Pay Yourself First!

by Miata on July 26th, 2016

How many of you read the title of this article and said “Oh no! Not that again!”?PayYourselfFirst

If you’ve ever attended any kind of financial seminar or read any books on money management, you have been told that you should consistently be putting a set amount of your income into savings. We all know that we are supposed to be putting away money every single month. Still, the reality is that an extremely small percentage of us actually do it.

So let’s just be extremely clear – no more beating around the bush… If you are not willing to make the commitment to automatically pay yourself first—every, single month without exception—you will NEVER build any kind of financial security, let alone wealth.

Take a moment and think about all of the people that you pay automatically each month. Most of us who work in any type of job pay taxes to the government. These funds are automatically removed from our paychecks. Many of us have also set up a variety of our household bills to be paid automatically out of our checking accounts each month. Why do you think the IRS has arranged to have your taxes taken out of your earnings before you even see the money? The answer is simply that they recognize this is the only way to ensure that they receive what they are owed. You set up your bills to be paid automatically also to ensure that the respective companies receive what they are owed. This eliminates the possibility that you will forget or get too busy to make the necessary payment. We need to change our psychology that has us putting the government and the phone company and our cable provider ahead of ourselves and our financial security.

I am sure that every person reading this article has thought to themselves, “I’ll start putting some money away as soon as I start earning more.” As artists, we can be especially guilty of this mindset. I also hear repeatedly from students and coaching clients that, because their earnings are so sporadic, they can’t figure out how much they can put away each month.

It is time to realize that these are just excuses, and as long as we continue to make excuses we will never change our financial picture.

The first step is to open what I call your Wealth Account. The purpose of this account is to build up funds that will ultimately be used to purchase assets. Assets are not stuff—bigger homes, nicer cars or fancy stereo systems – assets are things that you own that you are expecting will increase in value and/or create passive income: investment properties, businesses, stocks, bonds, etc.

It’s important to recognize that your Wealth Account is not an “emergency fund.” The goal is to avoid taking money from this account for any reason other than to purchase an asset that will make you more money.

Once your account has been opened, decide how much you are going to put in it each month and immediately arrange to have that amount automatically transferred into your Wealth Account from your checking account. How do you decide what amount? I recommend that you look at your deposits for the last six months and determine what your average monthly earnings have been. Once you have that amount, take 10% and make that the dollar figure you will deposit into your Wealth Account each month. For instance, if you’ve earned an average of $2,000/month, $200 would be a reasonable monthly Wealth Account deposit. If that number feels too high, or your earnings right now are incredibly sporadic – start with 5% ($100), or even 2.5% ($50). Just promise yourself that you will re-evaluate that figure after 3 to 6 months and see if you are comfortable increasing it.

This month make a commitment to yourself to do the following:

Create a written statement regarding your decision to pay yourself first from this point forward. The wording could read:

“I am committed to building the foundation for my wealth. I will therefore open a wealth account with ______________ (Financial Institution) by ____________(Date). I will structure this account to automatically debit $ _______ from my checking account every single month.”

Sign and date this statement and place it somewhere you will see it every day. We recommend keeping a copy wherever it is that you pay your bills. Even when it feels like all of your money is going to other people, this will serve as the constant reminder that you have chosen to be financially proactive and that your wealth account is growing.

If you don’t already know where you want to have your wealth account, sites like bankrate.com can help you review the account parameters and interest rates currently being paid by a variety of institutions. I suggest opening this account in a different place than where you generally do your banking! This will help you avoid dipping into your wealth savings. Unless you already have a balance you want to transfer, you are probably looking for an institution with no minimum deposit required to start. There should be absolutely no monthly fees and if offered, I recommend declining a debit card attached to the account.

Here is a promise: Once you have gotten your monthly deposits set up to happen automatically, you absolutely will not miss the money. Over and over again clients tell us that they have no idea what they were doing with the one, two or three hundred dollars a month that they obviously used to be spending but that is now going straight into their Wealth Account.

As this account builds, you will notice yourself gaining interest in learning about possible investments for your money. You’ll find that you always have an ear out listening for potential financial opportunities. Your excitement and your commitment to building your wealth will grow as you start to realize that you will soon be able to afford that first investment.

Please e-mail us and let us know that you have opened your account and what amount you are committed to depositing each month. Putting your promise out there to someone other than yourself will absolutely help you to stick to it and we love to hear your success stories!

