The Well Rounded Woman: Money Talks

Proverbs 31's description of the virtuous woman describes her as a well rounded woman; spiritually and naturally. So I am going to talk other things that make us well rounded. Challenging myself to make some changes so that I can be that virtuous women. I am also considering join my other two blogs: Hair Junkie Diva and Plush Diva together with this one....it's just a thought. 

But I want to start with the topic of money. I have always be told to "speak prosperity into your life" but James says, "faith without works is dead." So we need to take the necessary step to be finanically sound. So for the first "Money Talks" post I what to share an article I found in Black Enterprise. 

(Just a reminder: Proverbs 31:10-27)

Peek In Your Purse

by Carolyn M. Brown

Cindy McField-Asamoah views  herself as a minimalist. “I don’t carry a lot of makeup or other items in my purse. I have an iPad 2 that I sometimes carry, and a BlackBerry Torch that I carry everywhere.” The 37-year-old married New York real estate broker switches up her purses according to her outfits, but they’re all hobo style—large crescent-shaped handbags with a long strap. “I need a large handbag because I often travel with my son [2-year-old Kaleb].

I am carrying things for both of us.” A vice president with the Corcoran Group in Brooklyn, New York, she keeps her wallet or clutch organized. “It doesn’t have sections, but my money is grouped together in one area, my credit and debit cards are in another, and my receipts are all in another.”

Why should it matter what’s in McField-Asamoah’s handbag? Robin A. Young, a certified financial planner, says a “purse check” is one way women can do a quick financial assessment. Financial behavior often reflects how you feel about yourself, says Young, president of Women Behaving Wealthy in New York. Money is personal and emotional—and what you carry around every day says a lot about your relationship with it.

For example, the credit cards McField-Asamoah carries in her purse are indicative of her challenges with debt. She admits that she was a frivolous spender before her son was born. “I tightened the purse strings because a lot of money now goes toward his needs.” McField-Asamoah is expecting another baby this summer. She avoids department store charge cards and currently has a MasterCard and American Express card. She pays with cash whenever possible, often using her debit cards, as she pays down her debt, including a $10,000 MasterCard balance.

An independent contractor, McField-Asamoah has a SEP-IRA account through Merrill Lynch to which she contributes on average $20,000 annually when feasible. She also contributes 10% of her paycheck to savings, mostly joint accounts with her husband, Kobla. The couple lacks structure. “We have goals in place but not a step-by-step plan for achieving them,” she says.

Like McField-Asamoah, many women want to pay off their credit cards and reduce spending while increasing savings. But the one area where most women still lack is retirement assets. The average woman near retirement has $34,000 in a 401(k) plan or IRA, whereas her male counterpart has $70,000. Roughly four out of 10 women rely on Social Security as their only source of retirement income. For many, a 401(k) plan serves as their emergency fund.

Part of the challenge is that the male-dominated financial services industry is oriented toward the male mindset, says Young. “The industry doesn’t meet the unique needs of women, who have more questions and approach money more holistically.” Young has worked in financial services for 12 years, most recently at Fidelity Investments, where she advised 500 millionaires how to invest their money.

“A woman behaving wealthy spends on the basis of what is important to her on her current income,” Young says. “You never want to operate out of a place of fear. The goal is to become more confident and comfortable about making wealth decisions.”
So, grab your bag and answer these seven questions to see if you’re a woman behaving wealthy.

What’s in your wallet?
Count the number of credit cards (not debit cards) that you carry. If you have more than one, you’re likely overspending and incurring debt. You should have one credit card that you use to, say, rent a car or pay for a trip, with the goal
of paying off that card in 30 days.

“You really should be using cash or a debit card, which would indicate that you’re living within your means,” says Young. “If you’re using credit then you’re probably spending beyond your income. Besides, managing multiple credit cards complicates life instead of simplifying it.”

What’s the average balance on those cards? For example, if you have five cards with a credit limit of $2,000 and each has a balance of $1,000, your total debt is $5,000. You have used 50% of your available credit, which affects your FICO score. You need to put away those cards, stop using them, and pay them off.

“Don’t close the account after paying off the balance, because that will increase your debt-to-available-credit ratio, which will lower your credit score,” cautions Young. Once you pay off all your cards, consider using one account. “Keep the credit card that offers the most benefits like cash-back rewards, merchant discounts, and airline mileage points,” suggests Young. Nix department store cards since they charge the highest interest rates, canceling out any 15% to 20% discount you get for using them, she points out.
To help you manage your debt, check your credit score, view alerts, and handle other tasks, use tools such as Equifax’s mobile app for the iPhone, iPad, or Android phone. For other management tools, see “4 Apps to Boost Your Score” in Money, this issue.

Is your cash organized by denomination? 
Open your wallet and look at how your cash is organized. Is it ordered by denomination with bills facing the same way? Cash that’s arranged and in order is characteristic of a person whose financial life is organized, Young says. Not to mention that it’s easier to get hold of and to add when making purchases.

