Financial Tips for Families

[00:00:00] Paula: Hello, everyone, and welcome to another episode of Chatting with the Expert with Paula Okonneh. I am the host, and every week, typically I bring a woman on from Africa or the Caribbean or the diaspora, and they tend to be professionals or entrepreneurs who inspire and educate women worldwide. But sometimes I make exceptions, and today is one. I have an exceptional man [00:01:00] and I’ll let him introduce himself.
[00:01:02] Joshua: Yes, so I am actually not any man, I am actually her son.
[00:01:06] Paula: Yes.
[00:01:06] Joshua: So I am Joshua Okonneh and I am a graduate of the Wharton School, specifically the Huntsman program so it’s an international business program. And actually prior to selecting a career in marketing, I was considering a career in wealth management and while it was ultimately not the path that I chose, it gave me some really important insight that’s helped our family and that’s helped me as a young man. And yeah, hope that this helps you as well.
[00:01:31] Paula: So what we’re going to be talking about is how to make sure that your house is in order. And when we say house, we’re talking from the financial aspect. Joshua, tell me, so what is one of the first things you think that anyone who has a business or who has a family, should be considering?
[00:01:51] Joshua: Yeah, so I think especially as somebody who is in a position of responsibility with the family or even just responsible for themselves in and or potentially their parents, [00:02:00] really it’s to seek professional help and professional advice. And one of the most important things I think is to select an advisor from a company or bank that is really reputable. That’s been around for a while. That’s large and really has the know-how and the track record and the expertise. And as we’ll talk, touch on later, I think one of the most important things as you go about selecting that advisor is finding somebody who you really trust and who you can have open and honest conversations with. So yeah.
[00:02:27] Paula: Okay. So open and honest conversations. Can you give me an example? What’s the process of intake?
[00:02:33] Joshua: Yeah. So usually I recommend that people talk to friends or talk to other kind of contacts, to find a recommendation that’s a warm lead or somebody that’s been vetted by somebody that you know. And really, I think when you’re getting to know that, that professional, that advisor, you really want to understand I’m going to be talking about some relatively personal things. And we’re going to be talking about, your future goals and aspirations and really like how much money you have.
[00:02:55] Joshua: And of course, those are really pretty personal conversations. And so you need to [00:03:00] really know that this is a person who you can be open with, you can be honest with, who’s going to understand your needs and going to make decisions for you on your behalf that are in line with your priorities and your needs and your concerns. Especially since this person is going to be managing your money on a day-to-day when you’re out making the money and engaging with your family and enjoying your money. So I think that’s the number one thing. And I think as I talked about with my mom, it’s really about understanding you and your values. And really doing that self-reflection before you go to the advisor which can lead to a more fruitful conversation.
[00:03:33] Paula: So when you talk about, understanding yourself when you say like one of the first things you should think of is your Risk Profile.
[00:03:40] Joshua: Yes, exactly. That’s something my mom and I have talked about very often. And I think the risk profile is the number one thing .Because when you’re investing you’re going to have losses. And you’re going to need to be able to handle those losses well, but of course you can’t have too many losses. And so I think really being able to understand what is your risk profile, what [00:04:00] risks are you willing to take and what risks are you willing not to take? And I think really knowing that well is important because the advisor has the expertise about the markets and can tell you what things on average should return. That should is not a guarantee. And as you think about, should I invest in stocks or bonds or real estate? You really need to think about what are the pros and cons of each of these kind of asset classes? And can I live with that? Does that line up with my personal goals and my personal kind of restrictions, responsibilities or concerns?
[00:04:31] Paula: Wow. Yes, that’s important. That’s important. That’s one. What’s the second, what’s another one, for example?
[00:04:38] Joshua: What’s another one? I think another one is I talked a bit about risk, but also there’s a lot about what are your goals? What are some of your bucket list things that you and your partner, you and your family would like to do? So I’ll give you a great example. For example, if you consider, so a lot of countries in Latin America and the Caribbean, they’re starting to really be open to people coming in and investing in property in their [00:05:00] countries. And sometimes that gives you immigration perks like citizenship or permanent residency. And so that’s something that, for some people, it may make sense because they’re adventurous. They like to go to new places. They like the idea of having a house somewhere else, but for another person that’s a money suck. That’s a lot of risk. And different people are going to have these different values.
