if you’re in charge everywhere except · starting today, make a pledge to take charge, to take...
TRANSCRIPT
Patricia Stallworth, MBA, CFP® Host Financial Boss Radio
Sign up for a free financial evaluation at
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HANDBOOK 5 Guiding Principles to Take Charge of Your Money
If you’re in charge everywhere EXCEPT when it comes to your money, become a
Financial Boss. Just imagine the possibilities when you are in charge of your destiny!
About Patricia Stallworth, MBA, CFP®
Patricia Stallworth is the founder and CEO
of eWorth Advisors, a fee-only financial
planning firm dedicated to empowering
people to take charge of their money to
create the life they want to live. She
specializes in working with women and
couples who are ready to break free from
things holding them back to achieve their
goals.
Prior to starting her own firm, she worked
in a management or advisory with several firms, including Deloitte
& Touche, American Express Financial Advisors, AXA Advisors
and the Small Business Development Center.
Patricia is the host of the Financial Boss Radio Podcast, a sought
after speaker and the author of several books, including Minding
Your Money and How to Get Divorced Without Losing Your
Blouse.
My Invitation to You!
Let’s talk. I invite you to schedule a call to see if we
might be the right fit. Contact me (Patricia) directly at
[email protected] or visit the website at
eWorthAdvisors.com and click on the Contact tab.
⚫ Find out where you
stand. Sign up for a free financial
evaluation!
FINANCIAL
Copyright © 2019 by Patricia Stallworth
All rights reserved. No part of this book may be reproduced, stored in
a retrieval system, or transmitted in any form or by any means, includ-
ing electronic, mechanical, photocopying, recording or any other
method – except in the case of brief quotations used in critical articles
or reviews – without the prior written permission of the publisher and
the author.
DISCLAIMER: This publication is designed to provide accurate and
authoritative information in regard to the subject matter covered. It is
sold with the understanding that neither the author nor the publisher is
engaged in rendering legal or other professional advice or services. If
such legal or other expert assistance is required, the services of a
competent professional should be sought.
This book belongs to:
_____________________________________
Owner’s Pledge
I am totally committed to achieving financial
independence/security/freedom. I realize that there will
be challenges associated with this decision and I accept
them as part of the process.
Signed:
Listen to Financial Boss Radio: www.FinancialBossRadio.com
introduction
what’s holding you back?
“Everyone is necessarily the (s)hero of his/her own life story.”
— John Barth
M oney is complicated. We love it. We hate it. We
obsess over it. We ignore it. We resent it. We
hoard it. We crave it. We bad-mouth it.. If fact,
we have so many mixed feelings about money
it’s a wonder we ever accomplish anything.
But at the end of the day, your money is one of the most valua-
ble assets you have to help you get to where you want to go –
to break free from the chaos – to live life on your terms. The
good news is even if you, like so many people, have a troubled
or conflicted relationship with money, you can still succeed –
you can still put your money to work to create the life you want.
And, it can all start with the simple decision to take charge!
Sometimes taking charge is easy -- it just requires a few simple
changes in your routine. Other times it requires putting guard
rails in place until you form new habits that work for you instead
of against you. I wrote the Financial Boss Handbook to help
you get and stay on track with your money. The five principles
included here have helped me as I have gone through the
twists and turns with money in my life and I hope they will help
you as well.
Starting today, make a pledge to take charge, to take responsi-
bility and to take action to create the life you so richly deserve!
Patricia Stallworth
principle #1
Cultivate A Wealthy Mindset
“You can only change your life if you change your thinking."
— Jannie Putter
C ultivating a wealthy mindset is key to achieving and
sustaining wealth. Having a wealthy mindset means
overcoming pesky money biases, attitudes, and be-
haviors that can block your path to success. These
biases are everywhere and we’re all vulnerable to them be-
cause they usually plant their roots deep in our subconscious.
So, for example, if you believe that having a lot of money or
being “comfortable” is a bad thing, there’s no way you will ever
achieve sustainable wealth because you will always find a way
to sabotage yourself. Want proof? Listen to some of the stories
of the big lottery winners who ended up losing their money al-
most as quickly as they won it. It wasn’t a lack of money that
caused them to fail, it was instead the lack of a wealthy mind-
set.
So what are some common money biases that might be hold-
ing you back? Here are seven particularly destructive ones:
1. “Money is the root of all evil.” The correct quote from the
Bible is “the love of money is the root of all evil,” but that
may not stop your subconscious from interpreting it differ-
ently. In other words, deep down you may actually believe
that money is evil and that you must make every effort to
get rid of it as quickly as possible when it comes into your
life so that it doesn’t corrupt you.
