The Busy Woman’s Blueprint for Wealth Building

Written by Barbara Huson

Soon after divorcing my gambling husband, I got a call from a friend of my father. He wanted me to invest in a Limited Partnership he was forming, TJ Cinnamons, a fast food place that made sticky buns.

I had no idea what a Limited Partnership was, but this man was wealthy, smart, successful, so it had to be a great thing, right?

I didn’t know that you can’t sell shares in a Limited Partnership because there’s no market for it. When TJ Cinnamons went under, I lost my investment.

That calamity taught me a critical lesson. I call it the #1 Law of Investing: Never put money in anything you don’t understand. I was determined to educate myself.

That’s when I devised The Busy Woman’s Blueprint for Wealth Building. Otherwise known as the Osmosis School of Learning. It consists of only 2 steps. Do them consistently, and you will be amazed, in just a short time, how much smarter you’ll be.

1) Everyday, read something about money, even if it’s just for a minute or two, even if it’s just glancing at the headlines of the business section of the newspaper, or a money magazine while you’re waiting in line at the grocery.

2) Every week, have a conversation about money. You can learn so much from people smarter than you. Anytime you meet someone versed in investing, ask how they got smart, the mistakes they made, and what they’d recommend to help you learn.

Try these 2 steps and watch what happens. They worked so well for me that, to this day, I still do them.

If you enjoyed these “Words of Wealth”, head over to my website and sign-up for my FREE weekly newsletter at: www.barbarastanny.com

Gotta Plan?

Written by Barbara Huson

I vividly remember a woman in one of my classes who stood up and proudly announced that she had maxed out her 401(k) and had a hefty portfolio outside her retirement. She’d been buying stocks based on the recommendations of her cousin who worked at a brokerage firm.

She had a right to be proud. But when I asked if she was following a plan, she looked bewildered.

“How do you know if the portfolio is properly diversified for you?” I asked. “How do you know if you’re taking too much or too little risk?

I then explained the difference between gambling and investing.

Picking stocks or bonds haphazardly, following a hot tip or purchasing the hottest fund, trying to time the market (buying when it’s high, freaking out and selling when it plunging), or just simply deferring investment decisions to another and turning your back…that’s gambling.

Investing, on the other hand, is a means to an end. The whole point of investing is to put together a portfolio that ensures you meet your goals. If you don’t have some sort of idea of where you want to end up, it will be far more difficult to make the right choices.

A good financial plan addresses three questions: Where are you now financially? What are your goals (short term and long-term)? What do you need to do to achieve your goals?

Once you identify the gaps between where you are now and where you want to go, you can create a realistic game plan with the right mix of investments based on your time horizons, budgetary restrictions and risk tolerance (how much volatility can you stand and still sleep at night).

Sure you can do this on your own. But my advice: Hire a fee-only Certified Financial Planner or a financial advisor you trust.

If you enjoyed these “Words of Wealth”, head over to my website and sign-up for my FREE weekly newsletter at: www.barbarastanny.com

How Many Baskets Do You Have?

Written by Barbara Huson

I saw a cartoon that cracked me up. A financial advisor sat on one side of the desk. The Easter Bunny, with a big basket of eggs, on the other. The advisor, leaning forward, warns the bunny: “Never put all your eggs in one basket!”

The advisor of course was giving his client the classic admonition: Diversify! Diversify! Diversify! Or put your money (eggs) into many different baskets.

You can significantly minimize risk by spreading your money out among the five asset classes: stocks, bonds, real estate, cash and commodities. Every asset class can be further divided into sub-classes.

The idea is that different asset classes, or sub-classes, react differently to various conditions and time periods. It doesn’t always work that way. Sometimes a turbulent sea sinks all ships.

But for the most part, diversification protects your overall holdings.

In fact, studies indicate that diversification accounts for 93% of a portfolios’ overall performance; 2% comes from stock picking; 3% from luck.

Two percent from stock picking!!! We make ourselves crazy trying to find the best companies, when we should be putting more energy into making sure we’re properly diversified over numerous categories

If you enjoyed these “Words of Wealth”, head over to my website and sign-up for my FREE weekly newsletter at: www.barbarastanny.com

What To Do Before Your Spouse Dies

Written by Barbara Huson

I’ll never forget the day I asked my mother: “Do you know what Dad has planned for you when he dies?” My father was seriously ill. I worried about mom. And I was terrified to ask her that question.