[00:05:19] Joshua: One thing that my mom and I talked about is sometimes one of the values of having real estate is that you can live in it, it has actual functional value and for some people that’s really important. And then for others. Maybe that’s less important because real estate can be very illiquid. And when you need to sell it a lot of, there’s a lot of steps that you have to take and that can worry some people. And so I think like when it comes to this, there should be an element of fun. You should be thinking about things that will bring you joy and you’ll enjoy. I think that’s an important element along with the responsibility.
[00:05:50] Paula: So when you talk about fun, you’re saying, okay, so invest, think about your risk profile, but fun, considering your bucket list.
[00:05:58] Joshua: Yeah.
[00:05:58] Paula: So where would you [00:06:00] like to travel to if you want to have a beach house or lake house? Something like that. Is that what you were making reference to?
[00:06:05] Paula: Exactly!
[00:06:06] Joshua: That’s what I mean And I think another thing that’s important to remember is everything can be done on a budget because for a lot of people myself included right now purchasing property is not something that’s that’s possible. But you can potentially structure your finances in such a way that you can take vacation. You can take relatively ample vacation. You may set yourself up for a time in which you can work remote, more remotely, or you may have more of a flex and you may have more time. And so I think, with just in general, with thinking about any kind of financial product, you just have to really understand you and yourself and your values and your needs. And that is going to really enable you to use finance and money as a tool for you to live the life that you feel called or you feel that you desire.
[00:06:50] Paula: I love that. Live the life that you feel called or desire. They’re not quite the same.
[00:06:54] Joshua: Not quite the same. I think as my sister said, like we are very Christian in this house. And [00:07:00] really the calling of God and what we feel that God wants us to do is important to us. But I think that for somebody who isn’t Christian and doesn’t see, and doesn’t have that kind of worldview. The things that they desire, the things that they see as important, I think that can also be an important element. So again, I think they fit in the sense that they speak to the fact that everyone needs to really be honest about their values and what’s driving them to make their investment decisions. And that’s really how you move forward.
[00:07:27] Paula: Okay. So in your experience what would you say is relevant to like someone who’s getting a bit older? When you’re young, it’s easy to take chances. I think you should enjoy yourself. You should take risks. But as you get older, it gets a lot more scary.
[00:07:43] Joshua: It gets a lot more scary. I think that’s very important. So I think one of, I would say two things. One of the things is to have the appropriate amount of insurance and I think that as you’re talking with your advisor, that should be something that they’re very skilled in knowing. Life insurance, long-term care insurance, [00:08:00] so long-term care is if you were to need a lot of kind of hospice care or kind of extensive medical care as you advance in your age that can get very expensive and so having an insurance policy that provides for that care. Accidental disability and long-term disability insurance.
[00:08:14] Joshua: Being the right amount of insured, that is really important for somebody who is advancing in age, and who also is probably the sandwich generation. They probably have children who are depending on them and parents who are depending on them. And so I think that, for somebody who’s older, one of the biggest tools to combat risk is being properly insured. And then of course, I think it’s also really thinking about how much cash you need to have in your portfolio to help you sleep at night. Maybe the advisor says, Oh, you only need X percent, but you think you need X plus Y percent. And being able to know and have those frank conversations with the advisor, I think are important.
[00:08:52] Paula: So it comes down again to…
[00:08:53] Joshua: risk profiles and risk tolerance.
[00:08:56] Paula: Yeah, boy. Yeah, insurance is something [00:09:00] that a lot, I know you’re not an expert on that, just talking in general. Insurance is something that people can get a bit tied up with, especially the older generation. When you talk about life insurance, people are worried that, okay, what are you thinking? Why are you mentioning life insurance? But life insurance is to guarantee that life insurance. Everybody’s going to die someday. Sometimes it’s to ensure that your dependents, your loved ones can continue to live. Or, even if they can’t even bury you when you pass away. Those are important conversations to have. Those are conversations that people sometimes steer away from, but are necessary.
