Archive for February, 2012
By Katana Abbott, CFP, CSA
Last week, I posted an article called, Five Smart Steps to Taking Control of Your Finances, and today, I want to go deep on Step #1: Pay Yourself First. We all have heard this statement, but what does it really mean AND how important is it?
Let’s look at some numbers:
In a June 2008 Associated Press survey, it was reported that:
- 78 million baby boomers are approaching retirement and that 66 percent –of these individuals expect to continue working after “retiring” to supplement their pensions, Social Security and savings.
- In a recent Gallop Poll – that number is now up to 80%
- Just 59% of workers are currently saving for retirement and one‐half of them have less than $25,000 tucked away, according to the survey.
How much do you think you will need for retirement?
This part is best left to a professional like a financial planner or a CPA since they have access to computer software that can calculate inflation to give you the future values of your needs over time. There are also Retirement Calculators that can give you a general idea like these on my CPAs website.
However, if you are not working with a financial adviser, I suggest that you spend some time getting a clear picture of your current financial situation. I have created a 33 page ebook that will help you do just that and it’s available to you for FREE as part of my Smart Women Success System.
What you want to do is to complete the worksheets and calculate what you own, what you owe (your Net Worth), plus what you spend and what you earn (your Cash Flow). The goal is to identify what you will have coming in at retirement vs. what you will need.
If there is a shortage, then you will either need to save more, work longer, get a higher return, or supplement with post retirement income. I also talk about this in the Prosperity System when I talk about The New Retirement Solution.
If you are looking for one on one help, please schedule a 30 minute complementary Money Breakthrough Method Consultation with me at www.talkwithkatana.com I am only offering these for a limited time, but right now, you are welcome!
How should you Pay Yourself First?
The smartest way to do this is to be saving in at least two pots — one for your Emergency Fund and one for your Retirement. Let’s talk about each and let’s start with your retirement plan:
- Most of us have access to some sort of “pretax retirement plan” through our employer. If we are self employed, we can set up a SEP IRA or simply an IRA or Individual Retirement Account.
- If you are employed, simply make sure that your employer is taking the MAX out of your paycheck each week and investing it into your retirement plan at work. You will have the responsibility to select how the money is to be invested and will want to get some advise if you aren’t familiar with investments.
- If you cannot invest the maximum, then consider starting somewhere, even if it is just $25 per week. But start now. Below, you will see the power of compound interest over time. The earlier you begin investing, the more you benefit from compounding interest. At one point, your investment will be making much more money from compounding than you can even add yourself. Isn’t this exciting!
Check out this chart showing how much you need to save to have $1 million by age 65 at an annual rate of 10%? As you can see, the secret is starting early. AND its never too late, you just need to save more or save longer!
Age Daily Savings Yearly Savings
20 $4.00 $1,460
30 $11.00 $4,015
40 $30.00 $10,950
50 $95.00 $34,675
Now let’s talk about creating an Emergency Fund:
- The next time you get your paycheck, go to the bank and set up a “Savings Account”. Before you deposit your paycheck, take 10% or a specific dollar amount, even if it just $10 and deposit into your savings.
- Now, here is the Secret: Every single paycheck, you will put this same dollar amount into your Emergency Fund (savings account). You will do this automatically and preferably “electronically”, so you don’t even see it.
- Continue to do this, even if you are paying down credit cards. (this will be addressed in a separate article)
For the Self Employed:
You probably get paid in chunks of money, at various times, and in uneven amounts. In fact, there are times when you get large amounts, and then times when you have no income coming in.
Here is the secret for YOU: Stop Being A Cash Cow! What this means is spending MORE when you have a BIG balance in your account. The most important thing you can do is discipline yourself with these three steps:
- Treat Your Business Like a Business and PLEASE make sure you have a Separate Bank Account for your Business.
- Put yourself on the payroll with a specific paycheck, just like everyone else. And actually write yourself a paycheck and deposit it to your personal account. Remember, you will then set aside your “specific amount” for personal savings!
- Now cut TWO MORE checks (or electronic transfers)
- Deposit this into your SEP IRA for your retirement.
- Deposit the second one into a Savings Account to pay your Estimated Tax Payment to the IRS.
The secret here is to keep a running cash reserve in your business checking account or savings account, so you can sleep at night. In addition, it is important to have a business line of credit to help you through the dry spells, even if it is from your credit card. I have a $50,000 line of credit at the bank at 6%, and even though it doesn’t have a balance, I will keep that account available for emergencies, as long as I have my business.
So I hope this has been helpful. Whether you are just starting out with your savings plan, or have built up a large nest egg, paying yourself first is a Smart Foundation to creating a life of Financial Freedom.
If you haven’t done so yet, be sure to pick up your FREE Smart Women’s Prosperity System and print out your copy of my signature 33 page Financial Organizer Planner eBook. And be sure to share it with your friends! My dream is to help thousands of women around the globe live with Awakened Prosperity – a life of health, wealth and happiness!
