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  How To Handle Financial Concerns

Money and financial literacy are not taught in school; the basics of money, how to make it, how to keep it and how to make it work hard for you. While little Johnny was getting perfect score in sex education and Suzie can get a degree minoring in dancehall music, there really are no classroom hardcore lessons on how money works and that is very surprising as it means that either or society thinks it is not necessary or our teachers really do not have a clue about the topic. I think it is due to the latter than the former. Indeed if one does not know a topic how can he teach it. The person who should be teaching a topic like this is one who has mastered it. Most teachers I know barely make a living and therefore have not grasped the concept of money.

So how is money taught or how do people learn about money? Well the truth is that the rich invented money and therefore understand it. Then they pass this knowledge to their children who do the same. That is why the rich will always be rich and the poor, if they do not learn from the rich will always be poor. The point however, is that it can be taught and learnt.

You see, not having this knowledge is what causes  a lot of lottery winners to go broke just a few years after his winnings. If he has no knowledge of how money really works, he will lose it all. The opposite can be seen in a financially intelligent person who has been schooled in the art of money. If his business went bust or bankrupt in a few months or years, he will be back on top making twice his usual earnings. Because he simply understands how to make, keep and cause money to grow by itself; yes, by itself. However, to become financially literate you have to become a reader and a life long learner. There are so many secrets out there that only the seeker will be able to find. I m far from mastering all the issues surrounding finances, but I am on the path of educating myself. Decide to take the plunge and become financially literate. Do not merely work for money; allow it to work for you. If you do this you:

  • Will not become a slave to money. You will be able to draw the line before it is too late
  • Will be able to better provide for your family and the future
  • Would be able to make better financial decisions

Below are some of the financial concerns that affect most if not all marriages.

 

Retirement

Why do we work? Is it not to earn money to pay for the basics or luxuries of this life? Some people see retirement as sitting on their rocking chair and having nothing to do. I see retirement as having enough cash flow from passive incomes to cover my expenses many times over and enough to allow me the freedom to choose to work or not. In other words, work if I feel like, not because I must. Retirement should free our time to do what we want, when we want to do it. There is a story of a fisherman who at 12 mid day put up his nets and finished fishing for the day. He went relaxing in his hammock. A business man came by and asked why he was relaxing and said he should be fishing. The fisherman asked, “why?” The business man answered, “Well, so that you can catch more fish to have more money to probably buy a canning factory to have a multi-national corporation to sell when you retire, so that you can have enough money to sit back and relax for the rest of your days.” The fisherman scratched his head and asked the business man, “Why would I want to go through all of that to enjoy life when I am already doing that right now?” I totally believe in enjoying life now and then later too. I do not know how long I have on earth so I treat each day as my last but with a plan and hope to see tomorrow.

Retirement has been on my heart before the first day of work. I used to go by the beach each morning in the summer in a community known as Harbour View (this was before I started working, just after college). I met a man who brought his sons to the beach each morning to swim. I thought it odd for a man in his late thirties to have this much free time and this got my interest peeked. I had to know the occupation of this gentleman. It turned out that he used to be a lawyer and had been retired a few years already. I asked, “how could this be.” He said something to me that has not left me since. He said he earned enough money to save most of it and gave it to a money manager that in turn continuously made him enough to live comfortably on! He is now able to spend most of his time raising his children along with his wife. That taught me a different outlook on life and money. I learnt also that no matter how much money you save if it is not working harder for you than you can spend it, it will be depleted. The key is to have a cash flow and not just capital. If you save a million dollars and you stopped working. To live off the savings alone will be useless as it will be depleted in no time.

A pension savings is okay but think about inflation, think about all the negative elements that will impact it in the years to come. If you are not a professional and your monthly withdrawal is minuscule, your pension will not be enough to sustain you. The question is, “Will it be worth anything at the time of your retirement? Cash flow is king and real estate rental, I believe, is the best solution for cash flow in retirement, in that as inflation rises and the cost of living increases, so does the rental income which goes up helping you to stay ahead of your expenses. I know of a lady who owns three apartment blocks and makes a very good retirement living on the rentals of these units. She earns much more than many executives in these large corporations who are still working for someone and running in the rat race. I know many who read this book will say, “Well that is all well and good for her, she has a lot of money.” I am flat broke and not a penny to spare.” Well, you too can start somewhere, the sooner you start, the sooner you will be able to reach there. I decided that when my passive income becomes ten times greater than my income from a nine to five job, I would retire. Let me just say that I am very close to my target!

 

Sudden Job Loss

The janitor of a church was laid off because the church had no money to pay him anymore. He was filled with grief and though, “how am I going to make ends meet to take care of my family?” He was a good man and while working for the church had to devise ways to sanitize the floors of the bathrooms without it costing the church too much. One such ways was to make a home made disinfectant from readily found items around his home. He used this knowledge to bottle some of his concoction and sold it at good profit in his neighborhood. Soon after, he opened a little factory where he made hundreds of bottles of his cleaner per day. In no time he was able to buy his own factory. One day he went back to the church and put in the offering several thousand dollars rolled up in coil form. The pastor saw him making the donation and after the service was finished made his way over to the ex-janitor and asked him why he would make such a donation when the church left him out in the cold. The janitor now turned businessman said, “This is to thank the church for letting me go to spread my wings, to be able to sore to where I am today. If I had not lost my job I would still be scrubbing floors.”

Sometimes losing a job seems to be the hardest blow one could be faced with, especially when we live in an economically unstable society. The truth is that what hits you hardest makes you stronger and causes you to get out of your comfort zone and think outside the box. You will have to do things a lot differently and it may cause you to see a need that you can fill. That is why the rich are the ones who still get rich in economic depressions because where people see a problem; they see a need to be met, which means an opportunity to sell something.

 

Bankruptcy / Debt

Most of us consider ourselves poor no matter how much money we have. In Jamaica, saying that you are broke is as common as saying that you are tired or hungry. The word bankruptcy is not a common word used here as most people feel as if they already live in a state of “brokeness”, that there is no need for the word. The truth is, everyone will eventually reach the state called bankruptcy if they do not take control of their financial situation. Let me explain in another way. Bliss is when your pay is $1000 and your expenses amount to $999. Torment is when your pay is $1000 and your expenses amount to $1001. Just that one dollar over your salary puts you in debt and the worst thing is being in bad debt. This is a debt that makes you no money. I like being in debt that pays me money, like borrowing money at a low interest to invest it on a higher paying interest instrument. If you always keep your expenses below your income, then you will find it hard to become bankrupt. If you are always saving a little more monthly and putting it aside for “a rainy day” then you shouldn’t have much problem.

 

Healthcare

I once thought that heath insurance was a scam and that I would never get it, after all, you pay the premium for one year and still not use the policy to claim its benefits if you are not ill, and then that entire premium for the year goes to waste. Then you miss payments for two months because things have been difficult financially, you get sick and now the insurance company does not honor your claim because your payments were not up to date.

Now I am a little grown up and older. When all my bodily components seem to be falling apart, I want insurance just as my car needs it to be road worthy. I need insurance as a “just in case” card, especially with medical bills being at the dizzying heights that they now stand at. I came to that realization after our friend went to the hospital for an operation. The cost was to be a whopping J$200,000.00, when she had to pay only J$10,000.00, a saving of 95%, simply because she had two insurance policies, one covered 80% and the other covered 80% of the remainder. SWEET! I thought; I need two of them there things.

As you get older the chances of you needing medical coverage increases, therefore, ensure that you are covered, please. If you are worrying about the cost, most countries have government subsidized health insurance for chronic illnesses such as hypertension and diabetes etc. Sign up for it. In Jamaica we have the National Health Fund (NHF), of which I benefit. This covers a great portion of my monthly prescription for high blood pressure.

By Mark Gregory

                           © Mark & Lesia Gregory – All Rights Reserved 2009.
                                         www.marriagethermometer.com

 
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