Seeds Planted Early Bear Fruit Later

Financial Tips

It’s important to work on your child’s financial awareness early on, for once they’re teenagers, they are less likely to heed your advice. Besides, they’re busy doing other things – like spending money. When your kids are young, giving them small amounts of money helps them prepare for the day when the numbers will get bigger. Teenagers and college-age kids have bigger responsibilities. Checking accounts, credit cards and debt are as elemental to the college experience as books and parties. Teaching high-schoolers about banking and credit will make them more savvy when they leave the nest.

Securities offered through LPL Financial, Member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, a registered investment advisor.

The Good, The Bad, The Ugly…Debt

Americans are loaded with credit-card debt. The average American household with at least one credit card has nearly $10,700 in credit-card debt, according to CardWeb.com, and the average interest rate runs in the mid- to high teens at any given time.

However, some debt is good. Borrowing for a home or college usually makes good sense. Just make sure you don’t borrow more than you can afford to pay back, and shop around for the best rates.

Of course, some debt is bad. Don’t use a credit card to pay for things you consume quickly, such as meals and vacations, if you can’t afford to pay off your monthly bill in full in a month or two. There’s no faster way to fall into debt. Instead, put aside some cash each month for these items so you can pay the bill in full. If there’s something you really want, but it’s expensive, save for it over a period of weeks or months before charging it so that you can pay the balance when it’s due and avoid interest charges.

Securities offered through LPL Financial, Member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, a registered investment advisor.

College Savings Plans

School is almost out for the year and that means you are one year closer to the children in your life leaving for college. If you have grandchildren or children at home you’d like to help with their college education, it pays to start saving as early as possible.

The government has given us a tool that makes saving for college a lot easier. The 529 college savings plan is a great tax-advantaged program to help you get a head start on your children’s college costs.
There are two excellent options available to help you save for college-the 529 college savings plan and prepaid tuition plans. The money you contribute to a 529 plan grows tax free within your account and withdrawals from the plan for qualified educational expenses are exempt from federal taxes. By investing in a 529 plan outside the state in which you pay taxes, you may lose tax benefits offered by the state’s plan. Withdrawals used for qualified expenses are federally tax-free. Tax treatment at the state level may vary.

You might also consider a prepaid tuition plan. These are offered primarily by state colleges and universities to help you lock in today’s prices for tomorrow’s tuition costs. They allow you to pay tuition in advance to cover your child’s fees and expenses.

With prepaid tuition plans, your concern might be that your child may decide on a college in a different state. Fortunately, these plans allow you to transfer the value to out-of-state public and private colleges.
Don’t wait too long to start your college savings plan. Talk to your financial advisor about setting up a savings plan for you to ensure that your children or grandchildren have the resources they need to get a college education.

Covering your back
No matter how well we plan, unexpected adversity can take us off track. That’s why it’s vital to include risk management as part of your financial planning process.
It’s important to review your insurance coverage from time to time to make sure that you and your family are adequately covered to get you through difficult times. Do you have sufficient life, health and disability insurance? Does your homeowner’s insurance policy provide enough coverage to protect you from law suits that may result from mishaps at your home?

Find out if you have the coverage you need to make it through your difficult times. For your own peace of mind and the financial security of your family, take some time now to sit down with your financial advisor and review your insurance coverage.

Securities offered through LPL Financial, Member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, a registered investment advisor.

Marriage and Finances

When one partner manages the finances, without regular updating, what happens if there is an illness or death? You not only probably have bills associated with that tragedy, but you may have the surviving or healthy spouse left in the dark about finances. Too often that is exactly what happens. Men usually manage the money – and they usually die first. Women’s life expectancy is 79 versus 72 for men. Because women outlive men by an average of seven years, their financial planning strategies need to take into account a longer life and the additional health care needs that may be associated with it.

These statistics make it clear why both spouses need to be involved in financial planning. The tendency of most couples is to divide money issues into two categories: periodic or regular expenses and savings or investments to finance future goals and plans. As I have noted, women are often responsible for the first, men for the second. Successful money management requires that those lines be erased. The result is that all the money in your household should be managed jointly and with agreement on your financial priorities.

Securities offered through LPL Financial, Member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, a registered investment advisor.

