Ladynomics, Vol. 2

A Woman's Practical Guide to Becoming Financially Healthy

Dr. Randi B. Nelson

• Publisher: Purposely Created Publishing Group
• Year: 2021
• ISBN:
  9781644843420
• Edition: 1
• Topic: Personal Development
• Subtopic: Personal Finance

The path to financial wellness continues in the sequel to Ladynomics: A Woman's Prescription for Wealth and Financial Well-Being. Global and national struggle, such as the kind that has resulted from COVID-19, underscores how important it is to be financially fit. In uncertain times, it can be all too easy to get discouraged by one's financial situation and become stuck in a negative cycle. Fortunately, it is never too early or too late to take steps toward financial wellness.

Well-versed in finance and personal health, Dr. Randi Nelson provides you with tools for the particular ups and downs of life, from purchasing your first home to grappling with unexpected unemployment. As Ladynomics, Vol. 2: A Woman's Practical Guide to Becoming Financially Healthy demonstrates, anyone, young and old, can take the necessary steps toward financial wellness. By reshaping your attitude and approach, you can open yourself to opportunities that will help you and your loved ones on your path to financial success.

C H A P T E R   1

Mindset and Getting on the Path to Financial Wellness

 

You don’t have to see the whole staircase, just take the first step.

—Martin Luther King Jr.

 

Prior to embarking on financial wellness and eventual independence, an individual’s mindset must be prepared. One of the greatest obstacles to achieving a particular goal is your mindset. If you believe deep down you will or cannot achieve a goal, it will not happen.

Let us meet Tasha, age twenty-two, and a recent college graduate. I’m so happy to meet her because she is really a miracle in the flesh. See, prior to college, Tasha grew up in homeless shelters with her mother and two younger siblings. When I met her five years ago, she was a high school student, unsure about whether she would attend college. She comes from a tight-knit family, and her mother did not want her to attend college; she wanted her to stay with the family in the shelter and perhaps find work. But Tasha had bigger dreams, and she wanted to break the endless cycle of poverty and make something of herself. During her senior year of high school, Tasha expressed her desire to attend college. After we talked in depth over a couple of visits, Tasha decided to submit her applications to various colleges and guess what? She got accepted to a local college, and now, she is a graduate. So, Tasha comes to me because she has a degree in accounting, and she wants to get on the right foot in terms of her finances. An issue Tasha confided to me was that she got a credit card in college and ran up significant debt, approximately $3,000. I asked her why she did this, and she said she wanted to buy everything that she couldn’t buy or what her mother could not afford for her while they lived in the shelter. She felt a bit ashamed because some of her friends came from different socioeconomic situations, and she wanted to feel like she was one of them, so she bought all of the latest things—the Apple Watch, the latest sneakers, and a Louis Vuitton bag—and she also confided in me that she bought things for her mother and her younger siblings on credit. She felt guilty that they, during her college years, lived in a shelter, and she was out on her own getting a college education. She felt like she left them behind. So, here is Tasha’s current financial situation:

1. Tasha obtained a new job as an entry-level accountant making $65,000 a year.

2. Tasha has school loans of $30,000 instead of $70,000 because she received a partial scholarship.

3. Tasha has $3,000 in credit card debt.

4. Tasha has no savings, but her mother has some savings for a deposit for an apartment.

5. Tasha admitted she does enjoy spending her money. She’s been working for three months while living in her mother’s supportive housing apartment, and she hasn’t saved anything—she hasn’t accumulated any new debt, but she hasn’t saved anything nor has she started paying any money toward her student loans. She’s just been using her money to buy the latest items, especially what her friends have.

THE ISSUES

1. Living in supportive housing in a neighborhood that she and her mother do not feel safe in.

2. Spending and not saving.

3. Debt

4. Mindset issues (especially surrounding lack of money) such as a lack of self-esteem and shame about her upbringing.

5. No understanding of finances since her mother does not know anything about finances, she learned very little in school, and received very little guidance.

6. Feeling bad about spending money but feeling that she needs these items because it makes her feel equal to her peers. She feels she does not deserve all this and believes she hit the jackpot.

DISCUSSION OF GOALS

These are Tasha’s financial goals:

SHORT-TERM GOALS (WITHIN TWO YEARS)

1. To find an apartment for the family where she can split expenses with her mother.

2. Reduce student loan debt and credit card debt.

3. Participate in 401k plan where employer matches 5 percent.

LONG-TERM GOALS (BEYOND TWO YEARS)

1. Purchase a home for her family.

2. Get married and have a family.

3. Save for a car in five years.

4. Own her own business and become an entrepreneur.

STEPS

These are the steps we discussed:

1. Fix her mindset issues and self-esteem issues.

2. Advise therapy to overcome mindset issues.

3. Give her a book to read regarding the financial basics, like Ladynomics: A Woman’s Prescription for Wealth and Financial Well-Being; meet with her to get an understanding of what she understands.

