Frank Drake

9 financial tips for Generation Y
By Karen M. Kroll • Bankrate.com

Highlights
Debt can be devastating if you don't get it under control.
It's not unusual to earn more than $1 million over a lifetime.
If you find number-crunching tedious, check out online tools.

If you're like many 20- and early 30-somethings -- aka Generation Y -- money concerns are probably hitting you in a way they haven't before. Your paycheck, assuming you have one, probably doesn't go as far as you'd like. Even if you're in tip-top shape, health insurance can be pricey. And fewer companies offer pension plans, even as prospects for Social Security remain unclear.

Perhaps not surprisingly, more than half of employees between 21 and 32 say that they're living paycheck to paycheck, according to a recent survey by insurer Metlife. Nearly three-fourths of respondents are concerned about making ends meet.

Fortunately, you can get off to a sound financial start with these nine tips.

1. Respect debt
Debt can be devastating if you don't get it under control, says Wes Moss, a Certified Financial Planner, or CFP, and director and chief investment adviser with Capital Investment Advisors in Atlanta. It limits your career choices, your chances of buying a house and often leads to tension in personal relationships.
Moss acknowledges the dilemma, as your 20s and 30s can be expensive decades. You're outfitting a place to live and may need to buy a car and work wardrobe. At the same time, you're at the low end of your earning potential. You need to closely track spending and cut waste to avoid running up credit card balances.

2. Save
To start, you need a cash cushion to cover any periods of unemployment, as well as unpredictable expenses. Then, begin saving for retirement as soon as possible, says Sarah Young Fisher, a CFP and owner of Fisher Advisers in Lancaster, Pa.
You'll need to learn to be a savvy investor, says Robert Manning, author of "Credit Card Nation: The Consequences of America's Addiction to Credit." That means understanding the tax implications and costs of different investments.

advertisement3. Assess your career
"You are your biggest asset," Moss says. Today, it's not unusual to earn more than $1 million over a lifetime. "Think long and hard about where and how you'll earn an income," he says. While you want a career you enjoy, you also want to consider how different paths will impact your financial security.
When you change jobs, roll over to a new retirement account any money you have in retirement savings with your old employer. Here's why: Spend the money and you'll pay penalty and taxes, which can top 25 percent.

4. Rethink education
In this economy, you need to take a hard-nosed assessment of your education plans. If you started college but didn't finish, go back, Moss says. "The rewards are huge to finishing school."
What about getting an additional degree? While learning more is always great, take a pragmatic approach. That may mean heading to a vocational school for a certification, even if you've earned a four-year degree. "It's more practical and cheaper than graduate school," says Anya Kamenetz, author of "Generation Debt" and a writer with Fast Company magazine.

5. Get insured
You're not invincible. Moreover, given that one illness or injury can bankrupt you, health insurance is a must. If you can get it through your employer, consider it. It's usually a better deal than options available to individuals.
You'll also want disability insurance in case an illness or injury keeps you out of work for some period of time. "The probability is low, but the impact is severe," says Todd Katz, senior vice president with MetLife.

Homeowners or renters insurance is smart. Even if your furnishings are castoffs, replacing everything would add up.

Finally, if others depend on your income or if family members would need to hire someone to cover the work you do at home, life insurance is a must.

6. Consider housing options
Your living arrangements need to be safe, inexpensive enough that you can build your savings and flexible enough that you can move if your career demands it.
One option is to head back to your parents' home for a year or two. "If you can grin and bear it, it's a great way to get a financial buffer quickly," Moss says. Of course, you need to be disciplined about stashing away the money you're not spending on rent.

Renting an apartment with roommates helps you stretch your housing budget and learn to live with someone else. That's good preparation for marriage, says Fisher.

7. Budget
While major outlays are hard to overlook, you also need to track smaller, ongoing expenses, like lunch money and gas for the car. These add up, and the totals can shock you.
Consider that a modest dinner out each week at $30 will leave you $1,560 poorer by next year. If you find number crunching tedious, check out online tools that can automate the process.

