The 4 Steps You Need to Take to Secure a Healthy Financial Future

By Christopher Haymon

Christopher Haymon is the founder of Adulting Digest.

1.jpg

Are you planning for your financial future? If you’re like the average person, you’re more focused on today than tomorrow. But failing to plan comes with major consequences, and they don’t always wait until you’re 65+ to strike. These are the four steps you need to take to protect your family today and into the future.

1. Plan for Emergencies

According to a survey from GoBankingRates, 69 percent of Americans have less than $1,000 in their savings account. That’s less than you need to cover a broken furnace or a trip to the emergency room, let alone a major event like losing a job.

If you’re among that 69 percent, prioritize building an emergency fund over other financial goals. Your emergency fund should cover three to six months of living expenses. This includes non-negotiable expenses like mortgage or rent, car payments, and utility payments, food, and gas. The exact amount in your emergency fund depends on your expenses along with other factors, such as benefits you might qualify for if you lost your job.

It’s also beneficial to have a general idea of how much your assets are worth when planning for emergencies. Assets include your home, cars, investments, and other items of value you own. You can use an online estimate to calculate an approximate value for your home.

2. Pay Down Debt

Debt seriously hampers long-term savings goals, especially if you have a lot of bad debt. Debt.org defines bad debt as debt that doesn’t increase your net worth or hold future value, and it’s this debt you should focus on paying off first. Common forms of bad debt are credit card debt and car loans. While student loans are often considered good debt, high balances can still make this debt burdensome, especially for privately held student loans with high interest rates.

There are two philosophies regarding paying off debt: paying off debt with the highest interest rate first, to minimize the total amount paid over time, or paying off debts with the smallest balance first, to build motivation by eliminating debt accounts. Choose the strategy that works for your finances and your morale.

3. Invest in Good Insurance

Life is full of unexpected events. If you’re not prepared in the event of a medical emergency, disabling health condition, or early death, you’re putting your financial security at risk.

Paying hundreds of dollars monthly for insurance is a hard pill to swallow, but when you look at the numbers, investing in insurance makes sense: one in four people will spend at least three months out of work due to a disabling condition, the average funeral cost is over $7,000 and is rising, and medical debt is the leading cause of bankruptcy in the US.

Most Americans understand the value of a good health insurance policy, but life insurance and disability insurance are less understood. Disability insurance pays a portion of your income if you’re unable to work, both short-term and long-term disability policies are available. Many workers can purchase disability insurance through their employer at a discounted group rate. Life insurance pays money to beneficiaries in the event of the policy holder’s death. It’s important to have this if a spouse or children depend on your income or if you don’t have savings to pay for funeral expenses (though many people opt for burial insurance to help cover the cost of funerals). While many people opt for term life insurance due to lower premiums, a term policy doesn’t accrue cash value. Purchasing a whole life policy instead gives you the option to sell the policy later on to free up cash for retirement.

4. Save for Retirement

Unless you want to work until your final day, you need retirement savings. If your employer offers a 401(k), this is the best place to start. Workers contribute pre-tax income to a 401(k) through payroll deductions, and some employers match that contribution up to a set percentage. To save beyond the annual 401(k) contribution limit, or if you don’t have a 401(k), look to IRAs. You can save either pre-tax with a traditional IRA or post-tax using a Roth IRA. If you’ve maxed out both your 401(k) and IRA, talk to your financial advisor about other ways to invest.

You can’t afford to put off thinking about the future. While today may be comfortable, tomorrow won’t be without a strong financial foundation. Whether you’re just getting your finances on track or looking to expand your investments, talk to a financial counselor about how you can better prepare for your financial future.

How I Increased My Net Worth By $10,000 in One Year

By Amy Lancaster

art-background-beautiful-1124092.jpg

Up until I started working at Milborn Advisors, I had no money. Seriously - I was living paycheck-to-paycheck, wondering how I was going to come up with rent for the next month. Now that I am involved in the financial world daily, I decided I wanted to grow my own bank account and really start taking my own personal finance seriously. From August 2018 to now, I’ve managed to increase my net worth by $10,000.

Of course, it’s not where I want it to be yet - but it’s been a huge help in my financial future. I’ve been able to begin to pay off student loans - something I’ve never done before. I’ve raised my credit score. I have health insurance for the first time in my life. I have an emergency fund that can cover me for up to six months. All in all, while I still have a lot of work to do, I’m incredibly proud of what I’ve accomplished in a year.

Here’s how I did it.

I researched.

