College, Students

College Major … Choose Wisely

Making College Pay

I often hear people say, “You go to college to get an education.”  I’d say a more accurate statement is, “You go to college to prepare you to get a (good) job!”  Too many parents and students miss the subtle yet profound difference in these two statements.  Let’s think about this for a moment.  Does it really make sense to spend four to five years and tens of thousands of dollars attending and graduating from college only to find out there are no jobs (or very low paying jobs) in the course of study you’ve chosen?  However, it is my experience that many students give very little consideration to the long-term impact of choosing a particular major (I was one of those students!).  Parents are often just as guilty in that they provide very little guidance.

Kiplinger Magazine published an article that focused on the ten best and worst majors and the results are worth noting. 

Ten best college majors

Computer science; information management systems; software engineer; economics; finance; physics; statistics; civil engineering; actuarial mathematics and nursing.  For the most part, the common theme here is math, science and computers.  This group experienced many more job opportunities with starting wages in the $50,000 to $60,000 range.

Ten worst college majors

Culinary arts; music; child & family studies; animal science; media (radio, TV newspaper); interior design; drama; art; education; and graphic design.  A strong theme here is creative arts.  This group will often struggle to find jobs and starting pay will be nearly half that of those who graduate within a top ten major.

Why this matters

A few years ago, I was a trainer at a financial seminar and a sixty-something attendee came up to me after a session and said, “All this talk about money!  Money is not that important!”  My response was, “You’re broke, right?”  After a moment of stunned silence, he said, “Well yes, but…” 

Ok, I get that money is not the most important thing in the world and there are lots of things that are more important, but having enough money to pay your bills and save for retirement is immensely important.  I’ve watched way too many families struggle their entire adult lives because they didn’t earn enough money.  Understand that students entering college don’t have the perspective of not earning enough money because, in many cases, their parents have provided for most, if not all, of their needs.  Many see college as a fun adventure and give little thought as to ‘what happens next’ after they graduate.  They choose a major because it sounds fun.  The result is often the frightening realization that there are no jobs for which their major has prepared them and they are forced to accept a low paying job and, too often, return home to live! 

Here’s the takeaway

If you’re a student, before you choose your major, research what the job prospects are as well as the long range opportunities for advancement.  If you’re a parent, do your best to steer your children during their primary education and early secondary education towards academic areas where they’ll have the best opportunity to succeed financially.  I remember counselling a college student who had majored in accounting (a very good choice) but who was burned out had decided to take a management training job rather than continuing for one more year and getting his masters in accounting.  My partner, Greg Weyandt, CPA, and I convinced him his future was ever so much brighter if he gutted it out another year.  He did and he easily got a great job and has become a rising star in his field.  My associate, Beth Moody, CFP, points out that there are many incredibly rewarding careers with only modest income prospects.  If you choose this path, do so knowingly and prepare yourself to become a master of managing your money.  The bottom line is that your choices make a big difference in the trajectory of your life so be thoughtful and deliberate.

One final point.  My partner, Michael Wagner, CPA, pointed out that another major goal (opportunity) in attending college is to significantly expand your personal relationships.  Understand that financial success is always built around other people so the more people you have great relationships with, the more likely you are to succeed.  Use college as an opportunity to connect with lots of people through active participation in several campus organizations.  Not doing so is probably my greatest college regret.

Stewart H. Welch, III, CFP®, AEP, is the founder of THE WELCH GROUP, LLC, which specializes in providing fee-only investment management and financial advice to families throughout the United States.  He is the co-author of J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning (John Wiley & Sons, Inc.) and THINK Like a Self-Made Millionaire. Visit his Web Site  Consult your financial advisor before acting on comments in this article.

Smart Moves for College Grads

Smart Moves for College Graduates

Smart Moves for College Graduates

As I reflect back on my college years I mainly remember how much fun it was and then once I entered the ‘real world’ feeling a bit shocked at the reality of it all.  There is definitely a feeling of leaving one world and entering another completely different one.  I also remember receiving very little coaching about how the new world game was played.  That led to a lot of mistakes…or what I now call “learning opportunities”.  In this two-part series, I’ll share with you twelve of the lessons I wish someone had shared with me back then.

