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Managing money can be interesting, fun

Is it possible for you to be a millionaire if you were only to invest money from the ages of 19 to 24?

According to Nicole Middendorf, author and an LPL financial advisor, you would not only be a millionaire, but you would come out ahead of someone who began investing from age 24 until she was 65.

Middendorf cited this factoid and shared others when she recently conducted a “More Than Money for Women Workshop” at the semester's final financial literacy event of the series, "Money Doesn't Grow on Trees."

She told her audience of students and alums that developing healthy money management habits can be fun and interesting.“My goal is to not have any woman say, ‘my husband takes care of the money,’” she said. “And if I can get you to change just one small thing about your money habits, I’ll consider myself successful.”

Middendorf shared her own path into the financial world before sharing her “Ten Secrets of Money for Women.”

After selling Mary Kay Cosmetics in college, she became a food broker for the investment company Dean Witter. Her husband encouraged her to go independent and together the two of them formed Strategic Financial, Inc. seven years ago. In addition to her consulting practice, she discusses money management topics on WCCO-TV and WCCO-AM radio.

Her latest book, Simple Answers: Life Is More Than Just Money, uses a straightforward Q & A format to dispense advise on everything from budgets, credit cards and retirement to identity theft and divorce. The audience received a copy of her book as a door gift.

Middendorf’s 10 secrets

  • Liquid Money — Make sure you have three to six months of income readily accessible for emergencies either in a money market account or checking and savings.
  • Know the Rule of 72 — A mathematical formula where you divide the interest rate of your investments into the number 72. This yields the number of years it will take for your money to double. Middendorf counsels that historically, your money should double every seven to 10 years.
  • Save Money Monthly—Middendorf says it’s easier to save if you attach a value to a goal and the goal to money. For instance, saving $100 monthly for a trip to Australia makes saving fun and exciting.
  • Know Your Money — Citing that 90 percent of the American population operates without a budget, Middendorf stresses the importance of knowing where your dollars are. She advises writing down everything you spend in a seven-day period and looking closely at the money you spend on “extras,” and then cutting that in half.
  • Save for Retirement — Decide what age you want to retire and how much income you want at retirement. Put away a percentage of your yearly income for retirement purposes. The average is 10 percent for men; 12 percent for women.
  • How Much to Save — You should start saving beginning with high school graduation up through retirement. Again, the average is 10 percent for men; 12 for women.
  • Set A Savings Goal — Then “identify the gap” and what sources of income you can rely on. It could be social security, savings or the sale of a home. Middendorf advises taking advantage of company 401k (retirement plans) by contributing to them as much as the company will match.
  • Asset Allocation — There are a number of investments to choose from, whether they be certificates of deposit (CD), international investments, or investments that yield long- or short-term gains. Middendorf says it’s best to put your money into both domestic and international investments.
  • College Education Planning — An education IRA or Coverdell Account is typical. Amounts of up to $2,000 can be deposited into a Coverdell Account until a student reaches age 18, and the money has to be used for education purposes by the time the student is 30.
  • Managed Money — Money that can be distributed over separate accounts such as stocks, bonds or CDs. Each will have a different minimum amount that can be invested.
  • Estate Planning —Don’t forget to meet with an attorney to set up a will or trust. And, if you’re married, don’t assume that you will necessarily have access to your spouse’s money. Particularly if your spouse is incapacitated, it’s important to have a “durable power of attorney” and a health care directive outlining your or your spouse’s wishes.

More about St. Kate's Financial Literacy programs

Closing its third year, St. Catherine University’s financial literacy program combines sound financial advice, innovative programs and cultural sensitivity to build students’ money management skills. The program was designed to support students in attaining their educational goals and give them tools to sustain them throughout life.

The program is supported by generous grants from ING Foundation, GE Money and the Public Benefit Grant Program of TG, a Texas-based, non-profit corporation.

Arline Datu is a freelance writer and communications consultant in St. Paul.

April 26, 2010 by Arline Datu

See also: Students