Smart Money Tips: How Much Money Do You Really Need to Retire?
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Hello, friends, DaRayl Davis here, best-selling author and founder of the Smart Money Academy. And I'm here to share a Smart Money tip with you.
You know, often I'm asked the question "How much money do I really need in order to retire?" Now, while that's a very subjective question, it's going to vary from person to person, there is a formula and an approach that you can take that sort of gives perspective to reaching a number that works for YOU.
The first thing is to determine the standard of living that you want to maintain in your retirement. Often there's a misconception that oh yeah well in retirement I'll have less expenses and I'll just downsize. Well, that may be the case, but not necessarily is it always automatically the case. What do I mean? In retirement, we are retired from the need to have to work. That gives us time and availability to do things we prefer to do, that we enjoy to do, that we worked hard to do so now we can enjoy the fruits of our labor. Well, sometimes enjoying the fruit of your labor costs money. If you want to go out and spend time at the theater, if you want to get involved in the arts and even philanthropy, that's a given, if you want to travel and see the world or travel and see friends and relatives and family, that can cost money. So while many people don't have the same expenses in retirement, say your mortgage may be paid off, there are other expenses associated with enjoying the fruits of your labor. That's kind of unique. Since wealth in itself is a responsibility. So if you retire wealthy, there's even responsibility in that. But that's another conversation.
But the ideal scenario is to figure out the standard of living that you are accustomed to, that you want to maintain. If, for example, your standard of living requires $50,000 a year, you can then say, well, if I accumulate through my savings and investments $1 million, or through a business sale or otherwise, have $1 million in my possession... if you earned 5 percent a year, you can have $50,000 paid to you without touching your principal. And when I say earn, I mean passively earn. From your investments, from savings and your other activities. That million dollars is invested and returning 5 percent, then you would have $50,000 a year to sustain that standard of living that you're accustomed to, without touching the $1 million.
So that's just a formula you can use in approaching. But keep those things in mind. The myth of I'll have reduced expenses may or may not be the reality. But determine the standard of living and figure out the amount of money that you want to come from your passive investments, hopefully, without you actively having to work in order to sustain that standard of living.
Until next time, learn to prosper, strive for mastery and share your wisdom.
I have always believed that finding a mentor is a critical part of any journey toward success.
I have the distinct pleasure of being part of the upcoming the Black Women Millionaires Virtual Salon, which will bring together 16 black women millionaires and five of their mentors, including yours truly, for a discussion on how women can level the financial playing field. As we well know, women, especially black women, face many unique challenges in the marketplace, including overcoming the glass ceiling that often blocks women from reaching the same financial success as men. This virtual salon seeks to change that by introducing women to millionaire mentors who have made it big and can tell them how it’s done.
This amazing online experience will be held March 5 through March 7. If you’re interested, there’s still time to sign up!
The virtual salon was organized by Dr. Venus Opal Reese, CEO of Defy Impossible and known as the “Black Women Millionaire” Mentor. Dr. Venus started as a 16-year-old street urchin and eventually earned her way to a Stanford University PhD. She has made $7 million for her clients in five years by systemizing her way of survival.
I first met Dr. Venus in Dubai, India during the course of a mastermind in which several successful entrepreneurs and business professionals were all brought together by one of the leading brand strategists in the world, Lethia Owens. I was immediately impressed by the commitment Dr. Venus has to serving those who are and are aspiring to be millionaires. The fact that she is constantly seeking to deliver world class, cutting edge and actionable content to her audience of ambitious, talented, committed, enterprising women is inspiring. And when she later asked me to participate in this virtual salon because she believes that my message of Financial Transformation will resonate with her audience, I was humbled.
On top of that, Dr. Venus isn’t the type of woman you say no to.
While participating in this event, I was reminded that there are few things more fulfilling than adding value to the lives of other individuals, especially women, who in essence, give life to all of us and the environment around us. I learned the joy of working with an all-star cast of Black Women Millionaires and their Millionaire Mentors. In my previous experience, whenever you get a group of achievement-oriented, accomplished entrepreneurs, experts, and thought leaders — like the people involved in this virtual salon — together, amazing things happen. People’s lives are impacted for the better and progress happens.
The most important thing I think women should take away from this virtual salon is one specific nugget that will help them make a quantum leap towards achieving their individually defined success. This nugget can take the form of an idea, inspiration, a specific action or instruction, a new habit practice or discipline, a new coach, mentor or accountability partner. I believe the adage that says the burden of learning is on she who wishes to learn. The burden of teaching is on she who wishes to teach. I believe that from any forum or learning environment we are able to extract at least one nugget that can change our lives for the better. As such, I think women should expect to experience a transformation as a result of this experience. They should expect their minds, their perspective and outlook to be changed and expanded.