  1. Be flexible in finding a job.  I recently read an article attributed to the White House stating that real unemployment is zero percent.  Don’t you believe it!  The job market, particularly for college graduates, is particularly tight.  In this market, you may find that you have to ‘settle’ for a less than ideal job.  Your goal is to build work experience as you continue to pursue your dream job.  Whatever the job is, treat it as if it’s the best job in the world and your goal should be to master the position.  Learn the habit of always giving your very best.  People (employers) will notice. 
  2. Get more education.  The alternative to getting a job now in a challenging job market is to get more education.  When I graduated from college I was very ready to be finished with school but in today’s environment an MBA or other advanced degree can be very valuable and buy you some additional time for the job market to continue to improve.
  3. Begin saving from your very first paycheck.  This habit, more than anything else, will make you wealthy over time.  It is the single most important key for most people who become financially independent.  Start with a minimum of 20% of your paycheck…more if you can swing it.  Ten percent will be for long-term investing and, in a separate account, the other ten percent will be for future ‘big ticket’ items such as down payment on a home.  Set this up so that the money is either automatically taken from your paycheck or transferred from your bank account to an investment account.  Don’t ponder this one…just do it!
  4. Learn about personal finance and investing.  If you were to commit fifteen minutes per day to studying personal finance and investing, you’d be a ‘genius’ in a year!  Seriously, this stuff turns out to not be that difficult to master.  Mostly, it’s simply paying attention to your money and investing on a consistent basis.
  5. Buy a home.  Since the housing bust in 2008, home prices have rebounded but it’s still a great time to buy a home and home ownership is a great way to build wealth over time.  More good news is that interest rates on mortgages are still very attractive but realize that rates are likely to rise over the next few years so your best move is to buy as soon as you can.
  6. Avoid ‘bad’ debt.  If you could learn this lesson now, it will save you much misery in the future.  The definition of bad debt is any debt that is used for purchasing something that is declining in value.  For example if you use a retail store credit card to buy a closet full of clothes and then face months’ worth of payments…that’s bad debt.  Using a credit card to finance a big night on the town when you know you can’t pay the credit card bill in full when it rolls around…that’s bad debt.  Buying furniture and appliances on credit is bad debt.
  7. Avoid bad debt around owning a car.  I once had someone tell me, “I thought you always had a car payment!”  He was dead serious and he was also broke!  A car, by definition, is a depreciating asset.  In fact, when you drive a new car off the lot it depreciates in value about 10% that very day!  Most people arrive at the dealership, find their dream car and ask the salesperson, “How much are my payments?”  You’re asking the wrong question of the wrong person!  Dealers have been asked this question so many times that they figured out the perfect system to sell more cars and more expensive cars.  To get payments as low as possible, they’ll now finance a vehicle over as long as eighty-four months!  This is a terrible financial strategy for you.  Here’s a better approach:  If you don’t have cash to pay for a car, decide on how much car you can afford based on payments over twenty-four months.  In all likelihood, this will be a used car.  Once you pay your car off, continue to make ‘payments’ but now do it in an investment account dedicated as a new car fund.  Continue to drive your existing car and fund your ‘next car account’ until you can pay cash for your next car and then keep this cycle going forever.  That way you have your money working for you rather than for someone else.
  8. Embrace the concept of ‘Good Debt’.  Good debt is the use of financing to buy things that you expect to appreciate in value.  The best example is buying a home. Other examples include borrowing for investing such as buying rental properties or to start a business.  Even borrowing to advance your education can be a good use of debt.
  9. Protect yourself from adversity.  Great health may be your greatest asset.  There’s an ancient proverb that goes something like this, “A man with good health is a man of a thousand dreams.  A man with poor health is a man but with one dream.”  Like consistent investing produces wealth, a consistent program of exercise and good nutrition yields good health.  This should be one of your top priorities.  Believe me; it’s easy to allow other things to seem more important.  In addition, build cash reserves in a money market account equal to at least three to six months of your paycheck as a buffer against the unexpected expenses.  Also, make sure that you cover the insurance basics including owning disability income insurance, health insurance, auto insurance and life insurance if you have family dependents.
  10. Prepare every day for retirement. Ninety-seven percent of Americans arrive at retirement pretty close to dead broke.  The reason?  They felt they could worry about that ‘next year’…only next year never came.  Most companies offer some type of retirement plan that you can participate in and some also offer matching contributions.  But whether your company does or doesn’t have a plan you should set one up.  Your best first choice may be a Roth IRA.  To learn more, visit and type ‘Roth IRA’ into their search engine. 
  11. Cut the parental cord.  I just read an article that stated that 30% of millennials live with their parents! Reflecting on my thirty-plus years as a financial advisor, I’ve noticed that the most successful children have been those who had to ‘make it on their own’.  More so than at any other time, I see so many ‘helicopter’ parents who insist on helping run their children’s lives well into young adulthood.  Yes, it’s time to leave the safety of the nest, spread your wings and fly!  You can do this and you’ll be proud of yourself when you succeed.  So will your parents!
  12. Always be learning. Just when you thought you were finished with education, I’m telling you that you are just getting started.  There is no greater investment you can make than in yourself.  A primary life goal should be to be an insatiable learner.  Identify successful people in your chosen field and model what they do.  In fact see if they will act as a mentor to you.  If you ask, you’ll find most successful people are very willing to offer periodic guidance. 

