It’s sad, but true. Most millennial women are clueless when it comes to money – even those brilliant students who passed college-level business, accounting, and finance courses are still lacking the financial education and action they need to acquire financial freedom. So they’ll keep working for more money and never reach their goals because they don’t know how to make their money work for them.
So some of you may think I’m full of bologna. Here are four questions I want you to think about. If you answer NO to these questions, you need to invest in a financial makeover.
1. Do you pay yourself first?
When you receive your paycheck or cash flow, who is the first person you think about paying? Rent? Car note? Insurance? Yeah, these expenses all need to be paid, but not before you pay yourself. I don’t care how much money you bring in.
I’ve seen it time and time again: You end up making more money and adding more bills to the list, still neglecting to pay yourself first. And when you’re not able to pay for an unexpected expense, you become an emotional wreck and are forced to beg or borrow money from others. Sorry, that’s not how a Career Goddess operates.
Set up an online savings account that is linked to your checking account. Most online accounts offer more than brick and mortar banks because they don’t have as many expenses (paying for tellers, space, paper, etc). So those cost savings of not have a physical location (bank branch) get passed on to you in the form of higher interest income.
Do your research and find out which banks give the highest interest rates. Make paying yourself easier by setting up automatic payments to yourself. For example, you can start paying yourself $20 a week (you’re probably worth more than that, right? So of course you’ll give yourself a pay raise soon). Set up recurring payments (you can pay yourself without even moving a muscle) every week to ensure that you are faithfully funding your online account while you use your valuable time to plan your next vacation to Memphis or the Maldives. Now, how does that sound?
2. Do you have reliable sources of passive income?
Passive income doesn’t mean working 3 jobs and getting 3 different pay stubs every week. That’s called earned income – the type of income that most Americans fight for every day and the government gladly takes most of it in the form of taxes.
I’m talking about a form of income that if you put in the work now, you can get paid in your sleep later. This is exactly what passive income helps you to do.
Most people rely on real estate to provide a stream of passive income. But writing a book, selling audio programs, and participating in affiliate marketing programs are other sources of passive income you can take advantage of. And guess what? You don’t get taxed as much for passive income streams as you do when you commit to earned income. So that means you keep more of your money and you even work less when you have passive sources of income.
Find out how you can start building more passive income in less than 90 days! Workshop coming soon. Click here to download your FREE LinkedIn Cheatsheet while you prepare yourself for more passive income.
3. Have you found a way to pay off a 30- year mortgage in less than 15 years?
Is it still a part of your American dream to own a home? Ain’t (excuse my improper grammar but this topic brings out my truest emotions) nothing wrong with owning a home but don’t be an ignorant home buyer. I think it’s safe to say that 30- year mortgages may be one of the oldest and most popular financial scams perpetuated in America.
First of all, where does the word mortgage come from? It comes from the French term “mort-gage” meaning death pledge. How morbid? That’s probably one way to describe how you feel when you’re tied down and unable to fully enjoy life because you’re constantly worried about mortgage payments.
Here’s how they get you with the payments. Let’s say you have a 30-year mortgage at 8%. The home is on the market for $200,000.
Term: 30 Year
Monthly payments = $1468
Results: The interest payments inflate the real cost of a $200,000 home to more than $528,000. YIKES! Yes, you qualify for a tax write off but is the write-off worth an extra $300,000 expense? I don’t think so.
If home ownership is still a goal (yeah it’s on my bucket list), make sure it doesn’t take you 30 years to pay your home off or else you’ll be giving away thousands of dollars in the form of interest.
Call your mortgage lender to find how much you would need to add to your principal payment each month to pay off your mortgage in less than 20 years. Then, ask how much you would save in reduced interest costs. If those numbers don’t motivate you, I don’t know what will.
4. Do you have a plan to reduce or eliminate your credit card debt in less than 5-7 years?
If you have excellent credit and no bad debt, do you have a plan in place to maintain your ratings? Credit Cards can be your best friend or your worst enemy so proceed with caution.
If you are paying off your credit cards every month, avoiding late fees and high monthly interest payments, and receiving amazing rewards points that save you money on all your favorite travel destinations, restaurants, and every thing else you love, you’re one of the few disciplined credit card holders. Congrats!!
But here is the flip side of owning multiple credit cards. Your credit card balances and interest rates are so high that it seems like your monthly payments aren’t doing a thing to swing your credit score in the right direction. If you can only afford to pay the minimum balance and you’re still using your credit card like the slot machine, you’re headed towards a financial disaster.
Take a look at your credit report to see where you stand in the credit world. You are allowed to receive a free credit report every 12 months from each credit reporting company. There are three credit bureaus: Transunion, Equifax, and Experian.
You can obtain your free report at www.annualcreditreport.com.
Then look at your credit scores. You can download apps such as Credit Karma and Credit Sesame to keep and eye on your credit score and get tips on how you can improve your numbers. These scores help banks and other lenders determine if they should lend money to you and at what interest rate. Bad credit scores lead to high-interest rates.
If you have no idea what to do with the information in front of you, work with a trusted financial advisor or coach who can lead you in the right direction.
Ladies, don’t be so busy trying to build job security that you fail to focus on financial security. If you want to attract career success and a lifestyle you love, you need to have your finances in order. Start taking steps every day that will get you closer to your dreams. So what do you plan to do to take control of your finances? Give the gift of financial freedom to a friend by sharing this post. Comment below and let me know your thoughts. I’m about to search for accounts with higher interest rates so that my money can make me more money. Let’s do this!