Cleaning Tips for Your Financial House

By Marriage and Money Team | May 21, 2018

Cleaning Tips for Your Financial House

Is your financial house in order? Take the time to spruce it up. Here is a Top Ten list to make the task orderly and worthwhile.

Establish a regular maintenance program.

  1. Decide who’s number one. If you haven’t done so previously, set up a budget. Make “paying yourself first”–putting a set amount into your savings and investments every month–a priority. Analyze your current spending habits and plan ahead for large bills and expenses.

Consider a complete renovation.

  1. Rebalance Your Portfolio. Is it time to rebalance your investment portfolio? You may be at a stage of life that requires different investment tactics. Or, with the onset of higher taxes, you may wish to reposition your portfolio for a more favorable tax stance.

Consider the following: For a taxpayer in the 31 percent bracket, a tax-free investment yielding 6 percent is producing the equivalent of a taxable 8.7 percent yield. When the taxpayer jumps to a 36 percent bracket, the equivalent taxable yield of the same investment is 9.4 percent. If he or she leaps even further into the 39.6 percent bracket, the equivalent taxable yield rises to 9.9 percent!

Refurnish your credit “room.”

  1. Mortgage Refinancing. Look at refinancing your mortgage while mortgage rates remain low. There are many options from which to choose and there may be one that will put more money in your pocket now and save you interest payments in the long run.
  2. Home Equity. A home equity line of credit offers a low rate and the interest may be tax deductible. You may not need it today, but you can tuck it in your back pocket should the need for it arise in the future.
  1. Credit Card Debt. Transfer credit card balances to lower rate alternatives that have been appearing in abundance as banks and credit card companies seek out your business. Read all credit terms carefully, and remember that credit card finance charges are not tax deductible. Your best move would be to pay off your credit card debt and use the money you save on finance charges to begin a regular investment program

 

Look at future housing needs. 

  1. Retirement Plans. What accommodations have you made for your retirement? One of the best investments in today’s changing world of taxes is the 401(k), which can provide you with current reduction of taxable income, an excellent savings plan and tax deferral on earnings. Many employers offer excellent 401(k) contribution matching plans to further enhance the value of this retirement funding vehicle.

Checking windows, doors, and the roof.

  1. Insurance coverages. Review your life, automobile, homeowners, and disability coverages. The plan you established years ago may need updating to meet your current needs. There are many complex factors to review. You may analyze your liabilities: being hit by an uninsured motorist, someone falling on your sidewalk, falling off a ladder, or a storm destroying part of your house. Reviewing your coverage after a tragedy strikes is common for many, but disastrous. Do it now. You should consult your insurance professionals to confirm your interpretation of the language in the contract 
  2. Safety deposit box. One of the better “investments” is a safety deposit box. What should you put in one? Imagine, for a moment, that your residence was completely destroyed and you lost everything. Important papers would immediately come to mind. Deeds, marriage certificates, passports, and other valuable items would be candidates for a safety deposit box. Some people include a videotape of their home–both inside and out–as well as their valuables.
  3. Tidying up. Each of us has a spot where interesting items are stored: Old, unused credit cards, bank accounts under $10, or records that need updating or have outlived there usefulness. Close them out, cash them in, revamp them, or distribute them to the trash bin.
  4. Tax Records. Always keep a record of your tax returns and important checks or charge slips that you may need in the future. Even though you had another person prepare your return, they probably did not keep a copy in their file for you. Maintaining a good system for your records is important.It is always more relaxing to live in a clean and orderly home. By taking the ten steps above, your financial home will become an inviting, enjoyable corner of your life!

Unmarried Couples: Treading the Tricky Waters of Pooled Finances

By Marriage and Money Team | May 16, 2018

Unmarried Couples: Treading the Tricky Waters of Pooled Finances

For a variety of reasons, many couples, regardless of age, may find themselves living together for a period of time as unmarried partners. If you find yourself in this situation, it’s important to make conscious decisions about how to handle personal and household finances because unmarried partners lack many protections the law extends to married couples. If you and your partner pool your financial resources, there are no divorce courts, laws, or uniform legal guidelines to separate your combined assets if your relationship ends. So before wading into this uncharted territory, it’s worth taking a moment to consider the following questions:

  • If you and your partner merge your finances, will this be limited to household expenses, or will you share income, as well? 
  • How will you share household bills—equally or according to each partner’s income or use?
  • Will you hold joint checking and credit card accounts?
  • How will you handle retirement planning for the long term?