Realize this…as a college graduate, the only limitations you have are the ones that you place on yourself.  Create a vision of what you would like to accomplish; develop a written plan; be prepared to ‘correct and continue’ along the way; and focus on continuous improvement.  There is nothing you cannot achieve!

Stewart H. Welch, III, CFP®, AEP, is the founder of THE WELCH GROUP, LLC, which specializes in providing fee-only investment management and financial advice to families throughout the United States.  He is the co-author of J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning (John Wiley & Sons, Inc.) and THINK Like a Self-Made Millionaire. Visit his Web Site  Consult your financial advisor before acting on comments in this article.


Habits of Superstar Employees

Six Habits of Superstar Employees”

In last week’s column, I discussed seven tips for having a winning job interview.  Once you’ve got that new job, here are the six habits for becoming a super star employee:

  1. “Lights on…lights off”.  Before I started my first job, my father gave me this advice, “How you conduct yourself in the first six months of work will set the tone for how your employer sees you forever.  Make an effort to be the first one at the office and the last one to leave.  Your employer will notice and in his or her mind, will see you as a hard worker.”  I took that advice and found that what started out as a 6-month goal became a habit that helped me start my own business.  One side benefit is that more time on the job equated to more job experience and a shortening of the learning curve.  I also found that folks were more willing to mentor the ‘new kid with hustle’.  So start your new job with a secret weapon, “lights on…lights off!”
  2. Adopt a ‘Whatever it takes’ attitude.  Don’t be a ‘That’s not my job!’ type of employee.  Most businesses in America are small businesses and everyone needs to be prepared to help where needed.  In fact, ideally you want to become the ‘go-to’ person when a special project comes up.  When we hire someone at our two firms, our job description is: ‘Whatever it takes’…then we proceed to outline what we call ‘Primary Areas of Responsibility’.   
  3. Be a team player.  Americans are innately competitive by nature, but in business, the greatest success comes from cohesive teams.  You know you have a good team when members are willing to help each other without concern for personal recognition.
  4. Do the unexpected.  What can you do outside your normal job responsibilities to help or add value to the company?  Roxie, my personal assistant, takes it upon herself to take lunch orders every day, sort through everyone paying their share and pick up the food.  This has been instrumental in building inner-office relationships since on most days we eat together.  Ramona is part of our administrative group.  She attends the Brock Business School’s monthly networking breakfast and uses it as an opportunity to promote our company.  Jeff, our systems administrator, often works on our systems at night or weekends.  I have similar stories for virtually every associate.  No one has asked them to take on these extra efforts but management certainly notices and appreciates them for doing so.  What can you do to help your company that would be unexpected?
  5. Think like an owner.  Too often there’s a sense of ‘us versus them’ between employees and management.  Think of how you’d act and what decisions you’d make if you owned the company and let that help guide your activities and office-related conversations.  If you have a suggestion for improving the company, let management know.  Conversely, if you have a problem that needs management’s attention, be sure to have at least one possible solution to that problem.  Understand that owners will notice when you are thinking like an owner.
  6. Embrace the concept of ‘continuous improvement’.  Every day think of what you can do to improve your skills at least a little bit.  In particular, look at where you are and where you want to go within your company then ask yourself, “What do I need to do to prepare me to move to the next level?”  It may be more education or experience in another area.  Once you decide, lay out a plan of action and either implement it on your own or with the assistance from your company.  In our companies, we require all advisors to have advanced education such as the Certified Financial Planner™ designation and we have a program that financially supports that goal.

In the end, you are in charge of your own destiny.  By proactively taking these six steps, you’ll become a superstar employee and be on your way to maximizing your career potential.

One final thought: If you are not a new employee but rather a seasoned pro, how many of the six habits would your coworkers attribute to you?

