Updated: Apr 19, 2019
The second quarter of 2019 has officially started. We here at Jane Ella feel like time is buzzing by. Before you know it, summer will be here and we want to make sure our Janes are doing everything they can to live their best lives and reach those goals you wrote down way back in January.
One of the ways you can ensure you are living your best life and ensuring your legacy is intact is by setting up systems to promote generational wealth. The topic of generational wealth can seem daunting and like something you don’t start thinking about until much later in life, but the creation of generational wealth is a marathon and not a sprint. Here are some ways that you can build a nest egg that will last beyond your lifetime and move your family forward.
Saving may not make you rich, but it’s necessary
This means money for you (and future kids) in case of emergencies. Savings will not be enough to build generational wealth or will make sure you can retire comfortably, but it is a fundamental component of building wealth. Online savings accounts are the best. Why? They are harder to touch, forcing you to be more prepared. They also have interest rates far above those of traditional banks, allowing your money to make a little money while it sits there. Ally Bank, PNC Financial, Discover and Synchrony Bank all have online savings accounts with an APY (Annual Percentage Yield) equal to or above 2%. The national traditional bank APY is 0.01%. Sounds like a no brainer.
We should all have an emergency fund. Your emergency is not for the ‘emergency’ outfit or ‘emergency’ trip. It is there if you lose your job suddenly, have a tire blow out on the freeway or need emergency repairs to the house. Your emergency fund should be three to six months of your monthly income. Take all your bills and monthly expenses (including incidentals and those not so monthly purchases- toilet paper, paper towels, feminine hygiene products, etc) and add them together. This is a safety net. How does this help with generational wealth? It builds the muscle of being able to make saving a priority. Treat it like a bill and automatically pay yourself. A healthy savings account reduces stress and will allow you to be prepared for life’s inevitable curveballs.
401(k), 403(b), IRAs, Roth IRAs- all terms you should be familiar with. Which retirement account does your company offer? What is their match rate? When are you vested to receive the match rate? And lastly, how much power do you have to tweak your investments to possibly gain greater returns? All questions that need answers. Find out who your benefits person is and ask them for this information. If you are not yet contributing to your companies sponsored retirement fund, you are leaving free money on the table when they add their annual match towards what you have invested within the fund. We are not about leaving free money on the table, so make sure to get that information this week. Experts will tell you to contribute the maximum amount allowed to your retirement fund. That does not work for everyone’s budget. Find out what you can comfortably part with, and start there. Something is better than nothing.
Generational wealth is a hot topic recently. It basically means you are creating systems now that will produce income sources for those after you. There are many ways you can do that, so let’s discuss.
Let’s get real for a second. Every person needs life insurance. Some of you may have a small policy through your job, but a larger outside policy is also a wonderful asset. You may have seen people standing on street corners, collecting money. That is because they do not have the money to bury their loved one, let alone deal with any costs left to the family. The average funeral costs $7,000-$9,000. It may seem morbid to discuss this, but not enough people do and are left scrambling at the last minute. A life insurance policy makes sure that if a time like this arises in your family, your emergency fund doesn’t have to be depleted. Medical bills, funeral costs, and money to assist the remaining family stays financially secure during a vulnerable time gives invaluable peace for what could be a small monthly fee.
I can speak for myself when I say that the dream of owning property seems farther and farther away as I get older. I understand how owning something that can appreciate in value over time is a smart move. My hope is my future child will use it as an investment property, so this is still a goal I’m willing to work hard for. This is something you can own and pass down to future generations. With many first time home buyer programs, some only calling for FICO of 640, homeownership is possible; especially if you work with the right realtor. Listen to a recent episode of our podcast, The World is Her Office where realtor Anastasia Hunter explains some options to get into your first home.
The investing game has changed so much! You can buy stocks from your phone...while you’re out...spending money on another coffee. Some apps you can use are Robinhood and Acorns. Robinhood doesn’t charge to trade stocks, ETFs and options. Acorns charge $1 a month for use. Users can set up automatic investments daily, weekly or monthly or have Acorns use the spare change from your everyday purchases to invest in ETFs with Vanguard or iShares. These apps are available for both iPhone and Android.
You can go the traditional route and use an investment banker. If you choose to hire a financial advisor, make sure they are a fiduciary financial advisor. What is that sis? A fiduciary financial advisor is a person or legal entity, such as a bank or brokerage firm, that has the power and responsibility of acting for another (usually called the beneficiary or principal) in situations requiring total trust, good faith, and honesty (U.S. News Money, March 2018). As you can see, not all financial advisors are created the same. Do your research before employing the services of a financial advisor or using the previously mentioned apps to get the maximum value out of them.
This was just a short list of ways to start building your bankrolls so that your family is more financially stable and prepared for the future. Setting up a saving account and possible monthly withdrawals for investments can mean thousands of dollars down the line. Small steps leading to big gains.
Need some more inspiration? Follow these two ladies on IG if you aren’t already: @thefinancebar and @myfabfinance for all things money content.
From the list above, what is one thing you will be looking into or implementing this week? Which goal are you going to dig deep into for the rest of the year- home ownership? Emergency fund? Employer retirement fund? Let us know in the comments so we can cheer you on!
OK, Janes! You got this!