today I’m talking with the financial planning and wealth management expert, Karen Beckford about common mistakes that stop most entrepreneurs and professionals dead in their tracks before they even get started. Karen is a well known expert in the subject of financial planning and with wealth management. And she has graciously consented to this interview to share her extensive knowledge and experience to help us avoid the most damaging mistakes in this area. So every entrepreneur and professional can understand these common mistakes, and they can afford them in managing their finances. So let’s jump right in.
So Karen, my first set of questions is going to be about your background and experience in the field of financial planning and wealth management, so that entrepreneurs and professionals in our audience can understand who you are, where you’re coming from, and how you can relate to their situation that they’re in right now. So Tell us a little bit about yourself in terms of your background, your education.
Yeah, absolutely. Well, I’m a registered nurse. But I have practiced as a nurse for the past seven or eight years. And I look at it like this maneuver, I helped people get well physically and now I help people get well financially, right. I’ve always been good with numbers. And money is what I’ve been told by family and friends. And it was just a natural transition. To go to a training to become a master financial coach, I’ve always enjoyed working with money watching it grow. And I love real estate, just a wide array of areas. And so probably about four or five years ago, I became a master financial coach, I, give financial freedom seminars, I speak publicly, I also do one on one coaching, and I’m also an author. So everything I write about so far has been regarding money and getting money, debt and building wealth. So that’s my background.
That’sawesome. So how did you get into this field of financial planning? You said you will you were always good with numbers. But was there a particular point in your life when you, you know, move from your original profession of registered nurse into finance?
Well, a friend of mine said, Karen, you really need to go get training for that master financial coach, you’ve got a real gift and, you know, you’ve got that within you, you need to develop that more. And so I did, that’s exactly what I did. And of course, it’s an always ongoing process. Because even though the currency doesn’t change, money doesn’t change, how we invest it, and that kind of thing, and how to work with it may change depending on our circumstances. So I’m always learning and growing in the area of finance and money.
great. And so tell us a little bit about this formal training that you went through to become a financial coach.
Well, it was about a week Long training process it was about from 9am until 4pm each day, and just receiving that training to teach people how to get out of debt, teach people how to budget manage your money better. And you know how many people can get trapped in the credit card cycle. And it’s just an ongoing process. And it never seems that some people ever get out of debt because they don’t know how to break that cycle. I teach people how to break that cycle of debt.
That’s pretty good. So when you started your coaching career, tell us how that went? Like? Were you an overnight success? Or you had challenges finding your first clients? And how did how did it go?
Well, I use social media as one avenue because it seems that a lot of people use social media these days. And I got the word out. So I started doing some one on one coaching. And of course, word of mouth really spreads. So I started holding seminars, and now more people are aware of me, of course, doing podcasts with people like yourself, and that gets the word out even more so. And then utilizing amazon for the book sales and things like that. So it has not been an overnight, you know, sensation or success. It takes time. Yeah, definitely worth the process. Definitely worth the investment.
Great. Awesome. And so let’s dive into the dive into the core of the interview. Now let’s talk about some mistakes that people make in their lives and how we can help them avoid those mistakes. So what is the number one mistakes you see that people make in the area of finance, and wealth management?
The number one mistake people make is they don’t budget. And I know that sounds like a really simple statement to make. And a lot of times people you know, look at the word budget as if it’s a four letter word, because they’re thinking all know, I’m going to have to do without, but that’s not the case at all. Simply stated, a budget is telling your money what you want it to do, instead of wondering where it went, yeah. And so it’s just planning each month, and it doesn’t have to take you hours on end to come up with a budget actually a budget. Simply stated takes about 10 minutes, because you know what your house payment is, you know what your car payment is, you know what those monthly expenses are, very rarely Will you have to add something you know, we’re coming into the summer months, there’s probably going to be some wedding gifts or baby shower gifts that people are going to have to buy. And you just simply put that in the budget, knowing how much your income is at break that you bring in each and every month. And then planning how that money is going to be spent. How much is going to be saved. You decide your budget each month, because nine times out of 10 manuj, if I’m speaking with someone and they say, I made all this money this month, and I don’t know where it went, Tax time, right. So we’re getting ready to pay taxes. And a lot of times people will say, I made all this money this year, and I don’t know where it went 99.9% of the time, those people that make that statement is because they don’t budget, because when you budget, you know exactly where your money goes, exactly how it’s being spent. And you know exactly how much of it is being spent. I coached a person one time and they got a specialty coffee through a drive through every day on their way to work. And I said you know how much you’re spending. And they told me how much I said, Well, how often do you do that? And he said every day, we figured out he was spending $350 a month on his specialty coffee. And he did not realize how much he was spending each month. But it’s the little things that will add up? Yes, I did. He would change that a little bit and have a specialty coffee, maybe on a Friday night each week and the rest of the money he can invest?