Stewart H. Welch, III, CFP®, AEP, is the founder of THE WELCH GROUP, LLC, which specializes in providing fee-only investment management and financial advice to families throughout the United States.  He is the co-author of J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning (John Wiley & Sons, Inc.) and THINK Like a Self-Made Millionaire. Visit his Web Site  Consult your financial advisor before acting on comments in this article.

7 Strategies to Get a Job

Get that Job!

Get That Job!  7 Strategies to Boost Your Odds

Hundreds of thousands of students will soon graduate from high schools and colleges across the nation and will seek either summer or full-time jobs.  It’s no secret that the job market continues to be very tight, especially for first-time job seekers.  In many cases, you’ll have only one shot at making a great impression.  Here are seven tips to get you noticed:

  1. Be early.  Expect the unexpected to happen and make sure you arrive early for your interview.  The last thing you’ll want is to start the interview with an explanation about how a traffic jam caused you to be late.  Action plan:  Plan to arrive thirty minutes early.  Wait in the parking lot so as to time your arrival five minutes early.  Use the time to focus on the key points you want to cover in the interview.
  2. Control your image.  Recognize that your very first impression will be visual so a neatly groomed and well-dressed appearance will make a difference.  I realize that crazy hair, facial hair (men only!) and body piercings may still be ‘cool’, but cool isn’t what most employers are looking for.  As old fashioned as it may sound, most employers are still looking for the All-American man or lady.  Action plan: Take a long look in the mirror before heading out on your interview and make sure your overall appearance is congruent with the job you are seeking.  Also be sure to review your Facebook page (and Twitter, Instagram).  You’d be surprised how many potential employers will review it to get a sense of who you are.  Pictures of you at the beach partying hard with your friends might not be the image you want for your employer!
  3. Research the company.  It’s never been easier to learn about the company you are interviewing.  Most companies have some Internet presence through either a company web site or Internet articles.  Action plan:  Develop three to five key points about the company about which you can discuss during the interview, particularly if you can relate to how you can positively impact the company through your job.
  4. Focus on the opportunity.  Too many job seekers focus on what the company can do for them versus how their skills can benefit the company.  Avoid initiating conversations about salary, vacation time or perks and instead focus your comments on how your skills can help the company achieve its goals as well as the opportunity you see for yourself in the company.  Action plan:  To the extent you can get the interviewer talking by asking both good questions and good follow-up questions, you’ll stand out from the pack.  Most people prefer to talk rather than listen so ask the interviewer to describe the job responsibilities; follow with a ‘drill-down’ question like, “Describe the typical workday or work week”.  Do your best to engage the interviewer in a conversation versus you simply responding to his or her questions.
  5. Exude confidence.  People want to work with people who are fun, relaxed, and confident in the way they deal with others.  You can help build your confidence by being prepared for the interview by following the tips in this article.  Also, the more you interview, the easier it will become.  Action plan:  Make a list of at least a dozen companies where you might be interested in working.  Interview first with companies you are least interested in working for and save your best prospects for the end.  Consider your initial interviews as ‘practice’ for your later interviews.  Your goal is to become a master at the interview process.  And don’t be surprised if one of your early interviews is with a company you love and hires you!
  6. Be prepared to promote yourself.  No one’s going to blow your horn for you so you’ll need to be prepared to discuss your unique skills for this job.  Action plan:  Think of two to three personal characteristics that make you a great choice for the job and be prepared to weave them into the conversation.
  7. Say, “Thank You”, in writing.  Most job seekers simply move to the next interview without so much as a thank you to the interviewer for their time.  Others do send a thank you note but rarely is that note handwritten.  Action plan:  Be a standout by writing a hand-written note of thanks to the interviewer on custom stationary.  This assumes you have good penmanship; otherwise it should be a typed note on fine stationary.  Be sure you include something specific that impressed you during the interview.

My partner and our Director of Operations, Greg Weyandt, CPA, says that what employers are looking for is the ‘Wow!’ factor…that something that makes you stand out among all the interviews.  It could be exceptional maturity, being very prepared, asking great questions, being very at-ease during the interview all while focused on communicating that you want that job! 

Stewart H. Welch, III, CFP®, AEP, is the founder of THE WELCH GROUP, LLC, which specializes in providing fee-only investment management and financial advice to families throughout the United States.  He is the co-author of J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning (John Wiley & Sons, Inc.) and THINK Like a Self-Made Millionaire. Visit his Web Site  Consult your financial advisor before acting on comments in this article.

Ultimate Fitness Quest 2016

Anatomy of a Goal … Revisited

Ultimate Fitness Quest 2016Ultimate Fitness Quest Final Report:  “Anatomy of a Goal, Revisited”.  Most highly successful people are very goal oriented so I wanted to set a personal goal and have readers follow my progress so they could see one in live practice.  On April 4th, I launched the Ultimate Fitness Quest 30-Day Challenge where I set a goal to lose 15 pounds of body fat in thirty days.  I outlined my ‘action plan’ and posted what I ate and how I exercised each day on Facebook.  Several hundred people joined our group and many launched a fitness quest of their own.  Over the thirty days I lost thirteen pounds and one and a half inches at my waist.  I fell two pounds (and one-half inch) short of my thirty-day goal…so should I consider this a success or a failure?  The answer provides a good lesson in goal setting.  Too often we are too hard on ourselves when setting and measuring results of our goals and my experience is that goals often take longer than you think.  I say I was successful because I made substantial progress towards my goal and I don’t intend to give up.  I’ll keep going until I lose the entire fifteen pounds.  In fact, my success has inspired me to go further and I plan to lose even more body fat while also focusing on gaining muscle and tone.  Whatever your goal is, what is most important is that you have a clear vision of the results you want to achieve; develop and execute an action plan; monitor your progress and make adjustments as dictated by your results; and don’t give up until you reach your pre-determined destination.

Student Loan Repayment Strategies

Student Loan Repayment Strategies

Soon, thousands of college students across America will be graduating and seeking employment.  Soon afterwards, the government will come knocking on their doors asking them to begin making payments on their student loan debt.  As most people are well aware, the job market for graduates remains tight with many graduates having to settle for lower paying jobs than they had hoped for or that their college degree suggests.  As a result, many graduates will soon discover that the student loan repayment schedule is going to be a financial burden that is tough to bear.  The good news is that help is available under a new federal initiative called Payback Playbook.  Of the $1.2 trillion in student loans, about 25% are in some stage of default.  The new initiative requires loan servicing companies to provide borrower’s with a list of customized repayment options.  These options include repayment schedules based on your income:

  • Revised Pay as You Earn Repayment Plan (REPAYE Plan) – Generally you pay 10% of your discretionary income.
  • Pay as You Earn Repayment Plan (PAYE Plan) – Generally you pay 10% of your discretionary income but never more than the 10-year standard payment plan.
  • Income-Based Repayment Plan (IBR Plan) – Generally you pay 10% of your discretionary income if you’re a new borrower on or after July 1, 2014, but never more than the 10-year Standard Repayment Plan amount. Generally you pay 15% of your discretionary income if you’re not a new borrower on or after July 1, 2014, but never more than the 10-year Standard Repayment Plan amount
  • Income-Contingent Repayment Plan (ICR Plan) – Generally, you pay the lesser of: 10% of your discretionary income or what you would pay on a repayment plan with a fixed payment over the course of 12 years, adjusted according to your income.

Under each of these programs, the loan is forgiven if it is not fully repaid by the end of the payment period (typically 20 to 25 years) and there are provisions for hardship relief.

A number of other repayment options are available including the Public Service Loan Forgiveness (PSLF) program.  Because of the complexities and potential pitfalls you should consult a professional before making changes to your current loan program.

Source: Portions of this article were taken directly from the Federal Student Aid website (


Photo: ROBERTO SCHMIDT, AFP/Getty Images

Prince Died without a Will …

Photo: ROBERTO SCHMIDT, AFP/Getty Images

Photo: ROBERTO SCHMIDT, AFP/Getty Images

Prince Died without a Will…

and You?

Legendary musician, Prince, recently died suddenly at age 57.  Prince had a reputation as a meticulous businessman and had accumulated an estate worth $300 million.  It’s inconceivable that he would never take the time to draw a last will and testament, but that’s exactly what happened.  My best guess is that as a result, his estate representative will spend millions of dollars and perhaps decades settling his estate.  What a financial tragedy!

That brings me to you and your estate plan and two questions.  Do you have a will?  If your answer is, “Yes, of course I do!”, my next question is, “Is your will up-to-date and are you certain what it says?

