Family Finances Articles
How Much Money You Really Need to Retire – by – Julie Murphy Casserly
Money Rules for Kids – by – Julie Murphy Casserly
Financial Discussions Before Marriage – by – Julie Murphy Casserly
How To Budget For A Family Vacation – by – by Julie Murphy Casserly
Back to School: Saving for College – by – by Julie Murphy Casserly
What Your Children Should Know About Your Finances – by – by Julie Murphy Casserly
Family Finances: Talking About Money – by Julie Murphy Casserly
Financial Planning for Aging Parents – by Julie Murphy Casserly
The recent downturn in the economy, and the current upswing, has taught us many important lessons. One of the more important lessons? We cannot put off saving for retirement because we never know what the future will bring.
We are currently in a long-term cycle called a “secular bear market” which could potentially last for another 10 years. This means the market is anticipated to remain relatively flat so people must actively contribute to and manage a retirement plan now in order to build up assets for the future.
The amount of money a person needs for retirement varies from person to person depending on their desired lifestyle, location, retirement age and anticipated social security payments. The average person a may need anywhere between $850,000 – $1.5 million to retire comfortably, but this amount is different for everyone.
In order to determine exactly how much you need for retirement, there are several retirement calculator tools online like the one on MSN.com (MoneyCentral.msn.com/go) This tool allows you to enter specific information about your specific situation, while also accounting for inflation.
After filling out a personalized retirement calculator, you should analyze your risk tolerance levels and create a personalized retirement strategy. Here are some of my top tips to help you take action:
*The tips above may not be suitable for all people, and JMC Wealth Management advises clients on their investment strategies on an individual basis.
Julie Murphy Casserly, CLU, ChFC, CFP® is a 15-year veteran of the financial services industry, founder of JMC Wealth Management in Chicago and author of the award-winning book, “The Emotion Behind Money.” Julie helps people understand how their emotional attitudes and behaviors affect how they earn, spend and save. For more information, please visit www.JulieMurphyCasserly.com.
We all know that money does not grow on trees, nor does it fall from the sky. However, many parents are subconsciously teaching their children the exact opposite through their money behaviors. The sooner you erase this idea from your kids’ minds, the more wisely they’ll be able to handle their own money throughout their life.
Introducing concepts of money management and instilling a good sense of fiscal responsibility should start at an early age, and be continued throughout a child’s life. Below are some of the top money rules parents can teach their children during different life stages.
Yes, money patterns start during the pre-school years. You can start talking to your child about money when they are two or three by explaining that everything costs money – from the food they eat, the clothes they wear, to the house they live in. These talks need to go beyond the necessities too. Explain that new toys, accessories or video games are things your family can live without. Introduce new toys to them a few at a time, rather than showering them with an over-abundance. This will help them get used to the fact that they don’t need a ton of toys to be happy.
By the time your child is six or seven, you can start teaching them about prioritizing their money. For example, when you are at the toy store, instead of letting them pick anything off the shelf, try giving your child five dollars and letting them choose something that fits within this price tag. For parents who buy their children anything and everything, the child will expect this later on in life too, giving them a sense of entitlement. Ask yourself, is this the reality I want for my child 15 years from now?
This is also the point to show your child that money is the result of hard work. Work out a plan with a family friend or neighbor where your child will do housework or yard work for $5-$10 cash. Then give them the power to choose how they want to spend or save their hard-earned money.
At this point in life, it is critical to create a financial collaboration with your child. Encourage them to get a part-time job to help pay for their car insurance, their gas or portions of the monthly car payment. Children should be held accountable for sharing some of these costs with their parents. Once they get that paycheck, show them how it should be dispersed — 1/3 goes towards that car payment, 1/3 goes towards their future college fund and 1/3 can be spent on whatever they choose.
During this age, it’s also important to highlight the importance of living a quality of life, rather than the quality of things that you own. Help your children understand that material things like a brand new car when they turn 16, are often a source of immediate happiness, but sooner or later, this happiness fades and they will be left searching for deeper self-fulfillment.
Your child is an adult now. Have an adult conversation with them about their finances and make sure they understand how credit works. Tell them about your experiences with credit card use – the good, bad and the ugly. Once children are on their own, temptations will always arise and children in this age bracket will more than likely try to open a credit card to fund some of these temptations. Explain how credit cards can bring a false sense of financial reality. They make us less conscious of where our money is flowing. Talk about how the constant struggle to earn cash to pay off debt can take a physical and emotional toll.
