Do you have money questions

Delayed Gratification Today, For A Better Retirement Tomorrow

A little “delayed gratification” may help you retire more comfortably.

Baby boomers are known for wanting more out of life – and for living life on their own terms. They also get a bad rap as a generation weaned on instant gratification – wanting it all now, wanting to have it both ways.
It is neither wise nor truthful to paint a generation with a broad brush. What we do know in 2016 is that more Americans than ever are poised to retire. In fact, 10,000 Americans will turn 65 each day during the, last 6 years and for the next 12 years.1 Will their retirements match their expectations?
Are boomers in for a collective shock? Many boomers are used to affluence and expect creature comforts in retirement. Yet many may not understand how much money retirement will require. A 2010 study from the non-profit Employee Benefit Research Institute estimates that about half of “early” boomers (those aged 56-62) will face a retirement shortfall – someday, they will have inadequate income to pay medical costs and core retirement expenses. EBRI also estimates that 43.7% of “late” boomers (those aged 46-55) are likely to exhaust their retirement savings as well.2

Investing aside, what about the way we spend? EBRI research director Jack VanDerhei told TheStreet.com that beyond federal policy decisions, “[what is] even more important is to identify which of those households still have time to modify their behavior to achieve retirement security, and how they need to proceed.” 2

What is a need and what is a luxury? Now here is where it gets interesting. In a new survey of more than 1,000 boomers conducted by MainStay Investments, more than half the respondents identified “pet care” and “an internet connection” and “shopping for birthdays and special occasions” as basic needs. Almost half checked off “weekend getaways” and “professional hair cutting/coloring” as basic needs. Perhaps the definition of a “basic need” is expanding. Or perhaps we have gotten so used to these perks that we can’t imagine living without them (and not spending money on them).3
Boomers are necessarily growing more pragmatic. The MainStay survey results hint at a shift in their financial outlook. The survey found that 76% of boomers were willing to work longer and save more in pursuit of more retirement comfort.3
Additionally, 40% of those surveyed said they will have to delay retirement in order to afford their desired lifestyle – and 47% said they would be willing to live in a smaller house to have more of the above luxuries/needs. A whopping 84% of respondents indicated they would be willing to allocate a portion of their assets so that they might have consistent lifelong income. However, just 52% of them were in contact with a financial consultant.3
We can learn from our elders. Look at the sacrifices made by the “greatest generation”. World War II demanded so much from Americans, not only in the theatres of combat but at home. For several years, new cars weren’t manufactured, travel was discouraged, and food, clothing and gasoline were rationed. The entire economy was rearranged, and more than 40 million Americans had to start paying federal income tax.4
This generation certainly understood delayed gratification. Yet with all that economic and political upheaval, its members collectively enjoyed the most comfortable retirement in American history (and perhaps the history of the world).
Will we pay for today’s lifestyle tomorrow? Financially, that is a risk we face. Many of us have not saved enough for retirement, and the financial markets have been especially volatile of late. So it only figures that spending less and saving more today could help us out tomorrow. Who knows – if some extra effort is put in now, we may end up with enough money to “live it up” later.
Citations
1 – http://www.sacbee.com/2010/08/29/2990176/baby-boomers-signal-shift-in-what.html
2 – http://www.thestreet.com/story/10806795/even-wealthy-face-retirement-shortfall.html
3 – http://www.reeerisa.com/news/fe_daily.aspx?StoryId={66D70228-CEFE-4782-9058-F2F2DAB68DD1}
4 – http://www.nationalww2museum.org/education/for-students/america-goes-to-war.html

4 Money Blunders That Could Leave You Poorer

A “not-to- do” list for the new year & years to follow.

How are your money habits? Are you getting ahead financially, or does it feel like you are  running in place?

It may come down to behavior. Some financial behaviors promote wealth creation, while others lead to frustration. Certainly other factors come into play when determining a household’s financial situation, but behavior and attitudes toward money rank pretty high on the list.

How many households are focusing on the fundamentals? Late in 2014, the Denver-based National Endowment for Financial Education (NEFE) surveyed 2,000 adults from the 10 largest U.S. metro areas and found that 64% wanted to make at least one financial resolution for 2015.

The top three financial goals for the new year: building retirement savings, setting a budget, and creating a plan to pay off debt. 1

All well and good, but the respondents didn’t feel so good about their financial situations.

About one-third of them said the quality of their financial life was “worse than they expected it to be.” In fact, 48% told NEFE they were living paycheck-to- paycheck and 63% reported facing a sudden and major expense last year. 1

Fate and lackluster wage growth aside, good money habits might help to reduce those percentages in 2015. There are certain habits that tend to improve household finances, and other habits that tend to harm them. As a cautionary note for 2016, here is a “not-to- do” list – a list of key money blunders that could make you much poorer if repeated over time.