If you die intestate, or “without a will”

Let’s deal with the first question by assuming you don’t have a will.  In Alabama, any assets that don’t pass at your death by either title or beneficiary designation will pass as follows:

  • Married, no children or parents living. If it’s just you and your spouse, 100% goes outright to your spouse.
  • Married, no children, one or both parents living. Here, your spouse will receive the first $100,000 of assets plus one-half the balance.  The remainder goes to the surviving parent(s).
  • Married with children. If you have children, the state dictates that the first $50,000 goes to the surviving spouse plus one-half of the remainder.  The balance goes outright to the children.  Note that if the children are ‘minors’, they cannot receive property outright and, generally, the probate court judge will appoint someone as the ‘conservator’ (something like a financial custodian) to oversee the money for the benefit of the child or children.  While you may assume your surviving spouse would manage the money for your children, there is no assurance of this since it’s up to the court’s discretion.  Don’t forget, the conservator gets paid from your assets!
  • Unmarried, no children but one or more parents living. If you are not married and have no children, then 100% of your probate estate will go to your parents equally.
  • Unmarried, with children. If you are unmarried and have children, then 100% of your probate estate will pass equally to your living children.  Note that if any of them are minors, the same rules regarding the legal conservator apply.
  • Unmarried, without children or surviving parents. In this case, your probate assets will go to your siblings, equally.

Is Your Will up-to-date?

Under my second question, if you do have a will, take a moment to review it in light of the current value of your estate including your home and other real estate, life insurance, retirement and other investment plans along with personal property.  If you’re married, your assets likely go to your spouse but think for a moment about the next level of heirs.  If it’s your children, are they capable of handling the amount of money they will receive?  If not, consider the value of using a trust.

One final thought.  While your will directs the transfer of probate assets, many assets move based on either title or beneficiary designation.  I encourage you to double-check how these assets are set to transfer.  I cannot tell you the number of times a client has been ‘certain’ of a beneficiary designation or joint title only to find out they were wrong once we reviewed the actual documents.

Having a valid will is very important for every adult.  Intestate laws vary by state.  For a state-by-state guide, visit; click on ‘Resource Center’; then ‘Links’; then ‘Intestate Succession Laws- State by State’.  Your best choice is to consult with an attorney who is skilled in wills and estates.

Ultimate Fitness Quest status report

As I write this, I’ve lost 10 pounds of my 30-day 15 pound goal with five days to go!  Over 200 people have joined our Facebook Group and many are seeing excellent results following our free program.  It’s not too late for you to join in on a fitness quest of your own.  Connect with us at or on my Facebook page.  You’ll find lots of free resources to help you.

Wealth Creation

Wealth Creation: Own Your Own Business

Wealth Creation“Wealth Creation—Part 4: Be Your Own Boss”

More and more people are considering pursuit of the dream of owning their own business so they can control their own financial destiny.  It also happens to be the number one path to wealth creation.

Unfortunately, the majority of new businesses fail within the first four years.  Years ago I was the executive producer and host of a cable TV show where I interviewed self-made millionaire entrepreneurs who would share their secrets of success.  I’ll never forget the advice one multimillionaire business owner gave me.  He said the key to success for any business is three things.  The first key is, “Stay close to your numbers.”  Let’s see how we can apply this rule to tilt the odds of success in your favor.

I often hear that start-up entrepreneurs should expect to lose money for the first three to five years.  Nonsense!  Your business strategy should include a ‘plan’ to be profitable your first year.  Two key points here:

  • Before you start your business, you’ll need to develop a detailed month-by-month cash flow projection for the first 12 to 24 months of operation along with a less detailed projection of cash flow for an additional two to three years.  This exercise will suggest how much start-up capital you’ll need.  Technically, you’ll want to follow three sets of numbers on a monthly basis: Balance Sheet, Profit and Loss Statement and Cash Flow Statement.  The Balance Sheet lists all of the business assets, liabilities and net worth.  The Profit and Loss Statement tracks income and expenses to arrive at your profit (or loss).  The Cash Flow Statement tracks the sources and uses of your cash.  Managing your actual income and expenses against your budget will be one of your most important tools for success.  In good times, good cash management is your key to growth.  In bad times, it’s your key to survival!
  • Most new businesses require start-up capital to cover rent, equipment, salaries, etc. until such time as the business revenue can cover ongoing business expenses.  One of the biggest mistakes entrepreneurs make is underestimating these costs.  Often the entrepreneur is seeking capital from either a bank or friends and relatives and they typically ask for what they estimate will be needed, which more often than not, turns out to be inadequate.  Going back for additional funding typically proves to be a much more daunting task because the entrepreneur has now lost credibility from a business management perspective.  To your initial estimate, you should add 50% to 100% because my experience is that you will have underestimated your capital needs by that much money.

