Successful Habits of Wealthy People

Jane Young, CFP, EA

Jane Young, CFP, EA

Many believe that wealthy people are lucky or are born into their wealth but this myth is largely dispelled by research conducted by Thomas Corley.  Thomas Corley, CPA, CFP is president of Cerefice and Co. and the author of Rich Habits: The Daily Success Habits of Wealthy Individuals.  Over a five year period, Thomas Corley interviewed 233 millionaires and 128 people living in poverty.   Through these interviews he uncovered many daily activities that differentiated the two groups.  His research indicates that we have control over our destiny with our daily actions and habits.  It’s not always easy, but we can create our own luck by engaging in activities that will lead to greater financial success.  Over 85% of American Millionaires are self-made and are the first generation of wealth in their families.

Thomas Corley found that good habits are the foundation of success.  He discovered successful people have many good habits interspersed with a few bad habits where unsuccessful people have many bad habits with a few good habits.  Below are some of his findings on habits or daily activities practiced by successful people.

Successful people are goal oriented, 95% write down their goals and 81% maintain a To-Do list.  They don’t procrastinate and are focused on accomplishing things.   They are proactive, take control of their lives, and get things done.  They don’t let events or other people control their priorities.  Unsuccessful people are not goal oriented and can become easily distracted.  They don’t have goals to keep them grounded and focused on the end result.

Successful people eat healthy and exercise, 76% of the wealthy exercise aerobically 4 days per week. They rarely overindulge or binge, if they slip it’s a planned overindulgence on special occasions.  Eating well and exercise improves the immune system and energy levels which results in greater productivity.  Unsuccessful people have no consistent day to day control over their health.

Successful people place great value on relationships.  They are focused on others rather than themselves.  They understand the importance of networking and look for reasons to reach out to their contacts.  They don’t waste time in negative relationships with people who are only concerned about themselves.

Successful people engage in moderation.  They keep their thoughts and emotions in check and avoid obsession, addiction, extravagance, jealousy, envy and fanatical behavior.  People enjoy their company and feel comfortable being around them.  Unsuccessful people are more likely to live in conflict with little control over their lives.

Successful people are constantly engaged in self-improvement.  They watch very little TV and read for self-improvement.  They keep up with changes in their profession and devote time every day to better themselves.

Finally, successful people have a positive attitude.  They are happy, enthusiastic, confident and well balanced.  They feel empowered and take control of their lives rather than allowing outside forces to determine their destiny.  Have you taken control of your destiny?

Embracing the Future on Your Own

 

Jane Young, CFP, EA

Jane Young, CFP, EA

Losing a spouse completely changes your life, and it’s important to take the time you need to grieve and heal.  The sadness may never go away and you’ll always miss your husband, but after two or three years you may be ready to look toward the future.  Before the loss of your husband, the two of you made plans; these plans may no longer be the best course of action for you.  It is common to feel an obligation to follow the plans you developed together, that you would somehow betray your husband’s memory to follow a different course.   Nothing could be further from the truth.  Your situation has completely changed and you may have a whole new perspective on things.   Plans that worked for the two of you, together, may no longer be practical for you.  Without even realizing it, you may have been striving to fulfill your husband’s dream rather than your own.   It’s time to follow your own path and build a future that supports your new hopes and dreams.  This article makes reference to widows but it can also be helpful to widowers.

Start by reflecting on your personal values; think about what and who is important to you and what you enjoy doing.  What type of lifestyle do you want to lead and where do you want to live.   Take out a piece more info

of paper and fill it with goals and ideas on things you would like to accomplish.  Let your mind wander, don’t evaluate, just brainstorm ideas.  Now go back and contemplate this list and formulate about five to ten realistic goals to be achieved in the next year or so.  Prioritize these goals and identify some action steps to be taken.

