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Written by: Danny Kofke, Motivational Mentor

Most people already have some understanding of insurance. According to the latest data, roughly 91% of the U.S. population has some form of healthcare coverage through private insurance, Medicare, Medicaid, TRICARE, or VA Care. Therefore, if you are reading this, there is a high probability that you already have health insurance. However, once we move beyond health insurance — by far the most important type of insurance you can acquire — many individuals struggle to know what insurance they need.

6 Types of Insurance to Consider

In addition to health insurance, there are a few important types of insurance to consider for you and your family.  While not all of these policies may be beneficial or relevant to you, they can help the vast majority of people reduce risk and have greater financial protection going forward.  Like with most financial matters, you will have to evaluate your need for different kinds of insurance based on your finances, age, assets, and life circumstances to see which types of insurance fit you best.

Home or Renter’s Insurance

Whether you own a dwelling (house, condo, or apartment) or you rent your housing, you should have some form of insurance to protect against accidents or damages. The level of coverage you need will vary based on the value of the property, as well as the possessions on your property. If you want extra coverage for specific things like pieces of art or jewelry, many providers will allow you to pay for “riders” (add-ons) that offer you even more comprehensive coverage.

Auto Insurance

In most states, basic auto collision and liability insurance is a legal requirement for car owners. However, you can protect yourself even further by adding uninsured or underinsured motorist coverage, which ensures that, in the event of a collision with another driver, your repairs will be covered even if they do not have sufficient insurance. In any case, auto insurance is not just a necessity for legal reasons. There is always a risk of having a collision when you get on the road, and acquiring auto insurance greatly reduces the risk of a small accident turning into a financial disaster.

Disability Insurance

As the name implies, disability insurance provides financial protection in the event that you are injured or otherwise unable to work due to a disability. This is essentially paycheck insurance, as it guarantees that you will continue to have an income even though you cannot work. The exact amount you will receive depends on where you live, as well as your provider, but most people can get roughly 60% of their paycheck via disability coverage.

Life Insurance

Life insurance can be an extremely important coverage to get, though it still depends on your individual circumstances. With life insurance, your loved ones get a death benefit payout if you suddenly pass away, ensuring that they can continue to pay the bills without your income. So, if you have people who depend on your income, you likely need some kind of life insurance. Term life is less expensive and a good idea for people who still have time before retirement. Ideally, once you get older, you will have savings and will not have to pay the life insurance premiums anymore (as they can increase substantially with age).

Identity Theft Insurance

Large-scale data breaches are becoming more and more common. It’s something that many people don’t need, but if you have identity theft insurance, it adds an extra layer of protection in an increasingly complex age of virtual data storage. And if your identity is stolen, the provider will go through the list and contact all of the companies who need to be informed. This saves you from the hassle of contacting dozens of organizations to confirm that your data is safe.

Long-Term Care Insurance

Long-term care insurance (also known as “nursing home insurance”) is a great hedge against health-related issues as you age. You should probably consider buying some type of long-term care insurance in your 50s. If you buy it earlier, you may end up paying years of premiums unnecessarily. And while long-term care insurance may not be vital for everyone, it is a good form of protection if you do not have family members or loved ones to care for you when you are older.

The Bottom Line

There are many, many different types of insurance, far beyond what we have included in today’s guide. However, your needs dictate the type of insurance you should purchase. It’s like getting a warranty on a computer or mobile device. You should always do your research to make sure you’re not getting ripped off or becoming overly “insurance rich.” If you really evaluate the insurance you need (and the insurance you should forego), you can avoid overpaying for unnecessary insurance. This gives you more financial room to put money into savings or set up an emergency account.

And before you try to do all the work on your own, talk to your employer about different options. HR departments at work can help you get insurance through your company and let you know what options you have at your disposal. Then, you can go shopping to see what kind of policies and premiums you would need to pay. Mentoro can work in tandem with your employer to help you find the best solutions for your life circumstances.

