Alison Covarrubias,Julie Abrams,Cathy Curtis,Ayesha Mathews-Wadhwa

It was my pleasure to moderate a panel of women who have made it part of their life’s work to help and support women entrepreneurs. Julie Abrams as CEO of Women’s Initiative; Alison Covarrubias as Co-Founder of The Hatch Network; Baat Enosh of  NCWIT and Women 2.0 and Ayesha Mathews-Wadhwa as a Director of Savor the Success.

We started our discussion by exploring the popular notion that women will “rule the world” and that the economic recovery will be largely led by females. We went on to discuss the challenges women face securing funding for their companies, the conflicts inherent to being a parent and running a company, and the unique circumstances that women of color face on their road to successful entrepreneurship.

The panelists agreed that a gender war wouldn’t do anyone any good, but that bias still exists. Until influential men become more balanced and realistic in their opinions about women’s abilities, change will be slow – particularly in the area of venture capital funding. The fact that so few women are partners at venture capital firms is a roadblock,  as people tend to invest in people they are most comfortable with and more women V.C.’s invest in women owned businesses.

On the positive side, studies indicate that women-owned businesses are run more efficiently, achieve a higher return and are focused on more than just the bottom line  – usually with an additional mission benefiting the greater good in some way. The current recession may be the catalyst that women need to be recognized as leaders with unique qualities that are necessary to gain an edge in our increasingly competitive and global world.

You can view the entire discussion on a series of youtube videos, here are the links.

Opening Comments and Introductions of Julie Abrams and Alison Covarrubias

Introductions of Baat Enosh and Ayesha Mathews-Wadhwa

Women Will Rule the World?

Funding Your Business

What About Women of Color?

Can Women Do It All?

Final Words of Wisdom

Please comment and share your views!

Currently, the Club (in addition to its regular programming) is hosting a series entitled The Ascent of Women which will explore the lives of women today.  There are 30 programs planned beginning on July 30 and extending through the end of August 2010. Many of these programs will be of interest to Of Independent Means readers so be sure and explore the list.

I will be moderating two of the programs which I will highlight here:

On Friday, July 30,  Outliers and Outperformers: Women in Fund Management – this event will be a  panel discussion and will focus on the role of women in the fund industry today and how more women can reach the level of fund manager.

The panelists are:

Mellody Hobson, President, Ariel Investments
Ivka Kalus-Bysticky, Portfolio Manager,The Pax World International Fund
Luz Padilla, Head of Emerging Markets Fixed Income, Doubleline
Mary Ellen Stanek, Managing Director, Chief Investment Officer, Robert W. Baird & Co.
Cathy Curtis, Investment Advisor, Curtis Financial Planning – Moderator

If you would like to attend, you can click here to reserve

On, Tuesday, August 3:  Girls Gotta Do Business-The Rising Force of Women Entrepreneurs. This panel discussion will focus on the exponential growth of women-owned businesses, some of the struggles women face as they grow their businesses and how more women can succeed as business owners.

The panelists are:

Alison Covarrubias, Co-founder, The Hatch Network, SF
Baat Enosh, Entrepreneur Alliance Program Director, NCWIT; VP of Operations, Women 2.0
Ayesha Mathews-Wadhwa, Director, Savor the Success, SF Bay Area
Julie Abrams, CEO, Women’s Initiative for Self Employment
Cathy Curtis, Financial Advisor, Curtis Financial Planning – Moderator

To reserve for this program click here.

Check back as I will be blogging about both discussions!

Hope to see you there.

Temra Costa,Deborah Madison,Jessica Prentice,Leda Meredith

San Francisco is on the leading edge of the locavore movement.  It’s also one of the most expensive cities in the U.S.  No wonder the Commonwealth Club program at the Port Commission room at the Ferry Building housed a sell-out crowd this past Wednesday night. The topic: how to eat locally on a budget. The speakers, all passionate locavores and sustainable food advocates, have huge locavore credibility:

Temra Costa’s  just released book, Farmer Jane: Women Changing the way We Eat tells the stories of 26 women leaders that are working to create a more holistic and nurturing food and agriculture system. Prior to writing her book, Temra worked for CAFF – The Community Alliance for Family Farmers on the Farm to School and Buy Fresh Buy Local programs. Temra resides in the San Francisco Bay Area.

Deborah Madison opened Greens, a vegetarian restaurant in San Francisco that is still popular after over 20 years, and went on to write several cookbooks about vegetarian cooking: The Greens Cookbook and Vegetarian Cooking for Everyone amongst them.  Her latest book celebrates fruit in all it lusciousness: Seasonal Fruit Desserts From Orchard, Farm and Market.