2. “Rich people are greedy.” Just as no one wants to be
thought of as evil, most people don’t want to be thought of
as greedy either. But the simple truth is instead of changing
your behavior, money has a way of amplifying who you are.
So, if you were a greedy person before you had money,
nothing will probably change. On the other hand, if you
were a generous person beforehand, you will most likely be
even more generous. Remember, you can’t help yourself,
your family, the poor or anyone else if you don’t have the
money to do so.
3. “Financial planning is for rich people.” This is actually true,
but it is also true for people of modest means and everyone
in between. In fact, the less money you have, the more im-
portant financial planning becomes because it allows you to
maximize your money to achieve your goals.
4. “Money can’t buy happiness.” Here’s a news flash: neither
can poverty. Rich or poor, it’s your attitude that determines
whether you are happy or not.
5. “It’s better to give than to receive.” Giving is a good thing,
but so is receiving. If you’re uncomfortable being a receiver,
you will always find a way to push away gifts or to downplay
their value − from compliments to income − so always be a
cheerful receiver and giver.
6. “Women can’t learn to manage money.” Or “I’m not good
with numbers so I can’t manage money.” Even though con-
sciously you know this statement can’t be true, deep down
inside you may still believe it, especially if you struggled
with math in school or you never had any formal financial
education. But, that’s just not true. You can look around and
see lots of successful women managing money and if math
is an issue, we have tools (computers and calculators) that
can greatly simplify the process.
7. “The spouse or partner that is the most comfortable or skilled
in financial affairs should manage the family finances.” Its
okay for couples to split up the financial tasks, or even for
one partner to be responsible for all of the tasks. However,
both partners should be actively involved in, or at least
knowledgeable of, all aspects of their family’s finances.
Couples who can talk about and work together on their fi-
nances often find that it makes their marriage stronger.
Can you see how beliefs like these could sabotage your chanc-
es of building wealth and financial freedom? After all, who
would want to be wealthy if it meant that you were doomed to
be evil, greedy or unhappy? And most of all, that you couldn’t
be good at managing your money even if you wanted to be-
cause you didn’t have the ability to learn how.
Be on the lookout for these and other destructive attitudes and
thoughts. If you do encounter them, challenge them and do just
the opposite so you can prove them wrong. Never forget how
powerful your mind can be and that by simply changing your
mindset, you can instantly change the course of your future!
Money is a tool you can use for GOOD!
principle #2
Discover what drives you: Uncover
your Primary money motivator
“Money isn’t everything, but it ranks right up there with oxygen.”
— Rita Davenport
U nderstanding your money motivators or what acti-
vates or energizes your behavior and gives it direc-
tion is key to taking charge. In fact, they are often
the reason behind much of your earning, spending,
saving and giving decisions.
Money motivators are highly personalized to each individual
and to complicate things, they can change under different cir-
cumstances. However, uncovering your primary money motiva-
tor will provide you with the knowledge to play to your strengths
and become aware of behaviors that might trip you up and keep
you from creating financial freedom.
To be clear, none of the money motivators are inherently better
or worse than the others. They all have strengths that can be
beneficial to you and they all have their flaws. So, it’s important
to make a conscious effort not to get caught up in the extremes
because that can make it more difficult to achieve the freedom
to live life on your terms.
Once you understand your primary money motivator, you can
begin to see patterns and predict your behavior in different cir-
cumstances. This allows you the opportunity to take charge and
even override your natural tendencies when necessary.
The four primary money motivators are:
• Security - If you are motivated by security, you will most
likely want to stay in your comfort zone – a steady job, in-
vesting in real assets like properties and guaranteed in-
vestments with the goal of securing your future. And, you
may be resistant to change because of the uncertainty that
often accompanies it.
• Freedom - If you are motivated by freedom, you will
most likely resist anything that ties you down. You will
look for jobs that offer you a great deal of autonomy. In
fact, you will do anything to maintain your freedom, at times
even sacrificing security, love, and power to keep it.
• Power - If you are motivated by power, you tend to have a
high energy level. You are dedicated and driven, even ob-
sessive about your work, and you are always ready to take
on a new challenge. You crave success and the status
symbols that go with it, often to the extent of sacrificing
your family life.
• Love - If you are motivated by love, the most important
thing to you is to feel love and feel supported by the people
in your life. To achieve this you will sacrifice your dreams,
your career, and your financial future for your spouse, your
children, or anyone you love.
Once you understand your primary money motivator, one of the
best ways to stay in control is to set financial goals for your fu-
ture, develop plans to accomplish them, and then work on your
plan everyday.
