World Savings Day falls on October 31. This day is a reminder for us to think about our finances and our financial planning. This point is hammered home in Santa Ana every weekend when so many families resort to holding “Kermes” events – fundraisers to raise money to pay for the funerals of their loved ones. The families sell food at the Kermes events. However, when a family loses their breadwinner they need a lot more than funeral funds!
We interviewed Jason Williams today to find out what Santa Ana families can start doing now to shore up their finances and plan for the future. Jason Williams started his career as an Engineer and Consultant working in corporate America before becoming a Registered Representative with True Wealth Strategies and has been a financial professional for 4 years. Williams’ practice works with families and professionals in the Los Angeles, Chicago, and the New York areas.
Life Insurance
Why do so many working-class families skip life insurance, and what are the risks of doing so?
A lot of working-class families skip life insurance for several reasons. One, no one explains what life insurance is for to them, which is income replacement in the event of a death. Two, they think they cannot afford it. Lastly, it is not a fun exercise to think about the worst possible thing that can happen to someone.
The risk’s of not having life insurance can be devasting. Without it, a family is faced with the cost of burial, which averages over $30,000, as well as losing the income from the person who passed away. If it happens to be the breadwinner of the family, that is a loss of potentially millions of dollars over their lifetime. If a homemaker passes away, the cost of childcare as well as all of the other things that person was providing for the family will have to be paid for out of pocket.
What’s the most affordable way to get started with life insurance?
There are two ways. Talking to a financial advisor or working with an insurance professional who specializes in life insurance and knows the best companies to work with and understands the ins and outs of a policy. The second way is understanding your benefits through your employer and maximizing them as much as possible, if the company provides employee benefits. This is usually cheaper however the insurance is tied to your employment to the company and each company’s benefits can vary. If your employment status changes, you will lose your coverage.
Understanding how much insurance to carry is also important. Typically you want to carry between 10x and 30x your annual income in life insurance.
How can someone tell if they’re being sold the right type of policy (term vs. whole life)?
Term and Whole Life, or Permanent Insurance, do very different things and are used for different purposes. Any professional should be able to readily explain the differences.
Term Insurance, is much more affordable, and is usually used to protect families from severe financial hardships in the event of a death of a spouse or a partner. You can get a lot of coverage for very little money, comparatively. Think of it like a very effective way to protect your family while you are younger, in the here and now.
Whole Life, is much more expensive, and is a more of a multi-use tool for later in life. You can use it for accumulating Cash Value, which can be borrowed against later in life. You can use it as a way to pass along wealth to family later in life through the death benefit. With certain policies, you can even use the coverage to pay for Long Term Care events while you are alive.
Term and Whole Life are very different solutions for a reason. Term protects in the shorter term and Whole Life protects in the long term. A combination of both is sometimes a good option depending on your situation.
Are there any new laws or protections in California that help consumers avoid bad policies or scams?
California has several consumer protection laws in place, more than several other states. Policies are backed by the companies that issue them as well governed by several regulatory agencies to make sure insurance companies stay solvent. You can ask a professional for their National Producer Number to verify that they are in good standing with the state. While scams do occur, they are rare. Make sure to ask about the financial stability of the company providing the policy and tell your professional you would like to only work with A or A+ financially rated companies.
Saving Money
What are some realistic ways for families living paycheck to paycheck to start saving?
Saving is a skill that takes practice. You have to commit to saving, even a small amount, on a weekly or monthly basis. As you get better at it, and your lifestyle adjusts, you will want to keep saving more. Also, really understanding where your money is going and deciding as a family what is important and what is not.
How can people prioritize saving when they’re dealing with rising rent, gas, and food costs?
Saving for an emergency fund is a vital part of a running a household and being financially strong so we don’t get too dependent on credit cards or get buried by credit card debt which can be very costly and take years sometimes to get out of. Inflation affects us all however, committing to saving can be just as important as other parts of a budget in the long run.
Are there any local programs or tools that help low-income residents build emergency funds or savings?
Budgeting tools are varied however there are several free apps available as well as most banking apps have budgeting features on them. Talking to a financial advisor and focusing on budgeting is also a good idea. Going through a comprehensive budget analysis can sometimes find discrepancies to maximum cash flow and to find money to save every month.
Retirement Planning
What’s the biggest myth about retirement planning you hear from working-class clients?
That they will never be able to retire or that retirement isn’t for everyone. Planning for retirement takes one primary thing, and that is time. Time is more important than the amount you can save. Saving what you can early, often, and consistently, is more important than saving a lot later in life, hoping to catch up in only a few years.
Is it ever “too late” to start planning for retirement? What can someone in their 40s or 50s do now?
It is never ‘too late’ to start planning for retirement. Even if you start in your early 40s or 50s, you can save a lot of money potentially by the time you want to retire. Also, people are working longer than they ever have and the average age of retirement is 67 which could give you almost 30 years of saving if you start saving at 40 years old. Also, there are a variety of different strategies depending on your varying assets including leveraging property, equity, business interests, cash, and retirement savings.
How can gig workers or those without employer-sponsored plans prepare for retirement?
Any person who earned income in any given year can open up an IRA (Individual Retire Account). They are designed for gig-workers, people who work themselves, or those employees whose companies they work for do not offer traditional employer-sponsored plans such as 401(k)s. You can contribute up to $7000 annually to an IRA, plus an additional $1000 a year, up to $8000 a year, if you are over 50 years old.
Community & Culture
How do cultural attitudes toward money and family affect financial planning in communities like Santa Ana?
A lot of cultural and familial attitudes trend towards not trusting financial products such as 401(k)s, annuities, etc. due to fear. What I recommend you should try to do is educate yourself. All financial solutions have both pros and cons and no one solution is perfect or solves every possible solution. Having a professional educate you on the differences and options and picking the best option for your goals and your family.
What role can schools, churches, or local nonprofits play in improving financial literacy?
Community centers can invite financial professionals in to speak with their members. Financial literacy is so important to understand. Also, most financial professionals do not charge for advice or education and it is usually free to speak with them. Like any good service, financial professionals like to be referred to other people who are in need of their services, similar to a good contractor or dentist. So if you find a good financial professional, feel free to share them with friends and family.
If you would like to learn more about improving your finances and protecting your family you may contact Jason Williams directly to book an appointment.
- By email at jason.williams@twealth.us; By calling him at 630-277-0753,
- Or by booking an appointment directly onto his calendar at: