People tend to listen to those who know best. When asking for advice, where do they usually go? The experts of their respective industries. One has to be creative, persuasive and well-informed to become a figure of authority, expertise, and influence.
While the traditional pathway demands degrees and certifications that cost valuable time and money, there are a few alternatives worth trying:
1. Specialize and niche down.
Rather than trying to be a jack of all trades, zero in on a specific skill you excel in. You cannot please everybody. It takes twice the work, money and time if you choose to serve everyone. As you narrow down your prospects, you can better understand and focus on your chosen field. As a result, you gain more knowledge and expertise in dealing with every nook and cranny of your industry.
When your sink is broken or a pipe is leaking, who do you call for help? It’s likely the plumber, not the electrician, who comes to the rescue. It is the same for every business. You must stand out with your skill set by specializing and micro-niching. The clients who sought my services knew that I could deliver what they needed for their business. They wanted someone reliable to do the job, and I knew I could provide solutions to their problems. Clients will not hesitate to consult and take advantage of your service once they learn you are an expert.
2. Be a source of valuable content.
How do you stick out in a sea of competition? You have to position yourself as a professional who can provide essential information. This is because people flock to where they can benefit best. You establish your authority and expand your coverage as people begin to rely upon what you say. You can offer free courses or webinars relevant to your field to entice more curious minds. In this way, people will start discussing the value you provide. And as a result, your reputation as an expert will increase.
Before creating groundbreaking content, you have to ensure the validity of your sources. Doing extensive research first is crucial to keeping your material valid. Remember that, as an expert, the thoughts and opinions you state should be authentic. To make sure I obtained trustworthy information, I conducted interviews and explored various sources before publishing. I could then use this data to inform and pique the interests of my followers.
3. Stay relevant and move alongside the trends.
Press conferences, conventions, and expos used to be excellent platforms for aspiring experts. But when the pandemic struck, they became a thing of the past. Everyone shifted to digitizing their efforts by taking advantage of social media. Why stay stuck in the old days when you can do the same thing? If you cannot adapt to the changing times, you risk becoming an outdated expert.
People find it difficult to trust a specialist who thinks backward. Nowadays, strict health measures prevent social gatherings and large-scale events. It is more challenging to reach your target audience. In my case, I took down notes and looked at what the pioneers and renowned brands of my niche are doing. Now that most people depend on social media, I changed my business model to adjust to the situation. I seized opportunities and presented myself as an expert by riding the tide.
4. Join virtual events or create your own.
How do you share your knowledge with a bigger audience? Podcasts are great avenues for introducing yourself to the public. You can pass down your wisdom to those who thirst for it. Being a public speaker adds credibility and secures trust from your audience. Connect with notable podcasters, influencers, and thought leaders — they already have a large number of followers who help boost your publicity. Aligning with forerunners enables you to gain valuable information and expand your network.
Partaking in virtual conferences and seminars can be another useful approach. Giving speeches at large events cements your credentials as a reputable expert. Or you can create your virtual events on social media to maintain your online presence. When I started my podcast years ago, I encountered different challenges. The most important aspect is to keep exploring other options and trying new ideas. For me, it was about finding the right people for my team. They help me create concepts that pave more opportunities for me to get recognized as an expert.
5. Get featured in prominent publications.
A tried-and-true way of gaining the public’s trust is having your name featured in a reputable magazine or newspaper. These brands have years of backing and integrity, which is hard to contest. Thus, readers expect nothing but quality content from these publications. Build connections with editors, reporters and journalists, which can lead to securing a foothold in publishing companies. Your value as an expert in your industry increases as soon as you get published.
Writing professional articles requires meticulous research and study. It is also another method of showing off your expertise and knowledge of your niche. Choose relevant topics that stimulate interest and contain valuable information. Maximize this opportunity to engage and connect with your audience. In creating my content, I make sure to provide tips and pointers that readers can easily apply. By doing so, you position yourself as a thought leader and a figure of authority.
These steps are only the tip of the iceberg. There are other techniques to amplify your identity as an expert. The bottom line is to remain consistent and steadfast in honing your craft. When people see how authentic and genuine you are, they will always keep coming back for more. That is what an “expert” should be.