8. Have the money talk
Sure, discussing money with your significant other isn't the most romantic of conversations. But it's better to find out now if your future better half is hiding thousands in debt. "Ask the questions that might be uncomfortable," says William Bailey, associate professor in the School of Human Environmental Sciences at the University of Arkansas at Fayetteville.
9. Prepare before starting a family
It sounds crass to consider finances when you're thinking of starting a family, but you need to be realistic. Cut corners all you can, but kids are expensive. In addition to the gear you'll need, a baby typically means some time away from work. Start putting some money away before you're knee-deep in diapers and Onesies.
While the economy has been hard on almost everyone, you have a few things in your favor. First, you have time for the market to recover. Moreover, you should be able to halt any bad financial habits before they become ingrained.

Of course, the economy will change at some point. Even so, the key to financial security remains the same, according to Kamenetz: "Live within your means and put something away."

1. Body Part Maker

Due to the huge advances being made in bio-tissues, robotics and plastics, the creation of body parts - from organs to limbs - will soon be possible, requiring body part makers, body part stores and body part repair shops.

2. Nano-Medic

Advances in nanotechnology offer the potential for a range of sub-atomic 'nanoscale' devices, inserts and procedures that could transform personal healthcare. A new range of nano-medicine specialists will be required to administer these treatments.

3. Pharmer of Genetically Engineered Crops and Livestock

New-age farmers will raise crops and livestock that have been genetically engineered to improve yields and produce therapeutic proteins. Works in progress include a vaccine-carrying tomato and therapeutic milk from cows, sheep and goats.

4. Old Age Wellness Manager / Consultant Specialists

Drawing on a range of medical, pharmaceutical, prosthetic, psychiatric, natural and fitness solutions to help manage the various health and personal needs of the aging population.

5. Memory Augmentation Surgeon

Surgeons that add extra memory to people who want to increase their memory capacity and to help those who have been over exposed to information in the course of their life and simply can no longer take on any more information - thus leading to sensory shutdown.

6. 'New Science' Ethicist

As scientific advances accelerate in new and emerging fields such as cloning, proteomics and nanotechnology, a new breed of ethicist may be required. These science ethicists will need to understand a range of underlying scientific fields and help society make consistent choices about what developments to allow. Much of science will not be a question of can we, but should we.

7. Space Pilots, Architects and Tour Guides

With Virgin Galactic and others pioneering space tourism, space trained pilots and tour guides will be needed, as well as designers to enable the habitation of space and the planets. Current projects at SICSA (University of Houston) include a greenhouse on Mars, lunar outposts and space exploration vehicles.

8. Vertical Farmers

There is growing interest in the concept of city based vertical farms, with hydroponically-fed food being grown in multi-storey buildings. These offer the potential to dramatically increase farm yield and reduce environmental degradation. The managers of such entities will require expertise in a range of scientific disciplines, engineering and commerce.

9. Climate Change Reversal Specialist

As the threats and impacts of climate change increase, a new breed of engineer-scientists will be required to help reduce or reverse the effects of climate change on particular locations. They will need to apply multi-disciplinary solutions ranging from filling the oceans with iron filings to erecting giant umbrellas that deflect the sun's rays.

10. Quarantine Enforcer

If a deadly virus starts spreading rapidly, few countries, and few people, will be prepared. Nurses will be in short supply. Moreover, as mortality rates rise, and neighborhoods are shut down, someone will have to guard the gates.

11. Weather Modification Police

The act of stealing clouds to create rain is already happening in some parts of the world, and is altering weather patterns thousands of miles away. Weather modification police will need to control and monitor who is allowed to shoot rockets containing silver iodine into the air - a way to provoke rainfall from passing clouds.

12. Virtual Lawyer

As more and more of our daily life goes online, specialists will be required to resolve legal disputes which could involve citizens resident in different legal jurisdictions.

13. Avatar Manager / Devotees - Virtual Teachers

Avatars could be used to support or even replace teachers in the elementary classroom, i.e., computer personas that serve as personal interactive guides. The Devotee is the human that makes sure that the Avatar and the student are properly matched and engaged.

14. Alternative Vehicle Developers

Designers and builders of the next generations of vehicle transport using alternative materials and fuels. Could the dream of underwater and flying cars become a reality within the next two decades?

15. Narrowcasters

As the broadcasting media become increasingly personalized, roles will emerge for specialists working with content providers and advertisers to create content tailored to individual needs. While mass market customisation solutions may be automated, premium rate narrow casting could be performed by humans.

16. Waste Data Handler

Specialists providing a secure data disposal service for those who do not want to be tracked, electronically or otherwise.

