TOWARD FINANCIAL SUCCESS AN EXCERPT FROM COIN, THE IRREVERENT YET PRACTICAL GUIDE TO MONEY MANAGEMENT FOR RECENT COLLEGE GRADUATES BY JUDY MCNARY, CERTIFIED FINANCIAL PLANNER ILLUSTRATIONS BY JENNA M.K. WESTBROOK WHY READ THIS? Because it's about money. And it doesn't matter whether you love it or hate it – you need to be smart about it. Manage your money well, and life is good, but mess it up and suddenly life stinks. And if you don't fix it, you could end up old and poor. And bitter. And we don't want that. WHAT'S THE MONEY FOR? We begin with figuring out what you want your money to do for you. That's right – it's your money. What do you want to do with it? Maybe you're all about thrill-a-minute outdoor adventure travel. Perhaps mundane-but-rewarding freedom-from-debt is what will make you fulfilled. How about a little of each? It's your money and your life. Spend the next few minutes writing down what you want in life. I'm talking about your goals. Big ones, small ones, crazy ones. Let 'em fly. Have fun there. Maybe you really want to buy a new car. Or climb Denali. Get out of debt. Backpack through Thailand. Learn to play slide guitar. Go to grad school. Rollerblade down Machu Picchu. Well, maybe not that. How about achieving financial freedom? That sounds kind of cool, doesn't it? Don't get hung up on whether you think your goals are realistic or not. For now, just write them down, and we'll worry about the details later. Start the clock – you've got 10 minutes. On your mark, get set, go. GOALS: emergency fund financial freedom Now you have a glorious list 0' goals. This should have you pretty energized, right? Keep adding more as they pop into your head. Writing goals down helps make them real. Your next step is to prioritize your goals. I absolutely want you to aim big and high – but we can't take on everything at once. So we need to dial in on just a few goals to start. In the margin next to Emergency Fund, write #1. In ink. I've got dibs on this because your first priority must be to establish an emergency fund. Priorities for the rest are up to you. Go ahead and put an order number next to each. What are your top three? These are the goals we're going to focus on first. Once you have a plan for these, we'll work on the others. "You have brains in your head. You have feet in your shoes. You can steer yourself in any direction you choose." – DR. SEUSS OH THE PLACES YOU'LL GO! KAPPA DELTA FOUNDATION The Kappa Delta Foundation provided Coin to chapter leaders attending the 2016 National Collegiate Training Academy. Former KDF Chairman Bonnie Purvis Warren wrote in an introductory letter: "One of the most crucial skill sets Kappa Delta can help strengthen in its members is an understanding of personal finance and strategic budgeting . . . We hope this book helps you take one more step forward toward success." THREE TIPS FOR TACKLING STUDENT LOAN DEBT Stay current on all your loans – always Pay off loans with higher interest rates faster. Each month, challenge yourself to pay more than you did the month before. Little bits add up for big impact. Chip away at that principal QUIZ: EMERGENCY FUND Which is an appropriate reason to tap your emergency fund? A. BFF Jessica called and Nordstrom has a sale on Kate Spade purses. B. Your roommate needs money to visit the man of her dreams in D.C. C. Your car is leaking oil. The auto repair guy says the rear main is toast. You need that car for work. D. The airlines have launched a fare war – half off tickets to Cancun. ANSWERS: A & D ARE WRONG. USE OTHER MONEY FOR THESE – NOT THE EMERGENCY FUND. B. HAVE YOUR ROOMMATE CALL HER FOLKS INSTEAD. THEY LOVE THIS KIND OF STUFF. C. YEAH, WE'LL ACCEPT THIS. MOST DADS WOULD, TOO. THE TOP THREE: _emergency fund__ THE COIN JAR: You need to have a coin jar. It can be a piggy bank or a flea-market special. Keep out what you need for laundry, but faithfully add the rest of your spare change to the jar. This money is for your big, crazy goals. THE PLATINUM RULE Top priority for your money is saving some of it. Why? Because you've got dreams and goals. Big ones. And the easiest way to reach those goals is by following the Platinum Rule: SPEND LESS THAN YOU MAKE. Platinum? What's that