Knowing that COVID-19 has disrupted the financial lives of people everywhere, Christal Johnson decided to do something different for her 43rd birthday: She is giving away 43 financial plans.
As a fan of The Stand, she has also set aside one of the free consultations and plans for a reader — that means YOU, if you get in touch with her in time. Johnson will work on a free financial plan with the first Stand reader who contacts her at (202) 643-6810 or email@example.com (put “The Stand” in the subject line).
Johnson, who has a doctorate in communications from the University of Oklahoma, originally hails from Kansas City, Missouri. She moved to the Syracuse area in 2015 to join the faculty of the Public Relations Department at the Newhouse School. Johnson says it is a misconception that financial plans only benefit people with a lot of money.
“Without a plan, people have no direction,” Johnson said. “No matter how little you have, you need a plan to accumulate more. It is very important to start your plan and stick to it when you only have a small amount of money so that you can build those habits. A plan makes you accountable — to your financial consultant, and, more importantly, to yourself.”
Johnson also gave The Stand some tips on financial planning for all our readers, not just the lucky one who will win a free plan.
No. 1: Ready, or not: Johnson said step No. 1 is to make sure the person is ready to commit to a plan once it has been developed. “When we talk about financial wellness, I need to know whether you are mentally and emotionally ready to change your behavior and stick to a plan,” Johnson said. “There is no reason for me to waste your time unless you want to make changes.” In this way, financial planning is a like a diet: Most diets will help you lose weight, but only if you stick to the plan.
No. 2: Hope for the best, plan for the worst: Johnson recommends that everyone have life insurance, which she calls “income protection,” regardless of their age or health. She said building wealth is as much about families and communities as it is individuals. In that light, she said the best place to start is to make sure family members don’t have to upend their financial plans to deal with an unexpected loss. “A lot of people in the Black community do not have income protection,” Johnson said. “God forbid someone died earlier than expected, and if that person does not have life insurance, the family has to turn to other means. So other family members must take away from their savings, their investments, to contribute to the deceased person’s expenses. The result is that everyone has to start over.”
No. 3: Save for emergencies. “We start with the things that people have no control over, like when someone dies and unexpected emergencies” like the COVID-19 crisis, Johnson said. “Research shows paying for funeral expenses and emergencies are two major reasons people go broke and stay in the vicious circle of poverty.” Developing a cash cushion, then, is essential. Many people are probably kicking themselves because they did not have a plan and savings in place before COVID-19. Don’t beat yourself up, Johnson said, but know that other unexpected emergencies are likely, so be ready for the next one.
No. 4: Protect what you already have. Auto, home (or renters) insurance helps you make sure you preserve the assets you already have. Johnson said a lot of people just want to know about investing. But investing is risky, particularly if an emergency forces you to withdraw money when the market is down. Johnson says these first steps ensure that when you do start to save and invest, you can keep that money earning more money rather than having to use it (often at a penalty) to replace uninsured assets that may have been lost, stolen or damaged.
No. 5: Know where your money goes. Most people, Johnson said, do not have a formal method of tracking their expenses. Developing a formal budget and tracking your money almost always reveals money that is being wasted — money that can be used for savings and investing. Johnson said every budget should include a line for savings. “People think paying yourself first means going out and getting something for yourself,” Johnson said. “But it means setting aside something for savings, even if it is just your change. Every bit helps.”
Johnson says her goal is always to put her clients on the road to financial freedom and to free up as much money as possible for their individual financial freedom plans.
“Financial freedom means not being stressed about finances,” Johnson said. “You can buy something without checking the bank account because you know exactly what is there and what you can afford.”
— By Greg Munno, board member and Newhouse faculty advisor for The Stand.