Treading Tricky Waters

Joint bank and charge accounts may carry some drawbacks for unmarried couples. Each partner is fully responsible for the entire amount of any joint debt. Creditors can seize funds in a joint account to satisfy one partner’s debt. And, if one partner depletes the funds in a joint account, or fails to pay for his or her credit card charges, this could damage the other’s credit rating.

As an unmarried partner, you also face unique difficulties when it comes to retirement planning, since you may be ineligible for two key sources of retirement income that many spouses depend on—spousal benefits from both Social Security and defined benefit pension plans.

Before combining your finances, it’s a good idea to have a candid, in-depth discussion of your financial values and goals. Only by addressing these issues honestly, will you have a solid basis for making financial decisions.

An Ounce of Prevention. . .

Before opening a joint checking account, select one that requires both signatures for withdrawals. Have a clear understanding of what expenses the funds will cover. Keep detailed, up-to-date records of the contributions you each make toward shared expenses, otherwise verification of these contributions may be difficult, if the relationship ends. And, if you do part company, close all joint bank and credit card accounts as opposed to just dividing them up. Remember, you are each fully responsible for all charges on a joint account. In addition, keep in mind that it’s important to establish and maintain your own separate credit history.

When it comes to retirement planning, unless you have a written agreement or irrevocable trust that will withstand a permanent separation, you may want to consider yourself as a single individual and plan accordingly. However, if you should decide to plan for retirement together, here are some strategies to look at:  Investigate the possibility of joint and survivor benefits; designate each other as the beneficiary of life insurance policies and qualified retirement plans; and cross-own life insurance policies.

Another step worth considering is a domestic partner agreement. This is a legal contract between unmarried partners that can clarify the sharing of income, expenses, and property. It outlines each partner’s ownership rights, and states his or her intentions for the distribution of his or her property if the relationship ends or if one partner dies.However, the acceptance of these agreements varies from state to state. Therefore, be sure to consult a qualified legal professional for your unique circumstances.

Look before You Leap

There are many options unmarried couples can choose to handle their finances. The least complicated and “safest” approach may be to keep your finances separate. However, this isn’t always convenient, and it may not promote trust in relationship building. But, by understanding the concerns you may face as an unmarried partner, and speaking with  your trusted advisors, you’ll be in a better position to determine the appropriate decisions to make for your financial and emotional well-being in this type of domestic arrangement.

Where Does the Money Go?

By Marriage and Money Team | May 14, 2018

Where Does the Money Go?

Do you ever wonder where all your money goes? Many people spend their money in small increments without realizing how it all adds up. Usually, it is not that mysterious if you take the time to write it all down. As you begin to track your income and expenses, you can craft a workable budget you can stick with, to help you manage your personal finances.

Here are some steps to help you design an overall budget regardless of your situation:

  1. Track income and spending. To start, tally all your sources of income and track your spending for a few weeks or months. An easy way to do this is to keep a receipt for all expenditures over one dollar. You may also refer to credit and debit card statements, monthly-bill statements, and check stubs.
  2. Categorize expenses. Expenses fall into two basic categories: fixed—not optional—which includes mortgage or rent, insurance, and utilities; and discretionary—optional—which includes clothes (beyond the basic necessities), movies, sporting events, and dining out.
  3. Set goals and prioritize. When you begin to see how much money comes in and how much goes out, you can prioritize your future financial goals. Do you want to buy a house or a new car? Are you saving for your retirement or your children’s college education? Are you paying down your debt? Once you establish your priorities, you can begin working toward achieving your objectives.
  4. Prepare the budget. Now that you have an idea of your current monthly income and expenses and have established some priorities, you are ready to prepare a budget. Remember to keep it simple. The less complicated your budget is, the easier it will be to maintain. For instance, to estimate monthly tax bills or insurance premiums, simply calculate the annual expense and divide by 12. It may take several attempts before you finalize your budget; however, you will eventually be able to zero in on which expenses need to be cut to reach your financial goals.
  5. Stick to it. Review your budget on a regular basis with your family, so that everyone is reminded that the budget is effective only if everyone sticks to it.

