WEBVTT - Saving for Retirement w/ Bola Sokunbi 0:00:09.960 --> 0:00:14.000 What's up, everybody. I'm Gammy and this is positively gam 0:00:14.160 --> 0:00:17.640 Last season, I did an episode on retirement. This time, 0:00:17.680 --> 0:00:20.599 I want to focus on how to say for your retirement, 0:00:20.960 --> 0:00:23.120 because I really don't think I did that all that well. 0:00:23.560 --> 0:00:26.239 I'm excited to have a financial expert join me on 0:00:26.280 --> 0:00:30.360 today's episode, so let's get into it. BOWLISHA Coombe is 0:00:30.400 --> 0:00:36.919 a certified financial education instructor, finance expert, best selling author, speaker, 0:00:37.000 --> 0:00:41.720 and founder of Clever Girl Finance, a financial education platform 0:00:41.800 --> 0:00:46.000 and community for women, empowering them to achieve financial wellness 0:00:46.280 --> 0:00:50.320 and live life on their own terms. Hi, Bolo, welcome. 0:00:50.760 --> 0:00:53.200 Thank you for having me. I'm so excited to be here. 0:00:53.760 --> 0:00:56.320 I'm at the age where a lot of my friends 0:00:56.440 --> 0:01:00.400 are retired or starting to retire, and we're constantly talking 0:01:00.400 --> 0:01:04.480 about how we wish we knew to save earlier in retirement, 0:01:04.520 --> 0:01:07.040 and I definitely did not do that. And I think 0:01:07.080 --> 0:01:10.000 it's really difficult for people a lot of times because 0:01:10.040 --> 0:01:14.240 we get so overwhelmed with just making it day to day, 0:01:14.800 --> 0:01:18.080 you know, making sure you have enough funds to pay 0:01:18.120 --> 0:01:21.000 the bills, and then you know you're trying to set 0:01:21.040 --> 0:01:24.320 aside funds for you know, to be able to enjoy 0:01:24.400 --> 0:01:27.319 some vacation. And I think when you're young, you just 0:01:27.480 --> 0:01:32.080 don't think about retirement. It seems like it's so far away. Yes, 0:01:32.280 --> 0:01:37.200 so when should people start saving for retirement? Well, the 0:01:37.240 --> 0:01:40.440 best time to start saving for retirement is pretty much today, 0:01:40.440 --> 0:01:42.680 as soon as you can, right, and this is because 0:01:42.840 --> 0:01:45.759 of the power of time and your ability to take 0:01:45.760 --> 0:01:50.160 advantage of compounding, appreciation and dividends. However, even if you 0:01:50.160 --> 0:01:52.480 are starting late, it's important to keep in mind that 0:01:52.560 --> 0:01:55.520 retirement is not a day. So the average retirement lasts 0:01:55.560 --> 0:01:58.000 about twenty to twenty five years, and most people don't 0:01:58.080 --> 0:02:00.880 get to the statured retirement age of age sixty five 0:02:00.960 --> 0:02:04.800 and just stop working. Many people take on second careers, 0:02:04.840 --> 0:02:07.560 take on part time jobs, etcetera. So there is the 0:02:07.560 --> 0:02:10.520 opportunity that if you're starting late with saving for retirement, 0:02:10.560 --> 0:02:13.480 that you can also take advantage of catch up opportunities 0:02:13.480 --> 0:02:17.120 with things like the i R a UH, the Individual 0:02:17.160 --> 0:02:20.680 Retirement Account where for two you can contribute up to 0:02:20.960 --> 0:02:23.600 six thousand dollars, but if you're over fifty you can 0:02:23.600 --> 0:02:27.079 contribute seven thousand dollars, and then also catch up savings 0:02:27.120 --> 0:02:29.840 with things like the four one K four three b 0:02:30.040 --> 0:02:33.280 et cetera. Where you can save an extra I believe 0:02:33.720 --> 0:02:36.680 sixty dollars if you're over the age of fifty, So 0:02:36.680 --> 0:02:39.040 there are opportunities for you to catch up. But while 0:02:39.080 --> 0:02:41.640 you're young, the best time to start saving for retirement 0:02:41.760 --> 0:02:44.880 is right now. So is that like as soon as 0:02:44.919 --> 0:02:47.960 you start working. Yeah, so, as soon as you get 0:02:48.000 --> 0:02:50.760 that first paycheck, you know, and you lay out your budget, 0:02:50.919 --> 0:02:52.960 one of your goals should be to think about your 0:02:53.000 --> 0:02:55.880 future self and put a small percentage aside. Right, the 0:02:55.919 --> 0:02:59.000 more time you have, the less amount of money you 0:02:59.080 --> 0:03:01.880 need to save, because over the long term, that money 0:03:01.880 --> 0:03:06.320 will compound and appreciate and gain dividends as that investment growth. 