Julie Murphy Casserly, CLU, ChFC, CFP® is a 15-year veteran of the financial services industry, founder of JMC Wealth Management in Chicago and author of the award-winning book, “The Emotion Behind Money.” Julie helps people understand how their emotional attitudes and behaviors affect how they earn, spend and save. For more information, please visit www.JulieMurphyCasserly.com.
*The tips above may not be suitable for all people, and JMC Wealth Management advises clients on their investment strategies on an individual basis.
Financial problems have long been a trouble area in many marriages and the current economic crisis is stretching even more people to the emotional breaking point. The resulting frustration can certainly take a toll on marriages which is why it’s important to have financial discussions before walking down the aisle.
Below are some of the top conversations you should have with your soon-to-be spouse to be sure you are on the same page financially.
1 – Past – Review and discuss all of your past choices and work to pay them down now.
2 – Present – Review your current monthly bills and purchases and set a budget that fits into your allotted incomes. Try to live the quality of life you want today on a cash basis, not a credit basis.
3 – Future – Plan for your short-term, mid-term and long-term financial goals and make them a priority. Enlist the help of a financial planner who can help you set up savings and investment accounts that will help you reach all of your life goals.
Julie Murphy Casserly, CLU, ChFC, CFP® is a 15-year veteran of the financial services industry and founder of JMC Wealth Management in Chicago. Julie is the leading authority on how emotional attitudes and behaviors affect how people earn, spend and save. To purchase her award winning the book, “The Emotion Behind Money,” also now available in an e-book format, please visitwww.EmotionBehindMoney.com.
*The tips above many not be suitable for all people, and JMC Wealth Management advises clients on their investment strategies on an individual basis.
Position yourself to be lucky to spend the amount of money you actually have for vacation, instead of going into debt and later on having to pay for past choices. No one likes having what I like to call a “spending hangover”…it takes all the fun out of going on vacation in the 1st place.
It’s all about what is your free cash flow to be able to afford a vacation. It’s all about what is right for you and your family, there is no right or wrong, it’s about what you have chosen as your financial priorities and making sure that you create a positive energy flow from your spending (spending on a cash basis) and not a negative energy flow (spending with debt).
We live in a world where there are so many things to do and many, many options. Many of the travel websites will have last minute trips at a deep discount, particularly today with this economic environment. Decide, OK, we have $2000 to spend on vacation and then search online for an all inclusive trip for the long weekend that falls into that number. The exciting part is that you are leaving yourself open to trying out a new adventure, to a new place.
Steven Covey says, “Begin with the end in mind”. I couldn’t agree more. Decide what are your priorities for your vacation, what amount your will choose to spend, then build your plan out from there.
Cost saving tips:
You can choose to travel on cheaper air fair days, say Tuesday – Saturday
Rent your car, hotel, or your airfare through www.priceline.com where you can name your own price…I have put down 30% lower price than the market price and most times I am successful
If you’re taking a road trip, pack a cooler!!!
Buy in bulk, get airfare, hotel, and car from one vendor
Talk to the locals once you get somewhere, go to the restaurants where the locals are at, they’re not tourist traps with higher costs, and many times better.
If you don’t have a vacation planned, set those financial intentions by opening up a separate savings account that is ONLY to be used for your vacations. If you’ve decided you want to spend $3000 per year on a vacation, then make sure you put $125 per check (if paid twice per month) into that savings account straight from your paycheck. I’ve met so many people who want to go on vacation, but they don’t because they don’t plan on it….this is a really easy thing to do to go have some fun in life!
According to recently released reports from the College Board, most students and their families can expect to pay, on average, from $108 to $1,398 more than what they paid in 2008 for this year’s tuition and fees, depending on the type of college. And with inflation rates continuing to increase, these costs will likely double and even triple in the years to come.
Although these costs are quite daunting, there are ways that parents and kids can prepare themselves for the sticker shock of attending college.
First and foremost, you want to make sure you are basing your college saving decisions on your families’ personal strategy rather than the stock market, which has been like a gambling roller coaster this past year. A few other savings tips for parents include: things to consider:
• Next pay raise, take 1/2 or 1/3 of it and put it in a 529 plan to get tax deferred and tax free gains.