There are so many choices and options today when people are looking to solve a challenge or problem. So just how do they make that choice?
They go to the trusted expert or authority who has established a relationship with them and has proven their expertise on their topic.
So when your community needs someone that offers the products or services that you do, will you be the authority that they turn to?
Perhaps you are unsure about how to establish yourself as an authority on your topic.
Fear not.
I’m going to share six guaranteed ways you can position yourself as a trusted authority with your community, industry, and/or topic.
6 Key Strategies To Become an Authority On Your Topic
1. Focus on a Niche
Don’t be a Jack-of-all-trades and master of none.
If you want people to see you as an authority, specialize in something. Pick a niche that narrowly focuses on your ideal clients and what they need or want.
For example, while I provide a variety of social media marketing and content marketing services, my specialty and what I’m best known for is LinkedIn. This is where 80% of my focus and energy is spent and what many people recognize me for. When I went to lunch with someone recently they told me “when I think of LinkedIn, I think of Melonie Dodaro.”
The benefit of being so specialized is that you can hone in on solving your ideal client’s specific challenges and needs.
With this specialization, you’re also better able to personalize your message to speak directly to your ideal clients and connect with them emotionally, which is vital to your success in becoming an authority.
Remember, people want and expect personalization today. They want a message that speaks directly to them and their needs.
So how do you choose your niche?
There’s no one-size-fits-all answer, but here are some questions you can ask yourself to help you:
If you look at your industry, is there a gap that needs filling?
What unique skill or value can you offer your customers?
What’s your ideal client’s biggest need or challenge?
What problems or needs have your existing customers shared with you?
Don’t be afraid to experiment until you find the right niche for your business and community.
2. Choose the Right Channels
Once you’ve chosen your niche, you also need to select the right channels to share your knowledge and expertise – you don’t want to waste your time sharing your knowledge in places where your community isn’t spending time.
While you’ll always want to have a website full of helpful content and to build an email list (two things that you own and control), you’ll also need to determine which other online channels are being used by your community including which social media channels.
Do they spend their time on Facebook, Twitter, Instagram, LinkedIn, YouTube, Snapchat, or somewhere else?
You also need to consider how your community prefers to consume content. Do they prefer articles, graphics, podcasts, videos, live streaming, eBooks or another form of content?
Knowing this will not only increase the engagement around your content but it’ll also help you choose the right social media platforms to attract the right audience.
3. Provide Real Value
What do I mean by “real”?
By real, I mean it needs to be seen as (and experienced by) your ideal clients, existing customers, and community at large as being of value to them.
What you think has value is meaningless – it’s all about what your community values.
Always ask yourself, “What’s in it for them”.
At the end of the day, people all think WIIFM (what’s in it for me) when they’re looking at what you or anyone else is providing.
Consider it from their perspective – if there’s no clear benefit for them, then they’ll most likely not waste their time as there are so many other options competing for their time and attention.
Depending on your goal, industry and community, some great ways to provide value is to create content such as:
blog posts
infographics
podcasts
checklists
reports
whitepapers
eBooks
videos
webinars
It also means not holding back. Share your best knowledge with your community.
You need to give them your best insider tips and tricks.
Now you may worry that by giving all your knowledge away that they won’t need you or that you might lose potential sales.
The opposite is true.
Those who will take and use your information to help themselves, often would not have been able or interested in paying for your services. But by establishing yourself as an authority to them, they’ll happily recommend you to others – others who will happily pay you.
By providing those with the desire to pay for your products or services with the information they need to make an educated decision, you’re not only working to establish yourself as an authority, but you’re also building up the kind of trust that makes you a natural choice when they’re ready to buy.
4. Be Consistent
Consistency is a key component to establishing your reputation as an authority and building the trust that comes with that reputation.
Being consistent proves that you’re not a fly-by-night operation here to lure them in and take their money.
Reliability shows your community that you’re a professional as well as an expert on your subject matter.
You must show your commitment to consistency in several ways.
Start with having a consistent brand and a voice that you use in all of your content and marketing materials.
This helps people to get to know you and easily identify anything created by you.
