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Developing Financial Literacy in Jamaica

Over the past eight years, I have been actively involved in writing, training and coaching on topics relating to financial education. Through interaction with thousands of Jamaicans from all walks of life, I have realised that the number one problem that prevents most people from achieving their financial goals is their lack of understanding of basic money principles.

Financial literacy is defined as the ability of individuals to make appropriate money decisions by learning the principles that relate to the management, growth and preservation of their money. When people are educated about the appropriate actions to take with their money, then they are more likely to save towards their goals, manage their debt, purchase assets such as a home, and make positive contributions to the economic development of the country.

Anecdotal evidence points to an overwhelming demand from Jamaicans for practical information on or about basic financial strategies such as budgeting, debt control, investing options and retirement and estate planning. Although some financial institutions have been offering public seminars to address some of these issues, their initiatives have been insufficient to meet the country’s requirements.

Want to learn how to ‘think and grow rich’? CLICK HERE!

There is now an urgent need to provide a coordinated national financial literacy programme to adequately disseminate critical information throughout all sectors of the Jamaican society. I often wonder why I learnt so many subjects in school that later proved irrelevant to my life, yet a crucial topic such as money management was never addressed in my primary to tertiary education.

Around the world, financial literacy education is an important focus of governmental agencies involved in finance. Let’s look at some of the programmes that have been developed in some other countries:

FDIC Money Smart Programme

The Federal Deposit Insurance Corporation (FDIC) was established In the United States to preserve and promote public confidence in the financial system by insuring deposits in banks and thrift institutions. In 2001, this independent agency of the US federal government developed a national financial education campaign called Money Smart, to “help individuals outside the financial mainstream develop financial skills and positive banking relationships.”

The FDIC collaborates with financial institutions, non-profit organisations, and community- and consumer-based groups to disseminate financial education using its Money Smart educational material which covers topics such as saving, borrowing, credit card management and home ownership. To date, the agency reports that it has distributed over 750,000 items of Money Smart curricula and has reached over 2.4 million consumers across the world.

NFLP in Trinidad & Tobago

The National Financial Literacy Programme (NFLP), launched in January 2007, is spearheaded by the Central Bank of Trinidad and Tobago. According to the NFLP’s website, the purpose of the programme is to develop “a nation of citizens who are conscious about and capable of managing their finances.” The NFLP’s aim is to change people’s beliefs, attitudes and behaviours around money issues, and give them the skills to function in a sophisticated financial environment.

The NFLP carries out primary school interventions and is currently working with their Ministry of Education to incorporate financial literacy in the secondary school curriculum. They have already trained over 200 teachers to impart the financial material in schools. Other initiatives include addressing the needs of persons with disabilities, with documents converted to Braille and sign language in their television advertisements. The NFLP has also developed financial literacy training material relevant to small and micro entrepreneurs.

ECCB’s Financial Literacy Programme

The Eastern Caribbean Central Bank (ECCB) has been playing the lead role in promoting financial education in the Eastern Caribbean Currency Union (ECCU). This union comprises seven countries including Antigua & Barbuda, St Lucia, Montserrat and Dominica. According to the ECCB, “educating the public about financial and economic matters is key to supporting the bank’s stability, growth and development objectives.”

The ECCB education initiative includes offering ten-week savings and investment courses teaching topics such as budgeting, understanding loan documents, avoiding financial scams and understanding wills; after-work seminars, a monthly financial newsletter; schools programmes with presentations, competitions and mentorship components; radio programmes; and financial month activities held every year in October.

CARTAC Financially Fit Campaign

The Caribbean Regional Technical Assistance Centre (CARTAC), a regional resource which provides training and assistance in economic management for member countries, is funded by international agencies such as the Canadian International Development Agency (CIDA), the Inter-American Development Bank (IDB) and the International Monetary Fund (IMF).

CARTAC recently launched its financial literacy website www.financialliteracycaribbean.com, which is designed to educate readers on financial terms and pertinent information to help them to increase wealth and prepare for unforeseen situations. The website provides practical guidance on topics such as budgeting, saving, risks and returns of investments, and estate planning; and also offers resources to assist Central Banks and other regional financial supervisory agencies.

Given their current emphasis on achieving positive economic changes, it’s now the perfect time for our local financial authorities to join with the over 60 countries around the world which have developed structured programmes to educate their citizens about basic financial principles.

Copyright © 2010 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, February 4, 2010

2010 Action Plan #3: Control Your Income

It wouldn’t be hard to predict that it’s going to be more difficult to make money in 2010. Employees and entrepreneurs alike are experiencing a decline in their earning power due to pay reductions, job layoffs, and consumer spending cuts. Investors who had previously benefited from lucrative profits in the money market now have to cope with decreasing returns.

How can you survive when you are not earning enough? Let’s look at some of the typical challenges that people are facing today and offer some possible solutions to these problems:

Situation: Your boss is cutting your work time to four days per week, and you stand to lose 20 per cent of your pay.