Now it’s time to review your financial situation with respect to your goals.  Many of your goals may be financially oriented.  Start reviewing your current cash flow, identify and tabulate your expenses, and compare them to your income.  Are your expenses in line with your goals, or do you need to change the way you spend money.   At the very least, make sure your expenses don’t exceed your income and put aside an emergency fund equal to at least three months of expenses.  I also encourage you to save at least 10% of your annual gross income.

Once your current financial situation is secure, develop a financial plan for the future.  Are there any major changes needed to achieve your long term goals?  Do you want to live in a different city or do you want to sell your home and buy something with less maintenance?  Do you need to rearrange your spending habits or make some changes in your career?  As you plan for the future, make sure you are saving and investing enough to cover retirement expenses.  Be sure to incorporate some fun and adventure into your plans!

Tips to Acheive Financial Fitness

Jane Young, CFP, EA

Jane Young, CFP, EA


The first step toward financial fitness is to understand your current situation and live within your means. Review your actual expenses on an annual basis and categorize your expenses as necessary or discretionary. Compare your expenses to your income and develop a budget to ensure you are living within your means and saving for the future. The next step is to pay off high interest credit cards and personal debts. Once you have paid off your credit cards, create and maintain an emergency fund equal to about four months of expenses, including expenses for the current month. Your emergency funds should be readily accessible in a checking, savings or money market account.
Now it’s time to look toward the future. Get in the habit of always saving at least 10% to 15% of your gross income. Think about your goals and what you want to accomplish. If you don’t own a home, you may want to save for a down payment. When you purchase a home make sure you can easily make the payments while contributing toward retirement. Generally, your mortgage expense should be at or below 25% of your take home pay.
Contribute money into retirement plans, for which you qualify. Make contributions to your 401k plan, at least up to the employer match and maximize your Roth IRA. If you are self-employed, consider a SEP or a Simple plan. If you have children and want to contribute to their college expenses, consider a 529 college savings plan. Do not contribute so much toward your children’s college fund that you sacrifice your own retirement.
As you save for retirement, be an investor not a trader. Investing in the stock market is a long term endeavor, forecasting the short-term movement of the stock market is fruitless. Avoid emotional reactions to headlines and short term events. Don’t overreact to sensationalistic stories or chase the latest investment trends. Establish a defensive position by maintaining a well-diversified portfolio, custom designed for your unique situation. Slow and steady wins the race!
Don’t invest in anything that you don’t understand or that sounds too good to be true. If you really want to invest in complicated products, read the fine print. Be especially aware of high commissions, fees, and surrender charges. There is no free lunch; if you are being offered above market returns, there is probably a catch. Keep in mind that contracts are written to protect the insurance or investment company, not the investor.
It is impossible to predict fluctuations in the market or to select the next great stock. However, you can hedge your bets with a well-diversified portfolio. Establish an asset allocation that is aligned with your goals, investment timeframe, and risk tolerance. Your portfolio should contain a mix of fixed income and stock based investments across a wide variety of companies and industries. Rebalance your portfolio on an annual basis to stay diversified.

10 Financial Planning Tips to Start 2012

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Jane M. Young, CFP, EA

 

1. Dream – Take a few minutes to look at the big picture and think about what you want from life. How do you want to live, what do you want to do and how do you want to spend your time. Successful businesses have vision statements and strategic plans. Create your own personal vision statement and strategic plan.

2. Set Goals – What are your goals for the coming year? Start by brainstorming – fill a page by listing all the goals that come to mind. Think about different facets of your life such as family, career, education, finance, health and so forth. Review your list and prioritize three or four goals to focus on in the coming year.

3. Evaluate Your Current Situation – What did you spend and what did you earn last year? What was necessary and what was discretionary? Did you spend in a purposeful manner and do your expenses support your goals and strategic plan. How much did you save or invest in a retirement plan? Can you increase this in 2012? If you are like most of us, a category is needed for “I have no clue”.

4. Track Spending and Address Problem Areas – If you aren’t sure where you spent all that discretionary cash, track your expenses for a month or two. It can be very enlightening – Yikes! Identify a few problem areas where you can cut spending and really place some focus. Identify the actions you will take to cut spending in these areas. Set weekly limits and come up with creative alternatives to save you money.