Ask anyone - I love learning about things. As soon as I see a movie, I immediately look up random facts about it. If I have even the slightest question about something, I google it. So, when I first got interested in finances, I read all the articles. I created an RSS feed that updates daily with blog posts just from financial sites. I looked into phone apps that would help keep me on track. I made sure I knew the ins and outs about everything I was going to be doing for the next year so I knew what I was actually doing.

I still do this, as well - not as feverishly, of course, because I’m still in the building stages, but once I get to a place where I can start contributing to retirement for example, I’ll be researching all of my options to make sure I choose the right one.

blank-coffee-cup-2180090.jpg

Arm yourself with knowledge.

I created a plan.

After having all the facts, opinions, and experiences laid out in front of me, I began to plan. What was my goal for this first year of finance overhaul? What did I want to accomplish? I decided on three things:

  1. Open a savings account and start contributing to an emergency fund.

  2. Get to a point where I can start contributing a large sum of money towards my school loans.

  3. Figure out a way to earn more money.

From there, I broke these steps down further:

  1. Open a savings account and start contributing to an emergency fund.

    1. Calculate how much money I can realistically put away each month.

    2. Divide that up by every pay period, and immediately put it into savings when pay day hits.

  2. Get to a point where I can start contributing a large sum of money towards my school loans.

    1. Determine if I can pay off loans while still in school.

    2. Determine what number this is that won’t put me in a bind for other expenses.

  3. Figure out a way to earn more money.

    1. How can I use skills I already have to earn extra cash?

I created a budget and started tracking my expenses.

All of these goals could not be completed unless I had set a strict budget for myself and tracked where every cent was going. I’ll admit - I’m the extreme case who has an Excel spread sheet color-coded tracking literally every cent daily - but that’s what worked for me. Whether you’re checking daily or weekly (and I wouldn’t recommend checking less often than that), be sure to at the very least keep an eye on your account balances.

I was also just genuinely curious about where most of my money went (hint: it’s food. It’s always food.)

Here is how I broke down my expenses every month:

  1. I wrote out where all my money would be coming from for the month and what my total post-tax income would be.

  2. I kept track of when that money hits my bank account.

  3. I took my income and tacked off 20% of it towards savings, setting a specific date for myself on when to transfer it over.

  4. I wrote out all my necessary expenses for the month (bills and loans), and determined that total.

  5. I subtracted that total from the amount of income left after my savings contribution.

  6. I tacked off 30% of that amount and transferred it to my “fun money” account.

You’ll notice I determine the amount of savings before I calculate my necessary expenses. This is important - you want to pay yourself first before taking care of anything else. You’ll also notice that with this method, I have a left over amount of money with no job. The first year I did this method, I didn’t worry about that money - I was more focused on getting this system in place and seeing if I did actually have extra money left over after all the payments and transfers were made.

I would not recommend doing this - if you can give every dollar a job, do it. I could have been putting all that extra money towards retirement, hitting two birds with one stone (retirement contributions and loan repayments).

I opened multiple bank accounts.

Before starting, I had one checking account with Chase, and one checking account with a mobile bank called Simple that I never used but just didn’t close. I also had a bank account from my hometown that had been open since I was 5. It had $6.00.

Here’s how I now allocate my accounts:

  1. Chase checking account - for bills, loan repayments, and other necessary expenses.

  2. Chase savings account #1 - for emergency fund.

  3. Chase savings account #2 - for long-term savings goals (I’m currently saving up for a new laptop, for example).

  4. Simple checking account - for “fun money”.

The childhood bank account is obviously closed. RIP. (I did get that $6.00 back though.)

I started paying attention to my credit score.

You’ll notice that I don’t have any credit cards or accounts. This is intentional. From personal experience, I’ve seen credit burn my family directly, so I vowed to not have to rely on credit to improve my credit score. Of course, you don’t have to do this - if you’re good with credit repayment, it doesn’t hurt to have one.

I do eventually want to be able to either open a mortgage or get a car or do things that rely on good credit, however, so I still pay attention to this. I’ve had my bad credit score bite me in the butt in the past, and I was tired of it. Because of my changes, my score has increased by 50 points in the last year.

I began tracking my net worth.

Now for the fun part! While I obviously could tell the health of my bank accounts because of my overly-obsessive budget tracking, I wanted to put everything together and see the progression as a total lump sum. So, I downloaded an app called Personal Capital and plugged in all my info. It’s nice because it tracks your bank accounts, loans, and investments all in one place and gives you your total net worth number, along with assets and liabilities. I believe you can also get your credit score on there. Seeing those numbers change and rise is a great motivator, and it’s nice to have all that info in one place.

bracelets-casual-clothes-934063.jpg

I compared last year’s amount to this year’s, and rewarded myself.