Don’t use that day to stay home and mope about your loss. Those extra hours away from your regular job can provide the perfect opportunity to take advantage of a business idea which you never had the time to pursue. If you hadn’t seen the need to create your own income before, get busy and brainstorm some ideas to earn extra money.

Your first goal is to replace your lost income. Break down your shortfall into a manageable figure; for example, if you stand to lose $10,000JMD per month, think of something you could do on your day off to earn $2,500JMD. Calculate how many customers you would need to reach your target. What service or product could you sell to 25 people in your community to earn $100JMD from each person?

Situation: You graduated from college with a management degree, but a year has passed and you’re still unable to find a job.

Widen the scope of your job search — don’t limit yourself to a typical managerial position. There are some fields that are always recruiting new persons, such as the life insurance industry, the army or the police force. You could actually find a satisfying career in the long term.

The reality is that we need more entrepreneurs in Jamaica to create job opportunities for new entrants in the job market. If you can’t find employment, then you may have to invent your own job. What skills and talents do you have that could provide an income? Many small businesses are contracting out their data entry, marketing, accounting and Internet correspondence needs; if you can supply these services, you may be in the money.

Situation: The company you worked for has closed down; your previous job was in a specialised field and there are few other businesses that utilise your area of expertise.

Need ideas to create more money? CLICK HERE!

If you’re facing a roadblock in securing another job, you may need to look far and wide to locate employment. The great news is that the Internet provides a virtual marketplace that can help you to link with a buyer for your services. Post your résumé on websites such as Monster.com or register with Elance.com or Odesk.com to find freelance work.

You could also examine the possibility of sharing your specialised knowledge with others. Is there a need for training courses or educational material in your area of expertise? Can you create a new service that would appeal to a wider retail market? For example, a geophysicist with extensive information on earthquake activity could hold seminars to teach people how to prepare for this natural disaster.

Situation: You are a self-employed hairdresser and many of your customers are cutting back on your services.

Consumers are now looking for better value for their money, so you have to respond to changing customer demands by giving more for less. One option is to offer frequent user specials, such as one free wash and set if your customer pays for three within one month.

Try to increase your business volume by designing a referral programme that will encourage existing customers to market your services for you. For example, you could offer a 25 per cent discount on services to anyone who brings a new customer.

Situation: You’re retired and you depend on the interest from your investments to pay your bills. Recent changes in the government paper market will reduce your income significantly.

If your earning source has decreased, you may be forced to find additional methods of generating an income. Don’t be disheartened by this development, as there are many retirees who are actually enjoying their ability to make money in areas that are exciting and fulfilling.

There are always available openings to work part-time if you have professional skills such as teaching or nursing. You could also look at providing consulting services or training persons in your field. Consider using your hobbies to create income; you could provide organic vegetables to the supermarket or sell ceramics or paintings at craft shows.

To succeed financially in 2010, you have to become more industrious and innovative in generating income. Don’t sit back and wait for someone else to make a job for you - get creative and do it yourself!

Copyright © 2010 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, January 28, 2010

Cherryl is a financial consultant and coach, founder of Financially S.M.A.R.T. Services. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Contact Cherryl

2010 Action Plan #2: Control Your Debt

Your child’s tuition is three weeks overdue and you’re dreading another phone call from the school office. It’s not that you planned to be delinquent, but the front end of your car finally gave way last month, and all your money had to be channelled into emergency repairs. Desperately looking for an answer, you notice a newspaper advertisement for a payroll loan.

Convinced that this may be the answer to your problem, you call the financial company to get more details on the loan. You realise that you can access enough funds to not only pay the outstanding school fee, but to clear off your credit card and repay your cousin the money you borrowed eight months ago. In fact, you decide that you might as well take the opportunity to finally replace your worn living room sofa.

Does this scenario sound painfully familiar? If so, you’re not alone. For many cash-strapped consumers, borrowing money to finance budget shortfalls is standard operating procedure.

Indebtedness On The Increase

There is an alarming rise in the number of people who are choosing to turn to loans to bail themselves out of financial jams. However, running out of money to pay your bills is one of the worst possible reasons to get into debt. While a ‘quick-fix’ loan may temporarily ease your cash flow challenge, you’re creating a cycle that will only bring increased financial hardships.

As you have to pay back the loan with interest, borrowing will only increase your monthly obligations. In addition, redirecting your income into repaying debt will prevent you from saving towards important goals such as building an emergency fund, buying your own home or investing towards a retirement nest egg. Don’t hand over your future wealth to a loan company!

Need help with getting out of debt? CLICK HERE!

From experience, I know that trying to become debt-free is one of the most difficult aspects of money management, as it takes tremendous effort, discipline and sacrifice. Here is an action plan to help you to dig your way out of debt:

1. Assess Your Total Debt

Many people are so depressed about their unmanageable debt that they refuse to open their overdue bills or communicate with the lending agencies. You must first gather up your courage and find out your true state of affairs. Examine your bank statements or call the loan institutions to get the current loan figures. You will need to know details on the monthly repayments, total balances, time left to repay and the interest rates.