0:03:06.400 --> 0:03:08.920 So you know, while you're young, you get your first job, 0:03:09.200 --> 0:03:14.200 start saving. Okay, So as an older person, let's say 0:03:14.240 --> 0:03:20.200 in your fifties, right, how much what percentage of your 0:03:20.520 --> 0:03:24.640 salary would you be needing to put aside compared to 0:03:25.360 --> 0:03:28.280 you know, a young person who's just starting out. It 0:03:28.320 --> 0:03:31.320 really depends. I would say that for an older person, 0:03:31.400 --> 0:03:34.280 you definitely want to take advantage of those catch up savings. 0:03:34.320 --> 0:03:36.600 So with the I R, like I mentioned, there's that 0:03:36.720 --> 0:03:39.280 extra thousand dollars you can save with the four one k, 0:03:39.520 --> 0:03:42.960 four three four seven bees there as the extra six 0:03:43.960 --> 0:03:47.120 you can save, and then whatever else you have to spare. 0:03:47.240 --> 0:03:50.120 After you have met your day to day obligations, your 0:03:50.160 --> 0:03:53.000 other shorter term goals, you can think about putting that 0:03:53.080 --> 0:03:56.119 towards retirements. It's important to keep in mind that you 0:03:56.480 --> 0:03:58.839 when it comes to retirement savings. Right when you get 0:03:58.880 --> 0:04:01.800 to your retirement age that you decide to retire, you're 0:04:01.840 --> 0:04:04.800 not going to cash out your entire retirement portfolio in 0:04:04.840 --> 0:04:07.480 that one day. Ideally, what you're gonna be doing is 0:04:07.520 --> 0:04:10.720 taking out a certain amount every year, which means that 0:04:10.760 --> 0:04:13.520 you still have a chunk of money that can continue 0:04:13.520 --> 0:04:16.800 to grow for you even during retirement. So you want 0:04:16.839 --> 0:04:19.560 to think about taking advantage of those catch up savings 0:04:19.800 --> 0:04:23.520 and then contributing whatever else you have extra towards saving 0:04:23.560 --> 0:04:25.800 for retirement. I guess I was thinking more of a 0:04:25.880 --> 0:04:32.080 percentage like fient of your salaries should put aside, compared 0:04:32.120 --> 0:04:34.559 to a younger person who may only need to put 0:04:34.600 --> 0:04:38.840 maybe five percent, like I don't know. Yeah, So it's 0:04:38.920 --> 0:04:40.760 kind of hard to say because it really depends on 0:04:40.760 --> 0:04:44.120 the person's financial obligations. The rule of thumb is that 0:04:44.200 --> 0:04:48.479 you should put aside ten of your income. That's the 0:04:48.520 --> 0:04:51.520 general rule of them. But if you're trying to catch up, 0:04:51.560 --> 0:04:55.840 then it all depends on your obligations. In terms of housing. 0:04:55.960 --> 0:04:57.880 You know how much you're paying for housing, how much 0:04:57.880 --> 0:04:59.920 you're paying for your other financial obligations. But a rule 0:04:59.920 --> 0:05:02.520 of thumbis ten percent, and then if you are trying 0:05:02.520 --> 0:05:05.680 to catch up or more, if you can fit it 0:05:05.680 --> 0:05:07.919 into your budget. So what are some of the most 0:05:07.960 --> 0:05:11.200 common challenges when it comes to saving for retirement? The 0:05:11.240 --> 0:05:15.159 bills that you had, your daily expenses, are those kinds 0:05:15.200 --> 0:05:17.440 of things that kind of get in the way of 0:05:17.480 --> 0:05:21.120 saving for retirement. Absolutely, so, a lot of people worry 0:05:21.200 --> 0:05:24.279 about just not having enough in their paycheck to save 0:05:24.360 --> 0:05:27.800 for retirement. A lot of people worry about the fact 0:05:27.800 --> 0:05:29.480 that or they kind of give up a little bit 0:05:29.520 --> 0:05:31.599 if they didn't start early enough, and they're like, Okay, 0:05:31.680 --> 0:05:33.360 what's the point, I'm not going to be able to 0:05:33.440 --> 0:05:36.000 save much? And then a lot of people worry about 0:05:36.080 --> 0:05:39.040 not having enough when they get to retirement, even though 0:05:39.080 --> 0:05:41.320 they're saving right now. A lot of you know, a 0:05:41.400 --> 0:05:43.400 lot of what I see is people worrying about how 0:05:43.440 --> 0:05:46.360 do I make get spare money within my existing budget? 