During a one-on-one meeting with a Mentoro financial advisor, we can help you determine what kind of policies you need and point you in the right direction. After all, insurance is not a one-size-fits-all type of risk protection. A 22-year-old single person has different needs and risks than a 40-year-old with a spouse and 2 kids. Fortunately, we have years of experience and knowledge to help you get the best insurance for your needs, all while sticking to your budget.

If you want to learn more about insurance education or financial wellness programs, be sure to contact the experts at Mentoro today!

Written by: Gilles Hudelot, Director of Education

Credit cards can really help you out when you are in a cash crunch. At the same time, they can become a barrier to your financial well-being if you do not practice caution and sound financial habits. As a result, it is impossible to say that credit cards are either “good” or “bad.” The reality is that there are plenty of credit card benefits and drawbacks. For the average person, understanding the pros and cons of credit cards is an important step toward building healthy financial habits and balancing the risks and rewards that come with credit card ownership.

The Pros and Cons of Credit Cards

Pros:

1. A credit card gives you access to money you may not have right now
2. If used wisely, a credit card can help you build up credit
3. You can take advantage of credit card cash-back or rewards programs

Cons:

1. It is too easy to use credit cards and spend more than you make
2. Interest rates can quickly lead to a spiraling debt cycle
3. Credit cards can negatively affect your credit score

Understanding the Risks and Rewards of Credit Card Debt

As you can see, there are several very good reasons to own and use credit cards responsibly. However, the emphasis has to be on responsible spending. If you are uncertain what responsible spending looks like, we can examine a hypothetical situation. Let’s say you have two primary credit cards. You use one on a semi-regular basis to supplement your debit card. You likely use it to make purchases, knowing that you will pay off the balance before the end of the month. This allows you to take advantage of any rewards programs without having to pay much (or anything) in interest.

Your second credit card is your “emergency” card. You don’t use it unless you absolutely need it. For example, if you get in a car accident and need to be rushed to the emergency room, you can put this credit card down to pay a large sum up front. While you should save this card for these kinds of situations, it is also important to remember that you need to use cards from time to time to ensure that they stay “active.” Why? Because if you have a credit card and never use it, your bank will eventually close the account. So, always remember to make infrequent, small purchases with your emergency card and pay off the balance as soon as possible.

In this scenario, credit cards are useful tools because they are being used wisely. However, credit card lenders make a lot of money because millions of people do not practice good financial habits with their cards. Perhaps they pay for something that they cannot afford or they use them for emergency expenses that cannot be paid off in a reasonable amount of time. In these situations, you can quickly fall into a downward spiral of debt. Over time, this will negatively impact your credit score, increase your interest rate, and make you lose more money in the process.

Though not quite as “responsible” as the example given above, there are many people who game the system, so to speak. They are very active in how they use cash-back rewards cards. By carefully managing how and when they make purchases and taking advantage of 0% APR periods, they maximize the benefits they can get from their credit cards. These benefits can often be used to cover travel expenses or other costs. However, this route takes a lot of time and effort because if you do not stay on top of it on a regular basis, you could end up in a lot of debt.

Even if you have had bad habits in the past, you don’t have to change them overnight. You can build good habits over time. You can even use credit cards to build credit slowly and take back power over your finances. Ultimately, you just need to evaluate your cash flow and determine how much you can reasonably spend with credit cards.

Educating Your Employees about Credit Cards With Mentoro

Mentoro can schedule one-on-one meetings for people who want to discuss strategies to manage their credit card needs. On our portal, we also have tools to keep track of your money and budget plans. This helps ensure that you are not starting or even continuing bad habits.

If you have already accumulated debts, we have tools to help look at your debt and develop strategies to pay it down as efficiently as possible. You can also see how much you can save by following the “debt snowball strategy.” At its core, this strategy requires you to line up all your debt, decide which one you want to tackle first, and then use that momentum to move from one debt to the next.