Money and Children

Our financial relationship with our children will go through many stages as they, and we, age. The four key stages of your financial relationship with children are:

• Protector and provider: What you provide for your children
• Teacher: What you teach your children. I have definite ideas about what and how to teach children about money and life. I have seen many clients and colleagues impart their ideas about the role of money to their children, intentionally or not. Whether you are an eager or reluctant teacher, you will certainly teach your children about money as their role model
• Financier: What expenses you pay for your children. College – and more
• Benefactor: What you leave your children

In almost all cases, these stages will overlap. As your children grow up you simply play more roles. Your roles as a provider and teacher certainly will overlap for some time. When you are no longer the provider for your children, you will remain, at least in your view, their protector – even if not financially. And you will always be a teacher. The only change is that as they mature into adulthood, your children will probably become more willing to listen to you; you will gradually grow wiser in their eyes. Even the financier stage of the relationship may extend well beyond paying for some or all of their education if you help them buy a car or a home.

Securities offered through LPL Financial, Member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, a registered investment advisor.

Financial Professionals – The Ones Who Can Help

In today’s world, many financial institutions offer a wide range of financial services to clients. Since the regulatory wall between banks and brokers was knocked down, the distinctions have been blurred, with many banks offering brokerage services, and vice versa. Still, I believe it remains true that most professionals tend to focus their efforts more narrowly.

Stockbrokers. Stockbrokers help primarily with the accumulation phase and tend to have a shorter-term approach to investing, concentrating on the best possible returns at any given time, rather than a longer-term view that helps you get to where you want to be.

CPAs. Certified Public Accountants are primarily tax specialists, not investment specialists.
Private Bankers. Banks tend to focus on trusts, so they offer legacy/transfer services but usually not broad-based planning.

Insurance Agents. Insurance Agents focus on risk or the legacy/transfer phase of planning. They are often also well versed in certain types of tax-deferral or tax-avoidance products that are insurance related. Most do not, however, offer well-rounded financial strategies.

Attorneys. Lawyers work primarily on estate planning, a legacy/transfer niche.

Financial Advisors. Financial Advisors can take your financial plan beyond accumulation strategies to address distribution and legacy/transfer issues as part of a comprehensive plan. I’m proud of what I do, and I believe independent companies like mine, by brining together experts in all of the planning phases, offer the most comprehensive service.

Securities offered through LPL Financial, Member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, a registered investment advisor.

Budgeting For Your Family Vacation

Summer is just around the corner and for many of us that means planning a vacation. As you begin your planning, give careful consideration to how much you can afford and how you plan to pay for it. Following are a few thoughts to consider:

Start with a budget. Develop a list of all of the various expenses (lodging, travel, food & attractions) and determine how much each may cost. Whenever possible, look for ways to cut those costs. Once you determine a budget that is right for you, set rules about spending and stick to them!

Plan ahead. If you plan to travel by plane, booking far enough in advance may allow you to use airline or credit card miles. You may also be able to find packages that allow you to buy airline tickets and book your hotel at the same time at a reduced price.

Search for discounts and coupons. Don’t be afraid the ask the hotels, car rentals and attractions to see if they offer special rates for various memberships or groups, such as, AARP for Seniors, Students, Military or AAA. You may also be able to find discounts or coupons available online.

Consider staying with friends or relatives for free if that is an option. If traveling in a large group, consider booking a vacation rental, which may offer more space and more amenities for potentially the same or lower price as a hotel.

Consider bringing and preparing your own meals whenever possible. Many hotels or rental units’ offer built in kitchen amenities.

If you examine your budget and discover you can’t afford to get away this year you might consider putting aside some money for next year’s vacation on a monthly basis.

Securities offered through LPL Financial, Member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, a registered investment advisor.

5 Financial Things You Don’t Want To Do – 5 part series

# 5 Retiring permanently when you just need a break or to do something different

If you love what you do, you never have to retire – but a lot of people have other passions and other things they want to do. There may be things that you could do that are intrinsically rewarding and you enjoy that might also give you a paycheck. Retirement may not mean the end of working, but having the choice to do something you love which may include still working, and brings in some income.

Securities offered through LPL Financial, Member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, a registered investment advisor.

5 Financial Things You Don’t Want To Do – 5 part series

#4 Letting Uncle Sam eat your retirement

There are lots of different types of investments and they all have quirks when it comes to taxes. Some are tax-deferred, some are fully taxable, some, like Roth IRAs, provide tax-free options. What we talk to our clients about all the time is that you want a mixture of all three of these.

Securities offered through LPL Financial, Member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, a registered investment advisor.

5 Financial Things You Don’t Want To Do – 5 part series

# 3 Not caring about asset allocation

We talk about this all the time on the radio show – we believe in efficient asset allocation. This means broad diversification, exposure to multiple asset classes and money managers simultaneously, and proactive management on that portfolio. Oftentimes people have over half of their stock in one company – this is not diversified enough and creates a great amount of risk. We always tell people that if you have more than 10% of you investible assets in any one company, that’s too concentrated.

Securities offered through LPL Financial, Member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services, a registered investment advisor.