Money Blunder #1: Spend every dollar that comes through your hands. Maybe we should ban the phrase “disposable income.” Too many households are disposing of money that they could save or invest. Or, they are spending money that they don’t actually have (through credit

You have to have creature comforts, and you can’t live on pocket change. Even so, you can vow to put aside a certain number of dollars per month to spend on something really important: YOU. That 24-hour sale where everything is 50% off? It probably isn’t a “once in a lifetime” event; for all you know, it may happen again next weekend. It is nothing special compared to your future.

Money Blunder #2: Pay others before you pay yourself. Our economy is consumer-driven and service-oriented. Every day brings us chances to take on additional consumer debt. That works against wealth. How many bills do you pay a month, and how much money is left when you are done? Less debt equals more money to pay yourself with – money that you can save or invest on behalf of your future and your dreams and priorities.

Money Blunder #3: Don’t save anything. Paying yourself first also means building an emergency fund and a strong cash position. With the middle class making very little economic progress in this generation (at least based on wages versus inflation), this may seem hard to accomplish. It may very well be, but it will be even harder to face an unexpected financial burden with minimal cash on hand.

The U.S. personal savings rate has averaged about 5% recently. Not great, but better than the low of 2.6% measured in 2007. Saving 5% of your disposable income may seem like a challenge, but the challenge is relative: the personal savings rate in China is 50%. 2

Money Blunder #4: Invest impulsively. Buying what’s hot, chasing the return, investing in what you don’t fully understand – these are all variations of the same bad habit, which is investing emotionally and trying to time the market. The impulse is to “make money,” with too little attention paid to diversification, risk tolerance and other critical factors along the way. Money may be made, but it may not be retained.

Make 2016 the year of good money habits. You may be doing all the right things right now and if so, you may be making financial strides. If you find yourself doing things that are halting your financial progress, remember the old saying: change is good. A change in financial behavior may be rewarding.

Citations.

1 – http://denverpost.com/smart/ci_27275294/financial-resolutions-2015-four-ways-help-yourself-keep

2 – http://tennessean.com/story/money/2014/12/31/tips-getting-financially-fit/21119049/

House and glasses on papers

When Mediation is NOT the best choice.

As a woman it’s easy to let your feelings of guilt, desire for closure and avoidance of conflict to undermine your divorce process, especially when engaging in mediation. When the emotions are running high you may be better served with a lawyer who can intervene when you are not making the best decisions for your future.

In mediation while the lawyer can suggest steps you should take to clarify financial values they can’t do more than just suggest. You may need someone to take you by the hand and lead you to the path that is best for your future. Remember in most cases it’s not just YOUR future it often includes your children as well.

Remember that it’s important to speak to a financial advisor, before, during and after a divorce, as lawyers are legal representatives, not financial ones? Please let us know by posting your comments on our Financially Savvy Women Fanpage.

Woman looking through binoculars

What do Women Want from their Financial Advisor?

Women are now the principal breadwinners in four out of 10 families with children younger than age 18, reports Pew Research (63 percent of such women are single and 37 percent out-earn their husbands). The financial-services industry is taking notice of gender differences, and so should you.

Finding an Advisor who speaks the female language is crucial. Presentations that focus on a portfolio’s return, investment style, market capitalization and performance compared with a benchmark tend to work well with men. This style does not work with women. Women prefer a more personalized conversation that focuses on their visions and goals.

When speaking with your Advisor, do you know what you want? Please let us know by posting your comments on our Financially Savvy Women Fanpage.

Family saving money in a piggy bank

Are your Kids Prone to Affluenza?

Children can become master manipulators finding ways to get you to pay for what they want. It starts as early kindergarten (sometimes sooner) barraging you for candy at the checkout counter (what mother hasn’t given in to that pressure), or perhaps it’s the latest and greatest toy (that typically keeps their interest for a week) or the latest fashion created by a rock star (that often has less material then most parents consider decent with 3x the price tag).
As a parent this constant pressure can become overwhelming creating a sort of entitlement syndrome or a state of affluenza in our children setting them up for financial failure. The key to helping kids learn how to manage their money effectively is helping them understand the difference between what they NEED and WANT and then managing their money accordingly. Here is a simple program that can simplify your life, reduce the constant pressure and teach your children a lifelong lesson:
Preventing Affluenza:

  1. Use school lunches as the basis to their monthly allowance, if it costs $4.00 a day for a hot lunch establish their monthly allowance at $80.00. $80.00 may seem like a lot but trust me we often spend more due to a lack of budget. They can choose to use this money on hot lunch, or bring a lunch and save the money for other things they WANT, like fun clothes, movies with friends, ice cream etc…. the choice is theirs.
  2. Open a checking account/savings account that gives them access to the ATM machine. Let them know that $40.00 will be deposited into the account on the 1st and 15th of each month and be consistent with the deposits if you want this to work.
  3. Clarify what is a NEED and what is a WANT. Food on the table, books and necessary school supplies, basic clothing are needs while designer clothing, a must have skate board or pizza parties is a WANT.
  4. Stay firm in your stance as to what they NEED and allow them to run out of money from time to time, even when it’s a special opportunity and they have no funds left you are NOT in the business of lending.