Conduct an annual review. Be sure to review your budget at the end of each year. By totaling what you spent and comparing it to your projected budget, you may identify areas to focus on during the coming year.

“Rainy Day” Reminders

After your household budget is created, remember to work toward setting aside emergency savings for that “rainy day”—when something unforeseen occurs, such as a job loss or unexpected damage to your house requiring a major repair. An emergency savings fund typically covers up to six months’ worth of living expenses. You can put money into this fund either weekly or monthly. Also, closely monitor your credit card use. Because a credit card is so easy to use, many consumers buy merchandise they don’t really need, which, in the end, costs more when interest charges are added to the monthly payments.

Having a household budget is a money management tool that both individuals and families can use to keep track of their personal finances, to reach their financial objectives. A spending plan may even serve to teach children to establish positive spending and saving habits early on.

Tips to “Shape Up” Your Fiscal “Fitness”

By Marriage and Money Team | May 10, 2018

Tips to “Shape Up” Your Fiscal “Fitness”

Many people realize that the best way to stay in shape is to develop an appropriate fitness regimen and then stick with it. If you start a fitness program and drop out, you never give yourself a chance to become physically fit. In the long run, regular workouts pay off. It is the same with fiscal conditioning. To achieve fiscal fitness and the financial independence that goes along with it, be sure to adhere to a regular program of sound financial practices. Here are some tips to help you “shape up” your finances:

  • Set short-, medium-, and long-term financial goals. With physical fitness, small accomplishments can lead to big successes. The same holds true for fiscal fitness. Set one-, three-, and ten-year financial goals and evaluate your progress regularly. Make adjustments, as appropriate, to achieve long-term financial independence.
  • Look for a savings “edge.” Just as personal trainers are available to guide you at the gym and accelerate your progress, financial professionals are available to guide you toward vehicles that help facilitate savings. Contribute to an IRA, 401(k) plan, or other retirement plan for which you qualify that offers an edge: tax-deferred savings.
  • “Pump up” your savings. Before spending your paycheck, put savings first. Earmark a set amount out of each paycheck for the future. Like regular repetitions at the gym, this habit can build financial muscle to help support you for the long term.
  • Trim high interest rates and finance charges. Just as you trim excess fat from your diet, shop around for credit cards and loans with low rates. Pay off your credit card balances monthly to avoid high finance charges. If you need to carry a balance, try to only use cards with low interest rates.
  • Schedule periodic insurance and legal checkups. Many people visit the doctor yearly for regular physical exams. Similarly, consider meeting with a qualified insurance professional periodically to review and update your insurance needs. Also, schedule a regular review with your attorney to evaluate and update your will and trusts to accommodate any tax law changes.
  • Monitor your progress regularly. To get in top physical shape, it’s important to chart your progress. It can be very inspiring to look back at your progress and see how far you’ve come. It is also important to monitor your financial progress regularly and to meet, at least yearly, with a qualified financial professional. This can help ensure you are moving in the direction of your long-term goals.

By committing yourself to fiscal fitness, you are taking the first step toward achieving financial independence. Before long, you may be able to achieve the future of your dreams. Remember, the sooner you begin, the better.

How Difficult Is It To Talk With Your Family About Money?

By Marriage and Money Team | May 8, 2018

How Difficult Is It To Talk With Your Family About Money?

Some families have no problem discussing money. For the rest, use these tips to get your family on the same financial page.

How many times have you been given the wrong change at a store or restaurant and just accepted it? Maybe the line was too long or the cashier didn’t seem particularly friendly and you thought a dollar or two wasn’t worth the hassle. Or maybe you’re one of those people who has no qualms making sure they get back exactly what they’re owed regardless of how they’re perceived by the long line or unfriendly cashier.

When speaking with your family about money it can go either way too, since most people tend to get touchy when discussing their finances. According to Yahoo Finance the best way to approach this is to simply make money a normal topic of conversation.

Money Is Harder to Talk About Than Death

A 2014 study from Wells Fargo revealed the following:

The most challenging topic to discuss with others is personal finances (44%), whereas death (38%), politics (35%), religion (32%), taxes (21%), and personal health (20%) rank as less difficult.

Take that in for a second: People would rather talk about no longer being on earth than money.