Yeah, for sure. Alright, so that’s, that’s a interesting story. And I, you know, I work with a lot of software engineers, and I go through similar conversations with them. Yeah, and it’s, a universal problem, I guess. Yes. So can you tell us or recommend any tools or, you know, frameworks, people can use maybe, you know, any programs that they can use that will make this budgeting process easier, or you recommend just basically pen and paper or simple spreadsheet
I recommend a simple spreadsheet or pencil and paper. Sometimes when you use software, you’re just plugging the numbers in after you spend it. And I want people to decide how much they’re going to spend on those particular areas before they spend. So I have a very simplistic budget form that people if they want, email me or contact, be more than happy to send that to you. But the key is to do it every month. Like I said, it should only take 10 minutes each time and you plan each month. And so very simplistic put those numbers down on that form, so that you know how much you’re assigning to each one of those categories each month before you spend.
Okay, so my next question related to budgeting is like, you know, I see, like, even in my case, I do budgeting, but sometimes it’s difficult to stick to that budget. So one thing but sticking to it is even more important, isn’t it?
Yes, it is. Well, you know, some people, when they come to my seminars, I tell them, I give them the option. Look, if you’re going to listen to me and take notes, and then just take this booklet home and put it in a drawer, this isn’t going to work for you. Because if you’re going to create a budget, the reason you create the budget is to follow it. And so yes, it definitely teaches us self control. And it teaches us you know, to wait it and a lot of times we’re not disciplined enough to wait. So if you end up going to the mall, and you see maybe you see ladies a pair of shoes you want to buy or guys, you know some kind of new fishing pole or whatever the case may be, you see something you want to buy, but you didn’t put it in your budget for this month. Literally just discipline yourself and wait till next month. You can buy it next month, it’s only 30 days, or 20 days or whatever date it is. Listen, discipline is the key with that. And if you really want something and you really want to get out of debt, build wealth, discipline is an absolute key. Listen, are we that impatient? We can’t wait 20 days until we buy that thing. We can wait 20 days. I’m not saying to wait for a year. I’m saying 20 days wait till next month to buy.
all those malls and window shopping the actually make it very hard. But I really yeah, I completely agree with you. That you know, self discipline is the key.
For sure. Absolutely. Yes
All right. So apart from the budgeting, what are some other what is another common mistake that you see people make? When it comes to financial planning and wealth.
credit cards, all credit cards are another mistake. And I’ve heard people say, Well, I use credit cards because I get airline miles. Okay, I’ve never heard a millionaire tell me that they made their money with airline miles. You know, where some people think that you have to have a credit card to buy online, you have to have a credit card to rent a car or what have you. No, you don’t, because they’ll take a debit card. So that’s a myth that a lot of people buy into, you don’t have to have a credit card. And many times people have credit cards because they don’t have the money. So simply put, the reason people like using a credit card is because they don’t have the money in their account to buy this purchase. Or they’re tricking themselves into thinking they can afford it, because it’s not money being taken out of their account immediately. And that’s not the case. So credit cards can be anywhere from 3%, all the way up to 33.3% interest charges. And I’ve also heard people say, Well, I’ll pay it off every month, you realize that 91% of people don’t pay their credit card off. And really 91% of people actually have a good they truly do have good intentions, they truly do want to pay it off every month. But something inevitably is going to come up. And then they just say I won’t pay it off this month. So they might hold to that story for two or three months. But I guarantee you, they’re not going to pay it off every month. So it’s just better not to have the credit card. And using a debit card will actually cause you more self control and more discipline, because the money has to be in your account to spend it now, the money doesn’t have to be in your account when you use a credit card.