If you have multiple loans, capture all this information on the debt tracker form available under the financial tools section of www.financiallysmartonline.com. You should also include information on any collateral backing your loans. This will help you to keep track of your overall debt position on one sheet of paper.

2. Find Extra Funds To Pay Down Debt

Many people are crippled by debt because the monthly repayments are difficult to meet. Use your budget to manage your spending and ensure that your loans are paid consistently. Where possible, try to cut discretionary expenses such as entertainment or eating out, and use these funds as additional payments to reduce your loan balances.

Another option is to liquidate assets or sell your belongings. If your loan is secured by collateral such as a bank account or land, it might be necessary to sacrifice the resource in order to get rid of the monthly debt burden. Remember that you can always recreate wealth over time. Also look to raising cash by having a garage sale or letting go of valuable possessions.

3. Create A Debt-Reduction Strategy

If you have multiple loans, then you could try to consolidate all your bills to obtain a more affordable repayment amount over a longer period. While debt consolidation may seem to be a good solution, be cautious about the assets you use as loan collateral. Several loan agencies are promoting home equity loans to consolidate debt, but in these uncertain times it can be dangerous to risk your property in this way.

If none of the previous options are possible then you will have to pay off your loans one at a time. Use the debt tracker to sort your debt according to the size of the loan balances, with the smallest one first. If you have two loans with similar sizes, rank the one with the higher interest rate first.

While paying at least the minimum required on each loan, concentrate on paying off the debt with the smallest balance as quickly as possible. When that loan is repaid, apply the former monthly payment amount to the debt that is next in the ranking. You will speed up your debt reduction by being disciplined in using this strategy until all the loans are paid.

So for 2010, change your appetite for debt and strive to live within your means. However, it can be difficult to stay out of debt if your income is not enough to meet your needs. Next week we will provide the solution for this problem.

Copyright © 2010 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, January 21, 2010

2010 Action Plan #1: Control Your Spending

In recent times, while speaking to several persons about their money problems, I have detected a growing sense of desperation in their voices. Although many have not yet reached a stage of full-fledged panic, it is obvious that they are very worried about the current financial situation facing Jamaica.

“If I can’t make ends meet now,” a client asked perplexedly, “what’s going to happen to me when the full impact of the tax increases hits?”

I believe that good results can come out of every bad situation. The prevailing economic crisis has forced many of us to recognise that we can no longer be nonchalant or clueless about our financial condition. We have received a monetary wake-up call - it’s now time to take control of our finances!

Over the next three weeks, I will share with you an action plan that will help you to survive in these times, and set yourself on the right track to long-term financial success.

Start with a Spending Plan

The initial step in sorting out your finances is being very clear about what you do with your money. Gone are the days when you could casually say, “I had some money this morning, and now it’s all gone and I don’t know where it went.” Every dollar makes a difference now; you must be very careful in choosing where and what to spend your money on.

The following are directions to preparing a budget that will allow you to effectively plan for your expenses:

1. Identify Your Expenses

Most people are unaware of exactly how much they spend on a daily basis, much less over the course of a year. Being in control of your spending requires you to plan not only for the bills that are due in the current month, but also for those that crop up occasionally throughout the year.

Think about the following costs:

- Recurrent expenses such as utility bills, rent, transportation and food that occur regularly every month;

- Occasional expenses such as school fees, cooking gas, car insurance and property tax, that are certain to come, but don’t come due every month;

- Non-essential expenses such as clothing, personal care and entertainment, for which you should establish spending limits;

- Emergency expenses such as hospital visits, major vehicle repairs and natural disasters, for which you should make allowances in your budget.

2. Record Your Expenses

Download a personal budget at www.financiallysmartonline.com located under the financial tools section and put your expenses in the relevant categories. In order to fill out this budget properly, you will need to express all your expenses in average monthly figures.

- Multiply your daily expenses by 20 or 30 depending on the number of days you purchase the item, to get the monthly cost. For example, if you spend JMD$200 on lunch five days a week, your monthly cost is JMD$200 x 20 - JMD$4,000. If you spend JMD$150 on phone credit every day, your average monthly total is JMD$150 x 30 - JMD$4,500.

- Multiply your weekly expenses by four to arrive at a monthly figure. For example, if you buy JMD$3,000 worth of groceries every week, then the monthly amount is JMD$3,000 x 4 - JMD$12,000.

Need to control your spending habits? CLICK HERE!

- For occasional expenses, estimate the total amount you would spend for the year, and then divide this figure by 12 to get the average monthly cost. For example, if car repairs cost you approximately JMD$30,000 for the year, your monthly figure is JMD$30,000 / 12 - JMD$2,500.

