In the news: money talks, money managers and millionaires

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Money Talks Every Couple Should Have

Discussing money is not a romantic topic but it is the leading cause of stress in relationships.

There are basic money talks you should have with your partner. They may be uncomfortable at first, but being open and honest about money can lead to a happier, healthier, successful partnership.

A list of basics you should learn about your partner as you start combining and planning for your future together.

  • Debt numbers. How much debt do you each have? What’s the rate? Is it credit card debt, student loans, car note, mortgage, etc?
  • Income and job stability. How much do you each make? Can you count on each other to contribute to your expenses and strengthen your financial future? This also can impact how you choose to split up bills, especially if there’s a big disparity in how much you individually make.
  • Savings. How much do you each have in savings? Do you save on a regular basis?
  • Spending patterns. It’s quite common for saver to partner up with a spender. That’s all good as long as you both know what’s up. Talk to each other about your spending and saving habits.
  • Long term financial goals. What are your long term financial goals? Are they in alignment?

Check out the article for additional questions around moving in together, getting married and having children.

Have fun. These convos are definitely worth having!

 

Photo illustration: Caroline David; Photographer: Peter Kramer/NBC/Getty Images

Warren Buffett Says Money Managers Charge Too Much

Warren buffet is one of the most successful money managers ever.

Buffet has been saying lately that money managers and investment consultants are not worth their fees. Instead, he’s been promoting low cost funds that passively track stock market indexes.

He essentially is steering people away from active managers because he thinks money managers and consultants charge exorbitant fees that ‘eat up capital like crazy’.

For example, the Vanguard 500 index has beaten 70% of funds that buy the large US companies over the past 15 years.

One of the money managers interviewed notices that clients who did the best in the market hardly ever traded. They bought stocks in companies they admired and stashed it away for years.

Save some. (Reuters/Las Vegas Sun/Steve Marcus)

The practical, unsexy steps it takes to actually become a millionaire

Thomas J Stanley spent 20 years studying American millionaires and patterns in their habits.

The summary is these 5 rules:

  1. Think long term

Harness the power of compound interest. Long term thinking applies to your savings and your expenses. You shouldn’t think of your $100 phone plan as “just $100 a month.” Instead, you see it as stealing $1,200 from you every year and $17,300 from you every decade. This will help you with silly spending. Your goal is to sacrifice high consumption today for financial independence tomorrow. Think long-term.

  1. Live well below your means

Frugality is probably the number one thing the wealthiest people have in common. Especially before they became rich. A lot of millionaires live on something like 10% of their income. Everything they own, their house, their cars, even boat, doesn’t surpass 10%.

  1. Know that financial independence is more important that displaying status

Did you know that people spend money they don’t have just to look good in front of other people? Know that advertisers spend millions of dollars hiring psychology experts just to make you think you want to buy something you don’t need. Stop trying to appear wealthy. It’s much better to become wealthy instead.

  1. Allocate your time, energy and money toward building wealth

Building wealth is the result of studying wealth and applying those principles. Study. Study. Study. Invest your time in learning and studying how to save or make more money.

  1. Have more than one source of income

If you’re only living off of your salary, you’re being risky. James Altucher has calculated the average millionaire has seven sources of income. For example,

  1. Earned income (salary)
  2. Profit income (business profit)
  3. Rental income (real estate)
  4. Royalty/patents income (depending on your business)
  5. Capital gains income (if you sell an asset for more than you bought it for)
  6. Dividend (4% every year on average in index funds)
  7. Interest (lending money to someone else)

Speaking and Spreading the word…

Maggie Germano and I recently spoke to a group of women about building a financially stable future. Maggie talked about the importance of budgeting and building your financial literacy. I spoke about money mindset and investing.

Also, this past week, I was a guest on a podcast called ‘Roads of Gold’. I talked about increasing financial awareness and making a pathway to wealth. The show profiles financial experts and is geared to building wealth in black communities. Check it out on iTunes.

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