While our portal tools are great for seeing how much you save over time, one-on-one meetings make it even easier to devise a highly specific strategy for you. This is because a big part of getting debt under control is psychological and emotional. Talking directly with a financial expert can help prevent you from feeling overwhelmed and put you on the right course toward financial wellness.

If you want to learn more about the pros and cons of credit cards or financial wellness programs, be sure to contact the experts at Mentoro today!

Written by: Dan Kofke, Motivational Mentor

For decades, companies have known about the negative correlation between financial stress and job satisfaction. As far back as 2004, studies have shown significant relationships between financial stress, work output, and absenteeism. More specifically, employees who feel financially stressed and do not practice smart money habits are more likely “to waste their work time” and frequently miss work. Researchers have also found that absenteeism and low productivity can be substantially reduced if employers offer “effective workplace financial education.” [1] For this reason, an increasing number of organizations are turning to financial advisement experts to reduce financial stress and improve overall employee engagement.

Smart Money Habits to Help Your Employees

Many financial “gurus” will tell people to get money smart, but what does this really mean? What are some actionable steps to practice smart money habits and set smart money goals over the short and long term? These are the questions we want to answer so that you can help your employees improve their financial lives.

So, If you want to help your employees overcome financial stress and ultimately improve their job satisfaction and performance, here are a few smart money habits to help get you started:

Build up your emergency fund

Most people associate good financial habits with long-term goals and strategies. However, protecting yourself and your family from risk also plays a vital role when making smart money moves. Building up a short-term emergency fund (we recommend 3-6 months of expenses) can ensure that, if you get in an accident and cannot work, have to pay for a major expense (medical bills, car repairs, etc), or lose your job, you have cash on hand to continue paying your bills until you can find a long-term solution.

It is important to note that these funds should be held in an accessible savings account — not an investment account. Why? Because investments require you to take on more risk. What happens if a recession hits and you lose your job and half of your emergency funds at the same time? Just because the paychecks stop coming in does not mean that you won’t have to pay expenses (you definitely will). In short, a healthy emergency fund is one of several smart money habits that ensures you are protected whenever life throws you a curveball.

Don’t trade stocks based on the news

Setting smart money goals almost always entails investing part of your available funds. However, nobody can predict the stock market with 100% accuracy. So, if you have little or no experience investing, you should try to learn as much as you can without letting the latest news and headlines push you into making rash decisions. Instead, stick to a safe investment philosophy that meets your budget and goals.

Headlines are designed to grab your attention and encourage you to keep reading. For this reason, many breaking news stories related to the stock market are sensationalized. More importantly, the stock market can go up or down from one day to the next, but it always trends upwards over the long term. Therefore, if you are tempted to sell off half of your portfolio when the market drops, we recommend waiting to take action. When it comes to investing in stocks, patience almost always pays off.

Rebalance your portfolio

As previously mentioned, evaluating your risk tolerance on a regular basis is one of several smart money habits that everyone should practice. When thinking about long-term investing, younger people usually have greater risk tolerance because they have more time to work and recoup any losses. However, as you get closer to retirement, you won’t want your portfolio to suddenly drop by 20%. So, make sure your investments are properly allocated based on your work status and risk tolerance.

Naturally, you may not feel ready to fully assess your own risk tolerance. Consequently, we recommend talking with a financial advisor and examining your ability to withstand financial setbacks. Then, you can rebalance your portfolio and be prepared for any potential losses in advance.

Do your best

Following smart money habits and financial fitness tips is not always easy. You may find yourself doing great for a few months before sliding into bad habits once again. Rather than getting stressed or feeling frustrated with yourself, remember that this is completely normal. In fact, the vast majority of American workers struggle with financial stress to one degree or another. There are no secret money habits of millionaires that you are missing out on. You simply have to do your best to stick to a practical, growth-centered plan.

So, just try to do your best and don’t beat yourself up if something goes wrong. If you make a financial mistake, don’t linger on it. Move forward. Learn from it and ensure that the past does not repeat itself. If you can’t move past a financial mistake, you will likely get in a rut that will have you feeling more stressed and less productive. This will only lead to further problems down the road. Just let it go, move on, and allow your money to grow.

