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I talk a lot about creating financial security through minimizing debt, creating significant savings as a financial buffer, etc. Another layer to the idea of financial security is creating multiple income streams.
ONE OF THE WORST BLOWS TO YOUR FINANCIAL STATUS COULD COME IN THE FORM OF JOB LOSS.
One way to minimize the magnitude of this type of event is to develop multiple streams of income. This is something that may take several years to put into place. Creating a plan to develop this type of financial picture may be something that you start now, with the realization that it may not come to fruition immediately.
The higher percentage of your overall income that comes from additional sources, aside from your primary job, the less likely any single event can substantially reduce your income.
HERE ARE A FEW...
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If you're planning for a kiddo in the near future, or know someone who is, knowing how to financially prepare can be hugely helpful. This information is courtesy of Morgan Campbell, a Strive STAR, and her baby girl Ella. Most of this is geared towards a first baby, but can obviously be modified if you already have some of the necessities.
EXPENSES TO PLAN FOR:
1. CRIB ($100-$500)
- You can get a basic crib for ~$100, but a fancier model that converts to a toddler bed will be more.
2. CAR SEAT SYSTEM ($150-$500)
- Most include a car seat, one base, and possibly a stroller. Don't forget about a second base for family members or caregivers! You will also likely need a new stroller once your little one grows out of their infant car seat.
3. STROLLER ($75-$300)
- Again, there are a wide range of options and significant price variability...
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While you're doing your usual spring cleaning routine, don't forget to do a financial "spring clean" as well! This is a great time to check in and make sure there aren't gaps in your financial plan. For those of us still quarantined at home, what else are you going to do?!
Your finances deserve routine attention (likely doing a monthly budget), but there are some aspects we rarely think about. Taking time to check in once a year can pay off substantially in the long term.
Carve out a few hours, and let's get to work.
TAKE A LOOK AT YOUR...
1. OVERALL SAVINGS RATE
- Review your past budgets. If you don't know what your overall savings rate is, now is the time to calculate it. If it's not where it needs to be (everyone should be hitting a minimum of 15%), figure out where you can make changes moving forward.
2. HOME AND AUTO...
One of the things that this pandemic has shown us with certainty is that nothing is certain. People have lost jobs, businesses, commissions, etc with little to no notice. You may have not been financially prepared this time around, but you can use this as a learning experience and motivation to be better prepared in the future.
An emergency fund is the key to financial security in an uncertain world.
This is one of those paramount "must haves" to protect you and your family. Determining how much you need and where to put it is fairly simple. The hard part is accumulating the money, and then having the self discipline not to touch it unless there is a TRUE emergency.
LET'S TALK THROUGH IT...
1. HOW MUCH DO YOU NEED?
- Take a look at your budget and calculate your monthly expenses. This includes all bills and essentials like food and household items. I wouldn't include entertainment or shopping "extras" in this. Take this amount times 6 (some say 3, but I like the extra...