat! We can review your situation, and what it would look like to overcome your financial obstacles.

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July 6, 2022

Severance Explained

Severance Explained

Getting paid to leave your job? It might sound impossible, but that’s exactly how severance works.

Though it’s not required by law, employers often offer benefits to laid off employees on their way out.

Why? Sometimes it’s an expression of gratitude to loyal employees. Other times, it’s to attract top talent.

Either way, severance can ease the loss of a job. It can give you a financial cushion when you’re seeking a new position.

Severance comes in several forms…

Income

It’s exactly what it sounds like—your paycheck continues after you leave. Sometimes, this is based on the number of years you worked for the company.

Insurance coverage

COBRA continuation allows you to keep your health insurance for a limited time after leaving your job. If your severance agreement includes this, your employer may pick up the tab for the first few months. But eventually, you’ll be responsible for the entire premium.

Outplacement services

These can help you find a new job. Services can include résumé writing, interview coaching, and job search assistance.

Vacation or sick pay. If you have vacation or sick days left over, your employer might pay you for them as part of your severance package.

Retirement benefits

If you’re vested in a retirement plan, you may be able to keep your benefits or cash them out.

Severance pay is often negotiable. If you have a good relationship with your employer, they may be willing to give you more than the minimum. And if losing your job will cause economic hardship, you might be able to bend the ear of your employer to get additional benefits.

It’s worth noting that severance pay only kicks in if you get laid off. Getting fired or simply quitting won’t trigger your benefits. Sometimes, you can negotiate a layoff with your employer in exchange for training a new employee.

Whether you’re just looking for a few more benefits or you want to get paid if you leave your job, understanding severance can help you get what you’re after. Know your needs, and negotiate accordingly.

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June 29, 2022

Sinking Funds 101

Sinking Funds 101

You can put down the life jacket—a sinking fund is actually a good thing!

Why? Because a sinking fund can help you avoid high interest debt when making big purchases. Here’s how…

Put simply, a sinking fund is a savings account that’s dedicated to a specific purchase.

For instance, you could create a sinking fund for buying a new car. Every paycheck, you would automate a deposit into the fund until you had enough money to buy your new ride.

And that can make it a powerful tool. Instead of putting big ticket items on a credit card or using financing, you can instead use cash. It can work wonders for your cash flow and your ability to build wealth over the long haul.

Here are a few tips for making the most of your sinking fund…

Plan in advance

Sinking funds work best when they’ve had time to accumulate—you probably can’t save for two weeks and then expect to buy a car!

First, write a list of all major upcoming expenses on the horizon. List how much you expect them to cost, and when you plan to purchase them.

Then, divide the cost by the number of pay periods between now and then. That’s how much you need to save each paycheck to buy the item in cash. Even if you can’t spare the cash flow to save the full amount, you can at least save enough to lower the amount of debt you’ll be taking on.

Prioritize access

What good is saving for a purchase if you can’t access the money? Not much.

That’s why it’s best if your sinking fund is highly liquid. No penalties for withdrawal. No delay between selling assets and accessing cash. Otherwise, you may find yourself unnecessarily twiddling your thumbs instead of actually making the purchase!

Prioritize safety

Remember—this is for a specific purchase on a relatively short timetable, so you might not want to put these funds in a more aggressive account. The last thing anyone wants is for their car savings to get halved by a bear market. There are other accounts specifically designed for building wealth. This doesn’t need to be one.

So before you make your next big purchase, call up your licensed and qualified financial professional. Give them the details about what you plan to buy and when. Then, collaborate to see what saving for the purchase could look like. It could be the alternative to credit card spending and financing that your wallet needs!

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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. Any examples used in this article are hypothetical. Market performance is based on many factors and cannot be predicted. Before investing or enacting a savings or retirement strategy, seek the advice of a licensed and qualified financial professional, accountant, and/or tax expert to discuss your options.

June 22, 2022

Are Gym Memberships Worth It?

Are Gym Memberships Worth It?

Let’s face it—we’ve all botched a New Year’s fitness resolution.

Sure, we started the year with great intentions and a few gym visits, but it didn’t take long for our resolve to waver and we never returned. However, many of us have kept that membership around. After all, we paid so much to sign up that we might as well hold on to it just in case our motivation comes back, right?

Wrong.

It turns out that gym membership might have been a bad value right from the start. But how can you tell? Here are a few things to consider if you’re thinking about finally moving on from your overly ambitious New Year’s resolution.

How gym memberships work

Gym memberships seem pretty simple on the surface; you pay once a month for access to gym equipment during operating hours. But annual fees and initiation fees can add up pretty quickly, meaning that you can potentially sink hundreds of dollars into a gym. National gym chains may range in price from $164 to $1,334 per year, but the national average comes out to $696 annually. Plus, some gyms make you sign a contract locking you into a year-long membership. You have to pay for the membership regardless if you work out!

