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.

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

# 2 Having no clue about how much to save

According to 2007 Retirement Confidence Survey from the Employee Benefits Research Institute, only 43% of workers have actually calculated how much they’ll need to retire on. We’ve always said you can’t hit the bull’s-eye if you don’t know what the bull’s-eye is – you need a plan and a goal. The goal is not a number, but rather the lifestyle you desire. Part of my job is to assess a client’s needs to attain that goal.

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

#1 Cracking your nest egg before retirement

A recent study by Hewitt Associates finds that 45% of workers cash in their 401ks when they switch jobs – meaning they pay taxes and a 10% penalty if they’re not 59 1/2 yet. I recommend that you roll that into an IRA or transfer it into a new company plan. The IRA will offer more choices and fewer restrictions than a corporate plan, but it’s important to seek out professional guidance as it’s easy to get penalized.

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