The color of money is green but being in the black should be your state of mind.

When it comes to the financial well-being of my fellow African-Americans, I have one message consistently: Black is beautiful, but being in the black is better and necessary. That’s why personal money management must begin with a revolution of thinking in living rooms and dining rooms and kitchen tables all across the country. As President Obama told the National Urban League: “We still have work to do.”

African-American unemployment is up; incomes were already and remain lower; there’s not much of a cushion. And though the country’s economy is growing once again, black communities must be of the rebuilding mindset that is not just for the immediate short term but rather for the long term future.

President Obama said – and I agree – that education is the economic condition of our time because 8 in 10 new jobs will require higher education by the end of this decade.  Education is a prerequisite for prosperity.  Financial education/financial literacy must be a component of our children’s learning.  Since it’s not being taught in all the nation’s schools – a commitment to teaching children about the importance of responsibly using money – depends on each of us who has access to and can influence children. 

Black families must act with a sense of urgency to become financially informed.  Hanging on to old bad habits about money and how to make it, save it, invest it and spend it – must be rethought.  As my grandmother used to tell me when I was holding on to misinformation or was unwilling to see the benefit of eliminating negative thoughts:  “Are you going to let bad things live rent free in your head?” Somehow that always made me see the light.

Yes, being Black is beautiful but being in the black – financially aware and smart – is better.  It’s your money so take it personally ™.

Here’s to your health and wealth.

It’s back to school across the nation and I want to give credit where credit is due.  Well intended parents are sending their kids off to college usually with a credit card.  I want to help you be sure they steer clear of some common credit card mistakes.

The average consumer has nine credit cards.  Don’t let your student get caught in the crosshairs of potential debt.  Collecting too many credit cards is absolutely not a good thing.  Even if the cards have zero balances, multiple open accounts mean the account holder is ripe for the potential temptation to max out on all the plastic.  So school them well before they get to school and are confronted with all those offers of free giveaways if they just sign up for yet another piece of plastic.

The credit card introductory rate isn’t forever.  But how many young consumers remember that?  If they do their homework, they’ll know that once that (usually) six month teaser, introductory rate is over it’s not unusual for the rate to jump to 18 or 20%.  That is an ugly and unexpected surprise for the uninformed.

A big lesson to be learned about credit cards is the importance of reading the fine print.  That’s where the (devil and) details of the offer are printed in tiny but all inclusive explanations.  Most credit cards have limitations about balance transfer fees, amounts and new purchases.  Your student should be well-schooled about the importance of knowing those tiny details.

Be sure to choose a credit card for the right reasons.  By this I mean, don’t let your student choose a card just because it has other attractions such as a rebate or rewards program or is offered by a well known icon or celebrity.  Remind your student that credit card granters aren’t their friend.  It is a business that wants to earn as much money as it can.  So make it your student’s business to shop for the card that has the best interest rate rather than the most interesting look.

Regardless the credit card that’s chosen as being the right one for your student – make sure they understand that even with the right credit card comes ongoing responsibilities:

• Credit card bills should be paid off at the end of every month.  Making a minimum payment only will get them in trouble for a very long time.  For example, if your student has a $1000 balance with a 17% APR and pays the minimum $25 monthly amount, it will take them 57 months to pay off that debt and cost $452 in interest charges. 
• Always pay on time, every month.  Be sure your student knows to check their account statement for the due date and pay at least 3-5 business days ahead of time

It’s vital that your student assume responsibility for their own money management.  Yes, it is time for them to understand it’s their financial thumbprint from now on.  It gives new understanding for them when they’re told:  It’s your money so take it personally ™ .

Anyone with health insurance is a potential victim of medical insurance fraud.  The crime can range from someone using your birth date and your social security number to running up bills and creating false records in your name.  The bills can be huge for services the victim never received as well as legal, medical and insurance fraud issues that take years to untangle. 

How can you protect yourself from becoming a victim of medical identity theft?

