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The Worst of Times Can Produce Your Best of Times

 By Valarie Eiland Davis

It’s trite but true to say that bad experiences can bring out the best in us.  Bad grades can make students work harder.  Bad work performance reviews can make us work smarter.  Bad relationships can teach us how to be better family members and friends.  Bad meals might even make us better cooks.  Well, the bad economic times we are living through right now can either bring out the worst in us or make us think thoughts and take actions that will eventually produce some of the best times we could ever have.  It’s your choice!

 I love the fact that bad times make us scrutinize our money matters with a magnifying glass – from how we spend our pennies, nickels and dimes, to whether it’s the right time to buy or sell our homes.  Bad times like these force us to do things we should have been doing anyway when it comes to managing our money, assets and liabilities.  But, none of us can think of everything.  So, I would like to share a few thoughts that might put you on a clearer or faster path through the present worst of times to your future best of times. 

GET YOUR FAMILY’S PRIORITIES STRAIGHT AND MAKE SURE EVERYONE IS ON BOARD 

If you don’t have a budget, schedule two hours with other household decision makers to make one, write it down, and share it with everyone that lives with you.  

·          Do you know how much money is really coming into your home?  Women, statistics show we will outlive the men in our lives, so it pays to know the numbers from start to finish. 

·          Does everyone in your home agree on “needs” versus “wants”?  What may be unnecessary spending to you may be essential to someone else. 

·          Do you know the spending tradeoffs your family is making and how they will affect you down the road?  Those quick fast food stops may add up to the cost of the school supplies you need to buy in just a few short months.   

How would you like it if your state and national elected leaders managed your hard-earned tax dollars the way you manage the money that supports your family?  Enough said. 

SAVE MONEY THE RIGHT WAY 

Everyone has heard the personal finance commandment “Pay yourself first.”  Well, here’s the way I see it.  Most of us end up paying the government first if you have federal and state deductions made from your paychecks.  Congratulations to you entrepreneurs who get all of your money up front!  That said, here’s my recommended “Payout Plan:”

·          Exercise your faith faithfully.  Pay your tithes and offerings.  If you believe God will never leave you hanging, then act you believe it and don’t hold back even in the worst of times.

·          Cover the basics.  Make sure your needs are covered comfortably with a reserve cushion of at least three months.  This is the first savings account any family (which includes single folks) should have.  Don’t do any non-essential spending until this is done.  That’s right, I said “none!”

·          Insure yourself adequately.  Do you know how much money your dependents would need to live on in the event of your death?  I know, I know.  You don’t like to think about death, and you’re planning on being around for a long time.  Well, few people actually plan to die – but those that do have a plan do their duty by their family members and leave them able to live a stable financial life.  Have a free consultation with an insurance advisor.  Have the advisor review your current policies (through your job and your personal purchases), and find out how the policies work.  Then figure out what you want to provide via insurance and make the investment.  I talked last week with an insurance advisor who met with two working parents on Friday and the wife was dead by Sunday – unexpectedly, of course.  The worse news is that he purchased life insurance and she said “No, I’m fine,” figuring that her husband’s policy was enough.  It’s not enough that the husband and children have to grieve the loss of their wife and mother, but they will likely lose their house and struggle financially for some time to come.

·          Elders first.  Make sure those with the least number of working years ahead of them are taken care of first.  The younger ones, if necessary can and will make their own way if you give them the basics.  This may sound backwards to those of you who are saving for college before your own retirement.  But, you are the only person who contributes to your retirement.  Your children have you and themselves.  Work with a financial planner to figure out how much money you will actually need to retire (or go on line and use a free calculator like the one at www.moneycentral.com ), and then take action.

·          Invest as aggressively as possible.  If you are under 50 years of age, there is no reason for you to be investing as conservatively as someone who is over 50.  Often we take the less risky route because we haven’t invested the time and energy to understand what we believe are riskier alternatives.  Don’t try to become a financial expert, but work with one who has experience with people in your particular situation.  Think of it this way.  You work hard for your money.  Be willing to work at least half as hard when deciding where to invest it.

I hope you can see how having your family make important and manageable changes in these worst of times will surely pay off financially in the future – laying the groundwork for the best of times. 

I’ll let you chew on that much for now.  In upcoming articles I will address: 

·          SPENDING MONEY: 

What Is Your Money Personality and How Is It Defining Your Life? 

·          HOMEOWNERSHIP: 

Real Estate is Still the Ultimate Investment 

That’s all for now!  Feel free to contact me with feedback, suggested topics for future articles, questions and concerns.  And, as I love to say “When we know better, we can do better.”

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Valarie is a published author, professional speaker and workshop facilitator.  She is a Certified Coach for the Delta Sigma Theta Sorority, Inc. national homeownership initiative, and is a Workforce Certified real estate agent for the State of Maryland.  Valarie is also a single mother of one adorable daughter, Lena Renea.