I applaud Dr. Venus and many others who make bold strides to teach others and help propel them to success. I encourage anyone looking for great “millionaire minded” insights to join this unique online experience March 5 – 7.
Operation HOPE and Smart Money Academy Partner to Deliver a Blended Learning Platform focused on Financial Literacy
We are excited to announce our partnership aimed at deploying 3D e-learning capability to engage learners, with a primary focus on Operation HOPE’s Project 5117, the 5 Million Kids Initiative, and Banking on Our Future.
Together, we are expanding Operation HOPE’s ability to reach its goals through a customized and immersive blended learning platform.
Smart Money Academy is proud to partner with JuniorAchievement of Greater Washington on the upcoming Finance Park in Prince George’s County. The park is scheduled to open Fall 2015.
I believe that every human life is uniquely valuable and capable of enriching the lives of others and the world around us. And while it is certain that money is a tool we can use to measure how we are deploying that value, money itself doesn’t determine our value.
We do get paid for the value we add or bring to the marketplace or often we hear it referred to as the economy. But each of us can determine how we’re going to use our intrinsic value, our gifts, our talents, our native abilities and our skills to enhance the world around us and improve the lives of others. This cycle of exchange, the process of giving and receiving, is how the whole global economy works.
This is how… there is no economy without you and me. Were it not for people, you and me, our human and intellectual capital — your knowledge, skills and expertise gained from life experiences and the wisdom you’ve gleaned from others. Without you and me, there are no financial markets. This is no Google or Apple or Oprah. When I finally realized and embraced this, everything in my world began to shift. I went from not having enough money to finish my engineering degree at Howard University, not being able to pay my rent for a room and a house I shared with other Howard students — I went from essentially being homeless to within a few short years building a million dollar business, earning one hundred thousand dollars a month and becoming a millionaire in my mid-twenties.
What changed? I met my first millionaire mentor, and he introduced me to a different way of thinking. He introduced me to the timeless universal principles and laws that govern success in any endeavor and work for anybody. I came to understand that my destiny, your destiny is not dictated by the conditions of our birth or our present circumstances but by our decisions. It’s our choices that determine the outcome of our lives. You and me have the power to choose. We can learn the principles and practices used by the world’s most successful people, not just today but throughout history.
Not matter what your struggles are today, there are strategies that can be used to turn your trials into triumphs. It’s all a part of the journey.
From each of the perceived failures that I’ve experienced, I’ve learned a lesson of greater benefit. And I’m passionate to share with you and with the world that in every area of our lives — financially, spiritually, professionally, socially — in every area of life, we can win. We can learn to prosper, however you define prosperity, whether you measure it financially or through fulfilling relationships with your family and friends. Whether you gauge it by your spiritual connection or your level of service to the community or country. We can learn what works and we can strive to master it. Strive for mastery. We can make a habit and a practice of the principles that have been proven with the world’s most successful people.
Today, I enjoy the privilege of spending time with world leaders from the president of the United States, chairman of the Federal Reserve, policy makers and titans of industry, transformative global thought leaders and true change agents. And what I’ve learned, the difference between them, you and me is how consistently they apply these principles, to what level of excellence and mastery do they make a practice of following these universal principles. And I believe that I’m obligated to share the wisdom that I — that has been imported to me. I believe that it is each of our duty and that this is the only way to fulfill our true purpose.
I believe we achieve our ultimate greatness and highest, most fulfilled self in service to others. Money is one of the — money is one yardstick we can use to measure our service. And yes, we can use money to gauge our success in our chosen field of endeavor. But success is really the progressive realization of our highest ideas, dreams and goals. True success is the degree and quantity of significant accomplishments that you and I are able to achieve in a given amount of time, with the resources that are available to us, that reflect our most important values, dreams and goals. I believe you can succeed.
This is Part 4 of the Smart Money Minute With DaRayl Davis series. This series offers quick-time answers to a variety of financial concerns facing each of today’s generations. See more here!
Summary:
NARRATOR: Blake and Linda are in their early 50's. They have two kids in high school and they're stressed, thinking about how to pay for college and the growing concern about caring for aging parents.
BLAKE: We've been pretty good about saving and investing.
LINDA: How do we choose between our children's education and care-giving?
DARAYL: Blake, Linda, I hate to be the bearer of bad news, but you live in a YOYO economy. That means YOU'RE ON YOUR OWN.
