July 2015 Newsletter

July 2015 Newsletter

Adult to Adult: Talking to Your Parents About Their Money

July 2015 Newsletter - 1Having the ‘money talk’ either happens at the ‘wrong time’, or can easily be put off because the generations feel differently about the ‘right time’. Regardless of opinion, having a talk with your parents (or children) is something that is necessary and should occur occasionally. Too often these talks happen when there is a sudden health issue.

Understanding what your parents what you to know or not know and their fears will help both parties come to a plan for discussion. The timing of the talk often leads to feelings of ‘control’ or the fear of ‘lack of control’. The older generation often mistakes their child’s inquiry as disrespectful of their privacy.

The reality is that this is not the case. If a parent becomes unable to make financial decisions because of health issues or death, and the other parent is not capable of following through or understanding financial decisions, this becomes the responsibility of the adult child. It is much better to know your parent’s financial information prior to a disruptive event and how your parents live off of their assets. Even being aware of their monthly obligations allows you to help take over or monitor bill paying.

Suggesting a financial review together with an impartial financial professional is highly recommended.

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Planning for the Rest of Your Life

July 2015 Newsletter - 2Have you ever stopped to think about the fact that you will spend your retirement dollars in less time then you spent saving them for retirement? Even though the age of retirement is becoming later in life, retirement can last twenty or more years and likely you saved for retirement over thirty or more years. We spend so much time trying to accumulate and without proper planning, we can spend our savings too quickly. If you’re still in the ‘accumulation stage’ take time to think about these things:

  1. What’s the monthly number? Write out your current monthly expenses. Even though these numbers need to be adjusted for inflation, it gives you a sense of what you will need at a minimum each month.
  2. Save then spend. Set up automatic savings deductions into your retirement accounts and saving account. After your savings comes out, do you have enough to spend on remaining expenses? If not, adjust your spending not your saving.
  3. How much can you potentially earn? Do you have the ability to earn more or advance in your profession? If so, plan to save the additional income. Take a look at the US Department of Labor industry data to help you get an idea of income growth in your profession for your planning.
  4. Diversify and Plan. Meet with your financial advisor a minimum of once a year to make sure your plan is well diversified to limit your risk and loss. Discuss your overall spending and savings plans.

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Newlyweds and Credit Vows

July 2015 Newsletter - 3Becoming a newlywed at any age is a time to commit to your financial future together. No matter what, committing financial or credit betrayal should be discussed so that you are both in agreement of what is allowed or not allowed. Because you are married, even if your money is not co-mingled, your credit responsibilities are. Consider the following when you get the conversation going:


  1. Opening accounts. Is it ok to open accounts without your partner’s permission? If both parties aren’t in favor of the account, it’s best to not open it since you’re both responsible for payment of the balance.
  2. Set the limit. Setting a spending limit that allows you to purchase without discussion with your partner helps build trust and communication. Not only should the limit of the item be set, but the account balance limit in a month’s time. If the spending is over the limit, consult your partner before buying.
  3. Agree on how to pay balances. Determine if carrying balances is allowed, or if you intend to pay off balances each month. This step is tied to setting your limits. Keep your credit in check by controlling balance limits since all credit companies will automatically increase your balance limit if you’re paying off your balance each month.
  4. Share statements. Allowing each other to view statements keeps the trust between you two. Make efforts to keep receipts until the item is posted in order to track discrepancies.
  5. Deal with secret spending. If not discussed and kept in check, secret spending can become a financial disaster.

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Starting a Roth IRA for Your Child or Grandchild

July 2015 Newsletter - 4Starting a Roth IRA for your child or grandchild is a great way to help them accumulate money for their future. Regardless if the savings is for college, their first home, or an early start on their retirement, there are requirements that need to be met.

First of all, the child needs to have income from their own job in which they are a W2 employee. The contribution amount can’t exceed Federal IRS guidelines or the amount that they have made in a calendar year.

Secondly, the account will need to be in the child’s (minor’s) name and the custodian’s name. The rules on who can be considered a custodian can vary by state, or financial firm to financial firm.

Lastly, if you’re a grandparent you may or may not be able to make contributions to the account yourself. You may need to give the money to the parent to make the contribution on behalf of the child. Many times this is determined by the rules of the account administrator.

Consult your financial advisor for account requirements and restrictions and for information needed to open the account. Helping a child save is an investment that will yield rewards for the future.

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