As of August 1st, one year has passed since I began this journey. Seeing the amount of money I had from last August compared to now is so amazing. I can’t believe it. So, I rewarded myself by (correctly budgeting for, of course) purchasing new work outfits.

Don’t be shy about celebrating your successes. You’ve worked hard, and you should be proud of yourself!

Let me know if you try this plan - I’d love to hear your progress! Also - are you an obsessive budgeter like myself, or are you more lax about your budget? Let us know in the comments!

5 Money Goals to Make to Build Your Future

architectural-design-architecture-buildings-830891.jpg

In most aspects of life, the journey itself is just as important as the destination. This includes the path you need to take to get your finances in order. It can be intimidating - but with the right directions and guides, it definitely doesn’t have to be!

Here are five goals you can get started on today to pave your path to financial success and stability:

Determine a budget

The first thing you want to do is collect all your statements, account balances, and any money hidden anywhere, and figure out how much you have on you right now. If you don’t want to crunch the numbers yourself, sites like Personal Capital can quickly do this and display everything nice and neatly for you - for free!

Once you’ve figured out what you have and what you owe, it’s time to set up a budget. There are a few ways to do this:

  • Flex those Excel skills and create a spreadsheet, where you can track monthly, weekly, or even daily;

  • Use a budgeting app like Mint, which can send you notifications in real-time about your budget (the “Set it and Forget it” method);

  • Set a meeting with your financial advisor (wink wink) and set up a budget for you together - this can allow for flexibility and you won’t be tracking it alone or relying on a robot.

Once your budget is set, you can see exactly how much you need to survive the day-to-day, along with how much you can allocate towards debt, savings, and investments.

Click here to read about how budgeting can change your life.

Prioritize your debt

The next step is to start ticking away at those loans. Your budget will show you how much you can spend monthly on your loans - now start applying it! The nice thing too is that you can adjust numbers here and there depending on if you want to be more liberal or conservative with your debt repayment - just make sure you adjust the rest of your budget to make up for the difference so you don’t end up putting more money towards your payments than you can actually afford.

Read our guide here on how to begin tackling your debt!

Decide how you will contribute to retirement

After setting a budget and paying off your debt, the next task you’ll want to tackle is getting yourself set up for retirement. What kind of account do you want to contribute to? Does your company have a 401(k), or will you need to open an IRA? Be sure to research all your options, and pick the plan that’s right for you.

Roth or Traditional? Which IRA Is Right For You?

Don’t forget to address these aspects of retirement that are often overlooked!

Figure out how to make your money grow

Congratulations! You’re beginning to set up a nice cushion for yourself. But - don’t get too comfy yet. While having a stable income is good, don’t you want to learn how to earn more?

This is where investing comes in. What is considered fun or a gamble to some can be intimidating for others - what if I lose all that I’ve worked up towards? More often than not, however, investing is worth it purely for the fact that you will walk away with more than you put in. As the old adage goes - “You gotta spend money to make money.”

Again, be sure to do your research: you can start with this article here.

Seek Guidance

Even if all your ducks are in a row, having an advisor or a mentor is a great way to stay focused and to be sure you’re making the right decisions. Many of the top successful people will say that they had a mentor, and wouldn’t have made half of their money-making decisions without them.

Whether you’re planning for retirement, looking to get out of debt, or just wanting a question answered - we can help. Click here to contact us and schedule your free 60-minute consultation today!

What are your goals financially to help build and secure your future? Let us know in the comments!

How Much Should You Save In Your Emergency Fund?

cash-cent-child-1246954.jpg

You’ve most likely heard many variations of answers when it comes to the question of “How much should I have in my emergency fund?” From $1,000, to six months of expenses, up to a year, and anywhere in between. These answers vary from person to person, so it’s hard to know which amount will be right for you.

We’ve come up with some guidelines for you to evaluate your situation and figure out just how much you should have saved in your emergency fund before taking the next steps towards financial freedom. Check them out below!

What is your living/family situation like?

The first thing you’ll need to consider is how many people you’ll need to support should you have to rely on your emergency fund for a while. If it’s just you, obviously you’ll need less than someone who is married with three children, or who has their elderly parent living with them. Keep in mind that the more people you have to support, the less your emergency fund money will be spent on you directly.

How do you pay for your living arrangements?