It also requires you to be regular in creating and posting content that helps them to be more successful. Additionally, your community needs to know that they can count on you to reply to their messages and comments in a reasonable amount of time.
5. Engage Your Community
You can help cement your position as an authority within your community by being open and engaging with your community.
This doesn’t just mean responding to comments and answering questions, you also need to ask your community what’s important to them and what they need, and then follow through based on that conversation.
Make an effort to celebrate the wins of individuals with your community, as well as share the content that they create when relevant and appropriate.
Being the authority on your topic doesn’t mean that it’s all about you or that you know everything.
Don’t be afraid to say “I don’t know the answer to that but I’ll look into it for you.”
6. Build Relationships With Experts & Influencers
Finally, make a regular effort to reach out to other experts and influencers both in your niche and in related niches that target the same audience.
There are numerous benefits to this.
As well as aiding and providing additional value to your community by introducing them to someone who can help them (in an area that you don’t), there’s also the chance to be introduced to the community of the expert you are collaborating with. This is a fantastic way to expand your reach and gain even greater authority in the form of social proof and third-party credibility.
A great place to begin is by visiting their blog. Check out their content and if you think there’s value in it, leave a comment and/or share it with your community. This introduces your community to them and is a nice gesture to send traffic their way.
You may then want to reach out on social media, particularly on a platform like Twitter, where you can start or join a conversation with them naturally.
Remember to approach this process slowly. It can take time to get on their radar and build a relationship with them, but the investment of this time and effort can pay off in the increased authority and community size you gain.
Wrapping Up
While it takes time and works to position yourself as an authority on your topic, the benefits you’ll receive will be worth the investment.
As the trusted expert, you’ll be the first choice in the minds of your community when it comes time to invest in the services you offer. This is because you’ve not only helped them to know, like, and trust you, but you’ve also clearly demonstrated the expertise that proves you can help them solve their challenge or problem.
“Ecommerce isn’t the cherry on the cake, it’s the new cake” Bob Howland
7 Easy Steps to Social Media Marketing
Social media marketing can help you build engaged audiences where your customers and target audience already spend their time.
Or, it can be a time-consuming obligation that spreads you thin, resulting in a drain on time and money rather than the asset you’ve seen it become for many established brands.
The difference is having a social media marketing planthat keeps your actions focused, along with a process that enables you to execute without taking too much attention away from running your business.
But starting from scratch can be a daunting task, especially with so many different channels to build a presence on and the commitment that comes with it.
That’s why we’ve put together this guide to walk you through how to approach your social media marketing strategy, along with tools and tips to help you pull it off. READ MORE
How to set ecommerce social media up for success
When social media first came onto the scene, it was designed for people to connect. But as the platforms developed and the user base grew, the money needed to be made, and brands found opportunities to participate and reach their customers in a new way. Nowadays, it seems unimaginable for a new business to open up without any social media presence.
The direct-to-consumer (DTC) model is still relatively new when compared to brick-and-mortar retail shops. For those that are solely based online, an investment in social media comprises a significant part of the marketing budget. When companies like Warby Parker and Casper first launched, the DTC model was fresh and unique. Nowadays, nearly every retail segment has a DTC brand and the competition is heavy with new brands.
In 2010, eCommerce sales made up only 4.2% of total US retail sales. One decade later, the number is now 11.8% and it’s only steadily climbing. In 2020, as the pandemic continues to prohibit retail companies from opening their stores, having an eCommerce marketing strategy seems more needed than ever. READ MORE
5 Practical Social Media Marketing Strategies That All eCommerce Sellers Must Know
ecommerce marketing strategy
With more customers shopping online than ever before, and ever-increasing competition for attention, online businesses will only be able to maximize their success if they learn how to build on organic engagement in social media.
Don’t get me wrong, gaining organic traffic through search, and even conversions from paid ads, are still great ways to build a business. However, leveraging a community to build sales from organic engagement costs nothing more than your time. And besides that, there are plenty of tools available to help you along the way.
Here are five practical strategies you can implement straight away which will help boost traffic and sales through your social channels.
