Yearly Archives: 2016


Financial Decisions Not Always About Money

Man and Child Having fun in the park.Financial decisions are not always about money. The things you value in life can and do influence the many financial decisions you make. In fact, according to research conducted by Lois Vitt, Ph.D., financial decisions are often not about money at all.

Vitt is chair and founding director of the Institute for Socio-Financial Studies. She conducts research on consumer decision-making, financial-literacy education and other financial topics. In a study funded by the National Endowment for Financial Education (NEFE), Vitt indicates there are four categories of human values that correspond to people’s financial concerns in life:

  • Inner values: psychological and spiritual
  • Social values: family, friends and communities of interest
  • Physical values: health and environment
  • Financial values: sufficiency, sustainability, appropriateness

These values can run the gamut from spirituality to physical health; from a desire to be with and take care of others to the need for freedom and independence; from craving beauty and comfort to controlling how others perceive you.

Take the Quiz

To better understand why and how you make financial decisions, Vitt asserts that you first must understand your values. When you have a handle on what you really value, you can clarify your thinking, make smarter decisions, improve your personal relationships, and get better at making, keeping and growing your money.

Click here to take the 20-question LifeValues Quiz.

By |September 12th, 2016|Financial Planning|

The Rainy Day Fund

Eng-WEBOne cornerstone of a good financial plan is a rainy day fund. Saving for a “rainy day” helps ensure you have money available to meet an unexpected expense, like a car repair or a medical bill.

Last year the Federal Reserve released a report on the economic well-being of U.S. households.  Their survey revealed that 47 percent of respondents either could not cover an emergency expense of $400 or would cover it by selling something or borrowing money. This means that almost half of American households do not have a rainy day fund.

I am often asked by clients, “If I had an extra amount of money left over at the end of the month, where should I put it?” If you do not have a rainy day fund, you should start building that up first. Good financial planning would not let an unexpected expense derail you and your family.

Start by putting aside $1,000 in a savings account to be your rainy day fund. This step is also the first of Seven Baby Steps recommended by financial guru Dave Ramsey of Financial Peace University. As with any type of savings goal, it is best to make it “automatic” by setting up a monthly auto deposit or direct deposit into a savings or investment account.

After your rainy day fund has been established, your next goal should be to grow that fund into a true emergency fund of three-to-six months of living expenses. This pool of savings will enable you and your family to weather a larger potentially-catastrophic event, such as a job loss or a chronic illness.

Another important thing to be mindful of when prioritizing your “extra money” is to make sure you are not going into debt to save. You do not want to max out contributions to your 401K plan at work and end up paying for other things with your credit card. Look at your goals as needs, wants and wishes. Understanding the priority of each of your goals will help you to know where savings should be allocated.

Saving for a rainy day is a great first step in a sound financial plan and will put you on track to understand how to prioritize that next dollar of savings.

By |August 22nd, 2016|Current Affairs, Financial Planning|

Save on Back-to-School Shopping

Average spending on back-to-school has grown 42 percent in past 10 years, according to data from a National Retail Federation (NRF) annual consumer survey. Last year, parents cut back on their spending, from about $670 on average per family for K-12 spending to about $630 per family. Most expect to spend about the same this year.

Purchases include school supplies, clothing and electronics. The NRF survey also found that families are increasingly on the hook for helping to stock their children’s classrooms; parents said that 64 percent of their purchases of pencils, folders and other school supplies were influenced by classroom lists or school requirements.

If you’re hoping to save money on back-to-school shopping this month, here are a few ideas that may help.

Shop early and a little at a time: Many retailers rotate through deals every week – pens and paper one week, notebooks and pads another, backpacks the next. It takes a bit more time, but you can maximize your savings by purchasing only the sale items each week.

Use apps to save: Many large retailers (Target, Walmart, Sears, etc.) have money-saving apps with special coupons or discounts not available anywhere else. Often, the deals can also be used in conjunction with other sales and coupons.

Apps like Coupon Sherpa  feature online coupons, in-store coupons, and location-based coupons from many different stores. You can even select your favorite stores ahead of time, pull up a coupon while standing in the checkout line, and quickly collect your savings.

Mail in rebates: Rebates that give money back to shoppers who mail in paperwork after making purchases often offer the best deals. But you have to put the effort into completing the paperwork; set aside time to do so as soon as you return home from shopping, so you don’t forget and lose out on the savings.

By |August 8th, 2016|Current Affairs, Financial Planning|

Trust Basics and Benefits

Larriva-WEBA living trust is a common estate planning tool that helps express your wishes for your estate while you are alive, as well as when you pass away. One benefit a trust provides is that it is not subject to probate (public records), and thus provides you with some privacy. This aspect can also help minimize costs if there are real estate assets held in multiple states; each state would require a probate filing, adding filing charges and attorney fees to your costs.

Trusts are also helpful in preserving rights to assets for blended families. If you want to assure that your children receive an inheritance, you may wish to craft your trust document to specifically leave a portion of the estate to them. Otherwise, there is nothing to stop your current spouse from receiving 100 percent of the assets and changing his or her plans after you have died.

The main components of a trust consist of the grantor (creator), the trustee to manage the trust, and the named beneficiaries who are entitled to the income and/or assets. You also need to name successor beneficiaries (if you and/or your spouse die), successor trustees to continue to make competent decisions, and any freedoms or restrictions you want afforded. One example is delayed distribution of principal to younger beneficiaries. What could happen if your beneficiary inherits $250,000 or more at age 19? It may be wise to set up the trust to parcel out the funds (e.g. 25 percent at age 23, 25 percent at age 28, and the final 50 percent at age 35), so they can learn the skills to manage significant wealth.

Important last steps are to fund your trust by changing the title of your taxable assets, such as your bank account, real estate, brokerage accounts and mutual funds. Not properly funding a trust is a common estate planning mistake. You can also create a pour-over will, which allows the executor to place any assets into the trust that were accidentally left out.

Finally, it is important to communicate your plan to your loved ones. They will appreciate your diligence, and it can greatly simplify an already difficult time in their lives.

By |July 22nd, 2016|Estate Planning, Health Care|