Financial Plan

Create Your Financial Action Plan to Secure Your Future Fortune

You have big dreams for your future…and financial independence can make them come true. This is about YOU, single moms, and your life apart from providing for your children. You deserve an anxiety-free financial future, where you can live your dreams without worrying whether you can pay all your bills.

With the sizable fortune you’ll build, you’ll have the freedom and flexibility to leave your job (if you want to)…the means to launch your own business…and lifelong financial security so you won’t have to be stressed about money all the time.

Now that you’ve transformed those dreams into clear goals, you’re ready to create your financial action plan, laying out the steps to build and preserve your fortune.

That plan will include ways to build and protect a substantial nest egg and create a steady income stream that will last for years. Your financial action plan will also include specific steps you can take to keep financial threats from eating away at your future money.

And it all begins with the first steps toward building wealth. Start by figuring out your net worth today, so you have a realistic starting point. You’ll also want to know how much money you have coming in, and where it’s going, so you’ll need a working household budget.

Now on to some serious savings. The more cash you stash now, the more time it will have to grow for you. If you have access to an employer-sponsored retirement plan, contribute as much as you can, and make sure to take advantage of any free money the company kicks in through a matching plan. Add to that tax-advantaged future savings by also contributing to an IRA, especially if you don’t have an employer plan.

Once your retirement funds are fully funded, you can turn your attention to investing. If you’ve never done your own investing before, it’s easier than you think to get started. The keys to investing success are to make smart – not emotional – choices and to own a mix of different assets (like stocks, bonds, cash, and real estate, for example).

Successful investing can provide you with future income, especially if your holdings include stocks that pay high, steady dividends. While you’re building your wealth, you’ll reinvest those dividends to expand your holdings, giving you even more to draw from when you’re ready to start pulling money out.

Another great way to shore up your wealth and future income streams: Start your own business. I won’t pretend that it doesn’t take a lot of time and effort to build a profitable business…but once you do, you’ll have an independent way to bring in steady cash for years to come.

A good financial action plan also takes a look from the flipside – preventing and minimizing the threats that can eat away at your wealth…and there are a lot of them. But knowing about them, and planning around them, gives you the power to stop them from blowing up your nest egg.

The worst wealth eroders include:

  • taxes
  • debt
  • market downturns
  • low investment returns
  • inflation
  • hidden investment fees
  • identity theft
  • unexpected expenses

…and all of them can put a serious dent in your future fortune…unless you take steps to limit them ahead of time. We’ll take a closer look at each one, with specific ways to minimize their potential impact.

Taxes: There are lots of ways taxes can diminish your wealth…and as many ways to legally work around them. The most important thing to do is make sure you’re not over-withholding taxes from your paycheck. That gives the government free use of your money when it could be going to work for you instead. Next, if you have a 401k through your job, make sure you handle it the right way to avoid steep IRS penalty taxes. And every year, when you do your taxes, make sure to take advantage of every single credit and deduction available to you.

Debt: Millions of single moms rely on credit cards to make ends meet, and when that turns into credit card debt (instead of being paid in full every month) it can demolish your wealth. Credit card interest is especially harmful, because it builds faster than most people realize. Take a hard look at your current debt situation by calculating your debt-to-income (DTI) ratio. Paying off your highest interest rate debt will bring you more returns than virtually any investment can.

Market downturns: It’s guaranteed to happen – the stock market will have dips, drops, and even crashes. The trick is to ride them out, because with time the market will rebound. As long as you have about five years worth of safe money (and that includes current salary and business income, cash in the bank, and government bonds), you’ll be well-positioned to weather market downturns. You’ve made smart investment choices, and the high-quality companies you’ve invested in will succeed over the long haul.

Low investment returns: Less risk comes with lower returns. We’re in a period of basement-level interest rates, and the only real returns are coming from riskier investments – but you don’t have to sacrifice safety for returns. Putting your investment money into low cost ETFs gives you a good shot at solid returns without excessive risk.

Inflation: Prices keep going up. Inflation measures just how fast that’s happening. So if inflation is at 2%, that means a pair of shoes that cost $100 last year will cost $102 this year. Doesn’t sound like much…but over time, cumulative inflation can spike the cost of basic goods. So that $102 pair of shoes could cost closer to $200 twenty years from now. If your income stream doesn’t keep up, your purchasing power (how much you can buy for your money) will shrink drastically. By knowing that ahead of time, you can add inflation into your future money plans, and be ready when it strikes.

Hidden investment fees: Most retirement plans (especially employer-based plans) charge high fees – but that may not always be very clear to investors. Investment advisors also charge fees, sometimes taking advantage of clients for their own benefit. And even seemingly small fees, like 0.50%, can cost you tens of thousands of dollars over time! So it’s critically important to understand all of the fees you’re being charged, and how they’ll affect your wealth over the long term. You can avoid excess fees by investing in index funds and low-cost ETFs instead of individual stocks or actively managed mutual funds.

Make sure your investment advisor is a fiduciary – meaning they’re legally obligated to put your interests ahead of their own. If you’re not sure – ASK!

Identity theft: Your personal financial information is less safe now than it’s ever been, so it’s more important than ever for you to take steps to safeguard your financial privacy and security.

Unexpected expenses: This one is extra important for single moms: Make sure you have plenty of emergency savings for those expensive problems that always manage to crop up. You can’t predict what will happen or when, but you can protect your financial well-being by preparing as well as possible to make sure emergencies don’t turn into severe financial setbacks.

Armed with these strategies, you can create your financial action plan, and set off on your wealth-building path today.

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