1. Create, Curate, and Share Awesome Content
If all you do through your social channels is promote your products, your audience is going to burn out on your pages and posts pretty fast. READ MORE
Social Media for eCommerce Businesses – Tips, Stats, Best Practices
Social media has become one of the most dependable and powerful sales tools for eCommerce businesses. Companies can go the patient route by building an organic following or the more direct route, with highly-target ad campaigns.
With 35% of millennials (and a significant number of older shoppers) making purchases via social media, there has never been a better time to get on board. Use this article as a guide for understanding the real value of social media for eCommerce, how to build an effective strategy, and tips & best practices for getting the most out of your social presence.
Why social media is crucial for eCommerce brands
The idea used to be that using social media in eCommerce was a bit wishy-washy; no tangible return to the business and “while it could work for some brands, it wouldn’t work for us”—this was a very common belief.
Obstacles are the stumbling blocks that prevent you from reaching your goals. They are the limiting factors that hinder you from achieving your desired dreams, and you have to overcome these obstacles to move further in life.
It’s not enough to set goals; you need to actualize your goals. It is at the point of execution that life becomes unbearable as unexpected setbacks and obstacles set in.
It is not an understatement to say that every success comes with challenges. Those challenges often come as problems you need to solve. If you can solve them, you can then have the assurance that you can reach your goals.
TABLE OF CONTENTS
7 Reasons Why Obstacles Are Important
7 Ways to Overcome Obstacles in Life
Final Thoughts
More Tips on How to Overcome Obstacles
1. Obstacles Reveal Your True Identity
Some life challenges will rip you apart. When this occurs, you get to know who you truly are. Sometimes, you don’t know your full capabilities and tendencies. Obstacles exist to test you and stretch you beyond limits.
The fact is once your limitations and inclinations have been revealed, you can begin to take steps to deal with them so you can win in life. You’ll be forced to overcome these obstacles, which will help reveal your true self.
2. Obstacles Direct Your Actions
Someone once said you could walk on water; you only need to know where the stones are placed. The stumbling blocks on your path create a new way to get to the next level or phase.
For instance, if someone continually hurts your feeling, the situation allows you to practice the art of forgiveness. Every problem comes with its solution. You only need to shift your perspective to uncover the lessons that challenges have to teach you.
No wonder Benjamin Franklin once affirmed that:
The things which hurt, instruct.
Once you receive instructions, learn, and make progress in the direction of your goals.
3. Obstacles Make You Tougher
No one comes with the natural ability to withstand challenges; you have to develop your resilience through life. And don’t you ever think everything will come to you on a platter of gold. That only happens in the grave
As long as you are here, you’d have to overcome obstacles and surmount difficulties. The essence of obstacles is to toughen you so you can be courageous. It would be best if you dared to change your circumstances – to improve yourself and the world.
And if you discover you are losing courage, obstacles can toughen you more so you can move to the next phase.
Do You Know You Only Have About 2,000 Weeks Left in Life?
We only have about 4,000 weeks in life, and if you’re in your mid-life, you only have about 2,000 weeks left.
4. Obstacles Enable You to Focus on What Counts
Not everything counts in life, so you need to focus on your goals and pursue your life missions. Once you are clear about your goals and tasks, every obstacle that comes your way looks smaller and manageable.
But when you lack clues and direction, this uncertainty magnifies every limitation and makes your pursuit a massive mountain that you need to climb.
The bottom line is that you need to be clear about your goals and focus like a laser so you can surmount the few mountains that deserve your attention.
5. Obstacles Unleash Your Creativity
You don’t know how far you can run until you meet a lion in the jungle. That’s the beauty of life!
Without impediments, you may not reach the untrodden territory. It takes persisting and resisting to learn where others fail because they were impatient. Obstacles are capable of stretching your creative muscles so you can go beyond the limits.
6. Obstacles Help You Find Meaning in Your Life
Your perception of life determines your outcome. You might want to take a cue from the experience of President Abraham Lincoln. While he battled with depression all though, he led the United States through one of the most challenging times in history: The Civil War.
Lincoln discovered the art of finding meaning despite his inner turmoil by channeling his efforts outward by uniting the entire nation. He learned the art of endurance. He articulated this attitude and derived meaning from his obstacles.[1]
He discovered purpose and found succor in a more prominent cause higher than his obstacles.