Not sure what you primary money motivator is? Take the
‘MYM Motivator Quiz’ on the next page to discover what’s driv-
ing you.
MYM Motivator Quiz:
For each question, circle the response that best describes you. 1. I feel that money...
a. can solve my problems. b. frees up my time. c. is a means to an end. d. helps make relationships better.
2. Money allows me to... a. feel secure. b. do what I want to do. c. get ahead in life. d. buy things for others.
3. If I suddenly came into a lot of money, I... a. wouldn’t have to worry about the future. b. wouldn’t have to work. c. could really build up my business. d. would spend a lot on family and friends and enjoy
more time with them. 4. Regarding saving money, I...
a. have a plan and stick to it. b. don’t have a plan and rarely save. c. don’t have a plan but manage to save anyway. d. don’t make enough money to save.
5. When I pay bills, I... a. pay them when due, but no sooner. b. put it off and sometimes forget. c. pay them when I get around to it. d. worry that my credit will suffer if I miss a payment.
6. When I make a major purchase, I...
a. research a great deal before buying. b. go with my gut. c. feel I’m in charge, after all it’s my/our money. d. ask friends/family first.
7. If I have money left at the end of the month, I... a. put the money in my savings account. b. go out and have a good time.
MYM Motivator Quiz (cont):
c. look for a good investment. d. buy a gift for someone.
8. When I eat out with friends, I prefer to... a. ask for separate checks. b. divide the bill proportionately. c. charge the bill to my bankcard and have others pay
me. d. pay the entire bill because I like to treat my friends.
9. When I can’t decide on a purchase, I often tell myself... a. it’s a bargain. b. it’s only money. c. it’s a good investment. d. he/she will love it.
10. In my family... a. my partner does/will take care of the finances. b. I do/will handle all the money and pay all the bills. c. I do/will pay my bills and my partner will do the
same. d. we do/will sit down together to pay bills.
Score: Add up the number of responses for each letter. Then look at the Answer Key below to see what each letter indicates. The letter with the most responses represents your primary money mo-tivator.
a. _______ c. _______
b. _______ d. _______
ANSWER KEY:
“a” answers relate to Security. “b” answers relate to Freedom. “c” answers relate to Power. “d” answers relate to Love.
principle #3
Keep track of where your are
“Even if you’re on the right track,
you’ll get run over if you just sit there.”
— Will Rogers
O ne of the best ways to always know where you are
is to track your net worth. Your net worth is essen-
tially a snapshot of your general financial condition
at a given point in time and it represents your finan-
cial power. That is, the amount of freedom, independence and
choices you have in your life. The higher your net worth, the
more financial power you have.
Calculating your net worth regularly allows you to track your
progress and to compare it to your goals.
NET WORTH equals what you own (assets) minus what you
owe (liabilities).
Net Worth = Assets — Liabilities
Assets include things you own like cash on hand (checking ac-
counts, savings, certificates of deposit (CDs)), stocks, bonds,
mutual funds, property you own, such as your house, cars,
household furnishings, jewelry, and collectibles, the cash value
of life insurance policies, retirement plans, annuities, real estate
and business interests.
In other words, anything of value you own that could be sold.
While it’s easy to determine the value of some items – your
checking and savings account balances, for example – others
can be more difficult to place a value on. For instance, if you
own a car that you originally paid $20,000 for several years
ago, what value should you use in calculating your net worth? If
today, according to Kelly Blue Book, you could get about
$15,000 for it, the answer is $15,000.
And, that’s the way to think about everything you own that has
a monetary value – what you could reasonably sell it for today.
Once you have a value for each item, add them all up to deter-
mine the current value of everything you own if it was convert-
ed to cash at reasonable market prices today. The key to keep-
ing the estimates of your assets consistent is to use the same
method to calculate them each time.
Next, consider your liabilities. Liabilities are items you owe and
include things like outstanding loans (student, auto, installment
and personal), mortgages, credit cards, unpaid bills (medical,
utilities, etc.), penalties related to situations like breaking a
lease if you’re renting and taxes you owe (income tax, real es-
tate taxes, etc.). In many cases, you will have a current balance
to use while in other cases, you may need to estimate exactly
what you owe. Again, once you have a figure for each item, add
them all up to determine the current amount you owe.
All of this may seem like a big, complicated exercise just to
come up with one number – your net worth. But it will get easier
each time you do it and it’s definitely worth it. Knowing your net
worth number gives you a basis to improve it and increase your
financial power. Plan to calculate your net worth at least once a
year. Also, perform a ‘before and after’ calculation if you’re
planning any major transitions, such as moving or making a
major purchase such as a house or a car so you can see the
impact such a purchase would have on your net worth.