The big question: Are you paying for something you won’t use?

Gym memberships are more cost effective the more you take advantage of them. Going to the gym seven times a week at an average priced gym? Let’s do the math. You’ll pay $1.90 per visit. Go four times per week? $3.36.¹

But let’s say you visit the gym about four times per month for an hour-long sweat session. You’ll wind up spending $14.50 per hour! To put that in perspective, we spend an average of $0.28 on Netflix per hour. Sitting around watching TV is far more cost effective than working out.

Alternatives to gym memberships

So what can you do if you want to get fit but don’t want the potential financial black hole of a gym membership? It’s often cheaper in the long run to build your own gym at home rather than getting a membership. You also might want to see if your apartment or office has a serviceable gym. If all else fails, you can always do body weight exercises. You might be surprised by how grueling and intense push-ups and squats can be!

The bottom line is that the keys to making your gym membership worth it are motivation and discipline. The cost of buying a membership isn’t enough incentive.² You have to find a deeper drive to get you in the gym week in and week out. Check out the costs of your local gym, weigh the alternatives, and ask yourself why you want to start working out before you sign that contract!

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¹ “Are gym memberships worth the money?” Zachary Crockett, Jan 5, 2019, https://thehustle.co/gym-membership-cost

² “Annual Gym Memberships Can Be a Trap. Do This Instead.” Whitney Akers, Healthline, Sep 24, 2018, https://www.healthline.com/health-news/gym-memberships-can-be-a-trap#2

June 13, 2022

Hard Skills vs. Soft Skills

Hard Skills vs. Soft Skills

Soft skills are having a moment.

Employers are realizing that there are some tasks that computers actually can’t do—at least not yet! So the words soft skills have started getting a lot of traction. One survey found that 92% of employers value soft skills as much as hard skills!¹ But what exactly is a soft skill? For that matter, what’s a hard skill? Let’s take a closer look at these two different types of abilities!

Hard Skills

A hard skill is quantifiable. You can typically learn them through taking a class or reading a book. They’re almost always technically skills that can be used in very specific circumstances. For instance, knowing how to design a website or retrieve data are hard skills; they’re very narrow types of knowledge that require training and technical proficiency to master. Engineers, doctors, and accountants are just a few examples of jobs that are based around hard skills.

Soft Skills

Defining soft skills is more tricky. Have you ever met a leader whose vision inspires you to work harder? Or have a coworker who’s able to rise above a stressful situation and keep a level head? Those are all examples of soft skills. They’re essentially people skills applied to the workplace.

Which one is more important?

It’s tempting to think that hard skills dominate the economy. The digital revolution is changing the way we interact with the world and tech related hard skills are becoming essential in more and more fields. But that doesn’t mean soft skills are going anywhere; one study from LinkedIn found that 57% of employers value soft skills more than hard skills!²

It’s easy to see why. A room full of super geniuses armed with quantum computers is useless if they can’t communicate effectively and don’t have a plan! Skills like leadership, conflict resolution, and stress management are just as important as ever and employers know it.

So let’s say you’re looking for a job and you’ve started working on a resume. How do you highlight both your hard skills and your soft skills? Hard skills often shine the most on paper. Portfolios, degrees, certifications, and recommendations all demonstrate that you’re actually proficient.

Soft skills tend to come out in interviews. Make sure you show up early and dress professionally. Making eye contact, smiling when appropriate, and asking thoughtful questions can all show that you’re the type of person who works well on a team and won’t start unnecessary drama. Those little things may seem insignificant if you’ve got a Ph.D from a top university with years of experience under your belt, but you might be surprised by how much they matter to employers and your coworkers!

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¹ “Soft skills,” Livia Gershon, BBC, July 21, 2019 https://www.bbc.com/worklife/article/20190719-soft-skills

² “Hard Skills vs Soft Skills: List of Examples for Your Resume,” Tom Gerencer, Zety, May 2, 2022, https://zety.com/blog/hard-skills-soft-skills

June 8, 2022

Tax Now or Tax Later?

Tax Now or Tax Later?

If someone asked if you’d rather pay taxes now or later, what would you say?

Paying later is tempting. After all, who likes paying taxes at all? As with most inconveniences, it’s easy to delay, delay, delay.

But here’s an important question. When do you think taxes will be greater—today, or years from now?

It’s impossible to answer.

Looking to history doesn’t really help—income taxes are actually far lower now than they were in the 1930s, 40s, or 50s.¹ So if you pay now, you may miss out if taxes sink even further.

But no one can predict the future. If you opt to pay later, unforeseen circumstances may create a higher tax environment down the road.

So if you’re comparing tax now vs. tax later, it may feel like you might as well toss a coin to determine your strategy. Not a good place to be!