7. Obstacles Can Help You Discover Meaning Beyond Your Inner Troubles
Just like Lincoln, you can find your purpose when you cease from peering at your troubles and begin to seek how you can make others happy. You can rise above your obstacles by lifting others.
This strategy is one of the best approaches to dealing with depression. It is a way of starving your problems of time so you can focus on others suffering.
Here’s the added advantage!
Focusing outward will enable you to improve inward.
7 Ways to Overcome Obstacles in Life
Now that you know the significance of obstacles, here are 7 ways you can turn them into stepping stones.
1. Find Out What’s Limiting You
Sit down and assess your limiting factors. What are the obstacles standing between you and your goals?
Figure out why you are not meeting the deadline. Avoid dredging up your list of complaints as it will eventually culminate into excuses.
For instance, if you said,’ I don’t have sufficient time,’ reflect on what you spend your time and energy on. Your limiting factors could be procrastination, complacency, or external events. If you said, ‘I don’t have enough funds,’ this is most times related to priorities.
Your immediate challenge may be a lack of motivation or time, or you need to commit to learning how to earn extra income and reduce your expenses.
2. Review the Obstacle’s Timeline
How long have you been dealing with the challenge? What attitude or habit is hindering you from overcoming the obstacles? Finding answers to these questions will enable you to make the right changes.
For instance, if you changed your job, there could be something about your new job or workplace that is challenging you. It could be the fact that you need to cope with a new environment.
Reflect on the different obstacles you have faced in life. Whether you work over them or not, take a cue from your experience and apply the lessons in dealing with new challenges.
3. Determine What’s Beyond You
Some challenges are beyond you. They are so daunting that you don’t have a clue on how to overcome them. Perhaps, you are even afraid or weak to the bone.
It shouldn’t be the end of the world. Just take a deep breath and list those things you can control, such as:
Your habits
How much energy do you exert
Your decision when you are offered an opportunity
Your lifestyle-exercise, diet, and relaxation, all of which affect your mood and personal disposition
Focus on what you can control. Start by cultivating all the good habits to have in life.
4. Break Your Goals Down
A giant stride is not about taking one leap to the top of the highest mountain; it is about boldness to pursue your goals in the face of opposition. It’s reasonable to break your goals into bits and develop a checklist to figure out the obstacles hindering you from actualizing the first box.
For instance, if you aspire to be the best copywriter in the world, one impending obstacle is to enroll and follow through an online course. Thus, your new goal can be to apply for an online class on copywriting. You can surmount this obstacle by opening your Google browser right now.
5. Maintain an Active Plan
Always work with a to-do list. Begin your day with what you have to do and achieve your goal. Recognize that there will be obstacles and distractions. The lessons from facing obstacles will help you to adapt your plan in finding the best strategy to achieve your goals.
6. Improve Your Problem-Solving Skills
If you tend to make decisions base on your instincts, you may try to be more analytic.
Here are some strategies you can adopt to make a decision:
Worst case scenario: If I enroll for the copywriting course and I fail, where would I end up? Design a backup plan for this eventuality.
Cost-benefit analysis: What would I gain if I complete the copywriting course? Assess if the benefits are worth the sacrifices.
7. Track Your Progress
As you pursue your goals, keep a journal of your successes and challenges. Establish milestones and compensate yourself when you complete each milestone. There are four steps you can take to track your progress.
Final Thoughts
Obstacles give life meaning. As long as you are on the face of the earth, you will keep facing challenges. It’s up to you to change your perspectives and deal with obstacles with the right mindset. It’s either they become your stepping stones or stumbling blocks.
Choose to live your life by design and apply the tips I have shared above to overcome whatever obstacle you are facing. Stay safe, and stay strong!
Source: lifehack.org ~ By: Leon Ho ~ Image: Canva Pro
How to lifestyle plan when you start having children
Summary of lifestyle planning
Practical ideas you can start with today
Personal finance isn’t just about stocks and bonds and charts and graphs. It’s ultimately about how you use financial principles to make your life better—otherwise, it’s just a bunch of useless data.
Lifestyle financial planning integrates psychological ideas into your financial situation, helping you craft a financial life that meets needs beyond mere dollar amounts. Ultimately, it’s your money, and you want it to go where it does you the best.