“Cash in disarray reflects a disorganized financial life. Focusing through clutter and chaos is difficult.” Organize your cash, financial files, documents, and accounts. “It is hard to have abundance when your money isn’t in order and financial papers are all over the place,” says Young. Disorder increases the odds that you’ll get overcharged or miss payment due dates. Some women are even afraid to look at their statements, allowing them to sit around unopened for months, notes Young. You’re not making the right financial decisions if you don’t review your financial statements each month.

Young explains that organizing—your cash and your financial papers—has to do with money awareness. “When I was at Fidelity, I managed nearly $1 billion in assets for clients who averaged $2 million each. The one thing my millionaires had in common is they were very money aware. If they got charged $10, right or wrong, they would question it. They were very focused—though not obsessive—on how much money they had at all times.” Every day, the woman behaving wealthy is aware of how much money she has in her purse, checking account, and savings.

In addition to tools such as Mint, Intuit’s Quicken personal finance software gives you the ability to track and maintain records of bank accounts, credit cards, loans, brokerage accounts, IRA accounts, insurance policy status, and various other transactions.
Do you have an up-to-date to-do list?

Whether you maintain a to-do list in a traditional day planner or on an electronic device, it’s essential that you have a written plan for what you would like to achieve, says Young. It can be daily, weekly, or monthly. “Having a current to-do list reflects that you have identified, quantified, and prioritized your goals. Research has proven that goals that are written down are more likely to be achieved.”

Let’s say one of your goals is to pay off your debts. When you go to the mall and see a dress you like, you need to know that spending that $200 means you’ll have $200 less to pay toward your debts. You’re even more aware when you have a specific dollar amount, adds Young. For instance, if your goal is to retire early and you need to save $600 a month to do it, it becomes easier to make daily buying decisions.

“Having a better sense of your day translates into having a better sense of your money,” Young says. “When you become more strategic about managing your daily life, you become more strategic about managing your finances.”

LifeWellth.com, a personal finance resource, now provides an iPad app that helps you set and formulate custom long-term plans to reach financial goals such as retirement, purchasing a home, and saving for college.

Do you have protection plans on your electronic devices?
Protection plans protect you from the loss or malfunction of your gadgets. Let’s say you lost your $300 smartphone. With a protection plan, you have the option of receiving a free replacement or paying a small fee. Ask yourself if you can manage the risk, says Young. If your $500 tablet is lost, stolen, or destroyed, can you afford a new one without financial difficulty?

Protecting your gadgets is analogous to protecting your assets. Essentially, you need five forms of protection or insurance coverage: disability, life, health, homeowners’ liability, and long-term care—especially given that women live longer, but often in worse health. “Every day, you face innumerable risks. A woman behaving wealthy protects her assets: loved ones, income, health, and property,” adds Young.

Retailers such as Best Buy and manufacturers such as Apple offer their own protection plans or warranties. Also, visit SquareTrade.com, an independent warranty provider that says it offers prices that are on average 40% less than most retailers’ prices. For more information on insurance products, visit A.M. Best’s Consumer Insurance Center at www3.ambest.com/consumers/.

Do you have an emergency card? 
An emergency card lists your healthcare emergency names and numbers (e.g., hospital, doctor, dentist, pharmacy, health plan, and insurance policy). It includes your family’s contact information (e.g., spouse’s, parents’, and children’s contact numbers) in case of an accident. The best time to prepare for an emergency is before it happens. One quick way to create an emergency card is to go to RedCross.org/contactcard. Young says that if you have an emergency card, you have probably taken steps to create an emergency kit, which RedCross.org also explains how to prepare.

This mindset of preparedness ties into estate planning, she adds, because women behaving wealthy prepare for other unfortunate possibilities such as disabling illness or death. You should have a financial directive or power of attorney (someone to handle all your financial matters) and medical directive or power of attorney (someone to make decisions about your medical treatment) in the event that you’re unable to.

Have you selected a custodial and financial guardian to care for your minor children, bearing in mind that minors cannot inherit assets, including life insurance benefits? Have you updated the beneficiary designations of your 401(k), IRA, bank account, and life insurance policy? At BlackEnterprise.com, watch the video, “How Estate Planning Protects Your Family.”

Are receipts and important papers organized? 
Receipts and important documents in your purse can represent additional income and savings if you use them to lower your tax liability. “By consistently categorizing expenditures that are potential deductions and credits, you are employing tax-reduction strategies to increase your wealth,” Young explains. “Taxes are a detour on the wealth-building journey, as they erode your investing power. A woman behaving wealthy has the objective of retaining as much income as possible, which can then be redirected to savings.”

ProOnGo.com is a personal finance tool that allows you to track things like automotive mileage and business-related expenses, and to generate expense reports for tax purposes. Another is Expensify.com, which creates automatic expense reports from photo scans of receipts.

If you passed the litmus test for six or all of the above questions, congratulations are in order—it appears that you are a woman behaving wealthy. If your purse audit suggests that you aren’t quite on the right path, it’s still not too late, Young says. “Take action today and transform your financial life.”BE