So your children need to figure out how to create their own debt-free college degree. You can't go into debt or expend your retirement savings, hopeful to put your children through college.
As for your parents, consider some legacy planning that would include long-term care insurance. Most of us spend the most of our accumulated resources and assets at the end of our lives. You may need to do that. You can't afford to expend it on your parents. Put your own oxygen mask on first. Your are responsible for your own retirement.
Your children are responsible for their own college education. Where there's no investment, there's no appreciation. Allow them to make the investment in their education. They can pursue scholarships, they can pursue grants and, if need be necessary, they can get loans.
NARRATOR: This is your Smart Money Minute with DaRayl Davis.
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Do you have a financial concern of your own? Shoot a quick video of yourself explaining a financial situation that troubles you and link it in the YT comments for this video! Or just comment there with your scenario! I will be tackling your concerns in future videos.
Also, if you enjoyed this tip, please reblog and share with others so they can also take advantage of the advice here!
This is Part 3 of the Smart Money Minute With DaRayl Davis series. This series offers quick-time answers to a variety of financial concerns facing each of today’s generations. See more here!
Summary:
NARRATOR: Newlyweds Jeff and Lisa have lived off a joint income. Jeff lost his government contract. They fell behind on their mortgage and car payments.
JEFF: Our credit was damaged after I got laid off. I found a part-time job, but I have no idea how I'm going to make ends meet with a smaller budget.
DARAYL: One approach to establishing a standard of living that is below your means, Jeff and Lisa, is to build your standard based upon one of your incomes. Thereby, in the event that either of you lose a job or have a reduction in income if there's a shift in the economy, any type of economic downturn, you can be insulated against both, maintain the standard of living you've become accustomed to and have a cushion beyond that which is typically recommended -- six to nine or twelve months of your standard of living.
NARRATOR: This is your Smart Money Minute with DaRayl Davis.
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Do you have a financial concern of your own? Shoot a quick video of yourself explaining a financial situation that troubles you and link it in the YT comments for this video! Or just comment there with your scenario! I will be tackling your concerns in future videos.
Also, if you enjoyed this tip, please reblog and share with others so they can also take advantage of the advice here!
This is Part 2 of the Smart Money Minute With DaRayl Davis series. This series offers quick-time answers to a variety of financial concerns facing each of today’s generations. See more here!
Summary:
NARRATOR: Tracy is a 33-year-old freelance writer who is burdened with student loans.
TRACY: I'm a single mom. I graduated from community college last year and my freelance work just isn't steady. All these loans -- I'm feeling overwhelmed. What can I do?
DARAYL: Tracy, you're like a lot of folks. And what I would suggest is that you consider being a stay-at-home Millennial instead of the boomerang Millennial that so many of your peers are.
One thing you can do is helping your parents with their household expenses. Especially consider helping them pay down their mortgage. You're probably going to inherit the property anyway. Now, Tracy, this may not be popular with your friends and it certainly may not win you any points with a perspective partner. But in the long run, it'll work out better for you and for your parents.
You can also, in this process, build up your cash reserves for future saving and investing.
NARRATOR: This is your Smart Money Minute with DaRayl Davis.
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Do you have a financial concern of your own? Shoot a quick video of yourself explaining a financial situation that troubles you and link it in the YT comments for this video! Or just comment there with your scenario! I will be tackling your concerns in future videos.
Also, if you enjoyed this tip, please reblog and share with others so they can also take advantage of the advice here!
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This is Part 1 of the Smart Money Minute With DaRayl Davis series. This series offers quick-time answers to a variety of financial concerns facing each of today's generations. See more here!
Summary:
NARRATOR: David works as a hotel desk clerk and runs his own graphic design business on the side to help make ends meet. He's one of a growing segment of Millennials that start their own business to supplement their income.
DAVID: How do I manage the income from my full-time job and my part-time gig? I mean, when do I get to replace my full-time job with my part-time passion?
DARAYL: David, I always encourage people to pursue their passion over a pension. Over the long term, you don't want to work for money. You want to put money to work for you.
Here's a simple 70:30 approach to managing your money. Never spend more than 70 cents out of any dollar for lifestyle expenditures -- food, clothing, shelter, transportation, entertainment, etc.
Put 10 percent into what we call Passive Capital. That is investing in your 401K or with an adviser or money manager.
10 percent goes into Active Capital. That's your side business or your enterprise. You want to use 10 percent to reinvest and grow that.
And 10 percent for charitable or philanthropic causes; you may say church or charity. That's the simple approach to managing your money. And over the long term, if you practice this, you can achieve financial independence and ultimately financial freedom.