While money cannot buy happiness, budgeting to achieve your life’s goals goes a long way toward achieving happiness. At some point, you must address the question: “What makes me happy?”
What is lifestyle planning? Here are the basics
As society becomes more aware of each individual’s special needs, techniques used in sociology and psychology are being applied to personal finance as well.
Lifestyle financial planning considers a person’s desires, dreams, strengths, needs, and goals and fashions them into the overall financial equation in order to bring those goals within reach.
Lifestyle planning is about more than just money
Heretofore, planning has focused on maximizing the accumulation of wealth. Lifestyle financial planning, however, focuses on maximizing the individual’s happiness. It de-emphasizes greed and embraces frugality. It also helps individuals focus on realistic goals based on their desires, dreams, strengths, and needs.
Many colleges, universities, and professional schools are implementing lifestyle planning counseling programs to help their students focus on what is important in both their personal lives and careers.
Lifestyle planning counselors help students make an inventory of those things in life that are important to them, such as where they want to live, the types of cars they want to drive, and the income they think they will need to support their lifestyles.
The types of things people typically save money for haven’t changed, but the way they look at them has. For example, people still need to save for the down payment on a house, but perhaps a smaller house. Buying a car? Consider a previously owned luxury car or a lower-quality, brand-new one.
Or, when planning for college, it may make sense to go to community college for two years and then finish the degree program in a more prestigious school—it will cost a lot less.
Other things to think about
Very often life throws us curves. How many people do you know who wish they were in a different occupation or profession? What if your relationship doesn’t work out? How will a breakup, separation, or divorce affect your lifestyle? Can you be financially prepared for it? You should be.
Lifestyle planning can help you reevaluate your personal choices and make decisions that will help you be happier and more productive. What about retirement? When planning for retirement, you need to consider what you want to do. This will determine how much you need to save and how frugal you will need to be to plan for your retirement.
How to start your lifestyle plan
The first step in lifestyle financial planning is to make a list of your desires, dreams, strengths, needs, and goals. Then identify the financial goals associated with them. It might be helpful to use a written questionnaire to organize your thoughts.
Questions such as “Where would I like to live?” “What kind of car would I like to drive?” “What kind of clothes do I like to wear?” “Where would I like to work?” and “What do I like to do for entertainment and recreation?” can all help pinpoint the lifestyle for which you need to plan.
The answers to questions like these will help you define and set reasonable financial goals.
Where the money comes in
The lifestyle plan includes allotting assets and income toward the goals you strive to achieve. Money can come from earned income from work, or earnings on your investments. As in all financial planning, you must guard against inflation, taxes, and the risk of loss of income due to death, disability, or legal action. You must also consider how to invest savings to help maximize growth while minimizing the risk of investment loss over the investment time horizon to your goal.
You can begin to implement your plan when you start to earn money and save for your goals. Your goals can be short-term, intermediate-term, or long-term. You should select investments according to the risk and return you need to achieve your goals. Generally, short-term goals require the safest investments while long-term goals can be invested more aggressively.
Measure your progress as you go along
But you’re not done yet. You should have mileposts along the way to see how well you are progressing. When you made your plan, you decided how much money you would need at a specific point in time to achieve your financial goal. A milepost measures how far along the route you are to achieving your financial goals.
In some instances, you will be ahead of schedule while in others you may be behind schedule. Or your goals may change. Be prepared to stop and reevaluate your plans and change direction if necessary. It’s your life, so live it the way that best meets your desires, dreams, strengths, needs, and goals.
What to do when you are out on your own
The financial future of most people is dictated by the way they start as independent adults.
If you are going to set up a house on your own or with a partner (or know someone who is), then you may find some good advice here.
Get in financial shape early on
Establish good financial habits early. They can save you lots of grief and money down the road.
Additionally, according to the National Council on Family Relationships, financial disagreements were the strongest disagreement types to predict divorce. Good financial habits will go a long way toward providing peace and harmony in your home. The key to developing good financial habits is a sound lifestyle financial plan that will help you achieve your lifestyle goals. Over time, your goals will change—that’s okay.