Encourage Smart Money Habits In Your Organization With Mentoro

If you want to learn more about teaching smart money habits and smart money goals in your organization, or if you want to find out how to begin a financial wellness program for your business, be sure to contact the experts at Mentoro today!

Source:
Financial Stress, Pay Satisfaction, and Workplace Performance
https://journals.sagepub.com/doi/abs/10.1177/0886368703261215

Written by: Dan Kofke, Motivational Mentor

For many people, the dream of becoming a homeowner in 2022 feels complex, expensive, and stressful. While there are various hurdles to overcome when finding and purchasing a home, it is still a very achievable goal — if the buyer makes plans in advance. However, it’s not just individuals who can benefit from homeownership.

Companies who educate their workforce on the ins and outs of buying, maintaining, or selling a home can help increase their employees’ quality of life and reduce financial stress at the same time. So, in today’s guide, we are going to take a closer look at what companies can do to help employees on their journey to becoming a homeowner:

What Are the Steps to Purchasing a Home?

The biggest step a business can take to increase homeownership rates within its organization is offering the right educational resources. More specifically, companies need to provide employees with accurate and useful information related to the home-buying process. So, here are some of the most essential steps to becoming a homeowner:

1. Decide if it’s the right time to buy a house – Timing is crucial when learning how to become a homeowner. You will need to consider your current salary and employment status, as well as any potential income changes in the future. You will also want to calculate how much you have in liquid assets. Finally, you need to know your current credit score to see if you will qualify for low-interest mortgages.
2. Determine how much house you can afford – Far too many people attempt to buy houses that they cannot afford. So, evaluate your debt-to-income ratio (it should ideally be about 30%) and consider the additional costs associated with buying a home, including taxes, homeowner’s insurance, and even HOA fees. You also have to remember that buying is very different from renting insofar as you are responsible for all repairs and maintenance costs.
3. Save for a down payment and closing costs – If you have determined that you are in a position to buy a home, we recommend saving enough so that you have at least 20% of the purchase price as a down payment. When creating your budget, remember to factor in the closing costs. These can range from 2% to 5% of the loan, but they can either be rolled into your monthly mortgage payments or paid upfront. Either way, closing costs will add to the total “price” of the home.
4. Get pre-approved for a mortgage – If you have a good credit score and enough income to make your monthly payments, you will likely get pre-approved for a mortgage. However, it is important to understand the type of loan you’re getting before you sign on the dotted line. The most important terms to know are adjustable and fixed rates. A fixed-rate mortgage charges the same interest rate for the duration of the loan, while an adjustable-rate mortgage has an interest rate that fluctuates over time.
5. Find the right real estate agent – While you could always buy a house on your own, it is a good idea to get the help of an expert real estate agent. Fortunately, you can shop around online or in your local area to find someone who understands your needs and can help you close on your ideal home.
6. Begin house hunting – Finding the right house is not just about aesthetics; there are many, many other factors to consider. First and foremost, you will need to find a house that is within your price range. It is also important to consider the square footage that you and your family need. If and when you find a house that you like, examine the condition of the home to see if it needs repairs before or after the purchase. Finally, consider the quality of the location, including its proximity to public transportation, local entertainment, and high-quality school districts. A real estate agent will have a lot of this information ahead of time, as well as the property value trends in the area.
7. Make an offer – Once you have found the right home for you, it is time to make an offer. Again, a real estate agent should work within your budget to get you the best deal possible.
8. If the offer is accepted, get a home inspection and appraisal – Your realtor can usually organize a home appraisal to make sure that you are not overpaying for the home. Moreover, a home inspection can alert you to the need for any repairs, which you can ask the current owners to fix or use as leverage to lower the asking price.
9. The final walkthrough – Do one last walkthrough of the home to ensure that you like what you see and are confident in your purchase.
10. Close on the house – Now you can close on the house, get the keys, and become a homeowner!