The first time you calculate your net worth can be a bit of a
shock – seeing everything you own and owe boiled down to
one number. In some cases, you may even be looking at a neg-
ative number because you have more liabilities than assets and
that can be even more shocking. While that’s not the best place
to be, it’s important to know so that you can determine areas
you need to work on to grow your net worth, your wealth and
your financial power.
Your goal should be to increase your net worth each year.
Common ways to increase your net worth include increasing
the value of assets such as your savings account balance and
the return on your investments, and decreasing your liabilities
such as paying off debts. Calculating your net worth not only
helps you track where you are but it gives you a starting point
to increase your financial power.
You INCREASE what You Measure!
Calculate Your Net Worth
ASSETS (Things you own)
Use Fair Market Value CASH AND SAVINGS
Cash and checking accounts ___________
Savings accounts ___________
CDs, Money Markets ___________
Other __________________ ___________
Cash and Savings Total $__________
INVESTMENT ASSETS
Stocks, Bonds, Mutual Funds ___________
Employee stock options ___________
Cash value life insurance ___________
Income producing real estate ___________
Other __________________ ___________
Investment Assets Total $__________
RETIREMENT ASSETS
Pension or Profit sharing plans ___________
IRAs, Keogh accounts ___________
Employee savings plan, 401(k) ___________
Other __________________ ___________
Retirement Assets Total $__________
NON-INCOME EARNING ASSETS
Home ___________
Furniture and equipment ___________
Autos ___________
Recreational vehicle, Boat, etc. ___________
Collectibles ___________
Jewelry ___________
Other __________________ ___________
Non-Income Earning Assets Total $__________
TOTAL ASSETS $___________
Calculate Your Net Worth (cont.)
LIABILITIES (Things you owe)
Use Current Outstanding Balances
Home mortgage ___________
Other mortgages or notes ___________
Installment debts ___________
Credit cards ___________
Other loans ___________
Taxes ___________
Other ___________
TOTAL LIABILITIES $___________
Net Worth = Total Assets – Total Liabilities
Total Assets $____________
minus Total Liabilities $____________
Your Net Worth $____________
principle #4
Pay yourself first and Grow
your wealth
"To be successful you don’t have to do extraordinary things. Just do ordinary things extraordinarily well."
— John Rohn
P aying yourself first allows you to grow your wealth
faster because it puts you and your goals at the top of
your priority list. In essence, it’s a top-down version of
a budget because it gives you the opportunity to put
your money to work where it matters most.
So often we miss out on the opportunity to save for goals such
as a retirement or a vacation because when the paycheck
comes in, it gets used up to pay bills and other expenses, and
any excess money just seems to disappear. So, if your like
most people, you tell yourself you’ll save when you get your
next check, but the cycle just keeps repeating itself over and
over and your savings never grow.
So, what’s the best way to pay yourself first? The very best
method is to calculate the amount you want to save each month
and then automate the process.
For example, Kim takes home $6,000 each month after taxes
and deductions for benefits. She has a list of goals she wants to
accomplish, including saving for retirement in an IRA, creating
an emergency fund, saving for a down payment on a house, a
vacation and setting something aside for her kids college. She
has calculated the totals for each goal and decided that ideally
she would like to save the following amounts each month:
• $450 a month in an IRA for retirement
• $250 a month in an emergency fund
• $500 a month for a house down payment
• $100 a month for a vacation fund
• $200 a month for the kids college fund
That’s a total of $1,500 a month. Next, she subtracts $1,500
from her monthly income of $6,000 and she’s left with $4,500
each month to spend on bills, eating dinner out or whatever she
wants without worrying whether she will have anything left to
save. (See her example of what this looks like on the next
page.)
If your income is relatively consistent, you may be able to auto-
mate all or part of the process like Kim did by having your bank,
brokerage or mutual fund company deduct the funds from your
checking account each month. However, if your income is irreg-
ular or you don’t have that option, create a bill for each item on
your list and place it on top of all of your other bills as a remind-
er so you never forget to pay yourself first.
Q: I’m worried that if I pay myself first, I won’t have
enough left to pay my bills.
I understand your concern, but it is all a matter of setting
priorities. Using the example above if Kim needed $5,000
instead of $4,500 to pay my bills each month, she would
need to make some decisions based on how important
the goals on her list were versus the expenses she had.