A good financial plan will allow you to change your goals as you go along. But remember, they’re your goals. Many persons become discontented because they try to achieve someone else’s goals. You’ve heard the expression “keeping up with the Joneses.” This refers to trying to achieve someone else’s goals. Even if you succeed, you most likely won’t be happy. You will only be happy if you achieve your own goals.
Be realistic about your goals
You may not be able to achieve all your goals in the first week out on your own. Not even in the first year, five, or even longer. The trick is to be realistic about your goals by setting a time frame in which to achieve them. In order to achieve your goals, you need time to accumulate the required resources.
Be realistic about your lifestyle planning goals. (Graphic: Hannah Smart/Cashay)
You will find that you can classify your goals as short-term (one year or less), intermediate-term (two to five years out), and long-term (more than five years out). You can also group your goals by order of importance. Some are “must have,” while others would be “nice to have.” No one can tell you which goals are more important than other goals—let others keep up with their own Joneses.
Make a list of your short-, intermediate-, and long-range “must haves” and “nice to haves.” It’s important to write this down. Goals that are not written down are nothing more than wishes. Goals are achieved; wishes may or may not come true.
Live within your means
It will be easier to achieve your intermediate- and long-term “must haves” if you can economize and save on your short-term “must haves” and “nice to haves.” You do this by making some short-term financial decisions regarding your current lifestyle.
All too often young adults fall into the credit trap they waste years getting out of. This happens when they mistake short-term “nice to haves” for “must haves.” Rule of thumb: if you don’t have the money to pay cash now, it’s not a “short-term must-have.” Avoid living beyond your means. You will need to save and invest in order to achieve your future goals.
To achieve your goals, you will need sufficient financial resources. These come in the form of income, savings, and investments. Whatever income you do not spend on short-term goals can be saved for future goals. If invested properly, your savings can generate more income and resources to achieve your future goals and more.
Why housing is important
An important part of living within your means is choosing the right place to live. Housing will be your largest expense, consuming about 25–40% of your income.
Whether you buy or rent depends upon your lifestyle goals and the current local housing economy. While it is generally considered better to buy a home than to rent, in some localities you may find it cheaper to pay rent than to pay large mortgage payments, taxes, and other homeowner expenses.
Cash flow and savings need to be an overriding consideration.
Should you decide to buy a house rather than rent, there are some income tax benefits of which to be aware. Interest paid on your mortgage as well as points paid to acquire the mortgage may be deducted from your income. Any property taxes you pay may also be deductible up to a limit of $10,000 which also includes state and local income or sales taxes (as of 2018).
Costs for making any improvement to the house such as putting on a new roof, replacing plumbing or electric wiring, or adding wallpaper (not painting) can be added to your cost of the house to reduce potential capital gains taxes when you sell the house. You should keep careful records of these kinds of expenses.
Your home as an investment
While some very creative financing arrangements appear to make home ownership very affordable, they might have unforeseen consequences on the other end that can be devastating. On average, a family owns about three homes over its lifespan.
This is possible because equity from one home is used to upgrade to another. A home is only a good investment if the mortgage terms and economy allow equity to build up as the mortgage balance declines. It’s not true that housing prices always go up any more than it’s true that stocks always go up.
There are many ways to keep housing costs down. One example is to share housing expenses with others or opt for smaller and more economical housing. Choose your neighborhood wisely, keeping in mind how much it is going to cost to commute to work, transportation costs, and safety. Housing is a short-term “must-have,” but it shouldn’t be allowed to break you financially.
Choosing your housing wisely will go a long way toward helping you realize your other lifestyle goals. After making a written list of your goals, attach estimated current costs to achieve them. Use these figures to start your financial plan. Make a short-term budget that allows you to save and invest for your intermediate- and long-term goals.
How to lifestyle plan when you start having children
These days, having children is more of a choice than it was a few generations ago. That being so, there’s no reason not to prepare a financial plan for a family lifestyle.
The basics are the same as any financial plan: set short, intermediate, and long-range goals, and then work out the numbers. When planning to raise children, you need to know that children are expensive—very expensive. If you are having your own children—the old-fashioned way—there are increased medical costs for prenatal care. Then there’s medical care for newborns, which is followed up by regular pediatric visits.