The study also reveals that while people aren’t comfortable speaking about money, it’s one of the biggest stresses in their lives, often causing sleepless nights. You’d think turning to family would assuage these fears, but silence often prevails.

When it comes to talking about money, Wells Fargo found “71% of adults surveyed learned the importance of saving from their own parents. Despite this, only a third (36%) of today’s parents report discussing the importance of saving money with their children on a frequent basis, with 64% indicating they talk about savings with their kids less than weekly or never.”

How do you comfortably discuss money with your family?

Tips for the Talk

Yahoo Finance provides four tips to make headway when having a cash chat with those who share your blood.

Frequency & Neutrality

Whenever a person prefaces a conversation with  “we need to talk…” odds are it won’t be a pleasant experience for at least one of you. Most money conversations seem to have ulterior motives, especially if the only time your family talks about money is during a crisis or when a person needs some. However, if money can become an unconditional part of your ongoing conversations (e.g. it’s peppered throughout all the other stuff you speak about), it won’t be so awkward.

You don’t have to break out bank books and give specific amounts, but regularly discussing financial tips, tricks, or experiences with kids, siblings, and parents will make it more normal and less taboo. If the first time your family talks about money is when an estate needs to be divided after a death, you’re doing it wrong. Start small — savings, investments, monthly budgets, advice you got from your parents or trusted advisors — and work up to bigger conversations once everyone’s on board.

Generational Divide

Citing the Wells Fargo study, Yahoo points out that “69% of older respondents viewed monetary gifts as an expression of love. On the flipside, 30% of millennials saw monetary gifts as a way to exert control or influence.”

An older person who worked their whole life to amass savings has a completely different perspective than

someone in their early 20s just getting started on the journey. While you might never see eye-to-eye with someone 20-40 years your junior or senior (especially when it comes to music), you have to try and understand their point of view.

Finding the Right Place

When it comes time for a bigger discussion about money and estate planning, where you meet can dictate how well it will go. Yahoo Finance suggests finding a location that will make everyone comfortable. This means finding neutral ground outside of the family homes to avoid anyone who might try and use the familiar setting, either on purpose or subconsciously, to their advantage.

The article suggests renting a private room at a favorite restaurant or a conference room at a local hotel, which seems to go against the whole “make money talk more informal” thesis they champion, but their point is valid. Once you’ve graduated to the point where you can have an official family meeting, you might not want to discuss secret business in a Starbucks or at the local park; you need a setting that’s suitable for a serious talk, but not at all intimidating. The private room in a restaurant probably works best, especially if they serve potato skins. Because, let’s be real here, who doesn’t love a good potato skin?

Be Calm While You Carry On

Body language is very important around family because they often know you the best (and worst). Unlike strangers who might put up with a little attitude, if a family member recognizes a slight mannerism or catches an eye-roll, things can get dramatic and explosive very quickly.

Ideally, you should have a clear idea of what you want to accomplish. If you’re one of the wise family elders, you most likely have a much better handle on all the finances and can dictate the tone and agenda.

You can also make sure everyone is comfortable
and willing to ask questions even if it’s a 15-year-old grandkid baffled by the concept of a mortgage. (Or a 35-year-old adult child baffled by the concept of a mortgage.)

Finally, don’t be coy. Unless someone is demanding specific figures you’re unwilling to offer, try to answer as openly and honestly as possible. For example, if your Will states that all your assets will be divided equally among your adult children, tell them that. The entire point of normalizing money discussions with your family is to limit surprises, not heighten the suspense and turn it into a free-for-all after you’re gone.

P.S. You really should try out your own Everplan.

It’s really simple to set up, it’s free to try, and it can make a world of difference for your family if something happens to you. Set up your Everplan now.

Are You Living on Easy Street?

By Marriage and Money Team | May 4, 2018

Easy-Street

Are You Living on Easy Street?

By: Liberty Publishing, Inc.

With today’s improving economy, you’re probably thinking less and less about your personal debts and spending habits. While debts may seem easier to pay off when times are good, don’t let yourself fall victim to this way of thinking. Ignoring debt and not watching your wallet, even as you coast down “easy street,” can be hazardous to your financial health! Here are four time-tested ideas for keeping you out of financial trouble.

