The stock market has entered into at least a short term correction based on technical analysis.  Technical analysis uses charts showing past performance to analyze probabilities for market direction.

Remember: What you focus on grows, so to grow money, give it your attention!

Let's Teach Them Financial Empowerment!

Last week at the NAPFA (National Association for Personal Financial Planners) event, T.D. Ameritrade sponsored several women focused events. One event was a showing of the movie Miss Representation. It highlighted the influence media has had on women in leadership and political roles.

Unfortunately, women in such roles has decreased rather than increased over the past thirty years. The pressure on girls to focus on their weight and appearance over education and leadership is alarming. According to the film, girls actually start saying they are not good at math around the age of twelve, whether it’s true or not.

A client recently asked me to work as a financial coach with both her and her young adult daughter; this is not the first time this has occurred. I am, of course, delighted because this is truly positive role modeling around financial empowerment for the next generation.

What message are you sending to your daughters, granddaughters, nieces and your friend’s daughters? Some of the ways that we can model an active role in our financial health are:

1. Being present in meetings with financial advisors, attorneys and CPA’s. We use a wealth team to do work for us, but this doesn’t mean that we don’t need to know them, and what we are asking them to do on our behalf.
2. Always, always, always know where your money is, and how to access that money.
3. Understand the very basics of any investment you have.
4. Keep a marketable skill. The divorce rate is almost 50% in the United States. No one plans for an accident just as no one plans for a divorce. Know you can land on your feet with Plan B if you have left the work force for any reason.
5. Have credit in your own name.
6. Know who is making the decisions about investing your money, and what kind of job they are doing for you; it’s your money.

Let the younger women in your life know and see that these things are important to you. If this list looks intimidating, seek the help of a financial coach. Money provides food and shelter for you or your family. Let’s demonstrate its importance so that the next generation of women doesn’t believe that the “man is a plan” myth is still valid either consciously or unconsciously.

Are you using your money as a tool to get what you want in life? During your next car ride or workout session, brainstorm this question, and ask yourself why or why not.

Remember: What you focus on grows, so to grow money, give it your attention!

It is interesting that physical money is actually paper, and paper has little value. Once we add those familiar “dollar green” graphics, that paper takes on a life of its own triggering emotions ranging from security to fear or greed.

One step to overcome the mistake of being emotional about money is to recognize and own the emotions you do have around money. Then see if you can figure out whether or not those emotions are valid. You may find they aren’t, but instead are based on ancestral money issues. If they are valid, however, they may be your intuition calling for you to take the actions you need to take that will allow those emotions to calm. These steps can be anything from getting paid market value for your work to committing to improving your financial education.

A second step to reduce the emotions tied to money is to think of money as a tool to get the things you want in life that money can buy. I call these things your money reasons. Like other tools that are used to bring about the end result we desire, money can be managed so that the result is, in fact, achieved.

The third step to reduce emotion around money is to create a plan, and then live that plan in your daily earning and spending habits. That overwhelming desire, or emotion which creeps in and grabs you when you pass the designer purse sale, when you really don’t need, or even truly want, another purse will vanish when you live from your plan and purpose.

These three steps can help replace fear and anxiety with harmony and security. Sometimes we can use our emotions as a guide to get the life we want. Turn your emotions around money into an asset instead of a liability on your personal balance sheet.

Be strategic with your borrowing. Think about your debt with a historical perspective.  Is it paying for something that will increase in value over the long term? Does your mortgage rate make sense in light of the fact that the prime interest rate was almost 20% in the early 1980′s?

Remember: What you focus on grows, so to grow money, give it your attention!

Financial Education from a VW Bug

One of the most important lessons of financial education that can easily be overlooked is that not all debt is bad. In this time of great fervor over formerly zero percent credit card rates that are now at astronomical levels, it’s not easy to see any debt in a positive light. Wisely used, however, debt can be a wealth management tool that allows an investor to grow money while also living quite comfortably.

With this in mind, I want to offer the following financial education tips regarding debt.

Good debt enables the purchase of assets that accumulate in value over time. It may be hard to remember that real estate does actually increase in value over long time frames, but it does. Real estate is also an inflation hedge, and it is commonly acquired with good debt.

Bad debt is associated with high interest rates, and is used for assets that decrease in value in the short term, only to never regain their original value. As much as I hate to say it, a good example would be clothes.

Debt frequently provides tax reducing benefits; this is an interesting but dynamic irony, which ultimately means that our tax system encourages debt, but that’s a topic for another day.