This entrepreneur’s second rule for success is, “Stay close to your customers”.  As a start-up entrepreneur, you may not have any customers yet but you do need a detailed written plan of who is your ‘ideal’ customer.  Further, you’ll need to develop a plan for how to serve these customers better than anyone else along with a plan for reaching new customers (your marketing plan).  The most successful businesses build growth based on a product or service niche.  How can you create a unique customer experience?

 The final key to success is, “Stay close to your employees”.  In the beginning, you may serve as the president, secretary, treasurer and janitor but soon you will need to develop your team.  Start by developing an organizational chart based on a successful business five to ten years into the future.  What ‘positions’ would need to be filled between now and then?  Look for people whose strengths counter-balance your weaknesses.  For example, if you excel at sales and marketing, hire someone who is excellent at operational details and managing financial systems.  One lesson I learned in building my businesses is to hire the very best people…people who are self-starters.  They will be more expensive, but they will be worth it.  Once you have great people in place, the best way to keep them is to set up a communications system that allows you to give and receive feedback regarding expectations, progress and ideas for improving the business environment.

Start your team by engaging ‘experts for hire’ including an accountant and business attorney and perhaps a financial planner.  Another excellent source of business talent that you can access for free is through SCORE.  SCORE is a nonprofit association dedicated to helping small business owners succeed.  Both working and retired executives and business owners donate time and expertise as business counselors.  For more information about SCORE, go to

The ultimate key to success will be your passion for your chosen business.  When you find yourself at a low point, it will be your passion for your business and your passion to succeed that will sustain you.

I’ll be writing more about creating wealth with your own business in an upcoming book I am writing for the Get Rich on Purpose® book series. Get Rich on Purpose® is dedicated to helping individuals achieve Financial Freedom through Financial Literacy and Entrepreneurship. To find out more, visit

Wealth Creation

Wealth Creation—Invest Like a Millionaire

Wealth CreationWealth Creation—Part 3: Invest Like a Millionaire”

To achieve higher levels of wealth you’ll need to start by learning three basic things:

  • Learn to love saving. A wise lady once told me ‘Sleep on it before you buy it!’  Much of what we spend money on adds very little value to our lives in the long term.  It’s simply ‘impulse’ buying.  Your best strategy here is to ‘automate’ your savings by setting up automatic withdrawals from your paycheck or checking account to your investment or savings account.
  • Learn the difference between bad debt and good debt. Bad debt is anything that you borrow money to buy that goes down in value.  Examples include cars, furniture, appliances, and most credit card debt.  Good debt is anything you purchase that goes up in value or at least holds its value.  Examples include a home, money for a business and, perhaps, student loans.  To create wealth, you’ll want to avoid bad debt.
  • Learn how to invest. Investing can be complicated but it doesn’t have to be.  Start with an automatic monthly investment program described in my last post, Wealth Creation—Part 2.  Now, if you’re really ready to improve your investing skills, commit to reading 15 minutes per day about investing.  Are you willing to do this?  Because this is the minimum it takes to become a great investor.  You’ll be amazed at your knowledge in just one year.  There are lots of books and Internet resources about investing but if you need a good place to start, visit  Vanguard is a low cost no-load mutual fund company that has excellent information for the beginner investor.

To become rich, study the rich

My upcoming book, “THINK Like a Self-Made Millionaire”, is based on interviews I had with self-made millionaires. It is the first book in my upcoming Get Rich on Purpose® book series. I wanted to find out how self-made millionaires created their success.  What I found out was that their success paths generally fell into one of three categories:

  • The systematic saver. I recently met the sweetest lady in her early seventies who was seeking help managing her investments because she had just retired.  She had a great life story and one that epitomized the systematic saver.  After graduation, she took a secretarial job with a start-up bank and stayed with that company her whole career as a secretary.  She made a habit of living well below her means and took advantage of all the savings and investment programs the bank offered.  Here’s a person who never made a lot of money but who had the good sense to save for her future.  Amazingly she accumulated over $1 million!  I have seen so many cases of people who simply save their way to financial independence.  This retirement savings approach tends to take twenty to forty years depending on how you invest and how much you save along the way.
  • The real estate investor. In studying self-made millionaires, two groups achieved the highest level of wealth in the shortest amount of time.  The first group is real estate investors.  One of the reasons real estate has so much potential for growth is that it uses leverage so effectively.  For example, if you have a $100,000 to invest and invest in the stock market, typically you’ll buy $100,000 worth of stocks.  However if you buy real estate you could put down, say, $20,000 and finance the balance then use the rental income to pay the mortgage and expenses.  With $80,000 left to invest, you could do this four more times and therefore control $500,000 worth of property.  Eventually your mortgages will be paid off and hopefully, your property will appreciate in value.  For example, if the property grew in value at 3% per year, in thirty years the property would be worth over $1.2 million mortgage free…not to mention substantial monthly cash flow.
  • The business owner. By far the biggest winners in the wealth accumulation game are people who own their own businesses.  Owning a business allows you to use leverage in multiple ways including financial leverage, people leverage and systems leverage.  Lisa Renshaw was age 21 and $3,000 in debt but she decided she would become a millionaire.  She scraped together enough money to purchase a failing parking garage in the Baltimore area.  Not having the money to hire a twenty-four hour attendant, she moved into the garage using a carpet remnant as a bed and kerosene heater for warmth.  She focused on great customer service but she persisted for three years before she was able to move out and buy her second garage.  Today, she owns or operates over 30 garages and is a multimillionaire!   Persistence and determination are key character traits of successful business owners.