0:05:46.520 --> 0:05:48.640 To put aside for my future self when life is 0:05:48.680 --> 0:05:52.400 happening to me right now. And how can people leverage 0:05:52.440 --> 0:05:56.599 an I RA or four oh one K for retirement? Basically, 0:05:56.640 --> 0:05:58.760 you set up an account rate you can set up 0:05:58.839 --> 0:06:02.400 depending on your employment status. Your employer may offer you 0:06:02.520 --> 0:06:04.800 a retirement savings plan that you can set up and 0:06:04.839 --> 0:06:09.080 have automatic peril deductions taken out of um your paycheck, 0:06:09.200 --> 0:06:10.480 or you don't have to worry about it. You just 0:06:10.520 --> 0:06:13.080 set up your percentages. Or you can open your own 0:06:13.120 --> 0:06:16.520 account with a brokerage right like a trow Price a 0:06:16.640 --> 0:06:20.520 Vanguard of Fidelity, for example, open your own traditional IRA 0:06:20.520 --> 0:06:23.120 A savings account and start to make contributions that you 0:06:23.160 --> 0:06:26.200 build into your budget into that accountant every time you 0:06:26.200 --> 0:06:37.680 get paid. Okay, now, what about people that don't want 0:06:37.720 --> 0:06:40.880 to just have their money sitting in a bank. What 0:06:41.000 --> 0:06:45.280 are some other ways that you can invest or other 0:06:45.320 --> 0:06:49.720 ways that you can't get a good return on your dollars? 0:06:49.800 --> 0:06:54.719 Like I somebody who never still don't understand stocks and bonds, 0:06:54.839 --> 0:06:59.240 but I know and cryptocurrency, Like that's like speaking Greek 0:06:59.240 --> 0:07:02.200 to me. What can you say that would be helpful 0:07:02.400 --> 0:07:06.919 in the language that we can comprehend about other ways 0:07:07.120 --> 0:07:10.480 to invest your money besides just putting in a bank 0:07:10.600 --> 0:07:14.720 and IRA. Yeah, so when it comes to investing, their 0:07:14.800 --> 0:07:17.320 variety of different ways. But the key thing that you 0:07:17.320 --> 0:07:20.560 want to keep in mind is broad diversification, and that 0:07:20.600 --> 0:07:22.680 basically means that you don't want to put all of 0:07:22.680 --> 0:07:25.800 your eggs in one basket, so you want to diversify. 0:07:25.920 --> 0:07:28.720 You can invest in stocks, which is where you buy, 0:07:28.920 --> 0:07:31.120 you know, part of a company, you become a part 0:07:31.200 --> 0:07:34.720 owner in a company. You can invest in in funds, 0:07:35.080 --> 0:07:38.880 which is an aggregation of different stocks into one fund 0:07:38.880 --> 0:07:42.000 where you become a part owner of several different companies. 0:07:42.000 --> 0:07:44.200 So you may hear people talk about index funds mutual 0:07:44.240 --> 0:07:46.880 funds as an example where they could have an arrogate 0:07:46.880 --> 0:07:50.000 of different types of companies within the fund. You can 0:07:50.080 --> 0:07:53.520 invest in bonds, which are essentially an IOU when you 0:07:53.600 --> 0:07:56.400 make a loan to the government or a corporation and 0:07:56.400 --> 0:07:59.040 in return they pay you interest as they pay you 0:07:59.080 --> 0:08:01.560 back their loan. And of course they're the more trendy 0:08:01.680 --> 0:08:04.800 investments like cryptocurrency n f T s. And then another 0:08:04.880 --> 0:08:08.240 investment is investing in business, whether it's your own business 0:08:08.320 --> 0:08:12.840 or somebody else's small business. The key there is diversification, 0:08:13.000 --> 0:08:15.640 understanding your risk tolerance, what's gonna cause you not to 0:08:15.680 --> 0:08:19.000 sleep well at night, and make sure you do your research. 