5. Evaluate Your Career – Are you doing what you really want? Are you being paid what you are worth? Have you become too comfortable that you are settling for safe and familiar? Could you earn more or work in a more rewarding position if you took the time to look? Are you current in your field or do you need to take some refresher courses? Do you know what it will take to get a promotion or a better job? In this volatile job market you need to keep your skills current, to nurture your network and to maintain a current resume.

6. Maintain an Emergency Fund – Start or maintain an emergency fund equal to at least four months of expenses, including the current month. This should be completely liquid in a checking, savings or money market account.

7. Pay Off Debt – Establish a plan to pay off all of your credit card debt. Once this is paid off establish a plan to start paying off personal debt and student loans.

8. Save 10-15% of your income (take advantage of employee Benefits) – You need to save at least 10-15% of your income to provide a buffer against tough financial times and to invest for retirement. At a very minimum, you need to contribute up to the amount your employer will match. Additionally, be sure to take advantage of flex benefits or employee stock purchase plans that may be offered by your employer.

9. Maintain a Well Diversified Portfolio – Maintain a well-diversified portfolio that provides you with the best return for your risk tolerance, your investment goals and your investment time horizon. Be sure to re-balance your portfolio on an annual basis. Avoid over reacting to short term swings in the market with money that is invested for the long term.

10. Don’t Pay Too Much Income Tax – Avoid paying too much income tax. Get organized and keep good records to be sure you are maximizing your deductions. Make tax wise investment decisions, harvest tax losses and maximize the use of tax deferred investment vehicles. Donate unwanted items to charity – be sure to document your donations with a receipt.

Year End Financial Planning Tips

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Jane M. Young, CFP, EA

Roth Conversion –
The income limitations on converting a traditional IRA to a Roth IRA have been eliminated and taxes due on a Roth conversion, processed in 2010, can be paid in 2011 and 2012.

Required Minimum Distribution –
A required minimum distribution on your IRA and 401k/403b is required every year once you attain 70 ½.

Maximize your retirement contributions –
Be sure to maximize your retirement plan contributions for 2010. Below are the maximum contributions for your 401k and IRA contributions for 2010. You have until April 15th to contribute to your IRA.

401k – $16,500 plus a $5,500 catch-up provision if you are over 50
IRA – $5,000 plus a $1,000 catch-up provision if you are over 50 (income limits apply)
Simple – $11,500 plus a $2,500 catch-up provision if you are over 50

Adjust retirement contributions for 2011 –
There is no change to 401k and IRA contribution limits between 2010 and 2011. However, if you have turned 50 you can make a catch-up contribution. A change in your income may also impact your ability to contribute to an IRA.

Harvest Tax Losses –
If you have been thinking about selling some poor performing stocks or mutual funds, do so before the end of the year to take advantage of tax losses in 2010. However, if capital gains rates increase in 2011 it may be more advantageous to offset gains in 2011.

Charity Contributions –
Go through your closets and garage before the end of the year and donate any unwanted items to get a nice deduction on your tax return. When you drop off your items be sure to get a receipt. When making a charitable contribution, consider donating appreciated stock rather than cash.

Take advantage of the annual gift allowance –
In 2010 you can gift up to $13,000 per person without paying gift tax or impacting your estate tax exemption.

Make 529 Contributions –
Contributions made to the Colorado 529 plan are deductible on your state tax return. Money can be contributed into the Colorado 529 plan for tuition that is payable in 2011.

Review your expenses and draft a new budget –
Everyone should review their expenses and revise their budget at least once a year. December is a good time of year to review historical spending habits and make adjustments to your budget for the coming year. It is difficult to establish saving goals without a good understanding of what is available after your non-discretionary expenses.

Set financial goals for 2011 –
I recommend setting new personal and financial goals at the beginning of every year. Think of it as personal strategic planning. Set some long term goals for 3-5 years then identify some action plans for the next twelve months.