Leda Meredith is a passionate locavore and urban gardener. Her most recent book:  The Locavore’s Handbook: A Busy Person’s Guild to Eating Local on A Budget is full of practical, down-to-earth advice about incorporating locally grown foods into daily meals. She wrote The Locavore’s Guilde to New York City and teaches classes on urban gardening.  Leda resides in Brooklyn, NY.

Jessica Prentice is a professionally trained chef and expert in sustainable agriculture issues. She worked as the Director of Education Programs for the Ferry Plaza Farmer’s Market and founded Wise Foods Way in 2004 and Locavores in 2005. She is a worker-owner in a CSK- Community Supported Kitchen in Berkeley called Three Stone Hearth. In her book, Full Moon Feast: Food and the Hunger For Connection Jessica champions locally grown, humanely raised, nutrient-rich foods and traditional cooking methods. Jessica lives in the San Francisco Bay Area.

The discussion ended up being about much more than budgeting tips. All the women expanded upon the psychic, health and political  benefits of creating community around food. As Deborah Madison put it “When you get involved in local food you’re getting a lot more than food, you are getting community.” Leda Meredith got us thinking about community in a whole new way when she said “I never eat alone….I have a whole family on my plate.”  All of the women are advocates of developing personal relationships with the people that produce the food we eat.

Jessica Prentice spoke eloquently and deliciously about creating nutrient-rich meals out of simple ingredients such as beans and rice. “Bone broths with beans and rice and a bay leaf – simple, delicious.”  Jessica has a great sense of humor.  When espousing the cost savings in choosing mutton over lamb in dishes like lamb stew she said…”you really can’t tell the difference in taste – mutton just has a p.r. problem!”

The conversation always circled back to the expense of eating locally. All of the women on the panel are budget-conscious and offered some excellent ideas for saving money while eating locally. Here are some of the best:

1. Volunteer for your local CSA or farmer’s market – many will offer trade in food for work.
2. Eat seasonally, prices come down when food is in plentiful supply, i.e., strawberries in the spring, tomatoes in the summer.
3. Use all parts of the vegetable: fresh organically grown beet, carrot and radish greens are delicious.
4. Choose grains and beans over meat and create simple inexpensive meals using bone broths and vegetables.
5. Preserve seasonal fruits and vegetables by freezing or canning.
6. Choose cheaper cuts of meat and make stews that can last all week.

As I was writing this post I got an email from Britt Bravo, a social change consultant/coach based in Oakland who attended Wednesday’s panel.  She wrote a truly comprehensive list of tips for eating locally on a budget gleaned from the discussion. Here is the post on her blog:  Have Fun * Do Good - 25 Tips For Eating Locally on A Budget.

Thanks Britt!

Happy Eating!

P.S. Zuzy from Cooking 4 the Clueless also weighed in on the panel discussion: http://cooking4theclueless.wordpress.com/

None of us knows how long we will live. But you can be sure that the longer you live the more money you will need – unless – you’re willing to reduce your lifestyle in retirement. According to IRS issued life expectancy tables, the life expectancy for a 25 year old is 83.2, for a 50 year old 84.2 and for a 75 year old it’s 88.4.

The older you get the more years you are expected to live. We can thank medical science and our healthier lifestyles for this increased longevity. In 1900, the average life expectancy was 47 years old!

Some of you reading this post may be so far away from retirement that you don’t think about it. You’re more concerned with building your career and trying to make enough money to do the things you want to do now. Others may be realizing that it’s time to get serious about having a plan. Then there are those who are either near retirement or retired and know that the nest-egg has to last.

The bottom line is: once you stop earning income you will start withdrawing from your savings to support your lifestyle. These savings (plus social security and if you are lucky, a pension) will be your new “salary.”  If you retire at age 65, your savings will need to last for 20-30 years or more.

How can you be sure that you will have enough?

Fortunately, an incredible amount of research has gone into determining how much a person can withdraw each year from their savings and still have enough to last to their life expectancy. The most widely accepted solution is the 4% withdrawal rate formula. This is how you calculate it:  Total value of savings at retirement x 4% =your  first year withdrawal amount.  Each year thereafter increase this amount by the rate of inflation (assume 3%).

