Financial Control Starts With Taking Control of What You Have With Ann-Marie Anderson
September 4, 2022
MP spoke with Ann-Marie Anderson, a financial strategist based in Apple Valley, California, with over 25 years of business and accounting experience. She is committed to educating people across the country in financial literacy, especially the African American community. Her work aims to shift families' conversations around finances and help others build generational wealth through proper planning and education.
Anderson recently partnered with PHP Agency, one of the fastest growing financial marketing organizations in the U.S., providing an educational platform for millions of Americans to use life insurance products to transfer wealth and reduce/eliminate generational wealth gaps.
She is also an author featured in "Shenomenal Women," an anthology of personal essays written by inspiring women who have overcome adversity.
Personal Finance Generally
What is financial literacy, why do so many people struggle with it, and how can we become more financially literate?
Financial literacy is the foundation of your relationship with money.
It’s understanding how money works and using financial tools, such as budgeting, financial management, and investments, to make your money work for you.
Most people struggle with money because they lack information.
Managing finances is typically not taught in schools, so, unfortunately, we learn by trial and error.
90% of us make mistakes before we get it right. The best way to become more financially literate is to work with a financial strategist or advisor.
Surround yourself with experts who can help you.
How can we manage our money more confidently, and what would this look like in practice?
Recently, I read “Secrets of the Millionaire Mind.”In it, the author talks about two types of habits: “not doing habits” and “doing habits.”
You don’t have to wait until you have a lot of money to learn how to manage it. Start where you are today and focus on the “doing habits.”
You learn by taking control of what you have.
For example, track all your spending and manage every dollar.
If you only have a dollar, allocate 60% to your basic needs, 20% to financial freedom (savings), 10% to charity, and 10% to recreation/play.
You don’t have to follow these exact percentages.
The point is to develop a habit.
How does our health affect our wealth, and what can we do to ensure we’re on track to a prosperous future?
Lack of finances or money is one of the most significant stressors that we experience, and stress is a common culprit for many health issues.
Having a good relationship with money and healthy money habits will reduce stress. Some studies show a direct connection between higher income and good health. Higher-income earners tend to have fewer health concerns.
Budgeting and Saving
What out-of-the-box strategies can you share to help us improve our personal budgeting?
An easy tool is having an envelope or jar system.
You can only spend what has been allocated in the envelope or jar.
Using a credit or debit card is a subtle way to overspend.
Instead, use budgeted cash when you buy groceries or gas. You can also have an accountability partner. Giving someone your envelopes/jars with instructions not to give you more than budgeted amounts can also help.
What strategies should we use to save more, and why might these be the most effective?
Get a Life Insurance Retirement Plan (LIRP)
It’s a great tool to help save, invest and grow your money with higher return rates without the risk of loss.
Identify Ways To Earn Income Based on Results or Start Your Own Business
Many tax advantages can help you save money as a business owner.
Make Your Savings a Bill
Treat your savings as a monthly bill. That way, it becomes a need rather than a want or option.
What should we look for in a bank account, how might this change based on our financial situation, and why?
Some things to consider are safety (insurance on your funds, like FDIC), interest rates, minimum balance requirements, monthly fees, ATM fees, and access to ATM locations.
The healthier we are financially, the easier it is to get better interest rates and receive better bank offers.
It also puts you in a better position to obtain loans or credit.
What steps should we take to reduce our current debts, and why?
Here’s a checklist I use:
Pay off high-interest credit cards or loans first. You’ll save money and get rid of high-interest debt.
Consolidate debt to reduce payments and lenders.
Establish a budget and track expenses.
Pay bills in full and on time.
Access funds through your permanent life insurance to pay off your debts.
What are three commonly made debt reduction mistakes, and how can these mistakes be avoided?
Not addressing the habits that caused you to get into debt. If you don't know how and why you got into debt, you will likely repeat the same mistakes.
Making minimum payments. It keeps you in debt longer, and interest charges continue to grow.
Getting into more debt.
What out-of-the-box tips can you share to help us better approach personal investing?
Safety, liquidity, and growth are not necessarily out-of-the-box tips but are factors to consider when investing. I would throw in taxes as a fourth tip. Taxes will increase over time, so investing in products that will allow you to have tax-free income in the future allows you to keep more of your income.
What are smart places to park cash, and why?
Again, I recommend a life insurance retirement plan (LIRP) because you get a high ROI and avoid taxes.
Most people see life insurance as money only available when you pass.
Still, wealthy people know that as technology and insurance improve, you’ll receive money and benefits while you’re still alive.
Also, Fixed Indexed Annuities have a great ROI, protection from market loss, and you avoid probate if something happens to you.
You also have the option of lifetime income.
Should investments into VC funds be included in one’s portfolio?
If you can financially absorb the risk, then yes, because of the trade-off of having ownership in the company.
Ownership is a big deal.
Think about people who invested in companies like Google and Facebook who became instant millionaires when those companies went public.
What tax complications can entrepreneurship present, and how can entrepreneurs protect themselves from the beginning?
Entrepreneurs receive many tax advantages. However, some mistakes they make are not paying quarterly estimated tax, not paying self-employment tax, and overreporting business expenses.
It’s essential that entrepreneurs have a good tax professional to avoid these costly errors and ensure they take advantage of all tax benefits available to them.
What types of insurance should we consider being covered by, and why?
Several types of coverage depending on a person’s financial goals and needs.
However, A Life Insurance Retirement Plan (LIRP) is an excellent plan because it’s structured to protect your family and assets if you die too soon, become ill, or live too long.
It also gives you the ability to access money tax-free.
Is there anything else you would like to share?
Like many people, I was raised to get good grades. go to college, secure a good job with a 401k, get married, buy a house and then start saving for retirement.
Now that I’ve experienced life, all those steps are great, but they’re not in the right order.
You need to prioritize insurance, and savings, then buy a home.
That is the best way to strengthen your financial foundation.
Responses provided by Ann-Marie Anderson, financial strategist.
Questions based in part on topics and comments provided by:
Jen Hemphill, Accredited Financial Counselor at Association for Financial Counseling and Planning Education (AFCPE®)
Herman Thompson, Jr., CFP®, ChFC®, Certified Financial Planner® at Innovative Financial Group
Leslie H. Tayne, Esq, Financial Attorney and Founder/Managing Director at Tayne Law Group
Linda Hamilton, Executive Vice President and Chief Operating Officer at Iroquois Federal
Ann-Marie Anderson, Financial Advisor at PHP Agency
Paul Dilda, Head of Retail Strategy, Products and Segments at BMO Harris Bank at BMO Financial Group
Matthew Benson, CFP® Owner and Certified Financial Planner™ at Sonmore Financial
Josh Richner, Outreach and Marketing Coordinator at National Legal Center
Ken Tumi, Founder at DepositAccounts.com and expert at LendingTree
Martin A. Federici, Jr., Chief Executive Officer at MF Advisers, Inc.
Ba Minuzzi, Founder and Chief Executive Officer at UMANA
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