Founder and Prosperity Coach
Smart Women’s Prosperity Institute™
Creating Wealth While Making A Difference!
By Guest Blogger, Jill Jordan – Personal Branding Coach
It may be hard to think that you can get what you want out of life sometimes – especially when you or others around you may be going through some very challenging times — but it is possible. If you dream it, you can achieve it (to borrow the age-old line).
These are times for cutting back. But when you cut back, it doesn’t always mean that you have to do without. You can get what you want, and get what you need on a more limited basis right now. And sometimes you’ll find you will be happier for it because it’s more rewarding to have to work for something now. We all need to feel valued and our work is worthwhile!
Many successful people – no matter what industry they’re in – create a personal vision board. This board helps you visualize what you want, and can give you the inspiration to get there. In my coaching work, I oftentimes suggest that my clients create one for themselves. It’s similar to putting your goals on paper, but instead it’s more artist and obviously, much more visual.
While I was giving this advice to others, I hadn’t actually finished mine. It hit me that I couldn’t possibly be giving this advice and not be doing it myself. So, I finally finished my board, hung it right above my desk – in order to see it throughout my day – and guess what happened? Yes, within days, one of my visions came to be. I wanted to speak at a particular company so I cut out their logo and placed on the vision board. I “saw” myself speaking to this group. Last December it became a reality.
One of my clients put a picture of a new digital camera on hers…she ended up getting what she wanted as a Christmas gift. There’s no right or wrong way to do it – just start keeping some things that inspire you and then arrange them on a board and look at it every day. Place pictures of the things you want to achieve, and inspirational words that resonate with you. You can even do this project with friends or co-workers — make it fun. Inspire others.
Another small thing you can do that won’t cost anything is to just change your attitude. If you find yourself thinking a certain thought that isn’t positive – stop! Stop and turn it around to something positive. Do this just once a day and see how it helps you feel better internally and then that will just radiate outward.
The path to a glorious and fulfilled life is yours for the taking. Go out and build your glorious life today! Visualize it!
To learn more about Personal Branding Coach, Jill Jordan, visit www.GetAheadByGettingKnown.com PLUS click here to Downloadher Branding Worksheet and then tune into Smart Women Talk Radio on Tuesday, 2/28/12 at 11 AM EST.
By Katana Abbott, CFP, CSA
One day it hits you like a rock. You’re knee-deep in financial quicksand with no savior in sight. Maybe it comes as a declined credit card purchase, or a minimum payment higher than your bank balance. Maybe it’s just the realization that you really are mortal and will need funds to support you when your working days are over. The bad news is you’ve got to dig out of the hole before you can build for the future. The good news is that with commitment and time, you can gain control of your finances.
Start with these five sensible steps:
1. Pay Yourself First
- Start a cash reserve fund with the intent of building it over time to at least three months worth of fixed expenses – rent or mortgage payments, utilities, auto payments, credit cards, food, and gasoline. Start today, even if you can only save $10 a week in the beginning.
- If your employer offers a retirement plan, enroll immediately. Since women outlive men and often take time out of the workforce to care for both children and aging parents, it is important for women to save more than men.
- Saving $4/day at age 20 at 10% could potentially build to $1,000,000 by age 65. Wait until you’re 30 and you will need to save $11/day. At 40, you’re up to $30/day and by age 50 it’s $95. So get serious and start now!
2. Respect Money and Control your Debt
- Pay your bills on time, and pay off your credit card every month, if you can. If you are in debt and able to make only minimum payments, stop spending and get help immediately.
- Buy a small journal and document every penny you spend for one week to identify your “spending leaks.” Typically, leaks are things like late fees, movie rentals, over priced coffee, fast food, and anything else you don’t need for survival. These are the dollars you will use to begin paying off your debt and building a cash reserve.
- Find your stuff, get organized and take charge of your finances with my signature financial organizer planning system. www.HowToCreateProsperity.com
3. Assess Your Current Career Path
- How is your income affecting your life and your finances?
- Are you passionate about your work, or is it “just a job”? Would you still do it if you won the Lottery, or had a magic wand? If not, then why are you still doing it?
- Are you utilizing your unique talents and skills?
- Are you earning what you are worth?
- Stretch – take charge of your career, and you’ll take charge of your income.
4. Create a Game Plan
- Write down your goals for the next 12 months.
- Make your goals clear, measurable, and time-specific so you can track your success.
- Tape the list to your mirror, on your refrigerator, or on your bedroom wall, where you can read them and focus on them every day. We really do attract the things on which we focus, so keep your focus on what you want in your life!
5. Find Support and Hold Yourself Accountable
- Surround yourself with positive, supportive people.
- Hire and meet regularly with a financial planner.
- Find a life coach or mentor.
- Read self improvement books and learn how to be smart about money.
