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Monday, February 6, 2023

Tips to Improve Financial Wellness in 2023

Marcella Mollon-Williams is a Behavioral Financial Advisor™ and co-founder of Legacy Builder Group, LLC. She provides insight about how a person may improve his or her relationship with money.

Q: Who is your average client? How do they benefit from working with a Behavioral Financial Advisor™?

A: Our clients are decision makers. They are the heads of households and individuals who are ready to feel confident as the chief financial decision maker of their money and investments. My team and I fully engage our clients in the plans we implement that educate them on how to break free from social, cultural and religious restraints around money in order to create the legacy they desire.

Q: What is a common financial mistake that people make?

A: A common financial mistake that people make is not knowing their numbers. That is, a working knowledge of how your money is flowing in and out. Not knowing your numbers can lead to a number of financial difficulties including, overspending, lack of savings, and even identity fraud. Having a budget is a good start but that only covers your expectations. You need to be conscious of what is actually happening with your financial accounts. I recommend scheduling a standing appointment with yourself weekly or bi-weekly to review all of your financial accounts which may include bank accounts, investment accounts, loan accounts, etcetera. This will help you to gain more control over your spending, stay on top of any fraudulent activity and create a mental habit of financial awareness.

Q: What is a good way to track financial progress?

A: A good way to track your financial progress is to set financial stages for your SMART goals (Specific, Measurable, Achievable, Relevant and Time-Bound). This could include paying off credit card debt, building an emergency fund, and/or saving for retirement. For example, if your goal is to have six months’ worth of emergency funds available to you, start by saving for two weeks’ worth. Then one month, and two months. Each stage gets you closer to your ultimate goal, right? How do you eat an elephant? One bite at a time.

Q: Is there anything key you feel that people should know about debt that they may miss?

A: It is important to understand the difference between non-preferred debt and preferred debt as it can be a costly mistake. So many people look at their mortgage like a credit card, non-preferred debt, and want to pay it off as soon as possible. This is often an emotional decision based on Great Depression Era thinking. Paying off debt and building wealth are two different approaches. When you learn the power of arbitrage, using the bank’s money at a lower interest rate to address your mortgage while you invest your money to earn a higher rate of return while keeping liquidity, you will discover a smarter way to build wealth. The banks use this strategy everyday— with your money.

Q: How can the average person begin to build generational wealth?

A: One of the best ways that the average person can begin to build generational wealth is through life insurance. There are very few financial products in the market today that have the wealth building capabilities, asset protection and tax advantage as life insurance. Many policies can be designed to provide cash value for retirement and long-term care benefits, along with a financial inheritance. An irrevocable trust can be used along with the life insurance policy to protect the wealth and manage the financial disbursements from one generation to the next.

Q: What is an effective strategy that an adult can try to teach kids or teenagers to be financially responsible?

A: The most effective strategy is to be an example of financial responsibility. We can do that by simply making sure that you are having conversations about money. Avoid the “No Talk Rule,” the unspoken agreement among family members that a particular topic will not be discussed, around money and start including your kids and teenagers in financial conversations as early as possible.

Q: Is there anything that people can do to begin to financially recover from student loan debt before it is paid off?

A: Yes. The looming debt of student loans can impact a person mentally just as much as financially. To begin recovering from both, start by gaining understanding about your financial situation. Know your numbers, set SMART goals, and most of all, keep your purpose for money in mind. Some people focus so much on paying off their student loan debt that they sacrifice their wealth building potential and long-term financial security. Have an educated plan of execution that suits your unique financial situation and remain open to asking for help from a qualified financial professional that can help navigate you through this process. You become more financially confident when you become more financially competent.

Mollon-Williams’ website is www.marcellamwilliams.com.

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