• Sign up for www.upromise.com where corporations will share in their profits and provide money to your children’s college fund on products that you already buy.
• Look for credit cards such as American Express linked with Fidelity where 1.5 percent of anything you charge will go into your kids’ college fund. Citibank has similar card.
? One of the keys is finding the right card, is to find one where the money transfers from your credit card or upromise.com account directly into the 529 plan. That way, you don’t have to manage the transfers yourself.
• Re-prioritize your monthly savings goals to fit the need, if one kid is in college and one is approaching grad school, determine which one to tackle first.
• Strategize with your kids to spend 2 years at a community college to save funds which will make your dollar stretch farther
But don’t put it all on yourself! There are things that your child can be doing to contribute to their college savings. Different banks and credit unions have special accounts for teens saving for college. Be sure to ask at your financial institution and have your child contribute some of his or her part-time wages to the account. Since today’s teens are so tech-savvy, have them research various scholarships, grants and federal aid available to them and help them fill out applications.
In my book, “The Emotion Behind Money: Building Wealth from the Inside Out,” I include 22 specific exercises to help families understand their current financial reality, learn how to transform their lives and build a new relationship with money.
Julie Murphy Casserly, CLU, ChFC, CFP® is a 14-year veteran of the financial services industry and founder of JMC Wealth Management in Chicago. Julie helps people understand how their emotional attitudes and behaviors affect how they earn, spend and save. To purchase her award winning the book, “The Emotion Behind Money,” please visit http://www.emotionbehindmoney.com.
Many parents may find it uncomfortable, or may believe it is unnecessary, to inform their children about their personal matters. Yet, communicating openly with your family can help everyone feel reassured about your financial and health care wishes. It can also ease the decision-making process in many important areas.
As you age, informing your children of financial, estate, and medical arrangements that could affect the entire family helps everyone prepare and plan for the future. This information need not include exact facts and figures; however, the following should be made available to, and be understood by, your grown children:
Life Insurance. Life insurance is typically purchased to provide cash to help cover mortgages, liabilities, expenses, estate taxes, and lost income. Knowledge of the existence and location of life insurance policies can be of critical importance to children when settling their parents’ financial affairs. A policy locked in a safe-deposit box may not be found in a timely manner, if ever.
Other Insurance. Adult children should be aware of any other insurance policies that you may have—including health, disability income, and long-term care insurance. If you are age 65 or older, they should also have a basic understanding of Medicare coverage and be aware of any health insurance policies that go beyond coverage provided by Medicare. Older adults can greatly benefit when their children understand and follow appropriate procedures, as well as submit any necessary forms in a timely manner.
Wills. It is important to prepare a will in order to avoid leaving the disposition of your estate up to your particular state and its laws. To help ensure assets are distributed according to your wishes, both you and your spouse should prepare wills, review them regularly, and make necessary updates as circumstances warrant.
Although the exact contents may be kept private, the existence and location of wills should be disclosed to all family members. Wills should not be kept in bank safe deposit boxes, which may be sealed at death. The original will may be left with your attorney for safekeeping.
Trusts. Although wills accomplish many estate-related tasks, trusts may help protect your estate from unnecessary taxation or mismanagement by individuals who may lack the ability to handle matters appropriately. Trust documents should be kept with wills for ease of access. Be sure to discuss pertinent terms with those who will be involved. As children reach adulthood, it is common for parents to select a responsible son or daughter to act as a trustee upon the parents’ deaths.
Living Will. This document specifies your preferences regarding the administering or withholding of life-sustaining medical treatment. Under many state statutes, a patient must be considered “terminal,” “permanently unconscious,” or in a “persistent vegetative state” before life support can be withdrawn. Copies of living wills should be made available to anyone who may be involved with the care of you or your spouse, and the originals should be kept in a safe, readily accessible storage place.
Health Care Proxy. This legal document allows you to appoint a person to act as an agent on your behalf to make medical decisions, should you become incapacitated. A copy of the health care proxy should be filed with your primary doctor and your hospital, if possible. The individual appointed as your agent should also retain a copy.
Durable Power of Attorney. With a durable power of attorney, an individual or financial institution may act as an agent to oversee your legal and financial affairs in the event of incapacity. Grown children need to be informed of the steps that have been taken to ensure the competent direction of your affairs, should the need arise. However, their actual involvement in your affairs may be limited, according to your wishes. A power of attorney automatically terminates upon the death of the principal.