But fortunately, there’s an alternative. Tax never.

And no, that doesn’t mean buying shady nail salons, opening businesses in the Cayman Islands, or committing a felony. It simply means working with a licensed and qualified financial professional to identify time-proven—and 100% legal—financial vehicles.

These include…

Roth IRAs/Roth 401(k)s Health Savings Accounts Indexed Universal Life (IUL) Insurance 529 College Savings Plans Municipal Bonds

Each vehicle has specific rules, limitations, strengths, and weaknesses. It’s absolutely critical that you consult with a financial professional before you start leveraging these tools. Remember, you don’t need to flip a coin to make financial decisions!

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¹ “History of Federal Income Tax Rates: 1913 – 2021,” Bradford Tax Institute, https://bradfordtaxinstitute.com/Free_Resources/Federal-Income-Tax-Rates.aspx

June 6, 2022

Retiring in a Bear Market

Retiring in a Bear Market

Is a slowing market challenging your peace of mind about retirement?

It’s no wonder why—losing wealth on the cusp of retirement can suddenly lower the quality of your post-career lifestyle.

And worst of all, it can seem unavoidable. If you turn 67 during a bear market, what are your options for avoiding a retirement disaster?

The first, most obvious solution is to keep working. Take the loss on the chin, push through, let the recovery buoy your savings, and retire at the top.

The drawbacks? It could delay your retirement by 3 to 5 years.

Even worse, you’ll then likely face the temptation to retire at the TOP of the next bull market. And if you don’t plan accordingly, your retirement savings and income could get hammered during the almost inevitable bear market that would follow.

The second, far more powerful strategy? Taper your risk as you approach retirement.

Why? Because it can make you far less vulnerable to market fluctuations. Whether you retire at the top or bottom of the market becomes less important for your retirement outcome.

That’s why it’s absolutely essential to meet with a licensed and qualified financial professional ASAP. They can review your goals and situation to determine what level of risk works best for you. They can also help you taper your risk exposure as you get closer to retirement.

And if you’re ready to retire but skittish about the market, they can help you weigh the pros and cons of taking the plunge or waiting it out.

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June 1, 2022

Cities vs. Suburbs

Cities vs. Suburbs

Deciding where to live is hard.

It’s a big decision especially in a historically unstable housing market. That’s why it’s important to know what to expect from the options you’re weighing. Here’s a quick guide to the pros and cons of living in a city or a suburb!

Cities: Pros and Cons

There’s a reason people flock to cities. First and foremost, jobs tend to be easier to find in the city than anywhere else. That means there’s a high incentive to move into town close to where you work. But that’s not the only reason to go urban. Cities are often more walkable than suburbs or the country and often feature extensive public transit. All the culture, nights out, museums, and coffee shops that your city has to offer are all easily accessible either on foot or with a quick subway ride.

But there’s a price to pay for the convenience of city living. Urban housing is typically higher than other areas, and normal things like a date night dinner will probably be pricier than elsewhere. Crime is also higher in the city than the suburbs or the country, so situational awareness is a key skill to develop if you’re living in-town.

Suburbs: Pros and Cons

The suburbs are designed to give you access to the benefits of the city while offsetting some of the costs. For starters, your dollar will probably go farther for housing in the suburbs than it will in the city. Suburbs tend to be safer and offer more space, making it appealing to people looking to start a family or couples with kids. Plus, if you’re lucky, you could be a similar distance from the countryside as the city, so you’re flexible between choosing a night in the city or a hike in the woods!

However, it isn’t all sunshine and roses for suburbanites. Housing might be cheaper per square foot, but houses also tend to be larger. That means you can actually end up paying more for housing in the suburbs even though you’re technically getting a better deal square footage-wise. The other big downside is that transportation in the suburbs can be brutal. The cost of driving a car in traffic every day can be high, so much so that suburban transportation can be shockingly expensive, especially when gas prices skyrocket. That’s not even factoring in the stress of dealing with traffic.

Deciding where to live comes down to what you prioritize and your stage of life. Are you a young professional with a new job downtown? It might make more sense to move closer to work and be near where everything is happening. The same might also hold for a recently retired couple looking for easy access to quality medical care and date spots. A young family looking for a safer space to raise kids, however, could potentially want to look further out for housing. Just take a few of the factors we discussed in this blog to heart before you make the big decision!

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May 30, 2022

Time Management 101

Time Management 101

We never seem to have enough time.

So often it feels like we’re balancing a million things at once with no wiggle room. We also probably feel guilty when we “take a little break” and burn some time scrolling through social media or chatting with co-workers. There never seems to be a balance between getting all the things done but enjoying some rest every once in a while.

Fortunately, time management isn’t something that requires a total life overhaul. It just takes a little discipline. Here are a few beginner tips to help control your time and use it wisely.