Becoming a Homeowner: Work With Mentoro to Help Your Employees Achieve Domestic Bliss

While the steps above can help your employees learn how to buy a house, there are additional factors to help build wealth and become financially ready to purchase a home. For this reason, companies have an opportunity to offer financial education resources so that individuals can set and achieve their life goals. With Mentoro, your employees can get direct access to financial advisors who can walk them through some of the more complex aspects of becoming a homeowner and offer financial wellness programs to help improve their overall financial health.

If you want to learn more about becoming a homeowner or if you want to find out how to implement a financial wellness program at your business, be sure to contact the experts at Mentoro today!

Written by Whitney Queen, President of Mentoro

Terms like “rich” and “wealthy” are often used interchangeably, despite the fact that they have very different meanings. At first glance, they may seem similar, but the truth is that one of these attributes does not guarantee the other. In other words, you can be rich but not wealthy, and you can be wealthy but not rich (depending on how you define the quality of “richness”). In any case, it is extremely important to differentiate the two terms and understand exactly what it means to pursue the status of being rich versus the state of being wealthy.

Rich vs. Wealthy: What’s the Difference?

If you look up these terms in the dictionary, they will appear as synonyms of one another. However, there are greater social, financial, and even linguistic nuances involved when we use these terms. Being rich implies a certain status. Perhaps you feel that you are rich if you own a big house, have $1 million in the bank, or drive a luxury car. Thus, rich is the more subjective of the two terms and it can mean something different to everyone.

For example, most people would agree that Elon Musk is rich. He is worth over $260 billion (as of this writing) and owns multiple high-value companies, to say nothing of his personal assets. However, someone who has worked at the same job for 30 years, owns a house, has ample savings, and has the ability to take luxurious vacations could also be regarded as rich, even if their total assets or net worth do not even come close to “billionaire” status. Thus, being rich is something that many people strive to reach based on their own goals and definitions.

On the other hand, being wealthy implies positive financial behaviors that lead to positive net worth. In other words, your assets are greater than your liabilities. Moreover, the state of being wealthy means that you have accrued enough money, assets, and resources to live the kind of life you want to live. So, while there is a certain degree of subjectivity with the term “wealthy” as well, it is easier to define concretely. This also makes it much easier to differentiate the state of being wealthy from the status of being rich.

So, how can one be rich and not wealthy, or vice versa? Let’s say that you have lifestyle goals that exceed your income and assets. This means that, in order to get the house or car or status symbols that you want, you have to take on liabilities. As a result, your liabilities exceed your assets. You may have $10,000 in the bank, but you may also have $100,000 in debts through mortgages, loans, and credit cards. In this case, you have the status of being rich, but not the state of being wealthy.

Alternatively, you may have ample savings and assets to cover your living expenses, but you choose not to spend your money on things that would give you the status of being rich. Perhaps you choose low-cost housing, stick to a frugal budget, and forego luxuries like designer clothes or expensive trips. In this case, you would be wealthy insofar as you have accrued enough assets and resources to live well, but still lack the status of being rich (at least from most people’s perspective).

Understanding How Financial Status Affects Our Decisions

Naturally, one can be both rich and wealthy, and this is the ideal state. In this situation, you have control of your finances, valuable assets, and the kind of lifestyle that makes you feel and look rich. But the key to the definition of wealthy and the definition of rich is understanding how these terms affect our financial decision-making. Unfortunately, society often promotes the status of being rich over the state of being wealthy.

As a result, being rich is the big shiny thing that everyone chases. It is what consumers see on social media through influencers or even their friends and family. Someone can appear “rich,” but have negative dollars in their bank account. Moreover, many people want to make a quick buck instead of thinking about the long term. This can lead to poor financial decisions that might make it easier to appear rich but much harder to actually be wealthy.