1) Do the Math First. Start by making a list of all your debts. Break them down into short-term (e.g., credit cards), intermediate-term (e.g., car loans), and long-term (e.g., mortgage) debt. Place long-term debt at the top of the list and short-term debt at the bottom. Just like that, you’ve quickly painted a picture of your current debt situation.

2) Work Your Way Up. Concentrate on the bottom of your list first. Pay off higher interest rate, short-term debt first (e.g., credit cards). Setting up a self-imposed payment schedule can help you manage your short-term debts and reinforce the importance of saving. Ultimately, your goal should be to eliminate all short-term debt and then budget for day-to-day expenses using personal savings rather than credit cards and high interest rate loans.

3) Avoid the Minimum Payment Trap. The interest that accumulates by stretching out payments makes any “bargain” purchase cost a lot more than you think. For instance, if you have a credit card with a 17.9% finance charge and your balance is $1,000, making a minimum payment of $20 per month for the next year will only reduce your balance by $66.26. That means you’d be paying the credit card company $240 in exchange for a $66 reduction in your debt. Simply put, making a minimum payment is like throwing away money!

4) Maintain Your “Impulse” Will Power. If you are prone to impulse spending, don’t go shopping unless you have a specific need. Even then, delay your purchase for 24 hours. Often, an impulse will pass once you’ve had a chance to sleep on it.

Before You Pass “Go”

If you’re finding that today’s American lifestyle leaves you with little choice but to amass some unnecessary debt, don’t panic. These common sense strategies can help you control your debt, making it manageable within your means. While you, along with most Americans, may be enjoying the ride down “easy street” today, making a right turn on to “smart street” will help solidify your personal finances for a better tomorrow.

 

A “Reality Check” for Emerging Families

By Marriage and Money Team | May 2, 2018

A “Reality Check” for Emerging Families

By: Liberty Publishing, Inc.

Steven and Pamela Jackson, both in their late twenties, have been married for five years. Steven is a customer service supervisor for a newspaper distribution company and Pamela works as a receptionist at a large bank. During the early years of their marriage, they enjoyed a lifestyle supported by two incomes. Without children, they were able to be somewhat carefree about their spending.

Now, however, they are contemplating having children and are raising questions about the financial implications of enlarging their family. Although their jobs seem relatively secure, they have friends who work for downsized companies and who are less certain of their financial futures. Moreover, some of their friends have lost their jobs and are going through difficult transitions.

Discussions with family and friends have led them to the conclusion that uncertainty may be the defining characteristic of their generation. Some of this uncertainty is tied to rapid technological changes, and some is the result of the realization that they personally may be responsible for providing for themselves much of what was previously provided by others (e.g., pensions by employers; social programs by the government).

Here are some of the issues that now concern the Jacksons as they look to the future:

  • Will corporate downsizing eventually catch up to them? Even if Pamela intends to return to work full-time after having a baby, how would they cope if one of them should lose their job?
  • What about the world of work in general? Will they go through several career transitions over the course of their working lives due to an economy that might be changing constantly? Is there a way to protect themselves financially?
  • With their college days not too far behind them, they realize their parents made sacrifices to send them to good schools. How difficult will it be for them to save for a child’s education? What about saving for more than one child?
  • They both participate in 401(k) plans at work, but will they be able to save enough for a comfortable retirement? What about Social Security? Will the system change significantly?
  • Will they be protected should they become disabled?

By discussing the various alternative solutions to the difficult questions above, Steven and Pamela hope to arrive at a realistic assessment of what they should and should not do financially, what they can and cannot afford, and what sacrifices they might need to make to assure financial security for both today and tomorrow. They know their spending choices will have to be made carefully, and that preparing for a bright financial future will require setting goals now.

As the Jacksons look to expand their family, their financial planning today will make them less likely to be caught off guard by sudden economic or personal changes tomorrow.

 

How difficult is it to talk with your family about money?

By Marriage and Money Team | April 24, 2018

How difficult is it to talk with your family about money?

By: Beyondly, Inc.

Some families have no problem discussing money. For the rest, use these tips to get your family on the same financial page.

How many times have you been given the wrong change at a store or restaurant and just accepted it? Maybe the line was too long or the cashier didn’t seem particularly friendly and you thought a dollar or two wasn’t worth the hassle. Or maybe you’re one of those people who has no qualms making sure they get back exactly what they’re owed regardless of how they’re perceived by the long line or unfriendly cashier.