Own the “My Money” Company

by Miata on June 3rd, 2016

Recently, I was reading about Elon Musk – the business magnate, engineer, and investor – involved in a number of amazing creations. GrowYourBusiness(Tesla, Space X, Hyperloop, SolarCity are just a few.) At first, I thought, “Goodness! He’s an incredibly creative guy!”

Then I realized that in a real sense, this entrepreneur is also an artist… He just creates his “art” in a way that emphasizes the business aspects.

That made me think that flipping the discussion might be fun. What would happen if as artists, we treated our financial lives like we were business owners?

How It Would Work

Examining your financial life as if it’s a business and you’re an entrepreneur, causes a noticeable attitude shift. Instead of thinking, “Maybe I’ll save a little money here or there down the line,” we ask “How do I start saving NOW?” If the answer is “It’s impossible,” then looking at your money like a business leads you to the next logical question: “How do I speed up the process?”

You are reframing financial planning in a way that makes it fresh, exciting, and empowering.

Here Are Some Ways Good CEOs Handle Their Own Money

They Use Good Tools – Where do you have your checking account? Does your bank offer all of the features you need to be successful? Do you even know what tools are available at your bank?

If your bank can offer you a Swiss army knife full of features, you’re all set. However, some people pay unnecessary fees and put up with banking practices that sorely need updating. As an example, if you’re paid via check, does your bank have a mobile app that allows you to take a photo and automatically deposit your earnings? LOTS of banks now offer this feature, so all that’s standing in the way of this massive time saver is changing institutions.

Other questions you should ask… Do you have a savings account that pays decent interest? Is your investment account using low-fee options? Are your paid advisors actually giving you good advice?

They Systematize – CEOs know that they’re too busy to investigate everything all the time. The company is successful when they keep their eye on the prize. In this case, the prize is accomplishing your craft. So, ask yourself: Is your savings automated? Are you paying at least the minimum on your credit cards automatically so you avoid unnecessary fees and dings on your credit report? On a more advanced level, do you automatically receive spending reports each week? Apps and tools exist (many free) that accomplish all of these things. A friend recently said to me that she wanted to make good money decisions as often as possible. I try to look at it a little bit differently. I want to make FEW money decisions, and the ones I make I want to be BIG decisions. I automate everything else so that good decisions are made for me.

They Seek Out Tax Breaks – This one’s pretty easy. Are you eligible for a 401k at your day job? If so, this is the perfect spot to save for your older years. Are you eligible for a Roth IRA? With this special retirement account you’ll pay taxes on money going into your account, but then all future withdrawals are tax free.

On another level, do you earn money as an artist? Are you writing off the cost of your tools and education? Mileage? Workspace? Working with a good tax advisor to understand what you can deduct can be a dividend-paying relationship.

They Focus Their Energy On Top Opportunities – The best CEOs keep a laser focus on the important matters and aren’t distracted by other things. What are you doing every day to advance your career or your craft? Great CEOs also don’t just think short term. They focus on long term relationships. Maybe an opportunity doesn’t pay wonderfully right now, but can build powerful possibilities for the future.

They Develop Partnerships – As I mentioned above, great CEOs make sure they focus… so they delegate to awesome people who have skills in the areas where they won’t have time to concentrate attention. Finding a knowledgeable tax advisor is just one example. And don’t ignore possibilities for career collaboration. A performance artist might partner with a visual artist to create a powerful multi-media piece that would be attractive to a new audience. Exploring partnerships can be rewarding and create new avenues for success (not to mention new income streams) that you may not have considered.

By thinking like a CEO, you’ll first shore up the bottom line, and then go about creating and maintaining good cash flow.  The result? A powerful shift in focus from financial concerns to craft!

Exploring the World of Financial Technology

by Miata on May 17th, 2016

LFinancial Technologyast week I had coffee with a friend who is feeling anxious about the size of her emergency fund and hoping for some tips that might help her put away additional money every month. I showed her some of the new apps I’m trying out. It’s amazing how the financial technology world has exploded in just the last couple of years. Not only can apps do some of the most obvious tasks like helping us save. There are also some that help us prioritize debts, make budgets, invest money, and even tip ourselves when we think we deserve it. “I don’t know,” she sighed. “I want it to be easy.” “Look at how simple these apps are, though!” I said.