3. Record Your Income

Record your monthly salary figure after any statutory deductions and pension payments have been taken from your pay. If you get paid daily, multiply your earnings by the number of days you work in a month; multiply weekly income amounts by four; fortnightly salaries should be multiplied by two. If your salary is not a set amount each month, put in an estimate of your lowest take-home pay.

Note: If salary deductions for loan payments or savings are taken out of your pay before you receive it, add these amounts back to the budgeted income figure.

4. Balance Your Budget

Subtract your total average expenses from your total monthly income. If you’re lucky enough to have excess income over your spending needs, then this surplus should be channelled into savings. If you really don’t have excess cash on hand, then go back over your budget - you may have forgotten to record some items such as lending money to friends.

However, if your expenses outweigh your income, you have a budget shortfall which must be addressed. Go back over your figures and try to trim non-essential expenses, conserve on utility bills and be more efficient in grocery shopping. If you’re still short after you have cut back as much as possible, the only option to balance your budget is to find practical ways to earn extra income.

Next week we will look at strategies to control your debt in these tough economic times.

Copyright © 2010 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, January 14, 2010

Cherryl is a financial consultant and coach, founder of Financially S.M.A.R.T. Services. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Contact Cherryl

We Will Rise Again in 2010!

Most of us welcomed in 2010 with sighs of relief; giving thanks that the challenges of the past year were finally behind us. However, despite offering best wishes to friends and family, we may actually doubt that the aspiration “Have a Prosperous New Year” can be realised over the next 12 months.

Even if we managed to ignore the discussions about Jamaica’s economic crisis during the festive season, reality was abruptly thrust upon us on January 1 when the new tax increases were implemented. As I noted the dramatic jump in petrol prices, it became even more obvious to me that we were in for a financially challenging time this year.

The pragmatists and pessimists are warning us about impending job losses, increasing poverty levels and inevitable social upheavals. At the same time, some business and political leaders are declaring that Jamaica is poised to benefit from myriad opportunities that always abound in periods of crisis. Where does our future really lie?

Jamaica - A Paradox of Possibilities

In some respects, the country’s economic woes are mirrored in the financial problems of many Jamaicans. The development of the country and its residents is being crippled by inadequate productive output to meet basic needs; overwhelming debt incurred for irresponsible consumption; and the absence of enlightened planning for future goals.

Is it any wonder that individually and collectively we are worried about our economic prospects?

Ironically, while we wallow in our monetary mess, the rest of the world is fascinated with Jamaica. Hundreds of thousands of people want to participate in the excitement and energy that we bring to the fields of music, sports, food, fashion and culture. However, while other countries are reaping financial windfalls from our brand, here in Jamaica we seem to be incapable of fully taking advantage of our opportunities.

Changing Attitudes and Actions

As we enter into a new decade, we cannot continue to operate as we have in the past. Although we are demanding better fiscal management from those in charge, we need to realise that our personal financial practices have a direct bearing on the success or failure of the country as a whole.

As we search for solutions, it is important to note that efforts of our government ministers and big business owners will not be enough to take us out of this crisis. Jamaica will only be able to survive the coming challenges if each and every one of us starts to transform our thoughts, words and deeds towards achieving financial progress.

It’s now the perfect time to decide to make a difference in 2010. Here are some practical steps that you can take that will create a ripple effect on the overall economy:

1.  Be Honest About Your Financial Situation

It’s time to stop pretending that everything is okay financially. If you have no clue about how much money you require to pay your bills, take the time to prepare a proper budget. You can download one at www.financiallysmartonline.com in the financial tools section. Examine your spending habits - are there areas where you’re wasting money? Be realistic about your income - do you need to earn more?

2. Manage Your Debt Effectively

It’s time to stop depending on debt to cover your budgetary shortfalls. Borrowing money for consumer needs must be your last resort, not your first choice. Too much of your future wealth has already been squandered in making interest payments for frivolous purchases that fade away. Let your mantra be: ‘If I don’t earn it, I can’t spend it.’

Want to learn how to achieve your goals? CLICK HERE!

3.  Use Your Resources Efficiently

It’s time to stop wasting precious minutes in unproductive activity. There are 24 hours in a day, how many of them do you use to generate an income? Are you sitting on your talents and assets instead of figuring out how you can earn from them? Focus on becoming more profitable by learning how to make more money this year.

4.  Plan For long-Terms Goal

It’s time to stop focusing only on your short term needs. Start creating a vision for your future - what kind of lifestyle do you want for yourself and your family? You must establish action plans for home ownership, children’s education and retirement, even if you’re not sure where the money will come from yet.

5.  Focus On Possibilities Instead of Problems

It’s time to stop complaining about money. Yes, you may have serious financial challenges; but instead of feeling sorry for yourself, be determined to find a way out. If you’re feeling afraid or confused about your finances, get help from a professional advisor and make every effort to implement the recommended solutions.