Reinforcing Financial Wellness in the Workplace

To add to the complexities of money and status, there can be a lot of misperceptions of how much people make within the workplace. Chasing richness and “keeping up with the Joneses” can cause financial stress for employees. This, in turn, can increase turnover, decrease morale, reduce employee engagement, and cause people to be less productive. A lack of financial wellness in the workplace can even make people feel shame or anxiety about their finances. Fortunately, positive financial behaviors can help move people closer to a wealthy state of being, regardless of their income. Having the right educational and financial resources available to your employees can help ease anxieties surrounding money and improve their financial state at the same time.

If you want to learn more about encouraging wealth in your organization, or if you are interested in learning more about a financial wellness program, be sure to contact the experts at Mentoro today!

Written by: Dan Kofke, Motivational Mentor

For many people, finding a personal financial mentor is relatively easy. There are thousands of financial advisement companies and individual advisors to help people with their long-term financial plans. However, the cost of acquiring a personal financial mentor is usually not within reach for the average 9-to-5 worker. Moreover, employees who do not feel well-versed in financial services and solutions may become overwhelmed by the sheer volume of options and information. This is part of the reason why adding a financial mentor to your arsenal of employee benefits could completely transform your organization and greatly improve the financial wellness of your staff.

Considering a Financial Mentor as an Employee Benefit

According to recent studies, U.S. employees are among the most stressed workers in the world. [1] Stress in the workplace stems from a wide variety of places, including long work hours, limited PTO, and high-pressure environments. However, time after time, studies have shown that financial stress tops the list of stressors for most Americans. This applies both inside and outside the workplace, with 73% of Americans naming finances as the number-one stress in their lives. [2]

In addition to its prevalence, financial stress has a profound effect on the average American worker. In fact, financial stress often causes employees to feel less focused on tasks and more likely to miss days of work to deal with financial problems. Employee engagement also takes a huge hit when workers feel overwhelmed by money concerns. Fortunately, employers can use a financial mentor as an employee benefit to make a workforce healthier and more productive.

Improving Financial Wellness in the Workplace

For middle or lower-income staff, a financial wellness program can be extremely beneficial, as many of these people do not have access to a financial mentor or retirement advisor. If you offer a free financial mentor as a standard employee benefit, you can give people the individualized help and resources they need to improve their finances. This can cover a broad range of issues, from student debt and refinancing a mortgage to creating a will and saving for retirement.

So how does providing a financial mentor as an employee benefit actually work? When using a company like Mentoro, you pick the kind of plan that best fits the needs of your business and workers. However, it is important to note that every Mentoro plan offers direct access to a financial mentor. Some of the most useful benefits for employees are the unlimited, one-on-one meetings with the company’s designated mentor. At Mentoro, we encourage family and spouses to be involved in these meetings as well.

Sometimes, financial mentors will have meetings in person, but we also offer virtual meetings for convenience and safety. Each plan varies in the kind of resources and services provided, but group presentations are also a common and effective way for employees to learn and become more financially empowered together. Being flexible to different people’s needs is vital.

For this reason, our financial wellness strategy is defined by 7 key steps:

• Spend less
• Save more
• Manage debt
• Save for retirement
• Protect yourself
• Plan your legacy
• Generate wealth

Finding a Financial Mentor With Mentoro

Empowerment is the cornerstone of our approach to financial wellness, and a financial health mentor can help give your employees the hope and knowledge that they can do it on their own. Our financial mentors are aligned with both the industries and companies of our clients. Moreover, we study each company’s needs (as well as the needs of the employees) thoroughly to make sure that we match you with the best possible mentor for your business.

If you want to learn how to find a financial mentor for your organization, or if you want to know more about acquiring a financial wellness program for your business, be sure to contact the experts at Mentoro today!

Sources:

Gallup Poll
https://www.gallup.com/workplace/349484/state-of-the-global-workplace.aspx

CNBC CreditWise Survey
https://www.cnbc.com/select/73-percent-of-americans-rank-finances-as-the-number-one-stress-in-life/