So yeah, I mean, that’s a striking, staggering number. I didn’t realize 91% That’s a lot.
It is a lot.
Yeah, I mean, I pay off my credit card, like every month religiously
one of the few short one of the mind percentage,
I guess. So. I used to think that it’s a good thing, because from what I understand about this industry is like if you use credit cards, and you pay them off, then it builds your credit because you know, it goes against your credit. Is that is that correct understanding? Or is that a myth?
No, that’s not a myth. When you paid off certain debts in it can raise your credit score. But I actually have the thought process. Why do we think we need a credit score? You know, because if you spend cash, yeah, you don’t need a credit score. You know, cash is the way to go? Is my thought my opinion on that? But until you have the cash to do certain things that you want to do, yeah, then you probably need to have a pretty decent credit score. But you know, when you pay things off each month, then yes, you can raise your credit score.
Yeah, I mean, for big purchases, like car purchases, or maybe if you’re buying a house or thing or maybe even renting an apartment, right? I think that’s where credit score will be necessary. But I get I mean, I see your point like, cash, is king, I guess?
cash is king. Yes.
Alright, so, you know, I think most people realize this, I hope, but just to make sure that everybody understand what are the consequences of not paying off credit card debt, you know, getting into a spiral of credit card debt
well, not paying it off to and cause several things to happen. Number one, if you don’t make your payments each month, that will definitely go against your credit score. So if you decide you’re getting ready to buy something, and your credit score is something they’re going to look at, then they’re going to see that your history of payments is sporadic. And so they’re not going to really possibly loan you the money for whatever it is you’re wanting to purchase. Number two, is if you’re not able to pay that credit card payments each month, then many times people will pay it each month because they don’t have the money. So this brings us up to the next point, you don’t have any kind of money in an account market emergencies. So here’s where the cycle will continue, you’re driving down the road, your alternator on your car goes out. And let’s say you don’t have the money in the bank to repair that or get a new alternator, whatever happens, you end up having to use a credit card or go into debt to get your car fixed. So now you have another debt. So my thought process is you need to have at least three months in an emergency fund and three months of living expenses. So for instance, if it costs you $3,000 a month to live each month, your rent your car, your gas, your food, utilities, etc, then you need $9,000 in, an emergency fund, because then you have three months of living expenses on hand, if you were to lose your job, if you were to get laid off. If an emergency were to arise, such as a car repair, then you can get that taken care of without having to go into debt. So that’s the spiral. If you don’t have an emergency fund, and you have an emergency arise, then what happens is you end up going to end the debt. And then you just start spiral all over again. So many times people have good intentions of not going into debt. But circumstances many times. That doesn’t happen.
Yeah, for sure. And also, credit cards are notorious to charge very high interest rates, right. So even a small debt can actually balloon up to, you know, significant size, right?