NARRATOR: This is your Smart Money Minute with DaRayl Davis.
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Do you have a financial concern of your own? Shoot a quick video of yourself explaining a financial situation that troubles you and link it in the YT comments for this video! Or just comment there with your scenario! I will be tackling your concerns in future videos.
Also, if you enjoyed this tip, please reblog and share with others so they can also take advantage of the advice here!
Seven (And A Half) Ways You Can Protect YOUR Money!
1. Spend only $9 for every $10 you earn.
Think of it this way, you spend 40 hours of your life (time you can never get back!) each week working for that money and end up giving away every penny for something you either want or need. Shouldn’t some of that money be saved for you? Set aside 10 percent of what you earn —equal to four hours of your workweek — for your financial future.
1.5. Build your own personal treasury.
Place that $1 you’ve set aside for yourself from every $10 into a retirement account or investment strategy and use the power of compound interest to help that money grow.
2. Control your expenditures!
Learn to live below your means. Take some time to monitor what you’re spending money on and then ask yourself whether each item is a necessity or a want. Develop a spending plan based on money you obligate to your necessities and designate to a few of your wants. If you cringe at the idea of not being able to buy what you want all the time, remind yourself that this plan will help you attain your most prized financial goals by defending them from your more casual wishes.
3. Make your money multiply!
Seek opportunities to invest in both passive and active capital. Passive capital is money placed into ventures you don’t actively work in or work on, such as stock investments. Active capital comes from businesses in which you have an active role in their management, such as a home business you start.
4. Guard your personal treasury from loss.
Fire your broker and hire a coach! A broker works for the brokerage company or brokerage dealer, not the client. A financial coach helps structure your portfolio by guiding your mindset through the various stages of the financial markets and the varying business and economic climates.
5. Make your residence a profitable investment.
Make it a goal to own your own residence. Typical homeowners may end up paying two to three times the value of their home over the life of a 30-year mortgage. What was once a $300,000 house may, in fact, end up costing $1 million by the time that mortgage runs its course. Owning your home allows you to divert tens of thousands, even hundreds of thousands, of dollars in interest savings to other areas such as your retirement savings or educational savings.
6. Insure a future income.
Have a short term and long term disability income plan in case you are injured and cannot work. Life insurance and long-term care insurance for when you’re older are also necessities so that your family is not left with a burden.
7. Increase your ability to earn!
Learn as much as you can about the field and/or occupation in which you currently work. Make yourself a leader in your area of focus. We get paid for the value we bring to the market. This value is judged by how we’re able to improve or enhance a product or service. Also, study your primary language to improve your communication skills. A person’s ability to communicate effectively has proven to be directly correlated with that person’s income and earning potential.
Davis Offers Training to the “I Have a Dream” Foundation
DaRayl Davis, founder of Smart Money Academy and CEO of Financial Assurance Corporation, was among the presenters at the “I Have a Dream Foundation” learning experience at American University in Washington, D.C. on July 24.
Davis guided more than 40 students from low-income communities in understanding a variety of financial education topics, including investment, credit and saving. He tackled questions from the students about money matters and urged the importance of having the correct mindset when deciding what to do with money they receive.
“Your generation will have major influence over the world as we move forward,” Davis told the students during his workshop.
Davis has spent more than 20 years in financial services. He recently launched Smart Money Academy, which provides online training through the application of core financial principles — empowering individuals to achieve financial success. He has also written several books on saving and investments and is the host of Wealth of the Nation, a program that tackles economic issues of the day with guest commentary. Davis is also the vice chairman of Operation HOPE’s Banking on Our Future College Education, a nonprofit devoted to helping students understand their debt and spending.
For more information about Smart Money Academy, visit www.smartmoneyacademy.com orwww.darayldavis.com.
About Smart Money Academy
Smart Money Academy is a Washington, DC based company providing financial education to individuals of all ages, as well as organizations. A model based on core success principles and mindset development is a fundamental part of its curriculum. Learning occurs through classroom instruction, workplace development, online training, webinars/teleseminars, workshops, private coaching, and game-based technology.
About The “I Have a Dream” Foundation
Businessman Eugene M. Lang formed the foundation in 1986, modeling it after Dr. Martin Luther King Jr.’s famous speech at the 1963 March on Washington. The foundation grew out of Lang’s promise of college tuition to every sixth grader who stayed in East Harlem Middle School and graduated. Since its creation, the foundation has worked to provide children in low-income communities with guaranteed tuition support and the skills, knowledge and habits they need to gain access to higher education and succeed in college and beyond.
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