17. Virtual Clutter Organizer

Specialists will help us organise our electronic lives. Clutter management would include effective handling of email, ensuring orderly storage of data, management of electronic ID's and rationalizing the applications we use.

18. Time Broker / Time Bank Trader

Alternative currencies will evolve their own markets - for example time banking already exists.

19. Social 'Networking' Worker

Social workers for those in some way traumatized or marginalized by social networking.

20. Personal Branders

An extension of the role played by stylists, publicists and executive coaches -advising on how to create a personal 'brand' using social and other media. What personality are you projecting via your Blog, Twitter, etc? What personal values do you want to build into your image - and is your image consistent with your real life persona and your goals?

Surviving Illiquidity

Create internal cash when outside credit is tight.

May 2009 | by Mark Sheffert

Mark Sheffert

In last month's column, I wrote about the current credit crisis and why banks are lending only to the most creditworthy businesses. The logical follow-up question is: "If I can't get credit from my bank, what can I do to generate internal liquidity to survive?"

Illiquidity is the number-one issue facing businesses right now-especially small and midsize companies. Even large global companies are holding onto cash and postponing spending, because all signs point to a long, deep recession that will challenge even the most financially fit companies.

The restricted lending environment is making credit tighter, more costly, and more difficult to negotiate. Business leaders need to employ creative ways to finance their operations through internally generated cash flow.

Leverage Your Assets

In today's credit market, banks are reluctant to consider traditional cash-flow loans, but I'm observing a renewed interest in asset-based lending. This type of financing, formerly reserved for asset-intensive or less creditworthy companies, is attractive right now because it allows companies to obtain loans that are secured by various assets, including inventories, receivables, intellectual property, royalties, and in some cases, real estate. In other words, the capital locked up in your assets may be unleashed to gain liquidity, without having to pony up a bunch of new equity.

Unlike traditional cash-flow loans, asset-based loans are not dependent on existing profitability. Even companies that are experiencing distress may be able to get one of these loans because banks have the reassurance of basically owning the assets that are backing the loan. This increases the banks' opportunities to recover their losses in the event of a default. Banks are seeing more defaults now, and that's one more reason that leveraging the value represented by your assets through an asset-based loan may be a smart idea-or the only option.

Squeeze Out Cash

I can't tell you how many people say they are shocked that their business is out of cash and failing even though their profit and loss statement shows they are in the black. I am amazed at the ignorance that exists about how cash flows through a business.

To pump life into your cash-anemic business, you must get a grip on the ins and outs of cash flow and make managing it your number-one priority. Start by creating daily cash flow projections for the next two weeks, weekly projections for the next two months, and monthly projections for the next 12 months. Break your cash flow problem into little pieces, figure out where the deficits are, and find ways to improve it.

One sure way to improve cash flow is to grow revenue. Think outside the box when it comes to strengthening the top line. To protect revenues from existing customers, beef up loyalty programs, for example. Spend marketing dollars on programs to improve immediate revenues. Rethink your product mix and pricing strategies.

The most immediate way to raise revenues is to increase prices, if the market will bear it. Are there any features that can be added inexpensively to allow increased prices? Can you bundle products and services into new products, or sell extended warranties or service contracts? At the same time, you should segment customers to reveal which products appeal to customers willing to pay higher prices.

While you are focusing on the top line, don't take your eyes off of gross profit margins. Find out where your value creators and value destroyers are by evaluating margins by product category and by customer. Now is a good time to dispose of noncore businesses and assets and refocus on what your business does well. Even if business units or nonessential properties are sold below market values, those divestitures are quick ways to raise cash and improve liquidity.

One unprofitable company that we recently counseled had a growing division that management thought was profitable. However, when overhead was accurately allocated, it was discovered that the division was losing money. And when we properly priced the division's products, they couldn't be competitive. The company eliminated this division, and as a result, became profitable.

Another way to internally generate cash is to examine what's going into your cost of goods sold. Can your labor force be more productive? Are you using Lean and Six Sigma processes? Are you negotiating with vendors to get the best prices on your materials? Are you getting rid of surplus, obsolete, or impaired inventory?

Can you increase your inventory turns? If your inventory turnover happens four times a year, you have three months' worth of materials (cash) sitting on the shelf generating no return. But by turning inventory six times a year, you've reduced that to two months' worth!

