As Susan sees it, the rules of successful dieting are the same rules that apply to successful money management. In her new book, Susan offers women a 3-phase personalized plan that follows common dieting programs to help them understand their finances.
Susan's program completely removes the intimidation factor that often accompanies the words 'personal finance' and 'investing' and provides women with all the information they need to take control of their financial situations once and for all.
We've asked Susan to answer our readers burning financial questions and here's what she had to say:
Question: How do I set aside funds to invest when I never know how much money will be brought in by my next project? Can you still invest even if your budget is tiny?
Susan: I am so glad you asked this question; because it is a common concern amongst entrepreneurs. The best way to answer this question is to ask you a question: how do you deal with your basic fixed expenses when you never know how much money will be brought in by your next project? If you think of investing for retirement as a fixed expense, it becomes part of your overall cash flow management.
The questions you should be asking are: What is the lifestyle I will require in retirement? What is my time frame? What do I have saved currently towards that goal? What is my risk tolerance? Once we answer these questions you will be to determine how much you need to save on a monthly basis to achieve your retirement goal. Many websites have calculators to help you do this (see smartmoney.com for example.) Now, the question becomes - Is this a realistic amount to be adding to my fixed expenses?
If you feel comfortable, that you will be able to manage it within your fixed expenses, bravo - you are on your way to meeting your goals!
If you feel uncomfortable adding that amount to your fixed expenses, I will say bravo as well. Bravo? Yes, because now you know what your situation looks like and are able to make more educated, conscious decisions between your needs versus your wants. You are the only one who can make the choice between your long-term goals and your current spending.
Furthermore, the amount you invest should not be an all or nothing situation. Here, something is definitely better than nothing. Keep in mind that many mutual fund companies allow you to contribute a minimum monthly amount (typically $50 or $100) as long as it is a direct wire from your bank account. Take advantage of one of the key drivers of success - time and the power of compounding. Albert Einstein is quoted as saying, "The most powerful force in the universe is compound interest." The longer your money has to grow the less hard it has to work in the future.
Do what you feel comfortable with today but know that you are making a choice about tomorrow. Plans and goals are dynamic and change as your business changes, so review your "retirement fixed expense" at least annually.
Susan L. Hirshman is a former managing director at JP Morgan. She holds an M.B.A. from Baruch College and is a Certified Public Accountant, a Certified Financial Planner, a Chartered Life Underwriter, and a Chartered Financial Analyst. She currently lives in Manhattan.
If you have a money question for Susan, email us at firstname.lastname@example.org.
Disclosure: This post is sponsored by the Role Mommy Writer's Network.