Oh, absolutely. I coached a couple one time and, unfortunately, at 86 credit cards between them. Wow. Yeah, that’s what I said, really. But anyway, we were sitting there and the couple of them, they listed all their credit cards that they had together. And then she fessed up and said, Well, I have some credit cards in my name that he doesn’t know about. Wow. And then he fessed up and said, Well, I have credit cards in my name that she doesn’t know about. So when it was all said and done, they had 86 credit cards between the two of them. And every one of those credit cards had a balance on them. So yeah, it can really spiral. And you know, sometimes people blame the credit card companies, but actually, the people are the ones that are applying for them. So, you know, don’t apply for the credit cards when you know you can’t pay on. And the credit card companies many times are going to go ahead and give you the credit card because they’re going to make money off of you. That’s why they issue the credit card. And like I said, you can have a credit card interest rate up to 33.3%. That’s the highest I’ve seen
That’s going to give up. Yeah, I mean, there’s very, very, it’s very difficult to dig out of that hole, you know, if they’re charging 33%. All right. So apart from not getting a credit card, are there any other suggestions that you will give them in regards to you know how to avoid credit card or basically just don’t apply for them,
don’t apply for them. And if you can’t afford what it is that you’re looking at, don’t buy it, save up for it. We live in such a impatient culture society today. And nothing against you know, younger people that are married. But I see so many 20 and 30 year olds, married with a very large house, you know, they end up with two mortgages on it, they have two brand new cars, they have 2.3 kids, not sure how that happens. But they end up and credit cards are maxed out. And the reason they do that is because they want the lifestyle now that their parents are presently living in with but they fail to remember it took their parents 20 or 30 years to attain that lifestyle. So I think we actually have to practice some patience, not saying that you can never have a nice house or nice cars or any of that. But if you can’t afford it, then don’t buy it be practice some patience, and practice some self discipline. Do you know that most of the time, if you were to walk in the store, and you want something many times you’ll be ready to buy it if you use a credit card. But if you spend cash many times you’ll wait. Yeah, and the reason I say that is because Carnegie Mellon did a story did a test several years ago, maybe 15 years ago. And they hooked up a person to an MRI machine of their brain. And they simulated that person spending cash. And so when they spent cash, it activated the pain centers of the brain, when they spent with a debit card or credit card, it didn’t activate the pain centers of the brain. So we’re supposed to feel money, leave our hands. It’s not supposed to be real pleasurable. And so when I go into a store, obviously, I don’t use a credit card. But when I spend with cash, I think differently, because do I want to spend this cash? Or do I want to keep this cash in my pocket? So it’s two different thought processes on that?
For sure. Alright. So next question is What? What is a financial planning and wealth management mistake that people make that they think in their mind, they’re doing actually the right thing? But in fact, it’s a big mistake.
Wealth planning? Well, first of all, they need to do their due diligence. I’ve had people buy stocks in various companies, and they have no idea anything about those companies. They haven’t done any checking into it. They haven’t done their due diligence. I am I’d like buying stocks. But I checked the history of the company. How long have they been around? What’s the history of their stocks? What was it 20 years ago? What was the price of it 10 years ago, five years ago, and now I want to see what that company has been doing? Have they had any troubles? You know? So when you’re planning wealth building, I’m not saying not to invest in stock, I’m saying check on the company, know what you’re investing in? Because you don’t want to invest in a company that you haven’t checked into? Right? I mean, I would think that you would want to know, what has their history been? Had they’ve been going up and down, up and down or hasn’t been a steady incline? Yeah. So those are some things to look at.
Yeah, for sure. I mean, I have so many people. I was a victim of this, because a lot of people are not very literate about the stock market gets hyped up in the news and everything. And a lot of people buy stocks based on tip from friends and family, right?
Sure. And that’s okay to listen to your friends and family. But you still do your due diligence, and she into it.
So yeah, It was a hard learning lesson for me for sure. Anyway, so in terms of investments, what kind of recommendation? So let’s say, you know, people are disciplined enough they have a nest egg saved up? How would you recommend they invest that for long term growth,
for long term growth? Well, first of all, I want to ask if you have a 401k plan, sometime have subtype of Roth IRA, some type of retirement plan, because everybody at some point is going to want to retire and not have to work until they leave this earth. So checking into a retirement plan, that’s a good investment strategy. So that you’re already pre planning for when you’re ready for retirement. The second thing is to look into or various stocks, that’s another thing to consider. But do your due diligence. And third is real estate, I absolutely love real estate, you have to still do your due diligence, you don’t want to buy a house, you know and fix it up and then find out that all the other houses in the area are selling at a particular price, but you have put so much money in your house that is well overpriced, and nobody’s going to pay that amount for it. So if whether you flip, whether you buy real estate to use those rental income, which can go on for years, and years and years, or if you just buy and sell properties, buy them cheap, and then don’t do anything to them, or just clean them up a little bit, but very little money into it, and just sell it for a little bit of a profit. Real estate is something I mean, I’m an avid investor in real estate. I love real estate. So any of those areas, but I just want to caution people still do your due diligence, do your homework, don’t just get excited, because you’re hard Manuj and Karen talk about it, do your due diligence and check into it and educate yourself. There’s lots of resources out there.