The 4% Withdrawal Rate Formula Illustrated:

Nancy
Nancy is 65 and about to retire. She has saved $1,000,000 that she has invested in stock funds (60%) and bond funds (40%). 4% of $1,000,000 is $40,000. This is the amount that Nancy can safely withdraw from her nest-egg in the first year to start her withdrawal program. She also is entitled to $21,600 in Social Security benefits. Nancy will need to develop a lifestyle (all expenses plus taxes) around this amount of $61,600 a year to protect against running out of money. In each year thereafter, Nancy can increase this amount by the rate of inflation (let’s assume 3%), so in the 2nd year she can withdraw $41,200 and in the third year $42,436 and so on.

Unfortunately, Nancy’s  pre-retirement lifestyle cost $75,000 a year.  She delayed doing any kind of retirement planning and in result, will have to make some sacrifices or move to a less costly area to preserve her capital.

Sarah and Mike
Sarah and Mike are both 45 years old and plan to retire at age 66. They hired a financial planner to help them determine how much they need to save in order to retire and maintain their current $125,000 a year  lifestyle.  They have saved $750,000  so far which is invested in  80 % stock funds and 20 % bond funds. They are expecting a total of $45,200 in social security benefits a year between the two of them. They are saving $12,000 a year each in their 401k’s but are not saving outside of their retirement plan.

The financial planner prepared a retirement projection (also referred to as a capital need analysis) for them and came up with the following:

Retirement Projection
Assuming a 7% average rate of return on their investments, a life expectancy of 90 years old and an average 3% inflation rate, Sarah and Mike will need to save approximately $1,600,000  more by age 66. With their current savings rate they will fall short. They need to increase their savings by $9000.00 a year to reach their goal.  Sarah and Mike plan to go back over their cash flow to see where they can cut back. Also, Mike is anticipating a big raise next year so it will get easier. They are relieved to have a plan and know what they need to do to reach their goals.

Since the longer you live the more money you will need, it pays to plan. Who would you rather be? Nancy facing some tough decisions right when she retires, or Sarah and Mike who have clarity and a road map for where they want to go.  Of course, there are going to be big bumps and little bumps along the way, but it pays to plan.

April Showers Bring May Flowers

“April is the cruelest month . . .” begins the first line of The Waste Land, the signature modernist poem by T.S. Eliot.

The poem had nothing to do with taxes. However, with the goal to raise awareness about National Poetry Month, the Academy of American Poets and the American Poetry & Literacy Project cleverly came up with the idea to distribute thousands of free copies of The Waste Land to selected post offices on tax day.  At least anxious taxpayers had something pleasant to read after they dropped their returns in the mail!

The first half of April can be very stressful and yes, cruel, if you aren’t organized or run out of funds to pay your tax. With the exception of an IRA contribution, there is nothing you can do to alter the outcome in April.  (Yes, you can file an extension, but you still have to pay the taxes due).

But taxes are money’s enemy on more than just tax day.  Taxes can erode the value of your investment portfolio and eat away at your income all during the year.  We all have to pay our fair share, but there are tips and strategies that can be implemented to help keep more of your money in your pocket and return thoughts of April to lovely Spring weather, longer days, strawberries and sweet English peas!

Tax Planning Strategies To Keep You Sane

Get Organized.
If you don’t do anything else, setting up a filing system for tax documents is a must. Not only will everything be in one place when you need it, but you are less likely to miss out on deductions when you are consciously filing receipts and documents all year. A series of folders with labels such as charitable contributions, property tax, business expenses is recommended. If you just dump everything into one file, you will have another major organizing task come April.

Tracking Expenses
Buy a notebook and keep it in your car. If you are doing charitable work, you can deduct miles to and fro. Keep good records of  the date, starting mileage, ending mileage, and the name and address of the charity. Keep track of business miles in the same manner. No more stressful guess work at tax time.  Also note the starting mileage on your odometer on January 1st and the ending mileage on December 31st. If you pay cash for parking meters while doing charitable works or business note those in your book too.

Know Your Cost Basis (purchase price of investments you buy)
Most brokerage companies track cost basis for you these days. But if you change brokerage company or advisor, it’s very wise to make sure you walk away with a document that lists cost basis for each investment. You need this data when you sell an investment. Maintain records of any improvements you do to your home as well. When you sell these costs will increase your basis (a good thing because it means you owe less tax).

Donating Items To Charity
Carefully itemize clothing, household goods, books, etc. that you give to your local Good Will, Salvation Army or other charity. Estimating a total dollar deduction is not enough. Do this before you drop the goods off, or you will forget what you gave away!

Calendar Important Dates
It’s so easy to forget to pay estimated taxes, especially if you are newly self-employed. When your taxes are not being deducted directly from your earnings you need to pay estimated taxes. The dates are April 15, June 15, September 15 and January 15. Set a calendar alert to yourself a week before so you have time to do the calculations. The best time to do tax planning is well before the calendar year is over: plan to do-it-yourself or meet with your tax advisor in October.