When speaking with your family about money it can go either way too, since most people tend to get touchy when discussing their finances. According to Yahoo Finance the best way to approach this is to simply make money a normal topic of conversation.

Money Is Harder to Talk About Than Death

A 2014 study from Wells Fargo revealed the following:

The most challenging topic to discuss with others is personal finances (44%), whereas death (38%), politics (35%), religion (32%), taxes (21%), and personal health (20%) rank as less difficult.

Take that in for a second: People would rather talk about no longer being on earth than money.
The study also reveals that while people aren’t comfortable speaking about money, it’s one of the biggest stresses in their lives, often causing sleepless nights. You’d think turning to family would assuage these fears, but silence often prevails.

When it comes to talking about money, Wells Fargo found “71% of adults surveyed learned the importance of saving from their own parents. Despite this, only a third (36%) of today’s parents report discussing the importance of saving money with their children on a frequent basis, with 64% indicating they talk about savings with their kids less than weekly or never.”

How do you comfortably discuss money with your family?

Tips for the Talk

Yahoo Finance provides four tips to make headway when having a cash chat with those who share your blood.

Frequency & Neutrality

Whenever a person prefaces a conversation with “we need to talk…” odds are it won’t be a pleasant experience for at least one of you. Most money conversations seem to have ulterior motives, especially if the only time your family talks about money is during a crisis or when a person needs some. However, if money can become an unconditional part of your ongoing conversations

(e.g. it’s peppered throughout all the other stuff you speak about), it won’t be so awkward.

You don’t have to break out bank books and give specific amounts, but regularly discussing financial tips, tricks, or experiences with kids, siblings, and parents will make it more normal and less taboo. If the first time your family talks about money is when an estate needs to be divided after a death, you’re doing it wrong. Start small — savings, investments, monthly budgets, advice you got from your parents or trusted advisors — and work up to bigger conversations once everyone’s on board.

Generational Divide

Citing the Wells Fargo study, Yahoo points out that “69% of older respondents viewed monetary gifts as an expression of love. On the flipside, 30% of millennials saw monetary gifts as a way to exert control or influence.”

An older person who worked their whole life to amass savings has a completely different perspective than someone in their early 20s just getting started on the journey. While you might never see eye-to-eye with someone 20-40 years your junior or senior (especially when it comes to music), you have to try and understand their point of view.

Finding the Right Place

When it comes time for a bigger discussion about money and estate planning, where you meet can dictate how well it will go. Yahoo Finance suggests finding a location that will make everyone comfortable. This means finding neutral ground outside of the family homes to avoid anyone who might try and use the familiar setting, either on purpose or subconsciously,
to their advantage.

The article suggests renting a private room at a favorite restaurant or a conference room at a local hotel, which seems to go against the whole “make money talk more informal” thesis they champion, but their point is valid. Once you’ve graduated to the point where you can have an official family meeting, you might not want to discuss secret business in a Starbucks or at the local park; you need a setting that’s suitable for a serious talk, but not at all intimidating. The private room in a restaurant probably works best, especially if they serve potato skins. Because, let’s be real here, who doesn’t love a good potato skin?

 

Be Calm While You Carry On

Body language is very important around family because they often know you the best (and worst). Unlike strangers who might put up with a little attitude, if a family member recognizes a slight mannerism or catches an eye-roll, things can get dramatic and explosive very quickly.

Ideally, you should have a clear idea of what you want to accomplish. If you’re one of the wise family elders, you most likely have a much better handle on all the finances and can dictate the tone and agenda.

You can also make sure everyone is comfortable and willing to ask questions even if it’s a 15-year-old grandkid baffled by the concept of a mortgage. (Or a 35-year-old adult child baffled by the concept of a mortgage.)

Finally, don’t be coy. Unless someone is demanding specific figures you’re unwilling to offer, try to answer as openly and honestly as possible. For example, if your Will states that all your assets will be divided equally among your adult children, tell them that. The entire point of normalizing money discussions with your family is to limit surprises, not heighten the suspense and turn it into a free-for-all after you’re gone.

P.S. You really should try out your own Everplan.

It’s really simple to set up, it’s free to try, and it can make a world of difference for your family if something happens to you.  Set up your EverPlan today.

Copyright © 2018 Beyondly, Inc. All rights reserved.  Distributed by Financial Media Exchange.