If you’re adopting, you can skip the prenatal and possibly the neonatal care (though you may need to budget for adoption expenses). Either way, raising children means increased medical care costs or increased health insurance premiums to cover your children.
Then consider costs of clothing and diapers. Young children outgrow clothing very rapidly—especially shoes, which aren’t cheap. If you are like most parents, you won’t want to wash diapers either—so be prepared to spend a lot on disposable diapers.
Don’t forget housing. A child or two means an extra bedroom—now. Do you need to move to larger quarters before starting a family? If you plan to move later, you still need to factor those costs into your plans.
Another thing to consider: it is very likely that one parent is going to have to stop work for a while, which means decreased family income. If you are financially able to hire a nurse or nanny, you may not have to sacrifice job income, but you will have the additional expense of a caregiver.
List your costs and factor the spacing of children
When planning financially to start a family, make a list of all the increased costs and changes in income that will result from having children and the duration that this will last.
Consider too whether you want to raise more than one child and the spacing in ages of multiple children. It may be more economical to have several children close in age to allow the “stay at home” parent to re-enter the work force earlier rather than later.
Having children close in age can also help economize on clothing costs if a younger child uses clothes that an older child has outgrown but not worn out. Children close in age may also be a benefit later when the school-aged children apply for financial aid, since aid is partially awarded on the basis of cost of all children in school during the same academic year.
This applies to private elementary and secondary schools as well as to institutions of higher education.
You also need to prepare for future childcare costs including toys, sports equipment, education supplies, outings, and higher education. Oh, and probably dental braces. You may as well start saving for these now while the kids are still young so you have time to accumulate sufficient resources.
If you are saving for your child’s higher education, the IRS offers tax breaks to persons using the Coverdell education savings account or your individual state’s sponsored 529 qualified tuition program.
Children can save you money at tax time
You should consider consulting with a tax advisor, however. Some good news is that children are a tax break.
But you will still spend a lot more on the kids than you save on taxes. Up through 2017, each child gave you a dependent exemption. However, the new 2018 tax law removed the dependent exemptions while greatly increasing the standard deductions—nearly doubling them to the following for 2020:
Single filers: $12,400
Head of household filers: $18,650
Married couples filing jointly: $24,800
Direct medical expenses and medical insurance premiums are itemized deductions subject to IRS limitations. You may also qualify for certain tax credits that are a dollar-for-dollar reduction in taxes. These include the child tax credit ($2,000 per child), a new $500 credit for dependents other than children, the dependent care tax credit (up to $1,050 for one child and $2,100 for two or more children), and the earned income tax credit (amount depends on income and number of dependents).
To get the credits, you must complete the appropriate federal income tax return and calculate the amount using the IRS’s complex methods. However, with a good tax software program or professional help, this should not be an insurmountable problem. If you want to complete your own tax returns, you can obtain IRS Publication 17, which has all the details.
If you pay childcare costs to someone who provides the services in your own homes, such as a nurse, nanny, or au pair, you may be subject to paying household employer taxes including withholding, Social Security, and unemployment taxes (see IRS Publication 926).
And as with all tax planning, you may want to check with your tax advisor when evaluating the applicability of these tax options.
Raising a family is an awesome responsibility and should be given careful consideration and financial planning. Children will put a great strain on any relationship because of the emotional and financial demands they make. However, if you are properly prepared emotionally and financially, children can be the greatest joy in your life.
Summary of lifestyle planning
As you progress through life, your goals may change, too. While it is impossible to accurately foresee all the things that will change in your life, you certainly can plan for those changes you expect to make.
Start by setting down those things that will truly make you happy. Then see what it takes to achieve happiness. Set your goals in writing and review them along the way. It’s okay to modify or change them. However, once you commit them to write, you will be on your way to success.
Practical ideas you can start with today
Make a budget that balances your cash inflows and expenses.
List your financial goals, the date you want to accomplish each goal, and the dollar amount of each goal.
Determine how much money you can comfortably set aside to invest.
Discuss long-term financial goals with your future spouse: e.g., having children, buying a house, and funding retirement.
Investigate the tax breaks available to parents.
Determine whether buying or renting is more advantageous.