• Protect your health insurance card.  Treat it like your ATM, debit or credit card that has a million dollar spending limit (which is the cap on how much many health insurance plans will pay for your care over your lifetime.)
• Shred old insurance statements and old insurance cards.
• Get a copy of your medical records every year from each of your doctors and review what’s there to make sure there are no errors (you may be charged for copies and postage).
• Be sure to open and read all mail from your health insurance company – especially those EOBs (explanation of benefits) statements that come after your insurer has received a claim.  Anything that’s not a service you received or remember, call your insurance provider immediately.
• At the end of each year, ask for a list of all benefits paid out in your name and challenge any discrepancies.

If you believe you’re a victim of medical identity theft – here’s what you need to do immediately:

1. Contact your health provider and insurer.  They’ll request a new card for you and have a watch put on your old one.
2. Keep careful notes which include the name and contact information of everyone you speak to (I suggest a spiral notebook rather than random pieces of paper so every conversation you have regarding this matter is contained in one place) and write the date, time and name of the person contacted and what was discussed.
3. Check your credit report with the three credit reporting bureaus (Experian, TransUnion and Equifax) because medical identity thieves can use the information they have from your health history to access your bank accounts.)  Look for errors or activity that you know isn’t yours and work to correct these errors.
4. Contact your local police and file an incident report (request a copy for your files, too).
5. File a complaint with the Federal Trade Commission by completing a fraud affidavit form which you’ll need in order to correct your records and help the government keep track of the number of medical identity

A final but important and sobering thought:  the person who steals your medical identity might have a serious condition that you don’t.  But if your records are compromised and the thief’s history is co-mingled with yours, serious challenges and concerns can arise for you should there be an emergency and you’re unable to provide answers to important questions.  Doctors and emergency rooms accessing “your” records could find information that impacts the care you’re provided.    It’s your money so take it personally (TM)  but it’s your life and well-being, so be sure the information in your medical file is all about you.

Here’s to your health and wealth.

As the month of August begins, if you haven’t taken time off yet, it’s time to stop being so busy and consider taking a vacation. Whether you are employed by a company or own your own business, you can’t afford not to opt out for at least a few days to recharge your batteries.

You may be thinking that it’s impossible to get away — too much work to do, the potential impact on clients and colleagues, etc. Yet, research done by the Boston Consulting Group published in Harvard Business Review in October 2009 showed that even consultants, whose extreme schedules are legendary, can take time off with no adverse effects. Those who did enjoyed many benefits including increased job satisfaction, better work/life balance and improved collaboration and communication with colleagues.

What can you do to ensure the world keeps turning while you are on vacation?

• Plan ahead.
  Choose the time you’ll take off carefully — set yourself up for success by carefully coordinating with clients and colleagues to be sure you can leave with a clear conscience. When I know I will be out of the office for any period of time, in addition to making sure I have coverage for the phones and e-mail, I often give my clients a “heads up” so they can let me know if they anticipate needing my help and I can take care of it before I leave.

• Use technology.
  Use an autoresponder for e-mail to let people know when you will return and whom they can contact in the meantime if they need to reach someone urgently. By the way, you may want to add an extra day to give yourself time to catch up when you get back.

• Guard your time off fiercely.
  You’ll be tempted to say yes to just one conference call or to delivering just one small project while you’re on vacation. Don’t let “vacation creep” ruin your time off — the time involved is always more than you think it will be and the fact that you have agreed to do whatever it is will be a distraction when you are trying for relaxation.

Readers, what other suggestions do you have?

TAGS: LinkedIn, taking time off, vacation

 Is your child money smart when they graduate from high school? 

Being financially literate is not the grade most teachers give the nation’s high school students.  More than half say today’s kids have not been adequately educated about money matters by the time they receive their high school diploma. 

According to a recent survey of teachers nationwide who are members of Business Professionals of America, 51% said students are either somewhat or very illiterate when it comes to money matters regarding managing a budget, saving and investing money, credit cards and paying bills.  Only 2% of these educators felt that graduating seniors were very well-versed in financial matters. 