0:08:19.040 --> 0:08:21.480 And I know a lot of people feel comfortable keeping 0:08:21.520 --> 0:08:24.480 their money in bank accounts, but really you want to 0:08:24.520 --> 0:08:25.960 put your money to work for you. And in the 0:08:26.000 --> 0:08:29.520 bank account it's great for short term savings, it's great 0:08:29.560 --> 0:08:34.160 for emergency savings, but inflation eats away at your savings 0:08:34.160 --> 0:08:36.520 in the bank account. Right So, prior to the pandemic, 0:08:36.640 --> 0:08:38.840 the average inflation rate in the US was about two 0:08:38.880 --> 0:08:41.120 and a half percent, and I recently read an article 0:08:41.200 --> 0:08:44.079 that says as a result of the pandemic, inflation is 0:08:44.080 --> 0:08:46.520 about six to six and a half percent right now. 0:08:46.559 --> 0:08:49.280 And think about the interest rates that banks are giving 0:08:49.320 --> 0:08:52.280 you all less than one percent right now. The longer 0:08:52.360 --> 0:08:54.640 you have that money there when you think long term, 0:08:54.760 --> 0:08:58.160 the less it's worth. So anything that you need your 0:08:58.240 --> 0:09:01.160 thinking about investing for the future or long term, you 0:09:01.200 --> 0:09:05.479 want to put it to work for you. So stocks, funds, bonds, business, 0:09:05.880 --> 0:09:09.040 real estate. That's another great way to invest and realistic. 0:09:09.120 --> 0:09:12.679 It's not just about renting property. You could buy farmland, 0:09:12.720 --> 0:09:15.760 you could buy into our resorts, you could buy into 0:09:15.800 --> 0:09:18.600 commercial property. You could buy into car washes. There's all 0:09:18.679 --> 0:09:22.439 kinds of real estate diversification ongoing. And then as you 0:09:22.480 --> 0:09:26.080 said about crypto, you know, it's new, it's highly volatile 0:09:26.240 --> 0:09:28.440 when it comes to investing in crypto n f T S. 0:09:28.520 --> 0:09:31.520 If you struggle with sleeping at night and you can't 0:09:31.559 --> 0:09:36.319 afford to lose it, that's it. I think that's really 0:09:36.760 --> 0:09:40.840 important for people over fifty to consider, like really be 0:09:41.160 --> 0:09:43.120 I do know that much like you have to be 0:09:43.200 --> 0:09:48.120 careful with what you decide to invest in because we 0:09:48.200 --> 0:09:51.080 can't afford to be that risky. So we want to 0:09:51.080 --> 0:09:54.200 be careful with the decisions that we make on what 0:09:54.240 --> 0:09:57.000 we and how we're going to invest our money. Where 0:09:57.000 --> 0:09:59.600 As a younger person, you know, they have a little 0:09:59.600 --> 0:10:01.760 bit more time and they may be a little bit 0:10:01.800 --> 0:10:12.199 more willing to take those risks. You were talking about 0:10:12.559 --> 0:10:16.960 investing in real estate and farmland, and you know, I 0:10:17.040 --> 0:10:19.080 just want to say that, you know, there there are 0:10:19.120 --> 0:10:24.000 a lot of young people that are working and coming 0:10:24.120 --> 0:10:29.520 into large amounts of money right and it's exciting and 0:10:29.559 --> 0:10:32.840 it feels good and you want to kind of splurge 0:10:32.960 --> 0:10:37.320 and take advantage of luxury items and all of that. 0:10:37.360 --> 0:10:39.560 But I feel like there's a lot of young people 0:10:39.559 --> 0:10:42.120 out here that are really doing well for themselves, and 0:10:42.160 --> 0:10:46.280 I just hope that they're getting the proper financial counsel 0:10:46.520 --> 0:10:49.719 because we have to provide for ourselves, We have to 0:10:49.760 --> 0:10:53.520 provide for our communities, and you know, we have to 0:10:53.600 --> 0:10:56.920 take on that challenge and responsibility for ourselves. We can't 0:10:56.920 --> 0:10:59.800 always be looking for somebody else to give us something. 