- Get help on the internet with a virtual community or forum group.
- Take a tele-class or seminar focused on money, career or starting a business.
Money and financial growth consciousness doesn’t come in flash. It may take months – maybe even years – to gain total control of your finances. But if you consistently follow these steps, that day will come. And when it does, celebrate!
What is the one area above that is worrying you the most? What is one thing that you can do today that will have the biggest immediate effect on your health, your wealth and your happiness? How would this change your life? Share it below. Thank you!
Recently, a man in Colorado woke up to find that his obituary had been accidentally printed in the local paper. It ended up being a prank; however, he said it was giving his life new meaning because he was connecting with so many relatives and friends that he had lost touch with.
This made me think about the story of many years ago, when Alfred Nobel’s obituary was also printed erroneously in a French newspaper after his brother, Ludvig had passed away.
Alfred Nobel was the inventor of dynamite, and in this erroneous obituary, the newspaper stated:
“The merchant of death is dead. Dr Alfred Nobel, who made his fortune by finding
a way to kill the most people as ever before in the shortest time possible, died yesterday.”
Alfred was horrified when he read this. He later became obsessed to change the legacy of “how he would be remembered” in the world. He started by changing his will and leaving most of his fortune to establish the Nobel Prize. His goal was to make sure no future obituary writer would have any doubt as to his yearning for peace and progress.
Eight years after his devastating obituary, Nobel died and his famous will was unveiled, laying the foundation for what today are considered some of the most prestigious prizes in the World!
Assignment: Ask yourself, “How do YOU want to be remembered?”
Take a few minutes now to write your own eulogy. Close your eyes and imagine you are walking into a funeral and everywhere you look are the faces of those you know, respect and love. It’s your funeral..How to you want to be remembered? What do you want them to say about you?
Now take a few minutes to really spend some time writing out this speech. Print it out and look at it for a few days. Now you have the basis for creating some very powerful goals and daily affirmations. This document can also be a good foundation for creating your own personal mission statement!
Want to learn how to write your own personal mission statement? Would you like to clear about your purpose? How would it feel to have unbreakable confidence about who you are and your ability to make a difference and get paid well at the same time?
I invite you to take my new home study course, Get Clarity Now: A 5 Step Roadmap to Purpose and Passion with Prosperity. Enter the coupon “clarity” and receive $100 off!
To your health, wealth and happiness,
Katana Abbott, CFP, CSA
Founder and Prosperity Coach
Smart Women’s Prosperity Institute™
Do you believe this? Open your wallet right now and take a look at how you treat your money.
Is your wallet in good condition with your dollar bills organized and lined up by denomination or is your wallet scruffy, with the dollar bills and old receipts just stuffed into it?
What feelings come up when you think about money?
Are they feelings of joy, gratitude, ease and flow or fear, worry, doubt and embarrassment?
Now think about other areas of your life and notice what’s happening here.
How you do money is how you do everything.
I teach a course called, Secrets of Successful High Earners: Going to the Next Level in Life where I take women through a five step process to step into their power and take charge of their money and their earnings. The impact of these teachings goes far beyond money.
Former workshop graduates reported that the most common results of the workshop were – in this order – significant weight loss, better financial habits, more leisure time, improved health, increased optimism, and enhanced relationships.
This is pretty powerful stuff touching all areas of life! Feeling great about your finances gives you a sense of confidence, clarity, happiness and peace of mind like nothing else.
We all know that money does now buy happiness, but your relationship with money and how you treat it, think about it and what you do with it will determine where you live, where your children go to school, where you vacation and how often, what you eat, what type of health care you receive, how you enjoy “retirement” and what type of legacy you leave when you are gone.
The average American spends more time planning their family vacation than planning for their retirement. I want to help you create your ideal life, one of health, wealth and happiness. It starts with getting smart about money.
Creating true prosperity is an art, and over the next few weeks, I will be writing about how to take charge of your finances, get organized, clear the clutter, and how to create, keep and grow your wealth.
Today, I want to introduce you to several very special FREE gifts in the Smart Women’s Prosperity System:
- My 33 page signature Financial Organizer and Planning System ebook which will help you find your stuff, get organized and see where you stand financially. It’s the same system I used for 20 years with my best clients. I highly recommend you print this out and use it.
- My Master Class on “Creating Wealth While Doing What You Love” audio and workbook. This program includes my signature system; The Six Pillars of Awakened Prosperity that helped me retire at 48 financially independent and it will work for you too.
This is what I suggest you do now:
- Click here to pick up your gifts.
- Schedule time immediately to listen to the audio with the workbook printed out.
- Plus make a date to work on your finances using the Financial Organizer Planner.
These products will only be available for free for a short time, so please pick them up now and share them with your friends! If you have any questions, please feel free to email me at email@example.com
To your prosperity,
Katana Abbott, CFP, CSA
Founder and Prosperity Coach
Smart Women’s Prosperity Institute