The survey was done for an interactive financial literacy board game called Wi$eMoney – a product of the Learning Key – a company that designs learning tools (http://www.thelearningkey.com/index.php).  I provided content for this board game and focused on challenging juniors and seniors to test their money skills and knowledge.  Wi$eMoney helps them understand early on why It’s your money so take it personally ™ should be their mindset. Wi$eMoney’s goal is to stimulate student awareness of their financial responsibilities and make the process fun! 

Many of the nation’s teachers – in fact, one in five of those asked –  who felt that students are very financially illiterate – don’t think their schools are doing enough to prepare students for the real world of money – how to make it, spend it, save it and invest it. 

Elizabeth Treher is founder, president and CEO of The Learning Key.  She says:  “Teachers, in general, are concerned that students are not aware of the financial responsibilities they will encounter when they become independent of their parents.”  Treher adds:  “Many educators feel that basic financial education should be introduced to students as soon as they enter high school and become involved until they graduate”. 

Financial education like reading should be fundamental as well as fun and mental.  What better way to engage students in learning to become money savvy than to make a game of it?   

Here’s to your health and wealth. 

If you’re interested in learning more about the Wi$eMoney board game and/or sponsoring financial education in your local school district, go to http://www.thelearningkey.com/PDF/Sponsorship_Promo_06092010.pdf.

TAGS: Generation Y, Women and Money

Who should be the successor of a family owned business when the founders are no longer available, willing or capable of continuing to run it?  That’s definitely a mind over money matters choice. 

My friend and colleague Dawn Fotopulos, a much sought after small business advocate and coach is the Founder of Best Small Biz Help.com, The Solopreneur’s Lifeline(http://bestsmallbizhelp.com/meet-dawn-fotopulos/).  She says usually one or two people are in charge of the business and have been the ultimate decision makers and they must be willing to delegate authority before they’re ready to sell or turn the business over to be run by someone else.  Why?  Fotopulos says because such a transition requires a three year on-ramp/off-ramp time frame to do it successfully and suggests the following: 

• Think about succession at least three years before you want to transition
• Delegate authority and not just tasks to your key proven people
• Seriously consider non-family members as viable leaders of the business 

If you’re the founder of a family business, are facing this decision and considering appointing two people to run the company and use an accountant as a referee – Fotopulos says you might want to reconsider.  She is a firm believer that you can never have a 50/50 split in ownership. 

“It’s a recipe for disaster,” she says.  “Designating more than one owner in a succession plan doesn’t work.  Someone must ultimately be in charge.  That person needs to understand the mission of the business.  Although a business should be able to run independent of the founder,” she goes on to explain, “it only can when the owner delegates authority regarding decision making and not just delegate tasks.”

A succession plan takes time.  So does identifying the right person.  Mentoring a successor requires good, time consuming, on-the-job training, nurturing and giving adequate lead time for a smooth transition.  Most family business founders haven’t done that or identified their successor because they’re structured the business around themselves.  Even if the owner/leader has identified the person to succeed them, often they can’t let go or they don’t think far enough ahead to implement change and find that it’s a crisis that forces putting a succession plan into play.

Lost time is lost money.  Forward thinking about the transition of power is a bottom line issue.  Mind over money really matters when it comes to this decision.  It should be made from the mind of a good business owner rather than the heart of a hopeful parent/founder.

Fotopulos says the successor boss must be responsible for the business viability year in and year out.  The entrepreneurial generation (founders) made the sacrifices but need to be sure that when the second generation (adult children) takes over, their willingness or motivation often isn’t the same.  Thus the s suggestion to consider a longtime, loyal employee – a person who is considered your critical second in command – to become your successor.

When choosing the person to succeed you in your successfully run and profitable family business, as you consider who best can do that, remember:  It’s your money so take it personally (TM).  It applies here more than ever before.

Here’s to your health and wealth.