Do you have a mortgage? Do you rent an apartment? How long do you want to be able to make payments before going to work again, should you lose your job or have medical leave or maternity/paternity leave? Are you paying for it all yourself, or are you splitting payments with someone?

Do you own a vehicle?

If you car is your primary source of transportation with no options of biking, walking, or public transportation, you need to take that into account when building your fund. If your car breaks down, you have to be able to fix it as soon as possible so you can continue to go to work.

How much do you spend each month on bills?

Similar to how you assess your living payments, figure out how much you pay monthly on bills. Are there any bills you could negotiate to a lower monthly rate? Are there any recurring subscriptions that you could cancel (whether you’re even aware of them or not)? Do you split costs with anyone? Knowing how much goes out each month will help you figure out how much you can put into savings each month, and how much you’ll need to live three-to-six months without worrying about extra income should the situation arise.

How much do you spend on extra expenses (non-necessary)?

Ah, here come the worst part. We all have to have our vices now and again, but how often do you indulge? Those daily coffee runs can add up, so see where you can cut back. After that, figure out how much this monthly cost is, and figure out if you’ll be able to spend that much after you put away your monthly savings contribution.

Do you have savings already?

Perhaps you have some money tucked away already, but you aren’t quite sure what to do with it. Figuring out a goal for your emergency fund helps give those dollars just floating into accounts a job to do. Plus - you’ll have a cushion already, and you’ll be that much closer to hitting your goal and taking your next financial steps.

Do you use healthcare frequently?

How often you need to visit the doctor and dentist will drastically affect your emergency fund. Make sure you have enough saved to cover any co-pays, medication, and hospital visits should an emergency arise.

Do you have debt to pay off?

If you do, hopefully you’re already making monthly payments. Make sure to figure out how much you can pay if you need to rely on your emergency fund to cover costs. That being said, don’t dip into your emergency fund to pay for debt if you don’t have to. Ideally, this account should be used for last-minute emergencies that may come.

Do you expect a major financial crisis to occur in the next year?

Obviously, it’s hard to predict financial crises, but if you feel as though you may have to make a big payment (for example, you have a feeling your car will break down for good and you need solid transportation), it’s good to trust that intuition and budget accordingly. Hope for the best, but expect the worst (or at least, prepare yourself for it).

What number are you comfortable with?

All in all, it really depends on what number you feel you’ll be comfortable living off of for an extended period of time. Ideally. you won’t need to use your emergency fund hardly ever, but it’s good to have a solid number and time frame should you end up in that situation.

Still not sure how much you should save? Contact us for a free consultation, and we’ll be able to tell you exactly what you should do!

My 2019 Financial Goals

creativity-cup-desk-893895.jpg

By Amy Lancaster

Me 5 years ago would have never believed that I would have this much control over my money situation. I always thought I was doomed to forever live from paycheck-to-paycheck, stuck in a small apartment eating ramen in the dark and only traveling in my dreams. But, I will say – working at a financial firm has seriously changed my life in terms of my finances. Just from being at Milborn for less than a year, I’ve managed to keep a consistent budget since August and put away over $2,000 in savings.

Still, there’s always room for growth – and, as a millennial always being told to live her “best life”, I know I can’t settle for my current situation. While I am in a much better position than I was just a couple years ago, this momentum has given me motivation to aim my goals a bit higher and start experiencing life the way I’ve always wanted.

With that being said, here are my financial goals for 2019.

  1. Save over 3 months’ worth of income in an emergency fund. I’ve done a lot of research into what exactly I should have in my emergency fund, and it’s ranged from $1,000 all the way to one year’s worth of income. Of course, I believe that having more in there is better, but at some point, I don’t want to spend the rest of my career putting away money into an emergency fund and instead put that money to work, so I’d like to have a cap-off. While the finish line will be six months for me, this year it’s more realistic for me to get to three months.

  2. Put money away towards my July trip to Japan so that I don’t have to dip into money from any other accounts. This is a goal I am very excited about. I’ve wanted to go to Japan for a very long time, and it’s been years since I’ve left the country. I never thought I’d be able to properly budget my money or make enough to make it a reality to actually save for a trip, but now that I’m in a more comfortable position financially, I want to take advantage of that. The goal is to have $3,710 (which, according to Money We Have, is an ideal budget for a  two-week trip), which means I’ll need to save $742 a month from now until July (along with the $530 I already have put away).