0:10:59.840 --> 0:11:04.240 And creating your own business. Real estate, there was an 0:11:04.320 --> 0:11:06.800 article not too long ago where people and it was 0:11:06.840 --> 0:11:11.120 being highlighted in social media where people were buying farmland 0:11:11.120 --> 0:11:14.800 because land is money. Real estate is money, you know, 0:11:14.920 --> 0:11:19.880 and those are investments exactly. Those are investments for the future, 0:11:19.920 --> 0:11:23.200 investments for your children. So we gotta kind of get 0:11:23.280 --> 0:11:26.520 past the fancy cars and the diamonds, you know what 0:11:26.559 --> 0:11:28.600 I mean. I couldn't agree with you more. I'm a 0:11:28.600 --> 0:11:31.960 firm believer of building wealth, prioritizing. You can have the 0:11:32.040 --> 0:11:34.240 nice things. You can have the fancy cars, you can 0:11:34.280 --> 0:11:37.280 have the jewelry, but you want to prioritize building wealth, 0:11:37.280 --> 0:11:40.240 and not just building wealth for yourself, but also passing 0:11:40.280 --> 0:11:43.800 on the knowledge that you gain in your community, in 0:11:43.880 --> 0:11:47.240 your family, and teaching your children the value of a 0:11:47.320 --> 0:11:50.600 dollar before you just hand them the dollar. That's where 0:11:50.640 --> 0:11:55.560 that generational wealth building begins, instilling the values and understanding 0:11:55.559 --> 0:11:57.720 the value of a dollar. You don't have to have 0:11:57.760 --> 0:12:00.400 a million dollars to transition generational wealth. You can transition 0:12:00.480 --> 0:12:05.320 generational knowledge to start building that generational wall. Yeah, and 0:12:05.440 --> 0:12:09.600 you were also talking about investing in business, like, for example, 0:12:09.640 --> 0:12:12.120 if there's a baker who wants to own their own 0:12:12.200 --> 0:12:16.240 shop later in life, or like I really love skating 0:12:16.400 --> 0:12:18.720 and I wanted to buy a skating make and my 0:12:18.800 --> 0:12:21.959 husband was like, that is the most ridiculous thing I've 0:12:22.000 --> 0:12:28.320 ever heard, and we're not doing that, but it would 0:12:28.320 --> 0:12:30.480 have been fun. But he didn't really see that, and 0:12:30.520 --> 0:12:33.120 he was probably right. He didn't see that as an 0:12:33.160 --> 0:12:38.079 investment is something that was going to financially benefit us. 0:12:38.600 --> 0:12:41.120 And so that's the Those are the kinds of things 0:12:41.120 --> 0:12:43.720 that you have to think about when you're investing in 0:12:43.760 --> 0:12:47.520 a business. Am I right? Yes, you are right. So 0:12:47.760 --> 0:12:50.160 when you're investing in business, first of all, you have 0:12:50.240 --> 0:12:52.200 to make sure the numbers work for you have to, 0:12:52.240 --> 0:12:53.720 you know, you can't just be I want to buy 0:12:53.720 --> 0:12:56.880 a bakery, What does the bakery? What's it gonna earn? 0:12:56.920 --> 0:12:58.439 You want average, how much money do you have to 0:12:58.440 --> 0:13:00.160 put into start it up? And how much money do 0:13:00.160 --> 0:13:02.559 you estimate you're gonna get from this bakery every month. 0:13:02.640 --> 0:13:04.280 You're gonna need to know your numbers so you can 0:13:04.280 --> 0:13:07.920 get some clarity and before you kind of go into 0:13:08.040 --> 0:13:10.040 delve into this business full time, you also want to 0:13:10.080 --> 0:13:12.120 make sure that you have a backup plan for yourself 0:13:12.200 --> 0:13:15.520 right start to save money. Put money aside for your emergencies. 0:13:15.760 --> 0:13:17.800 Put money aside to cover your day to day bill 0:13:17.880 --> 0:13:20.160 so that when you put your full focus on that business, 0:13:20.559 --> 0:13:23.880 you have a window of time, a buffer where your 0:13:23.920 --> 0:13:26.280 bills are taken care of while you focus your energy 0:13:26.280 --> 0:13:28.760 and getting your business on its feet and getting it 0:13:28.800 --> 0:13:32.400 to start generating income. Another really important thing about owning 0:13:32.400 --> 0:13:34.959 a business is that just like you have emergency savings, 0:13:35.000 --> 0:13:37.280 or you should have emergency savings, but your personal life 0:13:37.280 --> 0:13:40.440 in case life happens, you also want to start. Once 0:13:40.440 --> 0:13:43.440 your business starts making money, a percentage of your profits 0:13:43.480 --> 0:13:47.040 ten start putting it aside to create a buffer for 0:13:47.120 --> 0:13:50.520 your business. Because every business has a slow season. You 0:13:50.559 --> 0:13:52.040 want to meet payroll, You want to be able to 0:13:52.080 --> 0:13:53.960 make your products and services. You want to continue to 0:13:53.960 --> 0:13:56.640 market your business, so that way, you've built this buffer 0:13:56.640 --> 0:13:59.559 of cash that when things get slow you can tap 0:13:59.600 --> 0:14:02.200 into it. Especially you know, when you think about happening 0:14:02.160 --> 0:14:05.960 to the pandemic and black and brown communities being locked 0:14:06.000 --> 0:14:09.920 out of the PPE loan option, there was no fallback. Lin. 0:14:10.280 --> 0:14:13.360 So I'm a huge advocate of businesses having you know, 0:14:13.480 --> 0:14:15.440 buffer is the same way you create a buffer in 0:14:15.480 --> 0:14:25.480 your own personal life. I want to speak a little 0:14:25.480 --> 0:14:28.040 bit because I have a lot of friends who are 0:14:28.840 --> 0:14:33.560 um have job opportunities now, like with contract work and 0:14:33.720 --> 0:14:38.320 freelance work or part time work that is bringing in 0:14:38.720 --> 0:14:45.160 extra dollars. And also speak about entrepreneurship because there's so 0:14:45.320 --> 0:14:49.640 many entrepreneurs out here, so they don't have access to 0:14:50.200 --> 0:14:53.640 for a one K that's matching, you know, the money 0:14:53.680 --> 0:14:57.080 that they may be setting aside for themselves, what do 0:14:57.160 --> 0:15:00.800 they how do they invest or how do they manage 0:15:01.440 --> 0:15:06.680 those dollars that there those extra dollars that they're making. 0:15:06.960 --> 0:15:10.720 It might be as small as three hundred extra dollars 0:15:10.800 --> 0:15:13.520 a month and they decide, oh, well, I'm just going 0:15:13.600 --> 0:15:15.720 this is just my play money. So you have people 0:15:15.760 --> 0:15:19.800 that that are just have that kind of extra money, 0:15:19.920 --> 0:15:23.160 or people that are making thousands of dollars because some 0:15:23.240 --> 0:15:26.560 of these contracts, some of this contract work is particularly 0:15:26.560 --> 0:15:32.000 in healthcare, they're making really good dollars, and so how 0:15:32.080 --> 0:15:35.760 do you manage that money properly so that you really 0:15:35.800 --> 0:15:38.960 are saving the way you think you want to? Because 0:15:39.040 --> 0:15:40.960 it I mean, I think if I was bringing home 0:15:41.000 --> 0:15:42.840 that much money, it would be I would be like 0:15:42.920 --> 0:15:46.120 whoa you know, and it would be difficult for me 0:15:46.200 --> 0:15:48.840 to just say, Okay, now you're doing this for a reason. 0:15:49.400 --> 0:15:52.600 You're doing this to help plan for your retirement. What 0:15:52.760 --> 0:15:57.360 is the best way to handle those extra dollars? This 0:15:57.400 --> 0:15:59.640 is a great question I want to get asked for 0:15:59.720 --> 0:16:01.960 very often. So the first thing you want to do 0:16:02.120 --> 0:16:05.280 as you're making money each paycheck, especially if your contract 0:16:05.320 --> 0:16:08.000 based is you want to set money aside to pay 0:16:08.000 --> 0:16:11.400 your taxes, because come end of the year, you're gonna 0:16:11.440 --> 0:16:14.040 get that tax bill from Uncle Sam. And Uncle Sam 0:16:14.120 --> 0:16:16.560 doesn't play when it comes to his money. So about 0:16:17.880 --> 0:16:20.640 that income should be put aside separate account to cover 0:16:20.680 --> 0:16:23.240 your tax obligation. If at the end of the year 0:16:23.680 --> 0:16:26.000 you don't owe that much in taxes, that's great. You 0:16:26.000 --> 0:16:28.440 have extra money to save to invest in pursue your goals. 0:16:28.840 --> 0:16:31.160 The second thing you want to do is to create 0:16:31.200 --> 0:16:33.720 a budget. And a lot of times when people are 0:16:33.880 --> 0:16:37.080 working on contract basis, they have an inconsistent income and 0:16:37.160 --> 0:16:40.640 so they have low income paid low windows of income 0:16:40.640 --> 0:16:43.360 and high income high windows of income. And you want 0:16:43.360 --> 0:16:45.680 to determine what is your average what are your average 0:16:45.720 --> 0:16:48.280 expenses that you have to pay for every month and 0:16:48.360 --> 0:16:50.840 know that once you have that high window of income, 0:16:50.840 --> 0:16:53.040 you're gonna put money aside to be able to cover 0:16:53.080 --> 0:16:56.440 those monthly expenses when you have that low period of income. 