TAGS: Communication Skills, entrepeneurs, financial planning, Women and Money

It’s a fact:  family owned businesses are a huge part of our country’s economy. 

It’s a fact:  family owned businesses usually come with built-in problems. 

It’s a fact:  experts say family owned businesses (generally) fail not because of economic issues but because family life and workplace life can create turmoil. 

Family owned businesses account for 60% of the nation’s employment, 78% of all new jobs and 50% of the country’s gross domestic product.  But a lot can go wrong in a family owned business so it’s important that we all understand these businesses’ unique struggles and support them because only about a third survives into the second generation. 

Family business success depends on forward-thinking and planning. The problem with family owned business succession plans is that the well-intended founder – the parent who made all the sacrifices – remembers the lean years while in most cases, the adult child, would-be successor doesn’t.  Instead, the child only recalls seeing over and over that Mom or Dad (or both) took risks, worked the hours, made the sacrifices and got the business to break even and have free cash flow. That’s why many 20-30 year family businesses – viable when the parents hand it over (usually to the son) – are run into the ground in two years. 

As my long time friend and colleague Dawn Fotopulos, a small business advocate explains:  “The bottom line is – it’s so hard to get a business profitable but takes just an ‘eye blink’ to destroy it and decades of hard work.” 

Fotopulos’ business is to improve the viability of small business in the United States. (http://www.smallbusinesshow2.com/dawn-fotopulos.html) She’s committed.  She knows what she’s talking about and definitely knows what she’s doing when it comes to educating small business owners for success. 

“The disconnect,” says Dawn, “is that the parents who made all of the sacrifices understand there are going to be lean years and tend to be conservative about how they spend their money.  They loathe spending money but want to give their kids everything they didn’t have.  They spoil the kids and the kids are of the mindset that the business gave them a nice life and is always going to be there.” 

There’s such truth in Dawn’s assessment.  When it comes to family owned businesses, the second generation isn’t of the frame of mind to save for a rainy day.  “When they take over the business”, Dawn says, “the mindset is often first that they must have the biggest and the best of everything – equipment, furniture, expensive environment – that the business may or may not need!”  She says too often she sees them start to run the cash position into the ground. “So if they lose a client or end up in a tough economic environment,” Dawn told me, “they can’t stand economic shocks.” 

It’s your money so take it personally ™ absolutely applies here.  In the case of a family owned business that’s failing, Dawn says part of the dilemma is pride.  Many in this generation wake up and say, “I deserve to have the best” and put themselves first instead of the business. “The family business must be viewed and treated like the third entity it is,” Dawn explains.  “The one that provides for them and their family and those they employ.” 

Next week:  Who should be the successor in a family owned business when the founders are no longer available, willing or capable of continuing to run it?   That’s definitely a mind over money matters choice. 

Here’s to your health and wealth.

TAGS: family businesses, family money, succession plans, Women and Money, work life balance

 A recent survey by Money Magazine found that 36% of people surveyed had at least one family member they considered “a mooch” – a person who was always asking for money but rarely repaid the loans. 

So what are you to do if you find yourself being asked to lend a money helping hand and are regularly “The Bank of Me for You” for someone you love?  It’s tough.  The terrain is tricky.  The emotions can get high quickly – especially if you say “no”. 

This post is part of a continuing conversation that began with my Thursday blog last week “Meeting Other People’s Money Needs:  Guilt or Obligation (http://thethinpinkline.com/category/women-and-money/ ) and the comments it generated. 