Adjust tax withholdings for 2011 –
Adjust your tax withholdings or estimated taxes for anticipated changes in income and deductions in 2011.

Organize 2010 tax documents –
Year end is a good time to create a folder for all of the 2010 tax documents you will be receiving and to start organizing your expenses and receipts. You will have everything thing in one place when it comes time to complete your tax return.

Make adjustments for changes in family circumstances – birth, death, marriage, dependents, and retirement –
Major changes in your life circumstances may result in numerous changes in your financial situation. For example a birth, marriage, or death will probably necessitate a change in your will and beneficiary designations. It also may impact your income tax withholdings. The birth of a child may result in significant tax benefits. With the birth of a child you also may want to consider starting a college fund and a change in life or disability insurance.

Spend FSA accounts –
With many companies, flexible savings accounts cannot be carried over into the next year so be sure to spend the money in your FSA account this year, before you lose it.

Consider the impact of possible changes in the tax law –
If the Bush tax cuts are not extended, there is a possibility that the capital gains rate will increase from 15% to 20%, that tax rates will increase, and that some tax deductions will disappear. These possibilities need to be considered in making your year end financial decisions.

Take Control of Your Life with a Personal Strategic Plan

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Jane M. Young, CFP,EA

At least once a year we need to step back from our daily routine to look at our lives from a broader perspective. We get so bogged down with daily responsibilities we lose track of where we are, and where we want to go. Take the time to do some personal strategic planning. Start by looking at what you are actually spending and saving. How much do you spend in a typical month, how much is necessary spending and how much is discretionary? How do your expenses compare to your income? How do your expenses and your savings line up with your goals?

Maybe you haven’t thought about your long range goals for awhile. I challenge you to make a list of 30–50 goals that you would like to accomplish over the next five years. I know… that’s a lot! Think of this as a brainstorming exercise. Don’t evaluate the importance of a goal, just write down what comes to mind. If you are having difficulty thinking of 30–50 goals, try thinking of goals in the following categories: friends and family, health, career, social and entertainment, money and finance, spiritual, education, and community. Once you have created your list, prioritize your goals by importance and timeframe. Develop an action plan for your high priority goals.

Now go back and review your expenses. Are your spending and saving habits congruent with your long term goals? Use the information you have pulled together to develop a spending and savings plan that supports your personal strategic plan. Once you have a clear picture of where you are and where you want to go, you can take control of your life.

“The future belongs to those who believe in the beauty of their dreams.”
– Eleanor Roosevelt

Your Money Bus is Coming to Colorado Springs

Your Money Bus is coming to Colorado Springs.

                               Get free professional advice, no strings attached

It’s never too late to secure your financial future.

Re: Free Non-profit Financial Education Event – Please share with friends, family and business associates.

All of us have family; friends and colleagues who are struggling to save money, eliminate debt and find jobs. Please share with them the opportunity to meet for a free one-on-one with local independent financial advisors when the national Your Money Bus Tour rolls into Colorado Springs on July 8th and 9th. Pinnacle Financial Concepts, Inc. is coordinating the Colorado Springs stop of this non-profit tour, visiting more that 25 cities. We will be volunteering at this event along with several other fee-only financial planning firms in town. The Your Money Bus Tour is sponsored by The National Association of Personal Financial Advisors (NAPFA) Consumer Education Foundation, TD AMERITRADE, Kiplinger’s Personal Finance magazine and FiLife.com.

The Your Money Bus Tour will stop in Colorado Springs at the Penrose Library (downtown) on July 8th from 12:00 – 7:00 and at UCCS, Lot 1 on July 9th from 12:00 – 5:00. At each stop, consumers can sit down with locally-based volunteer financial advisors to ask pressing financial questions. All Money Bus visitors will receive a free financial education kit, including a Kiplinger magazine and a budgetary workbook.

Forty percent of American families spend more than they earn and the average American with a credit file has more than $16,000 in debt, not including mortgages. We encourage people to stop byYour Money Bus to learn how to better save, eliminate debt and develop personal financial sustainability habits that will get them through and beyond these tough times.