  3. Buy a new computer. After my big financial save for Japan, my next savings goal will be to get myself a new computer. While the one I have is good for day-to-day work and school, I want a computer that can handle my photography and creative endeavors, and one that I know I can rely on for years to come (whereas I’ve had this computer for less than two years and the keyboard is already broken, as well as the laptop-to-tablet switch feature is glitchy). The model I’m eyeing up – MacBook Air 256GHz (in rose gold, of course) is $1,399, which means if I want it by January of next year, I’ll need to put away roughly $117 every two weeks starting in August.

  4. Start putting away 10% of income towards retirement. After that goal, I will think of another savings goal (probably save up for an iMac, because I’d also like a desktop computer), but I know I really need to look into saving for retirement because – I’ll be candid – I have nothing saved. Stocks, IRA’s, and all that jargon really scared me until I started working for Milborn. Now, I have a better understanding just from hearing the day-in-day-out talk between Mark and Drew. By knowing I can save for retirement and still have fun in the present, I can be a little more willing to, you know, actually save.

  5. Invest? Actual investing, however, still intimidates me a little bit. I don’t have to start paying off school loans until I graduate (summer of 2020), so I may hold off on this until I pay those off – which are thankfully as of right now my only source of debt. Nevertheless, I will continue to do my research so that I have a clear plan of how exactly I want to invest when the time comes.

city-contemporary-crossing-1191377.jpg

Writing down goals always helps me stay on track. Plus, sharing goals keeps me accountable! What are you financial goals for 2019? Comment them below!

How Tracking My Budget Has Changed My Life

adult-adventure-backpack-287240.jpg

By Amy Lancaster. Originally published in the October 2018 Issue of the Milborn Newsletter.

Like most people my age (I'm assuming), most of my 20's have been less about financial freedom, and more about stressing about where my next dollar was coming and going. My adult life so far has been filled with nights of staying home, dodging plans, and not getting any sleep, rather than going out, partying, and traveling. Even more so, there were no saving habits to be found. Being almost 30, I knew things had to change.

Budgeting was something I knew I had to do - and wanted to do - but it wasn't until I started working at a financial firm and seeing the ins and outs of money and investing that I became truly interested in fixing my financial situation. From only two months of keeping track of my spending, I've managed to not only finally open a savings account, but I've tucked away over $700 that I just assumed I didn't have lying around otherwise. Here are a few more things I've discovered since tracking my budget:

1. I spend way too much on eating out. Lattes, sushi specials at the market, an alcoholic beverage or two - it adds up, and quickly. I'd always defend my eating out habit with "Well, I can spend $100 a week on groceries, or I can spend $5 a meal three times a day for seven days, which comes out to be the same amount." Oh Amy, you are so naiive. I'm still struggling with this, but being able to see how much I do spend on eating out (and so far, it's been 2 for 2 on being more than groceries a month) helps me curb this habit and see that I could be putting that amount towards something way more necessary (say, a new computer. I'm tired of living this USB keyboard life since my laptop's keyboard broke).

diner-dinner-drinking-6216.jpg

2. I discovered automated payments I didn't even know I had. The very first day I started tracking my spending, I noticed a $40 monthly payment for a resume website I used once. Immediately I canceled it, and thanked myself for tracking my spending, otherwise who knows how long I would have paid $40/month for something I didn't even need or use. 

3. My financial goals are more tangible. I haven't had a car since February of 2017. While I've been able to mostly get around and have had wonderful people in my life be so gracious to give me rides or loan me their car, I do miss the freedom of having my own vehicle. Now that I am tracking my budget, I can stop thinking "One day when I graduate and have a high-paying job I can finally get a car", and start putting away x amount every month and physically seeing my money grow towards that goal. That trip to Japan that I've been wanting to take for years? It doesn't seem so far fetched of an idea anymore.

busy-busy-street-city-1191375.jpg

4. It makes me excited for the future. One of my biggest fears for a while now has been being a financial burden on whoever my long-term partner ends up being. It's hard to admit, but in order to fix yourself, you need to admit what your problems are, and be candid with yourself. Now that I'm with that person, the last thing I want to do is put myself in that situation. I don't need to earn more than him (let's be real, I probably won't, He's a scientist, and I will brag about that at every opportunity), but rather have us spend our money on something for both of us - a spa day, a dream trip, our future home - than have him spend money on bailing me out of a bill or loan or a debt situation. By fixing my financial situation now, I can guarantee the future will be better for us - and it makes me look forward to it in a way I never have before. 

5. I can sleep at night. If that isn't financial freedom (or at least freedom from stress), I don't know what is.