Assets and Debts. It can be beneficial for your children to know that a list of your assets and debts exists, without necessarily seeing the list itself. An asset list, developed and updated regularly, may include information on your bank accounts, real estate holdings, pension holdings, annuities, business agreements, brokerage accounts, boats, cars, works of art, collectibles, other valuables, and insurance policies. A debt list should include information on your current mortgages, consumer indebtedness, personal loans, and business obligations. Both lists should identify where paperwork and associated files for each item can be found.
Planning for a worst-case scenario may help your loved ones through an unforeseen tragedy. At first glance, preparing these lists and the associated documentation may seem burdensome. However, once completed, both parents and children can rest assured that the thoughtful planning that has been implemented and discussed will ultimately be handled properly.
As children, we probably learned that it was impolite to ask how much someone paid for something. These learning’s generally follow us into adulthood and make it difficult for us to talk about our money situations….with our financial planners, our friends and even our spouses and children.
Unfortunately, there can be severe consequences when money is not talked about. Many couples cite money problems as a factor in divorce. And the failure to instill good spending and saving habits in children could result in them living an unhealthy, money-centric life.
There are several important topics to include in your discussions about money with your children.
First, help your children understand the families’ current financial reality. Explain how much of your earnings go towards the house, bills, the car, food and past debt. This will help them understand the value of a dollar and allow them to think about their everyday spending, wants and needs.
Secondly, it’s important that parents highlight the importance of living a quality of life, rather than the quality of things that you own. Help your children understand that material things are often a source of immediate happiness, but sooner or later, this happiness fades and they will be left searching for deeper self-fulfillment.
Explain the process of credit to your children and how credit cards can bring a false sense of financial reality. They make us less conscious of where our money is flowing. Talk about how the constant struggle to earn cash to pay off debt can take a physical and emotional toll.
And finally, talk to your child about where they want to be and what they want to become when they are adults. Encourage them to identify their true self and their life’s passions. When their financial life is guided by their true self, they have less of a chance to surrender their personal power to money.
Julie Murphy Casserly, CLU, ChFC, CFP®, is a contributor to On The Money. As a 14-year veteran of the financial services industry and founder of JMC Wealth Management in Chicago, Julie helps people understand how their emotional attitudes and behaviors affect how they earn, spend and save. She is author of The Emotion Behind Money: Building Wealth from the Inside Out.
Aging parents often have a difficult time managing their finances. As parents, they were used to taking care of you. But at some point, your parents are going to need your help with financial issues. If your parents are in their 60s or older, it may be time to speak with them about their financial affairs and be sure they are utilizing all of the resources available to them.
If your parents have assets under $3M, it is likely that they will need additional financial help in their later years. Below are a few options to discuss with them. Regardless of health or medical issues, everybody qualifies for at least one of these options so be sure to research one that is best for your family members.
Self-insure. With self-insured plans, your parents would put their own money into special investment accounts specifically for their long-term care. This option is best for those who have over $3M in assets, excluding their home.
Straight long-term care policy. These are purchased from an insurance company. Your parents would pay into them until they need the financial help down the road. I tell my clients to think of these policies like car insurance. You either use it or lose it. For example, your parents would only get a financial benefit if they need long-term care in their retirement years. If they don’t need it, they will not get any of their money back. Long-term care includes home health care, nursing homes, assisted living and/or adult care.
Life insurance policy with a long-term care rider. These policies are built so someone receives a financial benefit at some point. If your parents don’t ever need or use their long-term care insurance, their beneficiaries would receive a death benefit. These policies are more expensive, but are usually more than what is put into the policy so at least someone gets paid.
Annuity product with a long-term care rider. This option is specifically for people who may not qualify for other policies due to health and medical conditions. Most of these contracts allow three percent of the premium put into the contract after s certain period of time. Be careful with these as some of them require a five to seven year commitment before payout. This is also the most expensive of the options currently in the marketplace.
Julie Murphy Casserly, CLU, ChFC, CFP® is a 14-year veteran of the financial services industry and founder of JMC Wealth Management in Chicago. Julie helps people understand how their emotional attitudes and behaviors affect how they earn, spend and save. To purchase her award winning the book, “The Emotion Behind Money,” and to sign up for her weekly wisdom for wealth e-newsletter, please visit EmotionBehindMoney.com.