“I know. It’s just… there’s a ton of them. Who has time to sit on their phone all day flipping through a bunch of apps? Painting is easy. (My friend does beautiful watercolors.) This looks hard.”

I realized she had a point.

Many of the financial conclusions we reach have more to do with our point of view than about the topic at hand. In this case, I’m already pretty immersed in the financial landscape, so all of these tools are like fascinating new toys allowing me to explore something I already love. For her, it was a nightmare. She was worried about the fact there were countless new things she didn’t know how to use. Like a person who’s never seen tools before being introduced to a Home Depot super store, she’s overwhelmed. Read the rest of this entry »

The Formula for Success = You + A Dream + A Decision

by Miata on April 30th, 2016

I’ve written before that much of financial planning comes down to you. In my time working with people, I’m always sad when they want to talk about all of the reasons they can’t get ahead. They worry about politics, the government in general, rules and regulations, the stock market and more…

Yet there’s also something very exciting to be found at the other end of the spectrum. It’s inspiring engaging with clients who are passionate about life and everything they are “up to” in the world. These are the people who rarely have much to say about the negative external forces.Screen Shot 2016-03-15 at 2.22.30 PM Rather, they focus first on their own actions.

If you really want something, including financial security, there’s a five step process to getting it:

1) Decide. I’m not talking about hoping or wishing. You have to actually decide what’s going to be in your future. Several years ago, I worked with an artist who decided she was going to stop talking about “one day selling her paintings,” and instead, was going to actually do it. In less than 2 months, she sold her first piece.

Making the decision to change your financial status means that you’re going to do something about it. We’ve all felt the difference between hoping and deciding in our own lives. When you first decided to shoot your short film, finish your script or stage your solo show; when you decided it was time to lose weight; when you put down the cigarette and said, “That’s my last one.” You have to decide. Without this step, no magic happens.

The rule = You have to ask for it before you have a chance of receiving it. Read the rest of this entry »

How to Find Solid Interest Rates for Savings

by Miata on April 18th, 2016

Been to a bank lately? If you’re a saver, there’s not much for you to smile about.RocketSavings

It’s frustrating, isn’t it? You work hard to save money, and then there’s nothing to do with it. While interest rates have been supposedly on a rising path, a quick look at comparison sites shows that there’s not much out there paying more than one percent.

Let’s look at some potential ways to earn better rates on your money and examine the pros and cons of the various options, so you can approach your choices with a critical eye.

Money Markets:

What worries me: you aren’t beating inflation. I’ve heard arguments that inflation may be nonexistent but look at how much you’re spending on your craft…supplies…classes… Have those prices risen? I’ll bet they have.

Why I like it: Currently, money markets pay between a tenth of a percent and just over one percent. That’s certainly better than a savings account! Read the rest of this entry »

The “I Hate Talking About Money” Problem

by Miata on February 22nd, 2016

One of the most common feelings about money is that there is this “mystery target” out there somewhere… and that as soon as our bank accounts reach that magical number, all of our financial troubles and worries will be over and we won’t have to spend time dealing with our finances anymore.

Here’s the truth…

  1. Everyone – no matter how wealthy – worries about money sometimes; andSpeakSeeHearNoEvil
  2. We will always have to “deal with” our finances.

Financially successful people may not be worrying about credit card debt, building an emergency fund, or struggling to make sure every bill is paid. But more often than not, if you dig deep you’ll discover that they have meticulous systems for monitoring their financial picture. They face any challenges head on, and work to respond to them quickly, to reduce the possibility that a small financial hurdle snowballs into a full fledged money disaster.

Contrast this with the person who’s always disorganized and can’t seem to ever get ahead in their financial life. He or she consistently complains, “I hate it when money comes up…it’s too depressing.” Maybe. But hiding our eyes won’t make our money concerns disappear. Read the rest of this entry »

Interest Rates Have Gone Up…Now What?

by Miata on February 8th, 2016

In December, while you were most likely preparing for the holidays, the United States Federal Reserve raised interest rates one quarter of a percent. That small amount may not seem like much, but it signaled a big change in the minds of many economists. Interest RatesThe US Federal Reserve hadn’t raised rates since June of 2006, and generally when they notch rates up, it means a series of interest rate increases are on the way.

So, what does this mean? Let’s dive a little deeper.