Tax Saving Tips

• If you can hold on to a winning investment for more than one year, you will pay capital gains tax on the sale (currently at 15%) rather than your ordinary tax rate which can be significantly higher.
• Buy income producing investments (i.e. bond funds or balanced funds) in retirement accounts rather than taxable accounts as the income from these investments is taxed at ordinary income tax rates not the lower capital gains rates.
• Choose growth stock funds, individual stocks or tax-efficient mutual funds for your taxable accounts as they generate less or no current income.
• If you have losses in your taxable account, you can sell them to offset gains in that account. Plus you can deduct $3000 in losses against your taxable income. You can buy back the investment if you want to as long as you follow the wash-sale rules.
• Invest in a ROTH IRA if your income permits. You won’t get a tax deduction, but you won’t owe tax on withdrawal, ever.  (Special rules apply for earnings in Roth Accounts).
• Save as much as you can in company retirement accounts. This money is tax-deferred and provides welcome tax relief in your highest earnings years. If you are self-employed take advantage of SEP IRA’s, Simple IRA’s or Defined Benefit plans. The type of plan you choose depends on your income and number of employees amongst other factors.
• Consider converting some or all of your Individual IRA accounts to Roth IRA’s this year. For 2010, the income limitations are waived and you can spread the tax over two years if you choose.
• State and Federal government’s occasionally provide tax credits. Unfortunately they all have different starting and expiration dates. Do a search on the IRS website www.irs.gov and your State’s tax board website to keep abreast of current credits. There are or have been credits for energy savings improvements to your home, childcare credits, first home buyer credits, education credits, etc.
• Review your tax withholdings whenever your tax status changes. For example, when you get a pay raise (or pay cut), you buy a home, have a child, get married or get a divorce. The IRS has a tax withholding calculator or read IRS Publication 919 or ask your tax advisor for help.
• If you buy mutual funds at the end of the year in your taxable account, research the date of any planned capital gain or dividend distribution first. You don’t want to buy a fund and get immediate taxable income before you have a chance to benefit from any investment gain. Buy after the distribution date.
• Tax-payers in high tax brackets can benefit from buying muni-bond funds or bonds in their taxable accounts.  These investments earn federally tax-free and sometimes state tax-free income.  (Not beneficial for lower tax bracket individuals).

This isn’t an exhaustive list, but it’s a good start for most people. I hope these tips and strategies will help to make tax time less stressful and keep more money in your wallet!

Inflation and taxes can wreak havoc on the best-laid financial plans unless you arm yourself with the knowledge and tactics to prevent the most damage.

Today we’ll focus on inflation, which is one powerful enemy. Why? You can’t see it, there are are no laws protecting you from it and it’s not selective. Every single dollar is subject to its eroding influence.

What is inflation?  – Get to know your enemy.

Inflation refers to the increase in the Consumer Price Index (CPI), which tracks the prices of goods and services that most of us buy. Inflation has averaged 3% a year from 1926 to 2009.

When prices rise, each of your dollars buys fewer goods and services – eroding your purchasing power. Just think about the price increases on everyday items such as milk, bread and eggs over the last few years. Or, consider the rise in your medical insurance premium or the tuition for your children’s education.

It’s not hard to see that if your income doesn’t rise with the rate of inflation, your lifestyle can be dramatically affected. Not all goods and services rise at the same rate, however. If you buy more items that are rapidly costing more money (education, medical costs) you’ll be more adversely affected.

How can you fight inflation?

There are a few ways to fight inflation and fortunately you don’t have to take on this fight all-alone. One of the Federal Reserve’s (the Fed) key duties is to keep inflation under control or in Fed speak: to maintain stable prices. They do this by manipulating monetary policy – usually by raising short-term interest rates but they have other tools as well.

But since inflation is a persistent foe, all the Fed can do is control the rate of inflation, not stop it altogether (which could lead to deflation, but that’s a whole other story).

Five Inflation Beating Tactics

Fortunately, there are some actions you can take with your money to hold off or minimize the erosion of your purchasing power:

1. Invest your cash reserves wisely. Financial institutions are more than happy to take your cash and pay you a low interest rate. Then it’s invested for a higher return elsewhere! Keep up with current savings and money market rates and move your money to where you can get a competitive rate on your cash. Note: money market fund rates tend to move up quickly when interest rates rise.