Be aggressive in reducing costs and increasing efficiencies-nothing is too controversial in these times. The bright side of a difficult economy is that it forces the hard decisions that should have been made in the past. Remember, a dollar of revenue may create 10 cents of net income, but a dollar of eliminated expense creates a dollar of net income. Examine each general-ledger line for nonessential items, but don't do this alone. Ask managers and employees for ideas. Get rid of subscriptions and rented plants. Cut back on travel and entertainment expenses. Evaluate marketing and product development programs. Assess the number of employees in the company and whether you are getting value from every position. Be ruthless, creative, and innovative.

If your business is in really dire straits, cut back on employee benefits, implement a hiring freeze, and move to compensation with bonuses or company stock instead of salary increases. If you explain to your employees that this is a short-term situation necessary to save the company-and their jobs-most will go along with you.

Now is not the time to launch a new marketing campaign, start a major research and development project, or hire a direct sales force. Learn to make do with what you've got until your business has stabilized.

Finally, get more aggressive in managing your balance sheet. Focus on improving receivables collections and stretching out payables. Get as many customers as possible to pay within 30 days. Segment your customers according to credit ratings. Avoid the higher-risk customers and evaluate the trade-off of revenues from marginal sales. You may even want to consider a tiered billing program that offers a 5 to 10 percent discount for early payment.

On the flip side of the cash- management coin, hold onto your cash as long as possible when it comes to paying bills. Renegotiate terms with vendors and ask for 45- to 60-day (or even 90-day) terms. You won't be able to do this with everyone without damaging relationships or incurring late penalties, but the idea is that if you can pay your bills in 90 days and collect receivables in 30 days, you will generate two months of operating cash.

Prepare For Recovery

All these cash-focused activities, led by an executive team that is creating a sense of urgency and priority, will spread a fever of preparation and confidence among the employees at your company. Belief in the prospects for recovery is vital to survival, and it can become a self-fulfilling prophecy. Inaction is the worst reaction to an uncertain future. Even the wrong strategy executed properly can end up being more of a success than doing nothing.

The silver lining of economic downturns is the financial discipline that results. It's always good business to squeeze out internally generated cash flow, but a difficult economy makes it essential.

For businesses that do not manage cash generation, economic downturns become a time of gut-wrenching change for the worse.

For those who keep their eyes on the cash generation ball, these times are more likely to become a period of metamorphosis. The strengthened businesses that result are a whole lot prettier than the ugly caterpillars of the past.

1. A clear vision and goal
They know exactly what they want to achieve. This “laser like focus” helps form an unshakeable conviction and dedication to building a successful online business.

2. Patience and a long-term view
They constantly measure if they are gradually getting there. And they can live with the paradoxes in online retail. For example the Internet changes quickly but organic SEO is a relatively slow process. Every day, every week, every month gives feedback measured in many ways against targets.

3. Taking calculated risks
Taking necessary risk and being prepared to invest is key. Investment is the fuel of a business so choosing where to spend money is critical. Successful websites invest money in activities that generate growth or make them more efficient – ideally both at the same time.

4. A commitment to “Kaizen” or continuous improvement
Winners know this and delight in every little enhancement they make. Whole redesigns are common every 6 – 12 months. The search engines love it. These websites never rest on their laurels because within a few weeks someone could come along and take some of their business. Which is not part of the plan.

5. Successful sites employ good advisors
No one can be expert at everything and having specialist advisors you can trust and follow (and measure results from) is essential. ECommerce does not get simpler as time goes by. Winners pay for the best advice when it comes to strategy, tactics and growing the business.

6. They make decisions quickly and change their mind slowly
In the world of web retailing three months is a long time. Too long for inaction. In general, winners make decisions quickly then measure results and adjust accordingly. All improvements are based on measured results against documented targets – even if the targets are frequently revised.

7. The consumer is King
Changes and improvements should benefit the consumer and in doing so convert more consumers into customers and existing customers into bigger and more frequent spenders. Elegant design might be satisfying but frequent and multiple site enhancements whose effectiveness shows on the bottom line is even more gratifying.

8. Successful sites embrace technology and change
There’s a million teenagers out there who want to steal your business. If they had the funding they’d be doing it now. Keeping abreast of developments online is key in online marketing, news, shifts in online culture and understanding how to read basic web analytics. Being clueless to these things will eventually leave you for dead.