The Federal Funds rate, the interest rate that the Federal Reserve actually controls, is the amount of interest charged when banks borrow or lend for ultra short periods of time. This interest rate is then passed on to customers of those banks in their loans; so while you don’t have the Federal Reserve as your bank, any moves by the Fed will show up a few ways: Read the rest of this entry »

How to Finish the Year With a Flourish

by Miata on December 11th, 2015

In the final weeks of December, it’s important to take one last look back at the year. How’s your plan coming? If it’s like mine, there are still some items on the “to do” list that you’ve yet to mark off. We’re down to only a few weeks to finish up our goals for 2015.2015 to 2016

I was listening to a podcast recently with Hal Elrod (of Miracle Morning fame). He was sharing with the host that he sleeps very few hours most nights, but that it doesn’t seem to affect his day. He noticed that on short rest, everything hinged on his attitude. If he woke up and said, “Man, I’m tired. Today’s going to be awful,” the day stunk. If he said, “Alright! I’ve got a huge day today, no more time to sleep!” he became a powerful force in the universe.

I’m certainly not advocating that we give up sleep. More sleep AND a good attitude are probably the optimal one-two punch. However, if you’re in a situation where less sleep is the reality, attitude can change the game.

It’s the same with our money, isn’t it? Our attitude changes everything.

  • If I believe my debt’s killing me, it is.
  • If I think saving money is difficult, it is.
  • If I decide that I’m stuck in a rotten financial place, I am.

As creatives, we know from literature, film, plays, and even poetry, that the hero largely decides her fate. In the beginning of a three-act play, the character faces a problem. By the end of the work, the character has formed a plan, and for better or worse, they’re working through their plan to find a resolution. Read the rest of this entry »

Finding “Your Forever Pace” With Money

by Miata on October 23rd, 2015

A good friend just finished his first marathon in Chicago. I’ve always envied people who accomplish big goals like a marathon. It takes so much time to train, and there’s no monetary payout… AND you know it’s going to require lots of effort and will be incredibly painful.

As a friend (and a student of asking “why” about everything), I had to ask, “What was your secret to success?”

He said, “I just had to remember that it was going to be exciting at the beginning of the race, then the hurt would come, and then I’d find my forever pace. After that, I needed to just keep it up until mile 20, and then gut it out the final six miles.”

Easy, huh? It sounds good, but we know that the key is in every moment of that plan… still, there was one phrase I didn’t understand.

“Forever pace?” I asked. “What’s that?”

He smiled and told me that after a few miles your body settles into a pace that you feel like you can run forever, without thinking. It’s an automatic pace, hopefully fairly fast, but ultimately one you can run for miles and miles.

I like that idea… between that and “gut it out,” the creative person in me can see plenty of connections.

When I’m working on an acting or writing project, I find my “forever pace” after awhile. Skill and training takes over. That gets me through until I’m applying the final touches, when really, in many ways, I have to “gut it out” and finish.

…but what does this have to do with money?

Because we want to focus as much as possible on our artistic careers, it’s important to find our “forever pace” with money. We need our financial plan to work for us in the background, so that we’re not constantly being distracted by financial worry. Read the rest of this entry »

What to Do When Your Budget Collapses

by Miata on September 4th, 2015

My budget stopped working a few weeks ago.

I know what you’re thinking: “But Miata, you’re perfect with money…how could YOU have budget issues?” ☺

Well trust me, even I have budget issues and this last month was a doozy!

You may know that I have two children. They had some big expenses come up…as did we.

At the same time, we were invited to several events, which we agreed to attend…none of them inexpensive. We made a huge mistake and said “yes” to all of these without thinking about the budget. Because we overbooked ourselves, our schedules were crazy, so we gave up on groceries and cooking and ate at restaurants. And then with all of the increased stress, we found ourselves spending more money on movies and “fun” stuff.

“Fun” and my wallet were having an all out war and fun was winning.

So what do you do? When this happens to you?

Budget Collapse

Don’t Give Up

This isn’t the first time my budget has collapsed, and I’m sure it won’t be the last. We’ll fall off the horse, forgetting to prioritize what’s important and leave off the rest. We’ll ignore our family meetings because we’re too busy. It’ll happen again.

Our clients have similar issues. Even people with healthy budgets go through huge cash flow crunches. They’ve suddenly run up credit cards because of medical scares or car repairs. It happens.

The thing you don’t do? You don’t stop trying. Read the rest of this entry »