about? Well, the Golden Rule was already taken (duh) and silver tarnishes so that wasn't going to work. Bronze? Nah – not shiny enough. But seriously, platinum is cool stuff. It's rare and has so many amazing properties it's quite valuable. Just like this rule. Practice the Platinum Rule and life is good. Yup, it's that simple. Spend less money than you make. Why does it seem so hard? Because unless you do something radical like go live off the grid, you are bombarded by opportunities to spend your hard-earned coin. Things you just gotta have, like Zombie Plush Slippers or a virtual iThing. Quick now – flash back to fourth grade when you played Mad Libs® at a slumber party. Go ahead and fill in the blanks below. I'm not saying you can't ever buy a sleek, candy-apple red __ or shop for a __paid ____ What I am saying is that you need to wait to buy things until you've set aside a portion of what you earn. This is what's known as paying yourself first. For starters, you should save at least 10 percent of your income and more if you've laid out some truly audacious goals. Let's walk through a simple example. Gross salary is the amount before taxes and other deductions are taken out. And yes, taxes are gross. You know, Ben Franklin once said we all need to handle humor as well as our finances. (Footnote: Ben may not have actually said that, but I know he would've said it if he'd thought of it.) Moving on. YOUR SALARY IS $3,000 PER MONTH. YOUR SAVINGS FORMULA: $3,000×10% = $300 AT THE VERY LEAST, YOU SHOULD SAVE $300 PER MONTH. What if your paychecks vary? You're a nurse, and night shifts pay more. Or you're in sales, and you get commissions every other paycheck. You do project work, and some months you get paid more than others. You're a waiter, and most of your pay is tips. Don't make this hard – just take the average. YOUR TOTAL SAVINGS PER MONTH Your monthly salary: Your monthly saving formula: ____ × 10% = _____ Easiest way to make this happen? Set up auto-transfer each pay period from your checking to your savings account so you never see it. Then keep your hands off. Remember – 10 percent is the minimum. Aim higher to reach your goals sooner. IN CASE OF EMERGENCY The first thing to use your savings for is to build an emergency fund. It's pretty much exactly what it sounds like – a pot of money set aside for emergencies. Emergencies are unexpected financial whammies like cars breaking down or accidents that rack up medical bills. To be financially sound you have to have an emergency fund. Period. Here's how much you need: MONTHLY INCOME: ____×3 MONTHS =____ I know that sounds like a lot if you're starting from zero, but I need you to get there as quickly as you can. Think about it. What would you do if you lose your job or have an accident while hang gliding? Your emergency fund keeps you from having to sleep on the street. Seriously. It buys you time to find a new job or put all those broken bones back in the right places. This money needs to stay put, though. No emergency, no touchy. It belongs in a savings account – not checking. You want access to the money when you're in dire straits, but you do not want to be tempted by it. Build it and forget about it. SET THE DATE: I will have my emergency fund in place by/__/__. AVOID THE TlDAL SAVINGS TRAP If you have to keep tapping on your savings to cover expenses each month, they're not SAVINGS! Once money goes into savings, it stays in. Not in and out and in and out like the tide. Except for real emergencies. And we're not talking about fixing a botched dye job. Well, actually that could be an emergency, depending on how bad the dye job really is. Anyway, if you're starting from zero and cleaning up a financial mess or two, you can begin by saving a smaller percentage of your income – say 3 percent or 4 percent, then increase it every three months until you're at the target savings rate of 10 percent. Hurry up and start saving because once you have your emergency fund in place, you get to start chasing all the exciting entries on your goals list – the trip to Amsterdam, the Volkl Gotamas, the new set of wheels. . . For more information about Coin, go to www.coininthebank.com.
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