Tackle your biggest task first thing

You might be surprised by how much time wasting comes from being intimidated by a task. Maybe you don’t know where to start, you’re nervous that you’ll mess everything up, or you don’t know who to ask for help. The list goes on.

The best solution for overcoming this fear is to take on your most important assignment when you start your day. That gives you a few advantages. First, you’re closer to peak performance in the morning, meaning your best efforts are going towards the most difficult work. Second, just making a dent in a big project can give you the confidence boost you need to knock the rest of your day out of the park. It’s an easy way of proving to yourself that you’ve got what it takes to get things done!

Use a time limit

There’s nothing worse than setting aside a few hours to work on something only to find yourself overwhelmed and drained before lunch, and not having accomplished what you wanted to do. That’s why setting timers can be so useful. It means that you can work on a task, accomplish what you can, and move on to the next thing before getting burned out and bogged down. Try dedicating an hour to each item on your list and cycle through them. You might be surprised by the difference a fresh perspective makes!

Don’t multitask

This seems so simple, but we all need to hear this from time to time. It’s tempting to take the edge off a boring job or task with your favorite podcast or YouTube videos playing in the background. Worse yet, you might decide to try writing an email to a superior, hosting a webinar, and filling out paperwork all at the same time! What a simple way to boost your efficiency, right?

But you’re probably not boosting anything except the time it will take to complete any one of those tasks. When you try to multitask, chances are you’re actually slowing yourself down and making more mistakes along the way.¹ A much better solution is to turn off your phone, put on some classical music or white noise instead of a YouTube video, and knock out your tasks one at a time.²

Remember that the key to making these tips work is discipline. Setting a timer won’t make a difference if you check your social feed for two hours during the workday or can’t say no to last-minute lunch invitations. But these suggestions are easy places to start once you’re committed to making more effective use of your time!

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¹ “12 Reasons to Stop Multitasking Now!” Amanda MacMillan, Health, Jul 14, 2016, https://www.health.com/condition/adhd/12-reasons-to-stop-multitasking-now?slide=c12a3886-4ff2-4fbe-88fa-3216a321d642#c12a3886-4ff2-4fbe-88fa-3216a321d642

² “These 6 Types of Music Are Known to Dramatically Improve Productivity,” Deep Patel, Entrepreneur, Jan 9, 2019 https://www.entrepreneur.com/article/325492

May 25, 2022

How to Build Credit When You’re Young

How to Build Credit When You’re Young

Your credit score can affect a lot more than just your interest rates or credit limits.

Your credit history can have an impact on your eligibility for rental leases, raise (or lower) your auto insurance rates, or even affect your eligibility for certain jobs (although in many cases the authorized credit reports available to third parties don’t contain your credit score if you aren’t requesting credit). Because credit history affects so many aspects of financial life, it’s important to begin building a solid credit history as early as possible.

So, where do you start?

  1. Apply for a store credit card.
    Store credit cards are a common starting point for teens and young adults, as it often can be easier to get approved for a store card than for a major credit card. As a caveat though, store card interest rates are often higher than for a standard credit card. Credit limits are also typically low – but that might not be a bad thing when you’re just getting started building your credit. A lower limit helps ensure you’ll be able to keep up with payments. Because you’re trying to build a positive history and because interest rates are often higher with a store card, it’s important to pay on time – or ideally, to pay the entire balance when you receive the statement.

  2. Become an authorized user on a parent’s credit card.
    Another common way to begin building credit is to become an authorized user on a parent’s credit card. Ultimately, the credit card account isn’t yours, so your parents would be responsible for paying the balance. (Because of this, your credit score won’t benefit as much as if you are approved for a credit card in your own name.) Another thing to keep in mind is that some credit card providers don’t report authorized users’ activity to credit bureaus.¹ Additionally, even if you’re only an authorized user, any missed or late payments on the card can affect your credit history negatively.

Are secured cards useful to build credit?
A secured credit card is another way to begin building credit. To secure the card, you make an initial deposit. The amount of that deposit is your credit line. If you miss a payment, the bank uses your collateral – the deposit – to pay the balance. Don’t let that make you too comfortable though. Your goal is to build a positive credit history, so if you miss payments – even though you have a prepaid deposit to fall back on – you’re still going to get a ding on your credit history. Instead, it’s best to use a small amount of your available credit each month and to pay in full when you get the statement. This will help you look like a credit superstar due to your consistently timely payments and low credit utilization.

As you build your credit history, you’ll be able to apply for credit in larger amounts, and you may even start receiving pre-approved offers. But beware. Having credit available is useful for certain emergencies and for demonstrating responsible use of credit – but you don’t need to apply for every offer you receive.

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¹ “Does Being an Authorized User Impact Your Credit Score?” Discover, Jan 13, 2022 https://www.discover.com/credit-cards/resources/authorized-user-and-credit-scores

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