The NAPFA Consumer Education Foundation is a 501c (3) organization committed to educating Americans on personal finance. Consumers need easy to understand information without any bias, sales, or conflicts of interest. All volunteer financial advisors are fee-only fiduciaries; nothing is being sold or promoted. This is strictly educational and free information for the public. The public is welcome to just stop by or make an appointment ahead of time.

For more information, visit www.YourMoneyBus.com and for up-to-date schedule information contact Krist Allnutt,krista.allnutt@perceptiononline.com.

Warmest Regards,

Jane M. Young, CFP, EA

Combine Your Financial Goal Setting with a Romantic Valentine’s Day Retreat

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Jane M. Young, CFP, EA

Valentine’s Day is a time for showing love and appreciation for someone special in your life. It’s also a good time to work on your relationship and work on issues that cause conflict. One of the biggest sources of conflict and disagreement in relationships is money. Money itself isn’t the cause of our disagreements; we fight over our divergent goals and priorities for money. Many fights arise out of the lack of communication about our wishes, hopes and dreams. If you and your partner are constantly squabbling about money and how you spend your household income, I have a fun Valentine’s Day solution for you.

I suggest you take a romantic, strategic planning retreat. Block off a full weekend for you and your partner – no children allowed! Select a romantic Inn or Bed and Breakfast somewhere within a reasonable driving distance. The only requirement is a private area with a writing surface. Spend Friday night and all day Saturday discussing your values, sharing dreams, setting goals, creating a budget and making specific plans for the future. Reward yourself with a nice dinner and a romantic evening Saturday night, then play all day Sunday! Make this your Valentine’s Day gift to each other, this year, and every year.

My New Year’s Resolution Challenge to You!

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Jane M. Young, CFP, EA

I am a huge fan of short and long term goal setting and the use of to-do lists. We can be much more productive if we organize our objectives and our time. I wouldn’t set out on a major vacation without an itinerary nor would I try to cook a complicated dish without a recipe. Without goals or to-do lists we are too easily distracted. We waste a lot of time and end up going down the wrong path.

I encourage everyone to start with a list of about 20-30 long term goals. From this list identify about 10 things you would like to achieve this year. Then develop a to-do list of things you need to accomplish this week or month. You are way ahead of the game just by writing down some goals and priorities. This forces you to think about your values, desires and objectives for the year. This will serve as your personal strategic plan to make sure you are on the right track.

I know everyone comes up with a list of New Year’s resolutions and we seldom stick to them. So why bother? I think the process itself is good because you have given some thought to what you want to accomplish. You may not reach all of your goals but some of your effort will come to fruition.

I have a special challenge for you in 2010. Think about all the things you would like to accomplish or change in 2010. Select just ONE thing that you must accomplish or change this year and write it down. Make a vow to yourself to do whatever it takes to accomplish this one goal. Create an action plan to reach your objective. Share your goal with at least one other person who will hold you accountable. Be sure to monitor and reward your progress.

If you want to share, I would love to hear about your “One Goal” for 2010 and how you are progressing.

Annual Goal Setting Begins With Thanksgiving

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Jane M. Young, CFP, EA

As we approach the end of the year we look back on our achievements over the last twelve months and start thinking about goals for next year. I am a strong believer in personal strategic planning and goal setting. The first step in the goal setting process is to evaluate our values. Thanksgiving is the perfect time to reflect on those things for which we are thankful. By acknowledging what we are thankful for, we can easily identify the values that are of greatest importance to us. Once we have clearly identified our values we can set meaningful goals for 2010. When our goals are in integrity with our values we are more likely to monitor and achieve them. We will find that reaching our goals will be much more relevant and rewarding.

Take a few minutes to write down what you are thankful for this holiday season. Don’t forget to show gratitude to those around you who have helped you to achieve your goals or just put a smile on your face over the past year.

Happy Thanksgiving!!