SHAWN: 5:11 on WTOP; well if you didn't study economics or finance in college, you might not be familiar with financial terms that could help you better manage your cash and build your wealth.
HILLARY: Joining us live to help us beef up that financial literacy and our bottom-line, Nina Mitchell; Senior Wealth Advisor and Partner at Her Wealth from Bridgewater Wealth in Bethesda. Good to see you Nina!
NINA: Great to be here, thank you.
HILLARY: So, your Her Wealth initiative focuses on educating women about many aspects of managing and investing money, how are they doing when it comes to financial literacy?
NINA: You're absolutely right, Her Wealth focuses on empowering women with financial knowledge and confidence and this is really especially important for women because they tend to outlive men by many years and they are very concerned about running out of money during retirement or even managing rising healthcare costs. But unfortunately women are scoring lower than men in overall financial literacy and more than 80% of women between the ages of 60 and 75 failed a recent retirement income literacy quiz on investments, on retirement planning, on taxes etc. So to answer your question, women really need to be more financially savvy and more engaged.
SHAWN: So, what are some of the terms that we should know to get better at building wealth?
NINA: I like to group these terms in the same way that I approach putting together a financial plan, so women should be familiar and comfortable with terms that affect their personal finances; their credit and debt, their investments, their insurance, their taxes and their legacy. And all of these six key areas have an important impact on their overall wealth. So I created a list of 20 terms that’s in our article on WTOP and also on our Bridgewater wealth/her wealth website that I think every woman should know. And honestly if you come across a financial term that you’re not familiar with, just take the time to look it up or ask your financial advisor.
HILLARY: Is there a way to help make it less complicated?
NINA: One of the biggest challenges in the financial industry is just making things too complicated like you said, so in the article I try to replace a lot of the fancy terms with more relatable ones. For example; let's just take positive cash flow, that's just another way of saying wealth building engine because it means that your net income is more than your expenses and you can save and build wealth. And another important term is rebalancing, which may not mean a lot to most people, but if I told you buy low and sell high, then you'd know exactly what I mean. So I try to translate these 20 wealth building terms into more understandable language and so we can begin to break down the barriers with financial literacy and just improve everybody’s financial knowledge. Whether you're a recent college graduate or about to retire, financial literacy is just a necessity if you want to be financially independent and just have a safe and solid foundation. The more you know, the better your financial decisions that you'll make in the long run.
SHAWN: Alright Nina, thanks so much, I appreciate it. Nina Mitchell with Bridgewater Wealth in Bethesda, you can see her full list of 20 wealth building terms at WTOP.com search Her Wealth.
Shawn: Now you hear all kinds of deals about leasing cars, how can you negotiate a better deal if you want to lease?
Nina: Okay, well many people don't realize that they can actually negotiate the sticker price on a leased car in the same way that you would do that if you're buying a car. And since when you lease -- when you're, you know, your lease payments basically cover the depreciation, the difference between the sales price and the residual value. So it's definitely in your best interest to try to reduce that sales price as much as possible because then you'll pay you know, smaller dollars over the life of the lease. Make sure you pay attention to the down payment at the lease signing. And so here's an example, you might see an ad that says you know, lease payment is only 1.99 a month and that sounds like a great deal for thirty six months. The catch is, is that it might require a $3,600 down payment. So, if you amortize the down payment, then actually that 1.99 special, becomes 2.99. So, you really have to kind of look at total costs.
And then lastly, dealerships use the term, money or lease factor, when they're calculating your financing costs and a lease factor is not the same as an interest rate. So, you have to make sure the dealer converts that lease factor into a comparable interest rate so you know what your financing charges are.
Shawn: At the end of the day, does one method wind up being more expensive more often than the other, or can we tell that?
Nina: You know what, it really depends on how long, if you're going to hold the car for a long time, you're better off buying. But if you know, and if you're not, if you just really enjoy driving and you want to have a new car, then go ahead and lease. I mean, there's pros and cons to both, to be honest with you, it's not one size fits all.
Shawn: Alright Nina, great. Happy Thanksgiving to you. Alright, Nina Mitchell is with The Colony Group, for more go to wtop.com and search Her Wealth.
Consider this your training manual to get and stay financially fit for life!