So let us resolve to become financially responsible by being more introspective, industrious and innovative. Just like the mythological phoenix which emerged from the ashes, we will rise again in 2010!

Copyright © 2010 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, January 7, 2010

Cherryl is a financial consultant and coach, founder of Financially S.M.A.R.T. Services. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Contact Cherryl

No Regrets

Recently, my 25-year-old niece shared with me some of the strategies she was using to secure her financial future. She explained that she had rejected the credit-card consumption culture that was so prevalent in the United States, by only buying things that she could afford. Saving a good portion of her salary was her main aim, as she wanted to amass a significant down payment before she bought her own home.

Although I was filled with pride as I listened to her reveal her smart money habits, I couldn’t help but reflect on my own financial history, which was quite the opposite. When I was 25, my income was inadequate, my debt was distressing, and my net worth was nonexistent. As I mentally calculated how much wealth I would have possessed today if I had been wiser with money, I was filled with an overwhelming sense of regret.

After silently berating myself for a few minutes, I recognised that there was a positive side to my pathetic past. Once I discovered that my money woes were caused by my lack of financial knowledge and poor habits, I made it my goal to unearth all the money principles that could improve my situation. Today, I am able to use my former failings to educate and empower others who are facing similar challenges.

As another year draws to a close, take some time to contemplate the decisions you made and the events that happened, which are currently shaping your financial destiny. The year 2009 was fraught with many challenges, but as you look back on the past, try not to be consumed with regret about the negative things that took place.

In your reflections, you will probably realise that some occurrences, like the global financial crisis, were out of your control; while others, such as impulsive credit-card purchases, could have been avoided. If you are feeling despondent about your financial mistakes, it can actually prevent you from taking charge of your financial future.

Want to learn how to ‘think and grow rich’? CLICK HERE!

Here are some tips that can help you to release yesterday’s problems, and create a tomorrow with no regrets:

Let Go Of The Past

If you are haunted by poor financial decisions, the most important thing you can do is forgive yourself for your mistakes. As the saying goes, “Hindsight has 20/20 vision.” Don’t be too hard on yourself, as you probably did the best you knew how to at the time.

Many of us learn the right financial moves to make only after turning the wrong way, as there is no encyclopaedia that provides us with a complete guide to money success. Even wealthy investors such as Warren Buffett and Michael Lee Chin have admitted to making unwise financial decisions, so don’t be overly distressed if you experience failure too.

While some people may feel sorry for themselves, others deal with their calamities by existing in a state of denial. If you are consumed by guilt and shame from the consequences of your money muddles, you may choose to avoid the issues altogether. This is even more self-destructive than rebuking yourself, as you have to admit that you have a problem before you can get help.

No matter how bad your mistakes have been, remember that they don’t make you a bad person. Even if you squandered your parent’s life savings in an investment scheme or you’re about to lose your home through foreclosure, acknowledge your errors and then commit them to experience.

Learn From Your Mistakes

Once you’re willing to be honest about your financial challenges, the next step is to learn from them. Examine the reasons that led to you making the wrong decisions - did you lack proper information, were you influenced by greed, did you ignore the professional advice you were given? This assessment process can help to ensure that you don’t repeat the mistake.

Many of our money problems are caused by bad habits such as spending more than we earn, not saving for emergencies, or not planning for future goals. Do whatever it takes - read books, go to seminars, or visit a financial coach - until you learn all the basic steps about managing, multiplying and maintaining your money.

Look To The Future

Although you may think that your money problems are too severe for you to overcome, remember that it is never too late to transform your future. Don’t take the easy route by giving up and not trying to do better.

You can’t go back in the past to change it; all you can do is focus on doing the right things right now. Once you have learned how to make good financial decisions, set clear goals and positive expectations. Armed with the right information and guidance, you can create a new pathway towards financial success.

“When one door closes another door opens; but we often look so long and so regretfully upon the closed door, that we do not see the ones which open for us.” - Alexander Graham Bell

Copyright © 2009 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, December 31, 2009

Cherryl is a financial consultant and coach, founder of Financially S.M.A.R.T. Services. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Contact Cherryl

The True Currency of Christmas

Christmas is traditionally celebrated as a time to show appreciation to our family, friends and colleagues by exchanging gifts. Stores are usually overrun with frantic shoppers searching for perfect presents that are designed to impress, or inexpensive items that express ‘It’s the thought that counts.”

With the increasing commercialization of Christmas, it’s easy to put a lot of emphasis on money at this time of year. One regular feature that appears in December is the Bank of Jamaica report detailing the amount of currency in circulation; when more money exchanges hands, it’s a sign that the shopping season is in full swing.

With money being promoted as essential to the successful enjoyment of the holidays, it’s not hard to see why so many people get stressed out about it at Christmastime. Employees wait impatiently for their end-of-year bonuses; contractors work harder to finish jobs before Christmas; people descend on remittance agencies in anticipation of receiving money transfers from foreign sources.

