Michelle Singletary, a nationally syndicated personal finance columnist for the Washington Post, has a firsthand understanding of the importance of money management. It was a lesson learned at a young age from her grandmother, who raised Singletary and her four limited-income siblings in Baltimore.
"She was a nursing assistant and never made more than $ 13,000 a year," Singletary told the audience to open the fourth week of the ACA Virtual Conference Experience. Singletary noted that her grandfather was struggling with alcoholism, so his paychecks rarely made it home.
“What makes me want to help people is how I grew up and how my grandmother got along with so little. … She was a wonderful money manager, "said Singletary, who writes the syndicated newspaper column," The Color of Money. " She admitted that she had gained most of the wisdom she would share with the audience by watching her grandmother take care of her and her siblings without much money.
Singletary's keynote emphasized the importance of professional advisors looking after not only their mental health, but also their financial health. She then provided five steps to focus on financial health.
Step 1: Search your budget
Singletary, author of four personal finance books, including the upcoming guide, “What To Do With Your Money When The Crisis Struck? Arrive at the emergency room. In the event of job loss or economic uncertainty, people should also check their bills and focus on necessities like mortgage / rent, car loans, utilities and child support first, she explained.
Step 2: Be careful with credit
The last thing a consultant needs is to be overwhelmed by debt, Singletary said. Total household debt in the United States at the end of August 2020 was $ 14.27 trillion, with most of the debt being spent on credit card payments, student loans, and car loans.
Singletary told the audience that the best way to reduce debt is to take the "debt dash" approach: pay off the smallest debt first (regardless of the interest rate). “Psychologically, people are defeated by the slow process of debt settlement. So the debt slide gives them something to look forward to in the short term and encourages them to keep going, ”she explained.
She also gave the following tips to avoid getting into debt:
Top up only what you can pay for in the next credit card billing cycle.
If possible, use cash, not plastic, as it will save you overall spending.
Do not buy a car that requires a loan of more than four years.
Do not take advantage of the current hiatus in student loan payments if you still have stable income. continue to make these payments.
Consider moving home for a few years after college to save money. This way, paychecks can be used to pay off loan debts rather than rent or mortgage.
Saving money and paying off debts shouldn't be an either-or decision, she claimed. "If you just paid off debt, you have no savings. … You don't want all of this money in the bank to make no money and you have high-interest credit card debt," Singletary said. "You want to do a combination of the two to get you into debt Pay off and save. "
Step 3: Stick to a budget
Relying on her grandmother's wise advice that "every penny should have a purpose," Singletary told the audience that every dollar they make has a job – retirement savings or household expenses, for example.
She recommended budgeting for an emergency fund and a fund for “life happens”. The emergency fund should have living expenses of three to six months as it acts as a backup for economic emergencies such as job loss or time off to help a sick family member. Put money in this fund and don't touch it unless there's a real emergency, she pointed out.
The Life Happen Fund is intended for more frequent incidents and inconveniences such as a car breakdown. It's okay for money to go into and out of this fund, she said, but she advised keeping around $ 1,000-2,500 in such an account.
Consultants should also budget for training opportunities and insurance, she added. Each month, advisors can allocate funding for these two items so that when the time comes, that money “is right where you can invest in yourself,” she told the audience.
Singletary also gave practitioners five tips for managing self-employment income:
Establish a base for spending.
Set up an account from which you can pay all monthly expenses.
Create a "Sweep Account" to deposit all income from a part-time job. (This account can help offset fluctuations in income from self-employment.)
Avoid splurging if you are earning more than expected in a month.
Set up a separate account to pay the estimated taxes.
Step 4: Become an informed investor
Singletary discussed three main threats to investing: 1) inflation, 2) inaction, and 3) panic over volatile markets. "If you don't invest and keep up with inflation, you will lose profitability," she said.
She advised the advisors not to wait for an investment. "The biggest advantage you have as an investor is time," she said. By investing your money and having it pieced together over time, "you might as well be trying to find the next big stock."
She also told the audience that they could become a "401 (k) millionaire" by investing early and retiring at least 10-15% of their paychecks to meet the requirements of the full employers match (if offered)) taking into account investment funds that invest in stocks and cannot be paid out when changing jobs. Counselors can also use retirement calculators (like AARPs) to see if they're saving enough for retirement, she added.
Step 5: Be satisfied
Singletary notes that an entitlement mentality often prevents people from being satisfied with what they have. People fixate on the idea that they deserve more, owe it to their children to give them more, or have to do whatever it takes to get what they want. “But the truth is, you deserve what you can afford,” Singletary said. “You owe it to yourself and / or your child to live within your means. And that means saying no to yourself and to your children. "
"We blurred the distinction [between needs and wants]" she told the audience. "Need means that it is something essential, and [a want] is … [a] desire." She shared a simple question that can save people a lot of money if answered honestly: "Is it a need or a need?"
Singletary also advised audiences to focus on being grateful. One Sunday at church, her pastor asked the ward how many people were rich. Few people raised their hands. Then the pastor asked a series of questions: How many of you got up this morning and had a clean glass of water? How many of you can get in your car and drive to your job? How many of you have a job? How many of you have someone who loves you?
Singletary admitted she was ashamed not to raise her hand after asking the first question. She had focused on the monetary value of "rich" instead of seeing and recognizing everything she had in her life. "We are never satisfied enough to know that we are rich enough," she noted.
It's not just about the money
Singletary expressed her appreciation for the therapists she had in her own life. Her wish, she said, is for more people to be able to follow their purpose and enter mental health areas rather than avoiding them for fear that they are not earning enough. "If you don't budget well, you could end up doing something or getting a job that really isn't right for you because you're trying to make more money," she warned.
Her daughter, who is a social worker, did not have to make this choice because Singletary taught her how to take care of her financial health and "live on salary for chosen occupation [she had]".
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"Don't just do things for the money," she advised. "Find out what … really, really important and put your money into it. … You know enough [about money] to make better financial decisions, and that will make you a happier person and a better advisor . "
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Read more about the relationship between personal finance and mental health in Counseling Today's recent article "Money on the Mind".
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This keynote is part of a month of virtual events, including hundreds of training sessions and three additional keynotes ending April 30th.
For more information about the American Counseling Association's 2021 Virtual Conference Experience, visit Counseling.org/conference/conference-2021
Registration is open until April 30th. Participants will have access to all conference content until May 31st.
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Lindsey Phillips is the Senior Editor for Counseling Today. Contact them at [email protected].
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Opinions and statements in articles appearing on CT Online should not be assumed to reflect the opinions of the editors or guidelines of the American Counseling Association.