[00:09:37] Joshua: They are necessary.
[00:09:39] Paula: Conversations.
[00:09:39] Joshua: Yeah. And I think one of the other elements of life insurance is that it can be actually a vehicle of diversification. So as you’re putting money in your life insurance policy, like you’re storing up wealth. There are people who actually use that as another savings vehicle. So I think that’s important life insurance and and other kind of forms of insurance like [00:10:00] long term care or disability insurance. Sorry, I think I might have forgotten a little bit, I lost my train of thought for a second.
[00:10:04] Paula: No, you were talking about life insurance and the relevance.
[00:10:07] Joshua: Yeah.
[00:10:07] Paula: And it’s not just people sometimes steer away from it, but I was saying, don’t you think it’s a necessary conversation for families to have?
[00:10:15] Joshua: Yes. And I think that was the other element that I was going to say is, okay, beyond the savings vehicle. So I think that’s one of the ways that you can disarm. I think that covered that idea that, oh, it’s this taboo subject. No, because it’s actually a relevant savings vehicle. And the other thing is speaking on the more practical side, which is that, when a person passes, the funeral costs. That’s a very difficult thing. It’s a very difficult emotional time and oftentimes you’re in need of cash and large amounts of cash up front to pay for the funeral expenses. And you do not want to be in the position of really having to cut costs or make decisions for honoring the person who has passed that you wouldn’t have made if you had the financial resources.
[00:10:56] Joshua: And I think on the last element of it is when a person [00:11:00] has passed, especially if they’re a breadwinner, the grief can be complicated because. The people who are left behind are also thinking about how they’re going to survive. It can produce feelings of guilt in a way. And so I think having that conversation with your loved ones and when you see the different pillars like it’s a savings vehicle, it helps with upfront costs, and it provides for needs, I think it can help all people really feel okay.
[00:11:26] Joshua: We are able to talk about a subject that is very painful and is very emotional in a matured way and then we can all process it in the way we should.
[00:11:35] Paula: Good answer. So any closing thoughts in general? I mean we’re talking in general but then let’s move it across to like your age group, Millennials. What would you say to a Millennial that’s looking in this today?
[00:11:51] Joshua: Yeah. So I think for someone like me, who’s in their early thirties, one of the things I think is important to realize is that the world has changed a bit since our [00:12:00] parents’ generations. Housing prices, interest rates have changed, and even kind of things outside of the U. S. have changed. So I think the number one thing I would say to somebody who’s a millennial is to start with the insurance now. It’s oftentimes easier to get disability, long-term care or even life insurance when you’re younger, when you’re in really good health. And the last thing that I personally think often is, even if you don’t have a connection abroad I think our, my generation is pretty adventurous. They like to see the world more and…
[00:12:27] Paula: yeah.
[00:12:27] Joshua: Really thinking about investing abroad I think is something that’s really dear to my heart. And I think that for a lot of people it could be a really good way of diversifying, especially because in a lot of emerging economies, there is that interest by the government to get that kind of investment. And, you can have kind of another property or sometimes even, yeah, even a timeshare or even a bank account that can really potentially pay dividends in the long term.
[00:12:54] Paula: That’s great. I wish I knew all of that when I was your age. As you said, it’s a different generation. There’s a [00:13:00] lot more access to information now. And a lot more awareness.
[00:13:04] Joshua: Yeah.
[00:13:04] Paula: Knowledge is power. Yeah, it’s power and it’s priceless. We can learn every day. We have so much more access to knowledge these days. Google is your friend.
[00:13:12] Joshua: Google is your friend. So
[00:13:14] Paula: Yeah. So thanks everyone for watching this special edition of Chatting with the Experts and maybe I’ll have you come on again.
[00:13:22] Joshua: I would love that. Thank you so much.
[00:13:25] Paula: Bye for now.