With the rampant spending and overindulgence that takes place during this season, it should be expected that most people would be in high spirits, enjoying all the gifts and merriment. Conversely, Christmas is one of the saddest periods for many persons who become very depressed at this time.

Want to learn how to ‘think and grow rich’? CLICK HERE!

Where is the Christmas cheer?

Interestingly, studies have shown that most people who are seasonally unhappy are not disheartened because of a lack of money, but are empty inside because of their need for companionship. Some persons grieve because they miss family or friends who have passed away; others are miserable because they have no one to love.

The old saying “Money can’t buy love,” becomes even more applicable at this time. Despite all the cash circulating in the economy, and regardless of the high volume of material possessions that exchange hands, there are still so many people that feel unloved at Christmas.

As we get caught up in our quest for Christmas consumption, many of us don’t take the time to think about the real reason for the celebration of this season. This is really a time for reflection on the coming of the Christ child, who was born to demonstrate God’s love for the world. No matter what your religious affiliation may be, the essence of Christmas is love.

Human beings were designed with an in-built need for love and affection. Infants cannot thrive without loving hands, and we continue to crave that emotion through all stages of our development. The roots of the anarchy that exists in Jamaica today were not spawned from material poverty, but from the lack of love in the society. As literary genius Oscar Wilde confirmed, “Who, being loved, is poor?”

How can we change our focus from spending money on physical items that will pass away, to expending our renewable energy of love this Christmas?

Multiplying love for Christmas

To cultivate the right attitude you first need to be truly grateful for the things that you have been blessed with. Even if your financial situation is not what you desire, focus on the positives in your life. Give thanks for your health, personal freedom, people who are important to you, and the wonderful opportunities that the future will bring.

The next step is to consider the needs of others before you pay attention to your own frivolous desires. There are thousands of persons who can’t buy basic necessities throughout the year, much less special treats for Christmas. Look around for organisations that provide services for vulnerable groups - homeless children, the elderly, persons with disabilities - and pledge to give them regular support in cash and/or by volunteering your time.

Closer to home, examine your relationship with your family and friends; can you honestly say that you always show your love and appreciation in ways that can’t be bought with a dollar bill? Are you too caught up in the rat race of earning money to spend quality time with your spouse and children? Do you neglect the companionship needs of your ageing parents? Just like love, your time is a precious commodity that is much more valuable than money.

Even if you are single and have no close relatives on hand, you can still make a big difference by mentoring young people. Many of our youth are confused and aimless, because they have no appropriate role models to guide their development. A gift of your experience, leadership and support will have a positive multiplier effect that will surpass any physical present that you could supply.

So, as the dawn of another Christmas day approaches, will you spend the true currency of the season by giving the gift of your love?

Copyright © 2009 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, December 24, 2009

Cherryl is a financial consultant and coach, founder of Financially S.M.A.R.T. Services. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Contact Cherryl

Celebrating the Holidays When You’re Broke

As one of my favourite Yuletide songs proclaims, “It’s beginning to look a lot like Christmas.” It’s hard to escape the commercial manifestations of the holidays - aggressive advertisements, sparkling shops and tempting trinkets - all screaming at us to “Buy, Buy, Buy!”

Many people who would normally jump wholeheartedly into the seasonal spending spree can only look on from the sidelines as spectators, as their bank accounts reflect the current economic crunch. Other persons have decided to throw caution to the wind by declaring that it’s business as usual this year. Armed with partner draws, overseas remittances, or credit cards dangerously close to their limits, some shoppers are living on the edge by spending more than they can really afford.

How can you balance your desire to participate in the holiday festivities, if you’re strapped for cash and your financial reality dictates frugality at this time?

Smart Spending

It is possible to enjoy the merriment that the season has to offer, even with limited funds. Here are a few guidelines that can help you to spend wisely:

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1.  Use A Budget

Successful budgeting is all about making choices about how and where you spend your money. If you regularly use a budget to plan your expenses throughout the year, it can help you to find areas where you can redirect funds for the holidays. For example, you may choose to carry lunch to work instead of buying it, and use the money saved to buy gifts or go to a New Year’s Eve party.

2.  Prioritise Your Spending

Write down all the things that usually help you to get into the holiday mood. Do you enjoy seeing your home nicely decorated for the season, or do you get more pleasure from sharing gifts with others? Is this the only time of year that you go out and enjoy the company of your friends? Decide what is most important to you and channel your spending in that one area.

3.  Make A List

Wherever you choose to apply your limited funds, make a list of the basic things you will need to buy. Forgo extravagant purchases by using your imagination to find items that will fit your budget. For example, I wanted a festive piece to trim a particular doorway of my house. Not finding any one decoration that was within my spending limit, I decided to put together inexpensive items to create the look I wanted.