0:16:56.480 --> 0:16:58.600 So you want to know what your average expenses are 0:16:58.880 --> 0:17:01.920 and create that ash buffer to cover yourself when your 0:17:01.960 --> 0:17:04.040 income is lower. The next thing you want to do 0:17:04.240 --> 0:17:07.920 is save for retirement. And there are several options that 0:17:07.960 --> 0:17:11.120 have tax deferred benefits, meaning you don't pay taxes now 0:17:11.520 --> 0:17:13.960 on that money, and your money has the opportunity to 0:17:14.000 --> 0:17:17.360 grow tax free into the future, and you can say 0:17:17.440 --> 0:17:20.040 for retirement and they're actually really great plans. So the 0:17:20.080 --> 0:17:22.800 one we all know about is the individual Retirement account 0:17:22.840 --> 0:17:25.080 the IRA, and you can open one of those at 0:17:25.080 --> 0:17:27.000 a brokerage. It allows you to save up to six 0:17:27.040 --> 0:17:31.080 thousand dollars. However, depending on how you have structured your 0:17:31.119 --> 0:17:34.680 business or your freelancing work or your contracting work. There 0:17:34.680 --> 0:17:37.240 are other investment options like the s c P I 0:17:37.440 --> 0:17:40.280 RA or the Simple I RA or the self employed 0:17:40.320 --> 0:17:43.760 form mon K that are specific for business owners and 0:17:43.800 --> 0:17:46.680 self employed individuals where you can save more money. So, 0:17:47.040 --> 0:17:50.120 for example, with the step I ra UM you can 0:17:50.160 --> 0:17:53.080 contribute up to twenty of your up to a maximum 0:17:53.119 --> 0:17:57.119 of I believe sixty one thousand dollars every year into 0:17:57.160 --> 0:18:00.359 a retirement account tax deferred, and if you have in ployees, 0:18:00.440 --> 0:18:02.560 you would have to contribute to that for them as well. 0:18:02.680 --> 0:18:05.320 A Simple I RA is for business owners who have 0:18:05.800 --> 0:18:09.600 less than a hundred employees, where you can also contribute 0:18:09.640 --> 0:18:13.359 up to fourteen thousand dollars in two right, and a 0:18:13.440 --> 0:18:16.480 self employed foreign K is specific to individuals who are 0:18:16.600 --> 0:18:20.040 self employed with no employees other than their spouse and 0:18:20.119 --> 0:18:23.879 they can also contribute up to twenty dollars tax deferred 0:18:23.880 --> 0:18:27.720 in So there are options for you to save for retirement. 0:18:27.760 --> 0:18:31.119 As a business owner, entrepreneur or self employed person. You 0:18:31.160 --> 0:18:34.399 want to make sure that you understand the eligibility requirements 0:18:34.400 --> 0:18:36.119 and you can simply do that on the I r 0:18:36.200 --> 0:18:38.960 S website or talk to an accountant. But don't think 0:18:39.000 --> 0:18:41.159 that because you don't have an employer offering you a 0:18:41.200 --> 0:18:44.200 form on K that you cannot save. You absolutely can, 0:18:44.600 --> 0:18:47.400 and you can actually save more on average than someone 0:18:47.440 --> 0:18:51.240 who's employed by a company. You know this. Even listening 0:18:51.280 --> 0:18:55.440 to you, Bola, I'm still overwhelmed. I'm still really overwhelmed 0:18:55.480 --> 0:18:58.199 because it is so much information, and I'm feeling like, 0:18:58.800 --> 0:19:04.080 is it worth in vesting in a financial advisor to 0:19:04.160 --> 0:19:06.840 help you kind of figure all of this out? Because 0:19:06.960 --> 0:19:09.560 I'm just listening to you, I'm I'm still like yes. 0:19:09.560 --> 0:19:11.760 So I always tell people, you know, it's always when 0:19:11.760 --> 0:19:14.480 we talk finances, there's always a lot of information. But 0:19:14.640 --> 0:19:16.919 pick one place, right, and it could be starting with 0:19:16.960 --> 0:19:20.120 a financial advisor. And if you're someone who is overwhelmed 0:19:20.160 --> 0:19:23.000 