All right. Are there any other mistakes are any other pieces of advice that you will want to share with our listeners and viewers today?
Certainly demolishing debt. You know, so many people have debt today, whether it’s student loans, credit cards, car payments, whatever the case may be, very simple way to demolish, that is what we call a debt snowball, you list all of your debts from smallest to largest. And let’s say the smallest debt you have is a credit card of $100 balance, and the payment each month is $50, will you pay off that credit card, right? Now you have an extra $50 a month because you don’t have that payment anymore. Instead of spending that $50, what you want to do is now you want to apply that $50 payment to the next debt, along with its regular payment. And let’s say that regular payment is $100. Now you’re going to add $50. So now you’re going to put $150 on that debt until it’s gone, and so forth and so on, you will say that you will pay off those debts so much more quickly. And because you pay them off more quickly, it actually motivates you. And it builds up the momentum, you don’t want to give up, you want to keep hammering at it. So that’s the key that I want to leave the listeners is to demolish their debts.
Any advice on how to adopt a healthy mindset about money?
Absolutely. You know, many times people say, Well, I want to get out of debt. But then they end up saying, oh, I’ll never get out of debt, always have a car payment. No, don’t say that. Because you’re whatever’s in your thought process, you’re going to speak out your mouth. And whatever you speak out your mouth is what you’re going to move towards. So we want to move towards what we’re wanting. So we want to say things differently. And to say things differently. We have to think differently. Even writing down on a piece of paper, things that you want to see happen. I am out of debt. Every day, I’m hammering debt, I’m out of debt, and write down goals. Start writing down goals. Where do you see yourself in five years, 10 years or even next year? You want to take big vacations? Do you want your house paid off, start writing down those goals because a vision without written goals remains a dream. So write your vision down. Don’t just say well, it’s in my head, okay, that’s fantastic. But write it down, put it on a poster board, always put the vision right before you because you’re going to move towards what you’re looking at, you’re going to move towards what you’re saying. So change your words. And the when we change our words is the way we think.
Awesome. That’s great. Great advice. Thank you, Karen, for such a great interview. I’m sure all the entrepreneurs and professionals in our audience have a much clearer understanding of the mistakes that they may make, or they’re already making about financial planning and wealth management, and how to avoid them. So thank you very much for your sharing your expertise and wisdom with us.
Thank you so much when it is my pleasure.
Now before I let you go, can you tell us a little bit about your consulting services, your educational content, so that, you know our audience can learn from it as well. And also, please do talk about specifically how it helps entrepreneurs and professionals avoid these type of mistakes in managing their finances?
Well, absolutely one on one coaching, every person situation is a little bit different. I can do one on one coaching face to face, Skype, zoom over the phone, I’ve done all of the above. But each coaching session is detailed for that particular individual or their business. I’ve coached people from $400 in debt, all the way up to $800,000 in debt. So it doesn’t matter how much debt you have it, we can come up with a workable plan that you’re in agreement with. So it’s definitely doable. All my books are on Amazon, as well as you can connect with me on my website, which is Karenford.org.
Awesome. So what I’ll do is I’ll take that URL for your website, and I will put them in the show notes. And I will also grab the URL of the Amazon bookstore so that you can find those books easily.
Links & Mentions from This Episode:
- Link to Karen’s Website: https://karenford.org/
- Link to Karen’s Books: https://www.amazon.com/Karen-Ford
- ZIVAOnline meditation course: https://go.tetranoodle.com/z1
- TetraNoodle consulting services: https://www.tetranoodle.com
- TetraNoodle professional training: https://courses.tetranoodle.com