DISCUSSION

I admire Tasha a great deal. Here is a young woman who desired to break the cycle of poverty by obtaining a college education. Although college is not for everyone—trade school or entrepreneurship is just as valuable—Tasha saw it as a way out for herself and her family. And she had the right idea. According to the U.S. Bureau of Labor Statistics, in July 2017 the “median weekly earnings of full-time wage and salary workers age 25 and older were $909 in the second quarter of 2017. Full-time workers without a high school diploma had median weekly earnings of $515, compared with $718 for high school graduates (no college) and $1,189 for those with a bachelor’s degree. Full-time workers with advanced degrees (professional or master’s degree and above) had median weekly earnings of $1,451” (2). In other words, according to this statistic, college graduates with a bachelor’s degree earn nearly double the salary of a high school graduate with a diploma.

However, Tasha’s lack of personal finance and her propensity to spend can mushroom into further bad habits as time goes on. She is at risk of lifestyle creep which is the gradual increase of spending as your wages increase. Actually, she is in the full throws of it; since she started working, she spends the majority of her paycheck on non-essentials such as expensive clothes, designer handbags, and shoes. She gets her nails and hair done weekly. Since her school loan is on six-month deferment, she is not paying anything toward her school loans, and she pays only the minimum on her credit cards. If she continues spending this way, it will prove to be an obstacle to the goals she has for herself. Before she undergoes the basics of financial planning, she has to address her mindset issues.

It is essential that Tasha makes financial security and stability a priority especially at this stage of her life. Learning good financial habits such as eliminating debt, saving, and investing at an incredibly young age will yield exponential benefits. I suggest she jot her goals down on a sheet of paper and place it in places that are easily visible or create a vision board with her goals represented in pictures and place it in a prominent place in her room. To prevent lifestyle creep, I suggest the following:

1. Create a goal-based budget. As with any financial plan, it is important to set a plan to set yourself up for success.

2. Surround yourself with like-minded people, individuals who have similar goals and visions as yourself.

3. Limit social media. Many of our favorite social media sites strategically place ads to draw our attention.

4. Visualize your goals.

5. Treat yourself proactively. Instead of treating yourself to an expensive bag for your birthday, especially if you have debt or minimal savings, purchase a stock or mutual fund instead.

6. Learn and obtain information on financial literacy and concepts by reading books, attending seminars/workshops, and listening to podcasts. The more you understand the importance of finance, the more your decisions will be informed.

FINAL THOUGHTS

Tasha will continue to be the source of pride for her family as she embarks on a successful financial journey that will benefit her and her family.

C H A P T E R 2

Credit Card Management Including Budgeting/Net Worth Statement

When I was young, people lived paycheck to paycheck. Today, it seems like they live from credit card payment to credit card payment.

—Robert Kiyosaki

Credit card debt is at an all-time high. According to the Federal Reserve Bank of New York, American consumers have about $3.93 trillion of total issued card credit and have about $900 billion of credit card balances (3). This means the average American has about $12,000 in credit card debt, and many of these balances are at high interest rates with the average being 15 percent according to the Federal Reserve. Now, it is no wonder Americans are struggling to make ends meet and save when so much of their income goes toward credit card payments, with many making only minimum payments which can force individuals to take twenty years or more to pay off a credit card balance.

Let’s meet Kim who is struggling with her finances, in particular credit card debt.

Forty-year-old, single Kim presented to my office for counseling. She has found herself in serious financial trouble; she was in significant debt. It was an insidious journey because she is unsure of how she got here. She admits she was much more financially responsible in her twenties; she had a great paying job, no student loans because she received a full scholarship to college, and she had no consumer debt such as a credit card. She never had a car note until her thirties because she would save her money to pay for her cars outright. In those early years, she hated the thought of a car note. She admits she was not a big saver because she loved to travel, eat out, and shop. But Kim managed to save a bit, approximately 5 percent of her income to her company’s 401k account, and she had company matching. So, all was not lost. She doesn’t remember when things go...

Table of contents

• Title page
• TABLE OF CONTENTS
• PROLOGUE
• C H A P T E R 1
• C H A P T E R 2
• C H A P T E R 3
• C H A P T E R 4
• C H A P T E R 5
• C H A P T E R 6
• C H A P T E R 7
• C H A P T E R 8
• C H A P T E R 9
• C H A P T E R 1 0
• NOTES
• ABOUT THE AUTHOR