Financial Well Being

Three Financial Questions to Ask Before Unexpected Times

Emotions have reached high and low levels with the best strategy for money and business during the COVID-19 pandemic. Despite global issues, I encourage you to focus on a positive outlook and what is best for you and your family. Let us discuss three financial areas you can control before and during unexpected times.

1. Am I protecting my family and business?

More than ever, you need to review all insurance policies. Do you know your benefits? Are the correct people listed as your beneficiaries? These questions may sound simple; however, I worked with clients who had ex-spouses and deceased family members still listed as beneficiaries. Life gets busy; it's easy to forget or put off updating these documents. Your various insurance policies can be the difference-maker in your family's quality of life in unexpected situations.

Here are some action steps to ensure you are protecting your money, family, and business. First, locate all insurance policies (life, disability, health, and commercial) and attorneys' power. Second, review benefit amounts, verify names and contact information of each beneficiary. Last and most importantly, put the documents in a location accessible by family or trusted friends when needed to settle affairs. It is hard enough to deal with loss or illness without added emotional stress. Consider sharing this advice if you are a caregiver or responsible for assisting in parent's affairs. The best strategy is talking to your estate planner and family to ensure accuracy and transparency.

2. How many sources of income do I have coming into our household?

The objective is to have five income sources. I believe in striving for financial independence to release the dependence on a single paycheck—the three main types of income categories are active, passive, and portfolio. Active income is from your direct labor when you stop working, the paycheck stops. Passive income is from establishing an automatic system to receive money for providing a product or service. For example, rental property, selling digital workbooks, or selling virtual courses. Portfolio income is from collective investing activities earned as interest, dividends, and gains. I recommend having at least one fund source from active activities, three income streams from passive activities, and portfolio income from various investments. Passive income is a leading source because it requires some work upfront and occasional engagement, but other than that, it automatically generates income.

Here are a few ideas for earning passive income. Try selling downloadable digital worksheets, planners, and curriculums. Become an affiliate, getting paid to promote other people's products through social marketing. Passive income is a great way to quickly pay off debt, save for unexpected expenses, and invest to reach financial goals.

3. How can I reduce my debt and expenses?

We cannot rely on a single source income stream. During the COVID-19 pandemic, many people lost their jobs, unable to pay the necessary bills increasing their family stress. Here is a proactive strategy to get ahead in your finances. I recommend writing down all debts and expenses and then categorizing debts as 'must pay' or 'waive during hardship.' Contact each creditor to verify requirements and policies if you are unable to pay. Next, categorize expenses as 'necessary' or 'non-essential.' Call each company on the 'necessary' list to negotiate discounts or lower payments.

Everyone's situation is different; therefore, adjust the following options for your specific situation. First, put money in savings to cover future unexpected expenses. The amount does not matter; it's more about the commitment to a goal. Second, choose your smallest debt and commit to paying it off first while making payments on others. Third, do both by paying off the smallest debt and putting a small amount in savings. Remember, the amount does not matter- it's a commitment to achieve financial goals.

2020 is not over, and you can still crush it. Select one financial area to focus your efforts on protecting your family, increasing your income, or eliminating debt. I wish you the best on the strategy you select. If you have questions or comments, you can contact the team at www. InsightMasterminds.com.

Wanda Booth is a Business Strategist helping the Million Dollar Business Divas achieve financial freedom and purpose in their online business. After serving 25 years in the US Army, Wanda worked as a licensed financial advisor and broker, helping business owners and families build wealth. During her work, she noticed a gap in women’s leadership programs and financial literacy. Wanda had enough and decided to form a company strengthening business owners through the art of masterminding. Additionally, Wanda commits time and resources as a champion for several nonprofits assisting mental wellbeing for teens and young women.

Wanda is the best-selling author of two books, Insight 20/20: Applying Lessons to Advance in Life and Career and You Matter Most: 8-Week Self-care Guided Journal for Building Confidence and Coping with Anxiety.