The Journey

The dream of most American’s in addition to owning a home is for financial independence. Financial independence is defined differently for each individual; however, there are some basics that are required if that dream is going to be realized. In the light of the current economic environment sticking to the basics are even more important.

The journey for women that desire financial independence is a bit different than it is for men. In addition to the changing roles that women have in the area of money and financial matters, they face challenges that are different from their male counterparts. Women face three specific challenges that men do not. 1. According to the 2008 Census Bureau data women working fulltime earned 69% of what men earned, based on median earnings. 2. Women live longer than men. According to the same research there are twice as many women age 85 and older as men. 3. On average women spend fewer years in the work force. Women spend 13 years less in the work force than men due to family responsibilities.

So what does a sister do? The economy stinks. I am living longer, making less money and have a short window of time to accumulate than the average man. Additionally I don’t need research to tell me that I can’t bank on a brother helping.

Well, just like the trip to Jamaica, the first date with a new prospect or the dream wedding, the journey to financial independence begins with a plan. Just as you plan your outfits, your diet and your excursion while in Montego Bay you must take the time in making a plan.

The Steps that are needed for this journey are:

Organizing your finances

Identifying and prioritize your dreams and goals

Know the current state of your flock (Calculate Net Worth)

Establish monthly spending plan

Learn the Basics of Investing

Talk with a Tour Guide (Financial Professional)

Organizing Your Finances

There is a plethora of things that could come under getting your finances in order that would exhaust the area of this article. However, some key components to organizing are:

Keep all important documents in one place such as a fireproof personal safe or an electronic file that is password protected.

Videotape personal belongings and maintain offsite for insurance purposes

Review insurance coverage

Order and review credit report

Created and review will

Review and update beneficiaries

Identify and Prioritize Goals

In most cases the act of identifying goals is not the major challenge for women. The challenge is prioritizing those goals. Quite frequently in talking with mothers that matriculated from university they struggle with the choice of funding their retirement or their child’s education. I often remind them that in the US we offer student loan programs for education; however, I have not been made aware of a government funding program for retirees (don’t bet your future on Social Insecurity). Some common goals are:

Buying a house

Retirement

Starting a Business

Education for children

Paying off Debt

Establish emergency fund

Leaving a legacy

Know the state of your flock (Calculate Net Worth)

You need to start thinking of your household a business. One of the most important documents in any business is the balance sheet. The balance tells you where you are on a specific date in time. If it is important for public companies to calculate their value at least quarterly should not Jane Smith Enterprises know the state of her business? The Bible tells us that we should know the state of our flocks. That being said the net worth is determined by identifying all that you own and its value on a particular date as well identifying all that you owe on that same date. The difference is your net worth; it is advisable to calculate this figure at least annually. The net worth acts as a scorecard and the idea is to have this number increase year over year. (See sample worksheet)

Establish Spending Plan

The spending plan is fuel that will propel you in this journey. It is the spending plan aka budget that will provide the traction needed to grow the net worth. When looking at your cash flow you need to determine where you will spend your money, invest your money and to whom you will give money. There is and always will be competitors for your money, but you must be focused and disciplined. Remember it is YOUR future. If you can consistently spend less than you earn financial independence is in your view. The spending plan is another area that requires prioritization. Don’t forget…where your treasure is there will your heart be also.

Learn the basics of investing

You want to get a fundamental understanding of the impact inflation and taxes can have on you reaching your goal(s). Additionally, acquire the knowledge on the benefits of diversification in a portfolio and the value of ownership of stocks of both domestic and non domestic companies. Depending on your risk profile and your asset base you may want to gain an understanding of alternative investment vehicles.

Talk with a Tour Guide

What’s the difference between a tour guide and a travel agent? The tour guide is on the journey with you where as the travel agent is just booking the trip. I encourage you to talk with a financial professional. There is wisdom in counsel. This should be someone that has knowledge, resources and experience in investment planning, retirement planning, legacy planning and any number of financial planning topics. He or she should be able to help you navigate through all the emotions that come with money and the data pumped through the media. Also, important is your tour guide should be someone that you trust and has exhibited that they have the clients’ best interest at heart.

The Journey to financial independence begins with a plan. Apply these six steps and you are well on your way to reaching your desired destiny.

Troy A. Young, CFP®

Destiny Financial Group

3330 Cumberland Blvd. Suite 400

Atlanta, GA 30339

770.941.5757

www.destinyfg.com

Securities and investment advisory services offered through FSC Securities Corporation, Member FINRA/SIPC and an SEC-registered investment adviser. Destiny Financial Group is neither affiliated with FSC Securities Corporation nor registered as a broker-dealer or investment adviser.”

The views expressed are not necessarily the opinion of FSC Securities Corporation, and should not be construed directly or indirectly, as an offer to buy or sell any securities mentioned herein. Please note that individual situations can vary. Therefore, the information presented here should only be relied upon when coordinated with individual professional advice. Investing involves risk including the potential for loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance is no guarantee of future results.