While you may hear a few complaints from time to time, like “John’s parent’s pay for everything!” Make sure to hold your ground, as your children will learn valuable management skills that will have a positive impact on the rest of their lives.

Woman looking through binoculars

Women’s Money Mantra

When you begin the journey of taking charge of your financial life remember and repeat the Women’s Money Mantra.

1. You don’t have to have it all together, just start
2. It’s okay not to know, as long as you are willing to learn
3. If in doubt reach out and find a professional you LIKE and likes YOU not just your money
4. There are no stupid questions just complicated answers, keep asking
5. When they say “Just trust me” run the other way and find another advisor

 

Do you have a Mantra you would like to share? I’d love to learn about yours! Please let us know what you think by posting your comments on our Financially Savvy Women Fanpage.

Man and woman

Understanding Men, Women, and Money

For most people, money is never just money; it is a tool to accomplish some of life’s goals. It is love, power, happiness, security, control, dependency, independence, freedom and more. When two individuals form an enduring relationship with each other, money is always a partner, too.

Men and women vary in their idea of personal boundaries because they are both raised largely by women. Men have to psychologically disconnect more from women because of the sex difference; women do not have to separate so rigidly, and therefore can afford less distinct boundaries.

Second, men are raised to see the world as hierarchical and competitive. Women see the world as cooperative and democratic; they share. In addition, it is accepted that women are needy and vulnerable, while men are discouraged from such display.

When men make more money than their spouse, they believe their superior earnings entitle them to greater power in decision-making. By contrast, women who make more than their mates almost always desire democratic decision-making.

Money issues are different from other problems in a relationship. These problems are significantly more difficult to talk about and harder to resolve because of our extensive cultural conditioning. The most important thing in communication is empathy. It’s more important to be heard and understood than to have a partner agree with what you say without listening.

Mellan, Men, Women, and Money

What do you think? Can you relate? Or, is your situation different? Please let us know what you think by posting your comments on our Financially Savvy Women Fanpage.

Boomer Couple in Front of Their Beach House

Women and Financial Power

Too many women lack the confidence necessary to take control of their financial lives. Women fear making investments, managing their finances, planning and monitoring their spending, managing investments, and increasing their wealth.

Why aren’t women more confident with their finances?

The answer is that women are stopping themselves from being assertive. Many women leave their financial lives to their husbands, boyfriends or parents, and because of this way of thinking, they lack financial power. Financial empowerment must come from within. Women must seize it with fervor, reflecting an unshakable determination to take control of their financial lives. You must tell yourself that you can become empowered, and that you will not let outdated notions of gender hinder your success. Keep “EMPOWER” in your mind as an acronym representing these concepts:

Education is critical
Motivation inspired by your values
Protection against risk
Ownership of your future
Work — claiming what is yours requires effort
Emotions should be kept out of decisions
Responsibility to yourself

Do you use any acronyms to motivate you with your finances? I’d love to learn about yours! Please let us know what you think by posting your comments on our Financially Savvy Women Fanpage.

Gibbons, EmpowHer! Why more women are taking the financial lead

Happy senior couple making diner

Your Sex Might Cost You Money

There is no federal law banning discrimination based on sex, race, or gender on the cost of goods and services. Some states have adopted their own anti-discrimination laws, but many of these statutes are up for interpretation and don’t protect you. Here is what you need to know about how your sex might influence the prices you pay.
Women earn less and pay more:

Earnings: 81 cents for every man’s $1.00
Banking: 32% higher interest on subprime loans than men
● Cars: Offered list price $200 higher than men
● Deodorant: On average costs women 30 cents more than men
● Dry-cleaning: $6.50 per shirt; men pay $2.00 a shirt
Health Insurance: 45% more than men
Kingsbury, Buyer Beware

Boomer Couple on Motorcycle

Why are Women More Risk Averse?

Women avoid risk more than men; this can come back to bite them

Perhaps it comes down to both genes and social upbringing – women feel greater pain when they lose money than men. The result is that women tend to shy away from stocks more than men do. This makes intuitive sense because stocks are more volatile and unpredictable — on average – than bonds or cash. Perversely, it’s the wrong direction for women; they need higher exposure to stocks than men do. Women live longer than men; stocks broadly should continue to outpace inflation over long stretches of time vs. bonds and cash. Inflation is the enemy of all retirees and is especially corrosive to women due to their relative longevity.