Choose your path to wealth and do whatever it takes to learn what you must learn to succeed.  My best tip is to find a mentor, someone who has done what you want to do, and ask them to help guide you. For more information on my upcoming book, THINK Like a Self-Made Millionaire, and other upcoming books in the Get Rich on Purpose® book series, visit

Wealth Creation

Wealth Creation—The 5 Stages of Wealth

Wealth Creation“Wealth Creation—Part 2: 5 Stages of Wealth”

In Wealth Creation—Part 1, I discussed how to get started investing with as little as $1 a month.  This week, let’s look at the five Stages of Wealth and determine how much you must accumulate to become financially independent.

In my upcoming book, “The Fundamentals of Wealth Creation” (publish date: November 2016), I discuss the 5 Stages of Wealth.  This book will be the second book in my Get Rich on Purpose® Book Series, Take a moment to determine which wealth stage category best represents your current financial situation.

Wealth Stage One:  You achieve Wealth Stage One when you are paying all of your bills (on time!) and saving a minimum of 10% of your gross income.  Generally, saving ten percent puts you on a glide-path to becoming financially independent but it often takes twenty to forty years to reach that ultimate goal.

Wealth Stage Two: Here, you are paying all of your bills and the ‘growth’ on your investments is approximately equal to or greater than the amount you’re investing annually.  For example, if you’re investing $10,000 per year, the earnings (interest, dividends and capital appreciation) are also growing, on average, $10,000 per year.  Clearly, this is a significant step up from Wealth Stage One and will take a lot of years or a more aggressive investment strategy.

Wealth Stage Three:  With Wealth Stage Three, your cash flow (interest, dividends and capital appreciation) from your investments is equal to or greater than your earnings from work.  Congratulations, you are financially independent!  You get to choose whether you go to work or not.  For a lot of people, this is their basic retirement goal and happens between ages sixty to seventy.

Wealth Stage Four:  At this stage, investment cash flow allows you to significantly raise your lifestyle.  You’re not just paying your bills, enjoying the occasional night out and a modest annual vacation.  I normally think of this as you having at least two times the cash flow needed for your basic lifestyle and it’s what I refer to as ‘wealthy’!

Wealth Stage Five:  Very few people get to this stage and if you do, you are considered ‘rich’.  At this level your investment cash flow equals a minimum of five times what’s needed to cover your basic lifestyle needs.  You are free to travel extensively, own multiple homes, or become a philanthropist. You’ll also likely need extensive estate and tax planning.

How much is enough?  Achieving Wealth Stage Three

Let’s begin with the end in mind.  What’s your number?  How big of a pot of money do you need in order to retire (Wealth Stage 3)?  Let’s do a simple two-step calculation.  Step 1: Estimate what it costs to pay all of your bills for twelve months.  Step 2: Add a ‘0’ to that number.  For example, if it takes $50,000 to pay all of your bills for one year, then by adding a ‘0’, your ‘number’ is $500,000.  This assumes that Social Security will cover at least one-half of your retirement income needs.  As a footnote, according to the Social Security Administration, approximately 75% of Social Security recipients depend on Social Security for at least one-half of their income.  And approximately 50% depend on Social Security for 90% or more of their income.

If you want a ‘richer’ retirement, you’ll need to accumulate more.  I’m assuming your number is a bit of a shock and may come with some doubts about your ability to accumulate that much money.  I assure you it is possible as I’ve counseled hundreds of families who have achieved this level of wealth.   In fact, in Wealth Creation—Part 3, I’ll discuss strategies for achieving higher levels of wealth.