Comments »

1. Laura needs to realize she’s enabling her sister. Every time she hands over a dime, she is reinforcing to her sister that she (Laura) will always be there to help. Her sister is not experiencing any pain, and therefore has no reason to change her ways. Laura needs to cut her off. Tell her sister she’s having “financial problems” or whatever, and she won’t be able to provide anymore money “for a while”. And then *stick to it!* Yes she’ll feel guilty, and the sister will use the children to increase that guilt (“Well, I guess little Timmy won’t get that operation after all…”). But until her sister feels the pain necessary to make changes, she’ll continue to patronize the Bank of Laura. Comment by Debra — June 18, 2010 @ 9:50 am
2. Forgot to add: I don’t think budgeting for family will help. My educated guess is that the sister will start thinking of the budgeted amount as an allowance and spend more of her own money accordingly (“…because Laura’s paying the electric bill for me.”) Unexpected expenses will result in her asking Laura for “just a little more this month” … every month. Comment by Debra — June 18, 2010 @ 9:55 am
3. Hi Debra, I agree with you regarding Laura. She is enabling her sister. But as I wrote in my post, she feels a sense of obligation. Since I always work to meet a person wherever they are along their road to financial well-being, I wanted to provide Laura with real and doable ways to feel more in control and less put upon by her sister and family financially. Laura knows she is enabling her sister and has for years but that this is the first time she is consciously reaching out to figure out a way to stem the financial flow. As for the suggestion I made to her regarding budgeting the amount of money she’s willing to set aside for her family: since Laura is not yet ready to cut her sister off financially – at least she can say…”…I’ve already provided everything I can afford to give you this month.” The budget suggestion is more for Laura’s benefit than her sister’s. It will give her some control that can hopefully lead her to some concrete decisions regarding getting her sister from always wanting money from The Bank of Laura. Thanks for the comments, Debra. I know Laura will be reading this and hopefully be motivated to move quickly toward actually doing what you’ve suggested. Valerie Comment by Valerie Coleman Morris — June 18, 2010 @ 5:40 pm
4. Hi, I just wanted to write and praise your response to Laura. My husband and I do not have the highest combined income of our immediate family, but we are the ones who have mitigated our expenses and the ones who save. This means that we are usually the ones asked to help out “until a bonus” or until next pay day. We are paid back about 50% of the time. To be honest, we don’t mind that much. We like to be able to help out if someone needs it. If it got to be too frequent, or if the person seemed to demand instead of ask (as Laura’s sister appears to be doing) we might not be as comfortable with it.  Usually, when I read advice about this type of situation, people basically suggest cutting off others. This is impractical if one wants to keep relationships within family, not to mention doesn’t take into account that often people don’t mind small amounts of help, but just don’t like what the relationship has become. I liked your response, and just wanted to let you know that. We may have to keep the tips in mind if our own situation devolves into something like that! Thanks for the article!!  Comment by Bee — June 19, 2010 @ 11:39 pm

I think the comments show that this is a topic about which people take sides and feel quite passionate.  I make no judgments when it comes to the choice to give or not give money to family or friends because just saying ‘no’ can be tricky and difficult to just put into practice. 

In making suggestions on how to manage the family mooch or the worthy relative in need of a loan – I have but one basic rule and one caveat.  The rule:  the person who is “The Bank” should first be clear and deliberate about meeting their own financial needs and plans before extending a random or regular helping hand.  The caveat:  It’s your money so take it personally ™ and remember do not loan money you can’t afford to lose. 

Here’s to your health and wealth.

 A text message to me from a 40-year old female physician declared:  “See text below.  (The text she referred to read:  “Need $100 to cover me until the end of the month.  If you can’t do that, at least send enough for your nephew to get his hair cut for graduation this weekend.  Thanks.” )  Yet another demand from my sister that I give her money!  I can’t keep dealing with this.  It’s not right but I don’t know how to extricate myself.  Help!  Laura.” 

I followed up and spoke to Laura by phone.  She vented for about 10 minutes.  She told me that she regularly gave her sister money to buy food for herself and her two children; that she paid her mother’s car note and insurance premium; that she “had to come up with an immediate $600 last month” to cover the nursing home costs for her grandmother that were in arrears because her grandfather hadn’t kept up with payments which should have come from disability checks but used the money instead “for other things”.  Laura then returned to details about her sister and said while her sister makes $50,000 a year she is $40,000 in debt!  “What really upsets me,” Laura said angrily, “is that I feel guilty not giving her money when she asks for it!” 