4.  Don’t Cave In To Pressure

With so many delectable items on display, it’s easy to get carried away and purchase things that are not on your list. One way to avoid temptation is to only carry the amount of cash that you have budgeted to spend - using a credit card is definitely not an option! Another tactic is to prepare a list of all the essential expenses that will be waiting for you in January and hold it in your hand while you shop.

The previous tips are useful if you have some amount of money. But what if you’re a casualty of the economic downturn and have lost your source of income? Do you have to give up on the merrymaking and gift-giving?

Cashless Creativity

It has been said that there is no lack of resources, only a lack of resourcefulness; so you can still participate in all the trappings of the holidays if you use your creativity. Here are some innovative ideas that can help you celebrate without cash:

The purpose of holiday gift-giving is to show gratitude to those persons who impacted your life during the year. Sometimes people equate the level of appreciation with the cost of the gift, but it’s more important to give someone a gift they can truly utilise, than to worry about the price tag. If you have no money to buy gifts, consider giving of your time or talent instead.

Think carefully about what your friends and family would really appreciate you doing for them. You can design simple gift vouchers that can be redeemable for massages, car washes, cooking services, beach trips, or even de-cluttering a closet. If you grow fruits or vegetables, you can prepare a food basket with your organic offerings.

Chances are that you still have old trimmings from past years that can be reused. How about taking them apart and redesigning them to get a fresh new look? String lights on large potted plants instead of buying a Christmas tree, or spray gold or silver paint on pine cones and branches to make great accent pieces.

If you’re accustomed to throwing a big Christmas feast but can’t afford to buy the ingredients this year, why not have a pot-luck dinner where each guest brings one item? Create party themes such as games nights, beach picnics or movie evenings, where you can enjoy fellowship with your friends and family without the expense of going out.

So even if your money is in short supply, use your imagination and enjoy the holidays!

Copyright © 2009 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, December 17, 2009

Cherryl is a financial consultant and coach, founder of Financially S.M.A.R.T. Services. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Contact Cherryl

The Basics of a Business Plan

Establishing your own business can be one avenue to increasing wealth, as it gives you the opportunity to control and expand your earning capacity. So why is it that some business owners end up in less advantageous financial positions, sometimes losing everything they own?

One factor that can help to determine the success of your venture is the planning that you do before starting, and during the lifetime of your business. A business plan is basically a document that provides a thorough description of your venture; giving information about the type of operation, the products or services offered, the industry in which it exists and the target market, its objectives and the strategies to be used to accomplish its goals, and financial details about the business.

In theory, since you conceived the business idea, it should be relatively simple for you to put down these various details on paper. However, writing a business plan is a project that may require expert guidance, as it takes careful thought and analysis to develop a comprehensive blueprint for your business.

Recently, the Private Sector Development Programme (PSDP), an agency that provides technical assistance to small businesses in Jamaica, hosted a workshop that looked at the importance of business planning for organisational growth and sustainability.

Deanna McFarlane, consulting officer in the PSDP’s Corporate Finance Broker Unit, explained that a business plan would assist entrepreneurs to plot a course for their businesses and increase their chances for success. By completing a plan, owners would be better able to identify customers, improve operational efficiencies, focus on strategic goals, obtain financing for start-up and expansion, and attract investors for further growth.

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McFarlane outlined the following steps to completing an effective business plan:

1.   Executive Summary

This section provides the key highlights of the business plan, summarising the profile of the business, objectives, strategies and all the other areas that are detailed in the rest of the document. Although the summary appears at the beginning, you should only prepare it after completing the other segments. It must be well written and attention-grabbing to influence readers to continue to examine your plan.

2.   History & Background

You should provide a description and location of the business in this section, as well as the reason why it was started and its basic objectives. List accomplishments such as major contracts or awards won, along with details on memberships in business and trade associations. If your business is a start-up you can talk about your personal successes that are relevant.

3.   Strategic Direction

In this segment, you need to outline your vision - a short statement that highlights the soul of your business and its reason for being; and your mission - a statement expressing the overall purpose of the organisation. Then outline your goals, listing short-term objectives and your long-term plans over five years. Finally, describe the strategies that must be implemented in production, marketing, sales, distribution, internal operations, management and financing, to attain your objectives.

4.   Environmental Analysis

Describe the general environment within which your business is operating, and state the relevance of your business to the sector in this section. You should also analyse your strengths and weaknesses, those internal factors that can influence your development; as well as the external opportunities and threats that can make or break your business. McFarlane advised entrepreneurs to admit the truth about their businesses, as this would help them to solve potential problems.

5.   Market Analysis

A description of industry factors should be provided in this segment, looking at the size of the market, existing products/services and market segments, and trends that may affect your business. It is crucial to research details about your main competitors and identify their strengths and weaknesses, in order to plan ways to capture market share from them or maintain your dominance.

6.   Marketing Strategy

McFarlane explained that business success depended on the ability to attract customers and keep them satisfied. This section will help you to understand your market, by examining key demographic details such age, gender, income level, geography, buying habits and personal tastes. Give details about your expected sales performance, distribution channels and your competitive strengths.

7.   Organisational Structure

In this segment, provide information on the management and human resources of the organisation by giving profiles on key team members and important external advisors. You should also describe recruitment plans that may be essential to the business, and any relevant regulatory issues.

8.  Financial Analysis

This final section is the most crucial, as it details how the money will be earned and spent. You will probably need assistance from an accountant to create a balance sheet, profit and loss statement, cash flow projections and other revenue assumptions. Looking at the figures will help you to determine if your wonderful business idea is actually feasible.

So, if you haven’t already written your business plan, put aside some time to get it done. As McFarlane confirmed, proper planning will help to build people’s confidence in your venture, and greatly assist you in achieving your business goals.

Copyright © 2009 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, December 10, 2009

Cherryl is a financial consultant and coach, founder of Financially S.M.A.R.T. Services. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Contact Cherryl

Balancing Boomerang Kids

Twenty-nine-year-old Robert was confident that his MBA in finance would secure him a solid career and a comfortable future. After getting laid off from his enviable position at a top financial institution, he found it difficult to replace his income and had to accept a job with a 50 per cent pay cut. Unable to afford his rent and faced with mounting unpaid bills, Robert had no choice but to move back home with his mother.

Susan, a 46-year-old divorcee, had very little to fall back on after her husband of 25 years left her. She had not worked for a long time and was desperate without a place to call home. With no children, the only place she could turn to for help was her elderly parents. Despite her best efforts, Susan has been unsuccessful in obtaining a job and feels frustrated about being dependent on her parents for survival.

Aspiring artist Melissa is adamant that living at home with her parents is the only option that makes sense to her. After graduating from the Edna Manley College of the Visual Arts four years ago, she is in no hurry to go out on her own. “There’s no way that I can replicate the standard of living that I have grown accustomed to at home with Mom and Dad,” she declares. “Why should I leave and struggle to survive?”

There are several circumstances, such as loss of income or divorce, which may push adult children to move back into their parents’ home for a short time. In fact, it’s not unusual for grown children in Jamaica to remain a part of the family household without ever venturing out on their own. However, the current challenging economic climate has led to a marked increase in persons who are forced to return to their parents’ nest because of financial difficulties.

The Boomerang Generation

Thanks to this phenomenon, the media has coined a term ‘boomerang generation’ to refer to young adults, usually in the 20-35 age groups, who live at home with their parents and are financially dependent on them. Just like the Australian tool that gave them their name, these adult children boomerang right back home when the going gets too tough on their own.

The financial reality of our times doesn’t leave many options for today’s boomerang kids. Even though more persons are gaining tertiary-level qualifications, the number of job options to accommodate them is dwindling. Many college graduates are burdened with tuition debt that obliges them to stay at home until they can sort out their financial situation. It’s now also harder for young adults to afford to purchase their own home than it was for those in earlier generations.

Although some parents may initially welcome their adult family members back home, there are several issues which could affect their financial and emotional well-being that should be considered. Adding dependent children to the household’s budget can be an unplanned financial burden that can have severe implications for the parents’ future prosperity.

Here are some suggestions on how parents can balance the effects of their boomerang kids:

Set firm guidelines

To prevent disagreements and misunderstandings about the living arrangements, it’s best to first have frank discussions about the reasons that prompted the move back home. If the boomerang children are trying to recover from an adverse financial situation, agree on reasonable time limits on when they should be back on their feet. Help recent school leavers to set goals about attaining their independence outside of the home. Arrive at a mutual understanding about personal issues such as guests, partying and household rules.

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Ask for a financial contribution

Although some parents may be appalled at the thought of asking their children to pay rent, it is important to have them contribute to the household expenses. Their presence in the home usually leads to higher utility and food bills, and they should be required to share these costs. If they are without a source of income, ask them to take on some duties such as cooking or cleaning. It’s tempting for adult children to forget that their parents are no longer obligated to take care of them, so they need a structure to help them participate in the running of the home.

Maintain your financial security

At the end of the day, having adult children back at home should not put parents in an adverse financial condition. If they are facing challenging debt problems, help them to find options to reduce their obligations. Some parents would like to provide financial assistance, but they have to be careful about using money that should be earmarked for retirement needs. It’s also important that children don’t develop a dependency on their parents to bail them out whenever they make financial mistakes.

Boomerang kids can actually help to foster family togetherness by bringing multiple generations under one roof. However, parents must ensure that they protect their financial interests while enjoying their children’s company!

Copyright © 2009 Cherryl Hanson Simpson. No reproduction without written consent.

Originally published in The Daily Observer, December 3, 2009

Cherryl is a financial consultant and coach, founder of Financially S.M.A.R.T. Services. See more of her work at www.financiallyfreenetwork.com and www.financiallysmartonline.com. Contact Cherryl

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