2. Get the raise that you deserve. When it comes time for your performance review, let your boss know what a good employee you’ve been and ask for a raise when appropriate. A stagnant salary combined with rising prices is a formula for a less abundant lifestyle or the accumulation of debt.

3.If you’re self-employed, price your product or service competitively and take price increases when you can.

4. Monitor your investments based on your time horizon (when you will need the money) and risk tolerance (can you sleep at night?). Being overly fearful of the stock market and holding too much cash will not bring you abundance in your golden years.

5. Certain assets rise with inflation. Treasury Inflation-Protected Securities, gold, commodities, and real estate are examples of assets that typically rise with inflation. If you own a home, this is probably enough real estate.  One of the easiest ways to invest in commodities and gold is through exchange-traded funds.  Careful though, these assets can be volatile and you would only want a small percentage of a balanced portfolio invested in them. Educate yourself or get help before dipping your toe in!

Here are a few resources to get you started on inflation fighting.

From the Get Rich Slowly Blog: Best High-Yield Savings Accounts

From Morningstar:  Exchange Traded Funds

From the SEC website: Asset Allocation, Diversification and Rebalancing

Next Up:  Money’s Enemy #2:  Taxes  (To be posted soon).

Kim Kochaver, Trade Marketing Manager for LinkedIn

Manage the Brand That is You.

Last night, I hosted a LinkedIn workshop at my home for members of the Hatch Network a modern business school for entrepreneurial women. Our guest speaker was Kim Kochaver, a Trade Marketing Manager for LinkedIn.

Kim gave a fast-paced, gem-filled presentation on how to nurture your LinkedIn profile, build your network and then leverage it. Because many of the women in the room were LinkedIn neophytes, we spent most of the time on primping profiles, which is what I will share with you in this post.

Why should LinkedIn be important to you?
Because 60 million other professionals are using it. It is THE social media site for business networking. And most importantly, (as Kim stated so effectively last night) it is a growing phenomenon that our career or business success depends on managing our own personal brand. LinkedIn gives you an excellent platform to do just this.

Start managing your personal brand with an optimized profile.
Above all, Linked in is a site meant for doing business and making professional connections. The profile layout is straightforward and simple with fields to let people know who you are, what you do, your professional  memberships and interests. The following are a  few tips to help you set up an effective, professional profile (click on “settings” in the upper right corner of the your LinkedIn homepage to start editing). Definitely post a picture of yourself.

Choose a head-shot style picture. This is not the place for a picture of you on a beach in Mexico. If you can afford it, hire a professional to take a head shot. You can use it many other places.

Write a summary that is brief and interesting. Write it in paragraph form, not bulleted like a resume. Cutting and pasting your resume is probably not a good idea – do you find resumes interesting reading material? Highlight your specialties… Choose the experience or personal qualities that most represent your brand. If you don’t like to write about yourself, enlist the help of a professional writer/editor to help you.

Choose a custom Public Profile URL.  Kim recommends using your name since your employer or business could change. You will always be you. For example, my URL is http://www.linkedin.com/in/cathycurtis

Choose custom names for your websites by ignoring the default “my website”, “my blog” and choose “other.” By choosing other you can name your links whatever you like. Another great tip: rotate your links and websites depending on what you want your contacts to know about you. For example, Kim has a website link called Get LinkedIn’s Audience Stats and Follow Kim on Twitter.

Edit your Public Profile. The default public profile is too basic. At least include your picture, headline, summary, specialties, websites and interests. If you peak a viewer’s interest the more likely it is they will go on to read your full profile increasing your chances for a connection.

Use the Network Updates box to promote yourself and your business. Some ideas for effectively using this feature: post new blogs you have written; post event info, let your contacts know about special projects you are working on related to your business or job, if you are openly job hunting, let people know here. Network updates is a great tool to remind your network of what you are up to on a regular basis.

Take Advantage of LinkedIn Applications
LinkedIn has added several applications and there are more to come. Here are a few that are easy and fun to use and further the goal of building your personal brand:

Reading List by Amazon:   You are what you read?  Let your contacts know more about you by what you read. You can post your reading list and write recommendations for books you like.

My Travel by TripIt, Inc:  Fill in details of your upcoming trips. The application then let’s you know who lives or works in that area or if one of your connections is travelling there too. Think about the opportunities to meet business contacts while on the road?  Or solicit helpful comments about places you are going?

WordPress: This automatically syncs your wordpress blog posts with your LinkedIn profile. Expand your readership and contact list.

Tweets: Integrates your twitter account with LinkedIn and allows you to choose tweets for posting on LinkedIn.