by all the different plans and terms and you're not 0:19:23.040 --> 0:19:26.199 sure where to start, a financial advisor financial planner is 0:19:26.240 --> 0:19:28.679 a great place to get help with managing your finances, 0:19:28.760 --> 0:19:31.080 get that professional guidance. But it's important to remember that 0:19:31.119 --> 0:19:33.600 this is a relationship, right, So you have to be 0:19:33.640 --> 0:19:36.520 clear on your goals. What do you want to accomplish 0:19:36.560 --> 0:19:38.800 with your money. You have to be clear on your 0:19:38.920 --> 0:19:42.040 risk tolerance, right. The financial advisor cannot read your mind 0:19:42.400 --> 0:19:44.560 and you want to make sure that they're creating a 0:19:44.560 --> 0:19:47.800 plan for your hard earned money in a way that 0:19:47.840 --> 0:19:49.640 it's gonna work for you and allow you to sleep 0:19:49.640 --> 0:19:52.840 well at night. So when you're thinking about a financial advisor, 0:19:52.920 --> 0:19:55.040 you definitely want to ask them for their credentials. Right, 0:19:55.119 --> 0:19:58.480 what qualifies you to be a financial advisor or financial planner? 0:19:58.560 --> 0:20:01.440 How do you typically in ask money and make sure 0:20:01.440 --> 0:20:03.760 it aligns with your risk tolerance? Right? You don't want 0:20:03.800 --> 0:20:06.680 them taking risks with cryptocurrency if that's not what you're 0:20:06.720 --> 0:20:08.800 interested in doing and you don't feel comfortable with that. 0:20:09.240 --> 0:20:11.000 You want to get a sense for their values and 0:20:11.040 --> 0:20:13.119 their ethics to make sure that they are in line 0:20:13.240 --> 0:20:15.119 with yours and they're going to put it be putting 0:20:15.119 --> 0:20:17.960 your money in investments that aligned with you. You also 0:20:18.000 --> 0:20:19.840 want to get a sense of their fee structure. What 0:20:19.960 --> 0:20:21.959 is it gonna cost you? Do they charge you a 0:20:22.000 --> 0:20:24.600 flat fee, are they going to charge you a percentage 0:20:24.640 --> 0:20:26.720 based on how much you invest with them, or are 0:20:26.720 --> 0:20:29.840 they going to charge you based on commission? And ultimately, 0:20:29.840 --> 0:20:33.199 when it comes to any financial advisor financial planner, they 0:20:33.240 --> 0:20:36.600 should be working in your best interests first and not 0:20:36.680 --> 0:20:39.439 trying to sell your products and services ahead of that. 0:20:39.960 --> 0:20:43.280 So what is the best way to even find a 0:20:43.400 --> 0:20:46.080 financial planner for yourself? Like, do you just go to 0:20:46.119 --> 0:20:50.399 the bank or are you asking a friend or you know, 0:20:50.480 --> 0:20:53.840 how do you find that person? Yes, so the most 0:20:53.840 --> 0:20:56.200 popular way of finding a financial planner is through word 0:20:56.200 --> 0:20:59.240 of mouth from referrals, friends and valily because they already 0:20:59.320 --> 0:21:02.720 trust that person. You can certainly walk into your financial 0:21:02.840 --> 0:21:05.760 establishment and asked to be paired with one, or you 0:21:05.800 --> 0:21:09.680 can visit a CFP dot net the certified financial Planning 0:21:09.720 --> 0:21:13.680 board that can assign you or showcase to you financial 0:21:13.680 --> 0:21:17.520 planners in your area. But again, it's a relationship, right. 0:21:17.600 --> 0:21:21.000 This person is handling your hard earned money. You work 0:21:21.080 --> 0:21:23.960 really hard for it, so you can ask them questions, 0:21:24.040 --> 0:21:26.520 you can do research on this person. You can take 0:21:26.600 --> 0:21:29.320 your time getting to know them before you hand over 0:21:29.800 --> 0:21:32.880 your money, because you want to feel comfortable with this 0:21:32.920 --> 0:21:43.119 person who's going to be handling your money for you. Okay, 0:21:43.200 --> 0:21:47.080 let's talk a little bit about social security because I 0:21:47.160 --> 0:21:50.080 feel like people don't feel like they can live off 0:21:50.160 --> 0:21:52.480 the social security anymore. I guess back in the day 0:21:52.560 --> 0:21:55.359