|Royal, Leslie E|
Here's a look at three thirtysomethings making strides toward building their nest egg
YOUNG ADULTS ARE TAKING CARE OF BUSINESS when it comes to personal finance. Despite reports about their financial illiteracy and indifference, some have learned from the financial meltdown of 2008 that a secure financial foundation is essential. A 2011 survey by a division of
More young adults are beginning to understand that earning a high salary doesn't automatically equal wealth. "There's a tendency to equate high income with wealth," says
Here are three people in their thirties who are on their way to creating wealth.
The Boss: Kanyessa McMahon
Kanyessa McMahon recognized an opportunity and jumped on it. In 2008, after a frustrating four-month stint working at a video production company, she acted on her entrepreneurial aspirations.
"I was 2 S at the time," says McMahon. "My job wasn't working out because I wasn't getting paid on time. My paychecks were bouncing, and my skills weren't being utilized." McMahon left the company and, through an industry connection, acquired her first client –
"Most people who become wealthy do it through entrepreneurship," says Evans-Motte. A recent study by
As CEO of
McMahon's company has been profitable from the start. Last year's revenues reached
McMahon practices responsible money management by saving 1 5% to 20% of her salary. She also walks to and from work and eats lunch at home. She and her husband, Liam, work with a financial planner to assist them with retirement planning and disability and life insurance policies.
Although annual revenues for women-owned businesses typically stall at the
Hire a financial team.
McMahon advises hiring professionals to oversee both your business and personal finances. Her team comprises an accountant, attorney, and financial planner.
Keep operating costs low.
McMahon kept costs low the first three years by working out of her apartment.
Prepare for unexpected slowdowns.
McMahon says she makes accurate cash flow projections by adhering to a strict budget and preparing for the unexpected. "I structure my budgets to account for any emergencies." She also has a zero-balance low-interest business line of credit available if she needs it.
The Real Estate Investor Marcel Umphery
It was the fall of 2002 at
"I learned about investing from a friend," says Umphery, now 31. The friend, a fellow student at
To learn more about the basics of personal finance and real estate investing, Umphery read books such as
"If you're just starting out, consider purchasing a duplex," says
Educate yourself about a potential property.
Before buying property. Umphery says he pays attention to things such as neighborhood crime statistics and how much is charged for rent. "Most rental neighborhoods have higher crime stats than neighborhoods that are mostly owner-occupied," he says. Crime statistics can be found on your local police department's website, and rent estimates can be found on sites such as Zillow.com.
Screen prospective tenants.
I use an online resource called ResidentCheck.com. This site is ed [less than
Save for emergencies.
Make sure to set aside money for repairs and other emergencies, such as a vacancy. "I have money set aside for a handyman to work on properties that need repairs," says Umphery. "When renovating, I hire licensed electricians, plumbers, and roofers."
Consider an exit strategy.
"An exit strategy is the approach used to terminate one's involvement with an investment, such as real estate," says
The Saver: Tiffany "The Budgetnista" Aliche
As a child growing up in
Her parents' meticulous budgeting laid the groundwork for Aliche's own commitment to saving. At the age of 2 5, she'd saved
Aliche, author of The One Week Budget (Create Space;
"As soon as I receive any income, I immediately break it down into percentages and transfer the funds into their designated accounts," says Aliche, now 33. According to George Barany, director of Young America Saves, the best saving strategy is to set a goal, develop a plan to reach it, and save automatically thereafter. Depending upon their income, young people should save at least 10% each pay period. If you can't do that, save something – even if it's
"Wealth is a measure of net worth, and in order to have some wealth, a person needs to have more savings and assets than debt and expenses," says Barany. "Saving as a pattern of behavior can support the opportunity to build wealth. Without saving, it is very difficult to build wealth."
Open an online savings account," Barany advises. "This will help put distance between you and your money. Use
Take a second look.
"Look up local thrift and secondhand stores in your area. Keep in mind, the better the neighborhood, the better stuff you'll find. You'll save hundreds of dollars a year by letting someone else buy new stuff that you can get for pennies on the dollar later." says Aliche.
"Cash will allow you to negotiate prices and help keep you from overspending. You'll save on finance fees that can double or triple the cost of an item."
Do it yourself.
|Copyright:||(c) 2012 Earl G. Graves Publishing Company, Inc.|