SlideShare Presentations:  If you are particularly proud of a presentation you have created, you can now share with your connections. This is an effective way to highlight your particular knowledge or expertise and show off your slide-making skills. Think about the opportunities for connections with potential clients or employers!

Once you get your profile primped up to perfection, you can step up your network building activities and then start to leverage your network. In closing last night, Kim challenged us all to log-on to LinkedIn and spend a couple of hours carefully going through every section under “settings’:  Profile settings, email notifications, home page settings, RSS settings, groups, personal info, privacy settings and my network. There are many important choices within these sections that you won’t want to miss.

I’ve primped my profile, have you?

Primp your LinkedIn Profile:  Your Brand is Depending on You.

Contrary To Popular Opinion You Were Not Born To Shop

I’m a financial planner. But I’m also a normal person just like you, and I know how difficult it is to be an American and somehow not feel it’s your duty to shop. Our economic and social system is based on capitalism, which is partly defined as the creation of goods and services for profit in a market. The consumer (you) is a very important part of this equation because if there are no buyers for the goods and services – what happens to the economy? Economists watch consumer spending like hawks – and no wonder:  it fuels about two-thirds of total economic output in the U.S. Talk about pressure! Consumer spending is so important several indexes have been designed to measure it. The most widely used index is the Conference Board Consumer Confidence Index and amongst other factors is used to determine the direction of the economy.

The perfect agent for promoting consumption is the advertising industry. Advertisers want us to consume. Their mission is to make products and services as enticing as possible so we buy them whether we need them or not. Watch a few episodes of Mad Men to learn the tricks of the trade. Watch T.V, drive down the freeway, listen to the radio, log on to a website and you’re bombarded with advertising messages. It’s almost impossible to escape from the influence of advertising unless you live like a hermit. A quote from Wikipedia describes advertising as the “pillar of the growth-oriented free capitalist economy” and states that “contemporary capitalism could not function and global production networks could not exist as they do without advertising.”

Born To Shop?

No wonder we sometimes feel we were Born to Shop! The problem: economists and advertisers aren’t concerned about your personal bottom line. Just like you, they’re concerned about their jobs, their families, their standard of living and their ability to retire comfortably. We need to adopt a “me vs. them” mentality. When we open our wallet to buy something…..let’s stop and think: do I want “them” to have my money, or do I want “me” to have my money? The person on the other side of the cash register doesn’t know if you can afford the item you are about to purchase – nor do they care. Think of shopping as a psychological battleground – that’s how advertisers think of it.  Do you want to be the victor or the vanquished?

Feeling vanquished when it comes to your personal finances isn’t a good thing.  It probably means that you’re in debt; you’re anxious about your future and you feel stuck. Is all the stuff worth it? Probably not. Excess stuff clutters your environment and the collective environment and excess debt can ruin your credit score and your relationships. So it’s time to denounce popular opinion, admit you weren’t Born To Shop, stop spending more than you earn, and live within your means.

Like anything psychological or emotional, it isn’t easy to change. Read simple truth #2:  “Your Money Personality Affects Your Money Behavior“  for more insights on this topic. But there are things you can do to take control of your spending.

Here’s a strategy to get your started:

Balance Your Budget

1.  Using an excel spreadsheet list all of your expenses subtotaled as follows:  fixed and necessary expenses: these expenses are the same every month and/or are necessary to keep you housed, clothed, groomed, healthy, fed and mobile; other committed expenses: child related expenses, pet care, fees to professionals, adult education, gym membership, insurance premiums, debt payments;  discretionary expenses: vacations, dining out, entertainment, hobbies, electronics, gifts, home improvements, furnishings;  auto-savings: retirement contributions and other savings.

2. Total all the subtotals to come up with your total monthly expenses. Subtract this amount from your total monthly income. The outcome will either be a positive or a negative number.

3. If it’s a positive number, congratulations. You are living within your means.  If you know you’re saving enough for retirement and other financial goals and have no debt to pay off, then you have some discretion as to how you use the money. If the outcome is negative, go back and rework your expenses until it comes out even or positive. A hint: you will have the most flexibility to adjust on discretionary items, but you can also try and negotiate savings with service providers or increase deductibles on insurance policies to save on premiums.   Note: it’s important that you pay off your high interest consumer debt as fast as possible, so if you can increase debt payments do so.

4. Now that your cash flow is neutral or positive, this becomes your working budget. Need help staying on a budget?

Some Tips for Staying The Course

-Use mint.com – software that tracks all of your expenses, income and savings on line. You enter your budget and it will send you an email when you overspend on a budget item.

