Money and Happiness
Certified financial planner, author and speaker Elaine King helps families understand and manage their dollars and cents.
Elaine King has just returned from a trip to Miami from her native Peru, but she’s on her way to speak to local, school-age kids attending a money camp sponsored by Branches, a nonprofit that houses and operates the United Way Center forFinancial Stability. She rarely turns down such invitations. “It’s my way of giving back,” says the energetic financial expert, motivational speaker and book author, who sounds passionate about the power of reaching the younger generations. “When I teach children about the proper value of money, parents feel more motivated to lead by example with better financial planning,” she says.
She teaches them financial basics
For instance, in one of her books she explains why it’s better to invest a little of what you have for the possibility of a return — you can grow more trees with more fruit if you plant seeds, versus throwing them away. Her principles are based on using, saving, growing and sharing.
When King moved to the United States, she worked in the financial sector for years before she founded Family and Money Matters Institute™. A family business advisor and Certified Financial Planner whose books range from Family & Money Matters: Life Lessons for the Next Generation (Kabraah Publishing, 2010) to financial self-help books written in Spanish, King strives to educate families in the U.S. and South America about smart financial habits.
“This is what I do: teach people the value of money,” she says, and she doesn’t mean that 10 dimes equal a dollar. She shows them that money has value because it can mean dreams realized, or aspirations reached. If kids and their parents understand that, they have the motivation for mastering day-to-day budgeting and adopting saving strategies that will keep them debt-free and ready for the unexpected — not to mention for college costs and retirement.
After all, financial well-being goes a long way toward determining the security of a family — and ultimately, its happiness quotient.
“Studies have shown that once a person can cover their basic needs, the additional satisfaction metric does not increase at the same rate as the growth [of their income],” King says, explaining that while buying a Rolls-Royce might make a wealthy business owner happy, being able to attend a community college for just $1,400 per month might bring the same level of happiness to an aspiring student.
In other words, happiness doesn’t come from the amount of money, but the ability that the money gives you to achieve goals you’ve set. Those can differ for every family, and if you set realistic goals based on your financial situation and then achieve them, happiness can be yours.
“Healthy finances can lead to happiness because covering your expenses and directing the rest with purpose, strategy and responsibility will achieve satisfaction and align your values to your actions,” she says.
King urges families to identify their goals and find motivation for mastering their money by using these four steps:
Establish clear, long-term financial goals. Examine your net worth and current cash flow. Then you can establish a realistic financial to-do list and monthly spending plan. She suggests using the templates on Mint.com or downloading the Budget Evaluator form from her site: familyandmoneymatters.com. If you need help, turn to a pro.
“Save before you spend,” King says. “Otherwise, it will not happen.” Options abound, from interest-bearing savings accounts to Certificates of Deposits (CDs) and Individual Retirement Accounts (IRAs). Before allocating money to savings, however, create a plan for paying down any consumer debt.
“When we invest we should ask ourselves, what is the purpose, the risk and the time horizon?” says King. She advocates for using your company’s 401(k) and any matching funds it offers. Next consider an IRA, then college savings, such as a 529 College Savings Plan. “Don’t stop saving for your financial independence,” she says, noting that there are loans for kids’ college tuition, but no loans for retirement.
King talks with families about giving back – not just with a percentage of money but with time, expertise or belongings. “The act of sharing includes so many things,” King says. To help kids understand the joy of giving their treasure, however, let them help choose a family cause, from the environment to feeding the hungry, and show them how to allocate a portion of their allowance.
Once you’re practicing a sound financial strategy, protect assets with legal documents such as a will, durable power of attorney, guardianships, a living will and health-care directive. “They’re all as important to have as life insurance to secure your loved ones,” King says.
Financial well-being — now and after you’re gone — instills a sense of security and peace your family may not even realize they have. This is the best legacy you can leave them.