Debt allows us to purchase beneficial things that we would otherwise not have. My very first debt experience was with the purchase of my first car, an orange VW bug, in high school. The car allowed me to get to my job, and it also gave me the opportunity to learn about car maintenance, responsibility and personal finance. I sure hated using my income for car payments instead of buying clothes, but I also learned the good, the bad and the ugly about debt first hand with that little orange bug.  In retrospect, understanding that I had to save enough money to fill my car with gas at the then high cost of 53 cents a gallon was only a small part of the financial education I received from that cute VW.

View the cost of debt with an historical perspective. With mortgage rates still near all-time lows, it makes sense to lock in those low rates. It’s hard to imagine that the prime interest rate in the U.S. was almost 20 percent in the early 1980’s! There is a great probability (one of my favorite concepts when it comes to money and investing) that rates will again be in the teens at some point in the future. If you have a mortgage at 5%, and you can earn 12% on your money, that mortgage debt just got sweeter than simply providing a nice home.

Be strategic and smart with your debt. Make the use of debt part of your overall financial plan. Look beyond the house, the car or the purse; look at using your financial resources to make a purposeful and rich life.

Did you know that some investments had good returns during the period from 2000 to 2011?  These investments moved in the opposite direction of the overall financial markets; this is known as non-correlated.  Know how to evaluate the returns of any investment service you use or product you own!

Investing is simpler than you think!

Have you created a list outlining your financial priorities? Because money issues can be so all encompassing, it’s easy to get side tracked and spend time on the less important tasks if you haven’t.  This can lead to creating a spending plan for your home remodel when you haven’t completed the more important task of staying on top of your knowing your financial net worth.

While some tasks listed below overlap or are simultaneous, the list below can be used as a prioritizing guideline for financial tasks.

1. Meet needs for food and shelter (We take this one for granted sometimes.)
2. Pay bills on time to assure priority number one and to maintain good credit
3. File and pay income taxes to avoid fees and possibly even prison
4. Setting lifestyle goals beyond food and shelter
5. Establishing current net worth
6. Creating a cash flow plan for maintaining and enhancing your lifestyle, and also reaching financial goals
7. Increasing income generation
8. Making an investment plan to reach those financial goals
9. Handling financial related legal matters (This may be intertwined with the above steps.)
10. Establishing a detailed spending plan for specific areas, such as travel, entertainment, wardrobe and home

You may know that Step One in the Financial Woman plan to grow  money is to establish your money reasons, or those important lifestyle goals that define a rich life for you. This step as a priority assumes that steps one through three are already routinely done.

The main point is that it is easy to spend twenty hours researching and planning a trip on budget while your net worth statement hasn’t been updated in three years. Update the net worth statement, and then treat yourself to planning that trip. Prioritize; handling your money is like everything else in your life. While it may initially seem like a tempting idea, you probably don’t really want to come home from the grocery store with only flowers and wine!

Learn from others who have firsthand experience in any area that you need greater knowledge to expedite the journey to your financial goals.

Investing is simpler than you think!

Tina is an Austin based serial entrepreneur having founded PetsMD.com, LOCALoyalty Magazine and Book-a-Vet.com. Below is just a few of the life and business insights I have learned from Tina.

1. Network! It’s easier than ever to spend all of our time behind a computer, but this powerful paradigm is not going to disappear any time soon. Networking has a positive impact on our lives in every area. It also leads to life balance through new friendships and relationships in general.
2. Be Strategic. When Tina sold one of her start-ups to a large national retailer, she asked herself how she could keep a piece of the pie to generate future revenue. She then retained ownership in a small part of the company that continues to deliver income, while requiring little management time.
3. Select Strategic Partners. When starting a new endeavor, know what your skills are, and what skills you need to complete the mix necessary for success. Select a partner based on those skill requirements. With her strong financial background, Tina knew that an attorney would bring additional valuable skills she needed to the venture, so she partnered with a lawyer.
4. Go for it! Tina decided that she could make a difference in Austin given her extensive business experience, so she decided to run for Austin City Council in the May election. Now that is really stepping into your greatness while making a valuable contribution to society! (Austin residents, mark your calendar to vote for Tina Cannon on May 12 if you want honest, business-oriented representation at the state, local and federal levels!)

Who is waiting to share what they have learned from their experiences with you? Don’t go it alone; always learn from others who have “been there, done that.”  Save yourself a lot of time and energy on the journey, and increase your chances for success.