-Try the envelope system: place your budgeted amount for discretionary items such as clothing and food-out in an envelope in cash. When the cash is gone, you can’t spend on those items again until the next month.

-Leave your credit cards at home. Become more conscious that the money you spend is from a finite source. Try paying cash or using your ATM card whenever possible.

-If you are tempted to buy an item that you don’t really need, leave the store, walk around the block and think about it. Nine times out of ten you won’t buy the item.

-Print out a copy of your budget. Post it somewhere that is visible to you regularly. Keep it top of mind.

Remember: It’s “me vs. them”. Who gets your money?

Reward yourself

Each month that you stay within budget, reward yourself in some small but significant way. Indulge in a nice lunch out, get a pedicure; order a nice glass of wine with a meal.

Earn More

If after completing the budget exercise you find that it’s impossible to balance your cash flow or you don’t want to live so frugally – look at the income side. Can you ask for a raise at work? Find a higher paying job?  Freelance?  Start a small business? Rent a room out? Sell belongings to raise cash?  Explore all avenues. Exercise your capitalist gene by thinking about all the ways you can produce goods and services for profit – for yourself!

Below are some additional resources to help you start living within your means:

Read Your Money Or Your Life by Vicki Robin, Joe Dominguez and Monique Tilford
Read I Will Teach You To Be Rich by Ramit Sethi

Blog to Follow:
Get Rich Slowly

Please feel free to share your comments about how you keep on a budget and/or what you have done to bring in extra income.

The First Simple Truth About Money

Do You Know You Have a Money Personality?

Here’s a related question for you. Ever wonder why you procrastinate about financial matters? It may be due to your deep-seated money personality. We’ve all developed money habitudes and attitudes over the years – learned from our parents, our teachers and our peers.

Some of the information we absorbed about money may not be serving us so well now. For example, if you were raised in an atmosphere of scarcity, you may spend your whole life craving things you can’t afford and you now overspend to get them. On the other hand, if you grew up with abundance, you may expect things will always come easily to you. If your mom was a spendthrift, you may become one too or, you may overcompensate by becoming a miser.  If your dad procrastinated about important money decisions and took the attitude “things will work themselves out”, you may find yourself taking the same approach.

My Money Story

My mother and father were extremely frugal, especially my father. He didn’t want anything. Buying him a gift was torture because it was impossible to figure out what he would like – except peanuts, he loved peanuts.  So my siblings and I would end up buying him canisters of planter’s nuts for any occasion that required a gift.  His frugality rubbed off on my mom. Going out to eat with her is challenging. She’ll look at a menu and always order the cheapest thing on it – or a side salad.  Not a comfortable experience when you’ve just ordered filet mignon.

We kids would only get the “necessities” – food, clothing (thankfully we wore school uniforms!) and shelter. So, I learned early on that if I wanted the “extras”, I needed to find a way to buy them myself. This was probably a good thing, as I became self-sufficient at a very early age. But I also rejected the frugality of my parents and have been known to indulge myself on occasion. I’ve worked hard to find a good balance between being frugal and being extravagant.

Can you change your money personality?

Like anything with psychological or emotional roots, it’s possible but it takes work.  Deborah Price is the author of Money Magic, Unleashing Your True Potential For Prosperity and Fulfillment. She is the founder of the Money Coaching Institute based in Petaluma, California and she has developed a money coaching curriculum with the aim to “combine both practical financial guidance with sound psychological principles to help you transform your relationship with money and lead a more purposeful and prosperous life.”

I asked Elizabeth Husserl, a SF Bay Area based money coach, founder of www.innereconomics.com, and a graduate of The Money Coaching Institute, her insights about money personalities.  She said, “If we don’t pay attention to our money personalities they will act out in louder and more extreme ways. For example, the shopping sprees become longer and more expensive because you can’t quite fill the emotional hole you are trying to fill or the anger towards money grows until you blame it for everything wrong in your life.”  Elizabeth offers Inner Economics workshops and private work for individuals, couples and small groups.

Aurora Medina, is also a S.F. Bay Area based money coach. She produces Efecto Mariposa, a Spanish radio show for women that specializes in the psychology of money. One of the ways she does this is through “Mariposa Money Circles” – small groups of six women who explore together the beliefs and patterns associated with money that are holding them back from maximizing their financial potential. When I asked Aurora for her insights she said, “our money personalities relate to the way money is handled mainly in our family environment. We make unconscious contracts about how we will handle money depending on the experiences we encounter that affected us deeply either in a negative or positive way.”