A Changing Landscape for Young Families

By Marriage and Money Team | April 24, 2018

A Changing Landscape for Young Families

By: Liberty Publishing, Inc.

For today’s younger couples, taking a drive along the winding road of finances is a lot different than it used to be. There are so many choices—each one steering the young couple closer or further away from the dreams of a lifetime. Hanging in the balance are two individuals hoping that their decisions will be in their overall best interest.

To better understand some of the challenges facing young families, meet Joan and Tom Johnson. They’re both in their late twenties and were married three years ago. Joan is a registered nurse and John is a marketing representative for a local manufacturing company. Up until this point, they’ve enjoyed a lifestyle supported by two incomes. Without children, they’ve been able to be somewhat carefree about their spending.

Now, however, they are contemplating buying a home and having children. This has certainly raised questions about the financial implications of enlarging their family, as well as their financial future. Although the Johnsons’ jobs seem relatively secure, they have friends who work for companies that have experienced significant downsizing and who are less certain about their future employment situation. Moreover, some of their friends have lost jobs and are going through difficult transitions.

Discussions with family and friends have led them to the conclusion that uncertainty may be the defining characteristic of their generation. Emerging families like the Johnsons are facing a new reality, one with much more uncertainty about the future than that faced by previous generations. Some of this uncertainty is tied to rapid technological changes and some is the result of the realization that they personally may be responsible for providing for themselves much of what was previously provided by others (e.g., pensions by employers; social programs by the government).

There are many issues facing Joan and Tom, and they’ll need to ask themselves some difficult questions such as: Will corporate downsizing eventually catch up to them? If Joan intends to return to work full-time after having a baby, how would they cope if one of them should lose their job? What about the world of work in general? Will they go through several career transitions over the course of their working lives due to an economy that might be changing constantly? Is there a way to protect themselves financially? How difficult will it be for them to save for a child’s education? What about saving for more than one child? They both participate in 401(k) plans at work, but will they be able to save enough for a comfortable retirement? What about Social Security? Will the system change significantly? Will they be protected should they become sick or disabled?

What can a young couple like Joan and Tom do? A good first step is to discuss the various alternative solutions to these difficult questions. By doing so, Joan and Tom will be able to arrive at a realistic assessment of what they should and should not do financially, what they can and cannot afford, and what sacrifices they might need to make to assure financial security for both today and tomorrow. They know that their spending choices will have to be made carefully, and that preparing for a bright financial future will require setting goals now.

As the Johnson’s continue down the road of finances and look to expand their family, they can be a bit more optimistic about their future. The financial decisions they make today will make them less likely to be caught off guard by sudden economic or personal “bump in the road” tomorrow.

 

A Budget Can Help Boost Your Family’s Savings

By Marriage and Money Team | April 24, 2018

A Budget Can Help Boost Your Family’s Savings

By: Liberty Publishing, Inc.

In difficult economic times, many young couples and families may find themselves wondering where their money goes. Faced with income constraints and competing demands for their money, many people simply spend what they must on necessities and save whatever happens to be left over. Or they spend all of their wages trying to make ends meet and borrow or charge anything else that they need.

Whether you live close to your means or have substantial financial resources, a budget can serve as the foundation for a family savings program. It can provide an effective tool to help control both personal and household expenses, thus freeing up income that you can redirect toward your family’s future.

How does a budget accomplish these goals? Consider the following points:

  • By putting your family’s actual expenses down on paper, a budget may reveal an inefficient or ineffective use of your family’s financial resources.
  • Once you see where your money is going, a budget can encourage you and your family to conserve your financial resources or spend them more wisely.
  • A budget can assist you in anticipating financial problems that might otherwise arise from your present spending habits, thus allowing you to take corrective action to prevent difficulties before they occur.
  • Equally important, a budget may alert you to the need to develop alternative courses of action to achieve your family’s financial goals.
  • A budget can also help motivate you and your family to stick to a savings plan once you’ve committed yourselves to it.
  • Finally, a budget can help you evaluate and measure your progress toward meeting your family’s long-range financial objectives.

Regardless of your family’s dreams—whether of higher education for a child, an early retirement, or a once-in-a-lifetime family vacation—a budget can help boost your savings, thereby bringing your family’s wishes closer to reality.