Laura is a successful woman, a well-respected doctor, single and without children.  She asked that I help her get a mind over money matters mentality because her family just expected her to always cover expenses/needs/wants that they couldn’t.  “I’ve done well,” she told me again.  “I make a lot of money and I save it so that I can take care of myself.  My family reminds me of that each time there’s a money need in their lives that they want me to fill.  They’re not malicious about it – just unrelenting.  I can’t deal with this anymore!” 

The reality is Laura cannot afford to rescue everyone she loves.  The first suggestion I made is that she get clear about whether she was feeling guilt or obligation.  It was clearly the latter.  Because Laura is successful and her sister (by her own declaration) isn’t – Laura feels obligated to hand over money whenever her sister or other family member puts their hand out. 

Based on her sense of obligation which at least for now she feels she must fulfill, I made some basic, straightforward suggestions.  First and foremost, Laura should determine how much money a month she is going to budget/set aside for her family.  Determining the amount of this line item will help her feel more in control of the randomness with which she’s asked to provide money.  Have a serious conversation with her sister and insist on being given an accounting of anticipated monthly expenses and perhaps consider arranging direct payments for certain recurring bills for her sister (within the budget amount set aside for family) as well as for her grandmother’s nursing home care. 

The reality for Laura and others like her is that unless she establishes protocols and most importantly limits for family money requests – she will continue to be in the guilt game and paying the price.   I, of course, told her:  “Laura, It’s your money so take it personally ™.“   Laura says she understands the first step towards achieving this – begins with her.  Instead of getting angry about expected handouts she needs to get a plan and pay herself the compliment of being willing to help when she chooses without being made to feel guilty.  And her actions will underscore the importance of every member of the family who asks for her financial assistance – being expected to get educated about money skills and management as part of her requirements.   

Here’s to your health and wealth.

TAGS: financial planning, Women and Money

Children all need and require so much immediate loving care.  But children with special needs require so much more.  In addition to managing their health care, parents must also battle the social services maze.  Those realities often make it difficult for parents of differently abled children to find time to plan their finances.

Parents of special needs children are entitled to benefits and programs even if you have financial resources.  Long-term financial planning is essential to make sure your child gets benefits when you can’t care for them yourself.  You are able to deduct non-reimbursed medical expenses (as is anyone after costs exceed 7.5% of adjusted gross income.)  School for your special needs child is subsidized under the Individuals with Disabilities Education Act until age 18 in some states but until age 21 in most states.

If you’re the parent of a differently abled child, it’s important to know your rights and consult a lawyer or advocate.  Estate planning is essential because standard strategies could put your child at risk (with Medicaid and other benefit programs, for example, a child can have no more than about  $2000 in his or her own name either now or in a will.)

Some parents say they plan to leave money to a family member who’s willing to provide care for the special needs child but financial advisors tell me this plan doesn’t work and puts an enormous strain on the chosen caregiver.  They suggest instead that you set up a special needs trust.

A special needs trust is a receptacle for money earmarked for a differently-abled child:

• Name trust as beneficiary of life insurance & retirement plans
• Cash value policy rather than term life insurance since child could be dependent for more than 20-30 years
• Buy coverage for both parents (with most money in a second-to-die policy so proceeds are paid directly into trust after both parents death)
• Increase life insurance if other siblings
• Write letter of intent for what trust pays for

A special trust can pay for what government programs don’t provide such as travel to visit relatives, celebrate birthdays and other holidays.  And, relatives can contribute to it.  It’s suggested that you choose trustees and guardians who are young enough to manage trust this trust for decades. 

Though laws vary from state to state, at the age of 18, special needs children become their own guardians regardless their ability to manage their lives.  So it’s important to apply for guardianship before they turn 18.  Go to www.specialneedsanswers.com for special needs planners and state specific information

Here’s to your health and wealth.

TAGS: differently abled children, special needs money