Are You Feeling Stretched Beyond Your Financial Resources?

Many families today may face dual challenges. They have children who need money for medicine, clothing, recreation and education, and they have aging parents who need help with long-term care.

Are you stuck in the middle, struggling to keep up with your current living expenses and put aside something for retirement? The pull of competing financial needs can be hard to endure, but careful planning can help.

First, start with yourself. With life expectancies rising, you could spend 30 years or more in retirement, so don’t use your retirement savings for anything but your retirement. Employer-sponsored 401(k) plans, Individual Retirement Accounts (IRAs), and annuities allow your investment earnings to grow tax-deferred until withdrawn, which could mean greater asset growth than if you contributed to a taxable account.

Next, straighten out your children’s future. The first step toward financing your child’s education is to develop a college funding plan. To start, anticipate how much money you’ll need to pay for college, then consider how much of that you will have to pay (after financial aid, scholarships, grants and loans). Finally, subtract the amount you’ll need to pay from the estimated amount your child will obtain from other sources, then work with us to develop an investment plan to make up the difference.

Lastly, untangle your parents’ finances. Here, planning starts with finding out if your parents are prepared for long-term care expenses. If they aren’t, you may want to consider shifting some of your or your parents’ portfolio to investments with insurance components, such as annuities. Or look into long-term care insurance, which is best to buy while your parents are healthy enough to qualify and young enough that rates are affordable.

Call or email us today, and we can help you review your financial situation in light of your needs, your children’s needs and your parents’ needs.

Avoiding Affluenza and Raising Money-Conscious Kids

Is your six-year-old begging for $100 sneakers? Does your teenager think a trip to Europe is her birthright? If so, your kids may be suffering from “affluenza,” which is a sense of entitlement affecting affluent young people. But how do you address it?

At times, most kids demand things and show little understanding that those things cost money. For most kids, this attitude fades over time. For some kids, however, it becomes a way of life.

Do you wish you could cure your child of affluenza? You can start battling the bug when your kids are as young as four by talking to them about finite resources and the importance of making choices. When shopping, discuss the difference between needs and luxuries. Shoes are needs; video games are luxuries.

From ages eight to 12, you can explain that there will always be kids less and more fortunate than yours. Teach them that they must make financial decisions within the context of what they have by offering them an allowance and refusing to provide more money when it runs out. Involving them in charity work may also help them appreciate how relatively fortunate they are.

When your kids become teenagers, you can involve them in family budgeting, bill paying, and investing discussions but also offer them an allowance to spend on nonessential items. For example, if your teenage son wants $100 sneakers, you might give him $50 to cover your portion and make him come up with the rest.

A mutual fund may help show your kids the importance of saving and investing, and there are ways to set up accounts in their names while they are minors.

We are always here as a resource and can give you more tips for raising money-conscious kids. We’re just a call or email away.