9. Be fair and honest with customers and suppliers
Building a well-loved and respected business is key. The real money is made over the long term through repeat sales and referrals. So by offering great customer service and being fair in all business dealings, long-term relationships can flourish with both customers and suppliers. Customers may take a long time to get but can be lost in an instant through poor customer service. Don’t be afraid to give people their money back. Even smarter sometimes is to offer it very willingly and then chat through other options.

10. There is no such thing as “easy money”
There’s an army of wannabees online wanting to make a million for little or no work and hoping that it is possible to make money for doing next to nothing. Successful retail website owners know that this is a myth and the Internet is like any other business. It is focus, hard work, constant improvement and – if you.re targeting and measuring right – great fun!

When the leaves start falling, you know that the heating bills are about to start rising. But keeping your home warm and cozy on chilly autumn nights doesn't have to break the bank.

The U.S. Department of Energy offers these simple tips and relatively inexpensive home improvements that will help ensure cold gusts stay out and your furnace doesn't have to work harder than it should.

The goal: Conserve energy and keep more of your hard-earned dollars in your pocket.

Share these ideas with customers and use them for your own house. After all, who doesn't need to save a little money these days?

1. Plug air leaks with caulking, sealing, or weather stripping. Save 10 percent ($190 per year) or more on energy bills. Focus on windows, doors, outlets or switch plates on exterior walls.

2. Properly maintain the heating system. Heating accounts for half the average family's energy bill (approximately $950 per year). Make sure the furnace or heat pump receives professional maintenance each year. The small cost (about $75-100 for most service calls) will pay back in better performance all year long.

3. Install a programmable thermostat. Programming the thermostat from 72ºF to 65ºF for eight hours a day while no one is home, or everyone is tucked in bed, will cut the heating bill up to 10 percent ($90 per year), paying for a basic unit in less than a year.

4. Seal and insulate heating ducts. A system can lose up to 60 percent of its warmed air before it reaches the register (wasting $570 in warmed air per year) if ducts are not properly insulated in unheated areas such as attics and crawlspaces.

5. Insulate, insulate, insulate. Adequate insulation in the attic, ceilings, exterior and basement walls, floors, and crawlspaces can save up to 30 percent on home energy bills ($630 per year). Focus on the attic. (Heat rises.) Most homes should have between R-30 and R-49 insulation in the attic. Learn more at www.eere.energy.gov/consumer.

6. Close fireplace dampers when not in use. When in use, reduce heat loss by opening dampers in the bottom of the firebox (if provided) or open the nearest window about an inch, close doors to the room, and lower thermostat setting to 50-55ºF.

7. Let the sun shine in. Open curtains on south facing windows during the day to allow sunlight to naturally heat the home, and close them at night to reduce the chill from cold windows.

8. Stay out of hot water. Water heating accounts for 15 percent of household energy use. Reduce water heating costs by lowering the water heater’s thermostat setting. Each 10ºF reduction can save between 3-5 percent in energy costs. Also insulate the hot water heater and hot water pipes.

9. Install storm windows over single-pane windows or replace them with Energy Star qualified windows. Storm windows reduce heat loss by 25 to 50 percent, and storm windows with low-e coating that reflect heat back into the room during the winter months save even more energy. Look for the Energy Star label to maximize savings. Energy Star qualified windows reduce heating and cooling bills by an average of $345, but could be higher in cold and hot climates, compared with uncoated, single-pane windows. Can’t afford new windows just now? Tape clear plastic sheeting to the inside of window frames if drafts, water condensation, or frost are present.

10. Net big savings with a little label. When replacing appliances, light bulbs, electronics, or heating and cooling systems, cut energy bills by up to 30 percent ($600 per year) with Energy Star labeled products. Use compact fluorescent light bulbs (CFLs) in place of comparable incandescent bulbs. Find retailers at www.energystar.gov.

These and other improvements that impact the energy efficiency of a home can save home owners money in the short term and serve as a selling point to potential buyers later. Be sure to save receipts, documentation, and manufacturer’s information.

Not sure where to begin? Try the Department of Energy's online energy audit tool at www.hes.lbl.gov. In the long run, a whole-house energy audit is a fool proof way to make a plan to address wasted energy and make a home operate efficiently for years to come. Visitwww.natresnet.org to find a qualified auditor in your neck of the woods.