When I finally screwed up the courage, she quickly deferred. “Oh yes,” she replied. But when I pressed her for details, she couldn’t deliver any.

She also made it abundantly clear: this was not a conversation she wanted to have. I made it even clearer: avoidance was not an option. Here’s what we did:

1. We had “The Talk.” I had Mom sit down with Dad and we looked at all their financial documents: bank statements, investments, estate planning, etc. This was not, by any means, an easy conversation. Nerves were frayed. Mom glazed over. Dad lost patience. I kept scratching my wrist (a nervous habit) until it bled. But by the end, Mom knew where every penny was and what arrangements he had (and hadn’t) made.

2. We assembled “ The Team.” My Dad was very much a do-it-yourselfer. Mom needed a team of professionals. First on our list was an estate lawyer. Mom, my sisters and I met with him first, brought in my father, and together my parents created a very good, tax efficient estate plan. We helped her find an investment advisor and a CPA . She meets with her “team” on a regular basis to this day.

3. We updated documents. We made sure the Will, Power of Attorney, EVERYTHING reflected their latest info and current wishes.

4. We had annual family meetings. These gatherings, though often emotional, put everyone on the same page while Dad was still alive. The meetings included my sisters, spouses, and all the grandchildren (we eventually had great-grandkids crawling around too). My Dad let everyone know what his wishes were, especially for philanthropy, and enrolled the whole family to the board of his foundation.

By the time my father died, all my mother had to do was grieve. Every detail was in order. There were no surprises. Practically speaking, his passing was seamless.

Emotionally, it was devastating. But being financially prepared mitigated the hassles and made the experience…well…easier.

If you enjoyed these “Words of Wealth”, head over to my website and sign-up for my FREE weekly newsletter at: www.barbarastanny.com

A Very, Very Painful Lesson

Written by Barbara Huson

My first big mistake came with my first foray into the market. It was 1986. I hired a financial advisor and gave him the little money left after my divorce. He’d send me the monthly statements, but I tossed them in the trash, unread.

Then, October 19th, 1987, the market crashed with a vengeance… the biggest market crash since the depression. I called my broker, told him to sell everything.

He begged me not to.

“Barbara, the market will go back up. It always does,” he assured me. “And you’re going to have capital gains taxes to pay.”

I didn’t know what capital gains taxes were, but it didn’t matter. I wanted my money out where it was “safe.” Big, fat, awful mistake. The market went back up and very quickly.

That fiasco taught me well. In the 20 plus years I’ve been investing, despite living through at least 8 crashes, not just correction (when market falls 10%) , but full on crashes (when the market plunges 20%), I’m proud to say, I’ve done very well for myself. Instead of panicking, I stayed the course.

The next time the market plunges, if you tend to panic, let me give you some sage advice. Turn off the TV. Unplug the computer. Don’t look at your investments. Ignore the naysayers. Get a massage and remind yourself that the market will go back up…because it always does

If you enjoyed these “Words of Wealth”, head over to my website and sign-up for my FREE weekly newsletter at: www.barbarastanny.com

What do Money & Food Have in Common?

Written by Barbara Huson

I’ve long noticed that women who have problems with money often have problems with food.

Then I read Geneen Roth’s extraordinary book, Women Food and God, a New York Time’s bestseller. She confirmed my suspicion. I’ve never met Geneen personally, but I consider her a kindred spirit.

She insists that food is never the problem, just as I know problems with money are never about money.

Rather, says Geneen, overeating is “a doorway to your true nature,” echoing my belief that “financial problems are a doorway to your true power.”

Roth’s book, like my Sacred Success®, is based on her own unhealthy relationship with food and her experience teaching others what she learned during her weekend retreats. Her method of healing women’s relationship with food, similar to mine, mixes a hefty dose of spirituality with practical action and emotional transparency.

The key to success is not to focus exclusively on dieting…or budgeting. Instead, success comes from following a process that includes self-awareness exercises and specific practices to help women step into their power and overcome the urge to self-sabotage and other compulsive behaviors, like chronic busyness, over eating, binge spending.

In fact, my favorite quote of all time is a quote from Geneen which I saw on Facebook: “The only people who don’t have insane relationships with money are those who were willing to examine their insane relationship with money.”

Gosh, I wish I had said that!

If you enjoyed these “Words of Wealth”, head over to my website and sign-up for my FREE weekly newsletter at: www.barbarastanny.com

Just Keep Me Safe…Pleeeeeeease!

Written by Barbara Huson

It’s tempting to keep all your money in cash because it seems so safe, right? After all, it’s guaranteed by the government. However, you’ll never build wealth when you’re losing money to inflation.

Stocks, on the other hand, feel so risky. Most of us, including the dictionary, see risk as “the possibility of loss.” But as smart investors know, risk is an opportunity for gain.

In fact, the biggest risk you take, as a woman, is not that the market will go down. Because it will. It always does. But it also always goes up.

The biggest risk that you and I take is that we will OUTLIVE our money…that our purchasing power, like a wool sweater in a hot dryer, will shrink over time.

So at least a portion of our money must be invested in assets that grow faster than inflation and taxes take it away.

If you enjoyed these “Words of Wealth”, head over to my website and sign-up for my FREE weekly newsletter at: www.barbarastanny.com

The World’s Simplest Savings Plan

Written by Barbara Huson

Let me see a show of hands. How many of you promised yourself you’re going to save more. You really want to. But your savings remains minimal to non-existent.

I can understand if your hand went up. It’s easy to say that you’ll move money to savings but in practice, it often doesn’t happen. You forget; you overspend; you have a hundred excuses.

But that’s because you haven’t discovered the simple secret to amassing significant savings…easily, mindlessly.

Automate.

Every month, have your bank automatically transfer a certain amount of money (no matter how small) from your checking account to your savings account. All you have to do is fill out a form and it’s done. So simple.

What I love about this—you don’t miss what you don’t see.

If you enjoyed these “Words of Wealth”, head over to my website and sign-up for my FREE weekly newsletter at: www.barbarastanny.com

Pay Yourself First

Written by Barbara Huson

In 1926, George Clausen, publisher of the first road atlas of the United States, wrote a slim volume of parables about Babylonia, once the wealthiest city in the world. The Richest Man in Babylon has become a modern classic that some people, including me, consider among the best finance books ever written.

When we first meet the richest man in Babylon, he is telling friends the secret to his fortune.
“I found the road to wealth,” he tells them, “when I decided that a part of all I earn is mine to keep.” The men look at him incredulously.

“Is that all?” one asks, insisting that of course everything he makes is his to keep.

The wealthy man just shakes his head. “You fool, you pay everyone but yourself,” he cries, pointing to the clothing sellers, sandal makers, and wine merchants. Instead, the rich man counsels them, pay yourself first. “For every 10 coins thou places in thy purse, take out for use but nine.”

This is the way of the wealth builders. They pay themselves first, knowing that a part of all they earn goes into their personal savings on a regular basis.

Are you living that way?

How Do You Know When You’re Really RICH?

Written by Barbara Huson

Here’s an interesting question. How much money does it take to be rich? What would you say?

Of course, you may argue, there’s more to being rich than having money—there’s love, health, freedom, etc. All true. But for the purpose of research, let’s stick with a specific figure. How much money do you think you need to feel rich?

Despite a myriad of studies, no one can agree on a single number. The responses range from a mere $1.4 million to a whopping $100 million…and everything in between.

One thing that struck me. The amount is always more than the respondent had. As one researcher put it, “People always give a number that is twice their current net worth or income. Those with $100,000 in income say $200,000, while those worth $5 million say $10 million.”

This got me thinking. There’s no universal number because ‘rich’ is an attitude, not an amount. When you can say “I have enough to live my life on my own terms,” you can, indeed, call yourself rich.

Financial Wellness

The Busy Woman’s Blueprint for Wealth Building

Gotta Plan?

How Many Baskets Do You Have?

What To Do Before Your Spouse Dies

A Very, Very Painful Lesson

What do Money & Food Have in Common?

Just Keep Me Safe…Pleeeeeeease!

The World’s Simplest Savings Plan

Pay Yourself First

How Do You Know When You’re Really RICH?

Meet Barbara Huson

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