In my own financial planning practice, I find that the more I know about my client’s money type or personality, the better I can serve them. To that end I have each client fill out a money personality questionnaire, which seeks answers to such questions as:

• What messages did your receive about money as a child growing up?
• How did you parents handle money?
• Did you feel like you got an adequate financial education growing up?

Most people are perfectly willing to do this exercise and seem to find the opportunity to explore the emotional and psychological aspects of money cathartic. If I interview a potential client who is in financial trouble and I sense a pattern in his/her life, I will often suggest they work with a money coach first as a precursor to the more technical financial planning work.

If you think that you may be acting in ways that sabotage your chance of financial success and it’s become a pattern  - read, sign up for a workshop, talk to trusted friends or advisors, or engage a money coach. There are resources available to help you.

I’ve listed a few books  just below in addition to the resources I mentioned above:

Books

Your Money or Your Life:  Joe Dominguez and Vicki Robin
Money and the Meaning of Life, Jacob Needleman
The Soul of Money, Lynn Twist
Money, Money, Money: The Search for Wealth and the Pursuit of Happiness by Jacob Needleman
Seven Stages of Money Maturity: Understanding the Spirit and Value of Money In Your Life by George Kinder
You Paid How Much For That?: How to Win At Money Without Losing at Love by Natalie Jenkins, Scott Stanley and William C. Bailey

Other Resources:
National Foundation for Credit Counseling
Association of Independent Consumer Credit Counseling Agencies
United Family Services

Ten Simple Truths About Money

In the course of my financial planning practice, I meet many people who share similar attitudes, fears or misconceptions about money management. It turns out that most people make money way more difficult and scary than it needs to be. So in response to all this, I came up with 10 Simple Truths About Money in order to point out and identify some critical financial concepts that are easy to understand and implement. My next 10 blog posts are meant to inspire you to incorporate these truths into your actions around money.

Ready? Let’s go!

Simple Truth #1:   Procrastination is the Cause of Financial Fuzziness
Does any of this sound like you?

There’s 10 months of accumulated mail  – all unopened – that contain your investment account statements and they are all dumped into a drawer you never open.

You have $30,000 sitting in a savings account at the bank earning 0.15 interest.

You refuse to automate your monthly bill paying on-line, even though you often forget to pay your bills and end up with late fees.

You sold all your stock mutual funds in March because you couldn’t stand to watch them go down anymore and now they are sitting in a money market account earning 0.35% interest.

You know you need to do something, but you don’t.  This is called procrastination.  And, it doesn’t feel good. It generates feelings of confusion, guilt and worry – fuzziness!

If it makes you feel any better, you’re not alone.

However, that doesn’t make it better or okay. This type of procrastination can have serious consequences for your finances:  the spending power of your dollars gets eroded by inflation, your credit score gets downgraded, and you have constant fights with your honey about money. Not good, and even more to the point, not necessary.

Being up to date and clear about your finances can relieve so much stress, and really, it’s just a matter of making it a priority.  This is a great time of year to get started. 2009 is almost over, and January 1 is right around the corner.  If you want to call it a New Year’s resolution, go ahead.  If that doesn’t do it for you, get started anyway!

Here are some tips to get started:

Most time management experts will tell you that the best way to tackle a big hairy project is  to do a little each day, or divide the big project up into smaller ones.
So for a great first example, let’s take that pile of mail.

First day:  Take all the statements out of the envelopes and arrange them in date order, the oldest date on top. See! You’re already making progress!

Second day:  Starting with the oldest statements, glance at the first page which summarizes what’s inside.  Pay careful attention to any deposits or withdrawals – if anything looks strange – investigate.  If not, move on to the next statement. Keep going until you have reached the latest statement and set aside.

Third day:  Spend some time on the latest statement, as it should summarize what went on in your account year-to-date: total withdrawals and deposits, investment gains or losses, total interest or dividend interest earned.

By now, you should have a pretty good idea of the activity in your investment account over the time period that the statements covered.

Fourth Day:  Determine whether you need to make any changes to your investments (or find a financial advisor that can help you with this step). For example, if one of your mutual funds is down 50% year-to-date…go to Yahoo Finance and type the symbol in the search box….read up on this dog-of-a-fund and see if there is a good reason to hold on to it, or chuck it at the soonest opportunity!

From now on, when you receive your monthly investment statement in the mail, open it immediately, glance at the afore mentioned items and file it (in date order) with the others.

I suggest keeping a year’s worth of monthly statements, but hold on to your December statements for 3 years.

I can feel that fuzziness clearing up already, can’t you?