In some cases, she might decide that the goals were non
-negotiable and look for ways to cut her expenses. In oth-
er cases, she might decide that her expenses were non-
negotiable and look for ways to accomplish her goals
with less money, revamping them or even putting one or
more of them on hold. In either case, deciding how to
allocate your money is very personal and you should con-
sider all of your options before making a decision.
Kim’s Pay Yourself First Example
Don’t be afraid to fail. Be afraid not to try.
Salary
Separate ccounts • 5
• ergency fund 5
• ouse down pay ent 5
• College fund
• acation fund
Total 5
General Checking
5
• egular ills ortgage rent
ca le insurance phone etc.
• Fun oney entertain ent
clothes charity etc.
principle #5
Invest Early and Often
"Lack of will power has caused more failure
than lack of intelligence or ability."
— Flower A. Newhouse
I nvesting early and often allows you to take advantage of
compounding and time to build wealth faster. Com-
pounding has been called the 8th wonder of the world
because of its tremendous power. The secret to com-
pounding is that you not only earn interest on the money you
invest, but you also earn interest on the interest your invest-
ments earn. While this may not sound like much, compounding
can have a powerful effect on your investments over time.
Here’s an example of how compounding works:
If you place $2,000 in an investment that pays 10% each year,
at the end of the first year, you will have $2,200 (the $2,000
you started with plus $200 in interest). Assuming you make no
deposits or withdrawals, at the end of the second year you will
have $2,420 ($2,200 plus $220 in interest). The extra $20
comes from the interest on the $200 in interest you earned in
the previous year. As long as you keep your money invested,
this process will repeat itself each year, and after 30 years,
your account will have grown to almost $35,000 from your origi-
nal $2,000 investment. That’s the power of compounding.
But it gets better. Using the same example, if you add $2,000
to the original investment each year for 30 years, at the end of
that time, you would have approximately $400,000 from an in-
vestment of only $62,000! The more you invest and the longer
the time frame, the bigger it grows!
Finally, automating your investing will make it easy and almost
effortless to grow you money. Dollar cost averaging is one of
the most popular ways to automate your investing. With dollar
cost averaging you consistently invest the same amount each
month and instead of doing it manually, you can automate the
process by having your employer, banker, broker, or mutual
fund company deduct money from your checking or other ac-
count and invest it in a mutual fund, or other investment. This
occurs month after month regardless of whether the market is
up or down. Not only does this technique make investing easy,
but you may actually get more for your money over time be-
cause when the market is down, you will be able to buy more of
the investment for the same amount of money.
Here is an example of how dollar cost averaging works:
Sharon authorized her mutual fund company to deduct
$100 from her checking account on the 15th of every month
to purchase $100 worth of shares of XYZ mutual fund.
When the price goes down, more shares are purchased,
and when the price goes up, fewer shares are purchased.
Here is how Sharon’s mutual fund performed over the past
six months:
0
5
10
15
Jan Feb
Mar Apr
May Jun
Date
Amount
Invested
Price per
Share
# of Shares
Purchased
Jan 15 $100 $10 10.000
Feb 15 $100 $9 11.111
Mar 15 $100 $5 20.000
Apr 15 $100 $6 16.667
May 15 $100 $8 12.500
Jun 15 $100 $10 10.000
Total $600 48 80.278
Here is what Sharon’s mutual fund account looked like:
Average price per share = $8.00 (48 ÷ 6 months)
Sharon’s Average cost per share = $7.47 ($600 ÷ 80.278)
Sharon was not only able to grow her investments on a regular
basis with very little effort, but she also saved money in the
process because dollar cost averaging allowed her to pay less
than the overall price per share.
The CASH is in the CLARITY!
Epilogue
Do Something Today!
“If you want to know your past life, look into your present condition; if you want to know your future,
look into your present action.” — Padmisabha
D o something today!
I know there’s a lot of information even in this small
book, but I want to encourage you to pick at least
one principle and start working on it today.
And don’t forget, I’m here to help.
If you have a question about anything you have read or if you
are ready to take charge of your money life and you want to cre-
ate a plan specifically designed for you, let’s talk.
The biggest mistake I see people make is doing nothing.
Minding your money is a skill like any other skill, and it can be
overwhelming when you aren’t sure where to start. However,
don’t let not knowing what to do eat away at your joy. You can
have a life that excites you, but you have to be an active partici-
pant.
Don’t wait another day. Do something now.
DO SOMETHING TODAY!
Let’s Talk…
Schedule a supportive session to see if we might
be the right fit. Contact me (Patricia) directly at
[email protected] or visit the website at
eWorthAdvisors.com and click on the Contact tab.