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Clarity Financial Planning Services is an advocate for your financial future who takes a holistic approach to your needs and goals.

Is it Time to Review Your Estate Plan?

Estate planning is one of those tasks that people tend to avoid. And once someone has undertaken estate planning, they may be hesitant to revisit their estate plan because people are not eager to discuss the end of life. Kiplinger’s acknowledges this hesitation in “8 Signs Your Estate Plan May Be Worthless” but still recommends reviewing your estate plan:

“We recommend, at a minimum, that all clients have a will, a financial power of attorney and an advanced medical directive that have been reviewed by an attorney within the last 10 years and subsequent to any major life event.”

Who is your trustee? If you have a friend or relative as a trustee, Kiplinger’s suggests rethinking that. People who name those close to them and those who accept aren’t always aware of the weight of this responsibility, which may include enacting directives that disappoint people they know. A third party can be more objective.

What has changed? There are so many things that can change as time goes on after you have created an estate plan. Again, it is easy to think of creating estate plan as a one-time task but it does need review. The relief your beneficiaries may feel to know that you have an estate plan can be quickly snatched away if it hasn’t been updated and they encounter hassles because of outdated information. Review your estate plan if:

  • You have beneficiaries you want to add…or remove
  • You didn’t outline who should get personal items like jewelry
  • You review and update your life insurance policy
  • You know estate tax laws have changed but aren’t sure how it affects your estate plan
  • You’ve moved to a different state

A Fee-Only financial planner is one of the people you can turn to for help in reviewing your estate plan to make sure it is up-to-date and that it reflects your current wishes and current tax laws.

Mothers: Make Time for Estate Planning

In “The Intangibles of Estate Planning  for Working Mothers,” Working Mother outlines just why estate planning is so important for working mothers, as well as other adults. We all know that money is important but when we put off financial planning tasks, we forget that money matters because it represents security. And we all want to feel financially secure.

As the article points out:

“…it’s impossible to see the future, and you never know what circumstances might bring. Preparing early is the one way you can ensure that your children are properly taken care of, both monetarily and in terms of guardianship, should something happen to you. And, if nothing else, it gets it out of the way for down the road.”

Taking Stock: If budgeting and financial planning are not regular practices for you, then estate planning will give you a look at your financial health. This may be one of the reasons people avoid estate planning—we don’t want to face the uncertain future and we really might not like to see that our finances are not in great shape. However, they only want to know is to take a look. As you try to ensure your family’’s future financial stability, you may find that you have some work to do in the present. Some of us already know that our finances aren’t in great shape but meeting with a Fee-Only financial planner for estate planning might be the wake up call we need.

Having “The Talk”: Just as we avoid talking to our children about how life begins, we often also avoid talking about what happens as our lives wind down. Working Mother points out that framing it as part of a talk about estate planning is one way to approach a conversation about aging and death. Even if you and your children feel uneasy, you can discuss how you are preparing so they are not left scrambling.

And you too may feel more at ease knowing that you done what you needed to do to look out for your family.

Financial Planning Advice for Single Mothers

WealthySingleMommy.com offers the kind of financial advice you may find elsewhere with the addition of offering attitude adjustment advice needed when you’re facing a tough situation. It is easy to panic but better to save money and explore your options:

“But being a single mom does not mean you’re destined for the welfare line, free school lunches for your kids, or living in your parents’ basement.

The first step is to convince yourself that your new life will be one that is full, joyous and financially rich.”

Emma Johnson of WealthySingleMommy.com encourages single mothers to see themselves as financially independent because even if you get alimony or child support (or both), you cannot rely on that money since anything can happen. She adds that earning your own money without being totally dependent on a former spouse can help you heal emotionally.

Understand how your taxes will change. You don’t need to become a tax expert but you do need to have a general overview of how your tax filing is going to be different now that you are on your own as the head of household.

Set short and long-term goals. Sometimes single parents are so consumed with surviving day to day and week to week that they don’t look at the bigger financial picture. You don’t have to be wealthy to have financial goals; in fact setting goals can put you on the path the wealth. That article gives examples of short-term goals (pay off a credit card, build your emergency savings fund) and long-term goals (buying a house, retirement, college fund. Completing short-term goals can give you the confidence you need to keep working towards you long-term goals. Working with a Fee-Only financial planner can help you figure out a path to a financially secure future for your family.

Working Mother Magazine also suggest that single parents have life insurance, trauma insurance, or some other kind of income protection to ensure that you can still meet expenses if something unexpected happens.

 

 

Give a Graduate the Gift of Financial Planning

The 4 best financial gifts to give a college graduate (other than money)” is aimed at people who want to give a useful gift to a college graduate but you may want to also think about giving a gift that helps with financial planning to any high school graduates in your life as well.

Saving and Investing: The article offers two suggestions—either that you give a monetary gift with the stipulation that a graduate has to invest that money or you take the step of opening an account at a brokerage for the graduate and offer seed money to get them started. You can also open a savings account in your graduate’s name.

Only you know if the graduate in your life will invest money freely given. Only you know if a graduate will pay attention to an investment or savings account that you open. Overall, though, as the article states, “Being personally involved will encourage your graduate to save more and invest more and learn more.”

Financial planning: Some graduates think that sitting down with a Fee-Only financial advisor is for someone well-established in a career but this could’t be further from the truth. Many of us wish we had been able to sit down with someone to map out the possibilities for our financial future early in our careers. You can give a graduate the valuable gift of a session with a financial planner.

Communicating your message: Hopefully, you also have an idea of how the graduate in your life gets information. The article lists a number of books that are written with young people in mind but it also mentions some useful apps.  If reading about finance, investing and financial planning isn’t your graduate’s cup of tea then perhaps the right app will be. There are savings and investment apps that will allow you to provide money to get someone started and let them take over as time goes on.

Using Fiction to Discuss Money Matters with Children

Last week, we looked at lessons to be learned from the announcement that Toys R Us is closing its stores. There is nothing wrong with buying toys or other objects, as long as you recognize that they can offer a low return on investment since the good feelings they may spark are temporary.

Another way to teach your children valuable lessons about money and finance is through books. You can do this with books that are specifically written on financial topics in a nonfiction format. Or, as the Consumer Financial Protection Bureau (CFPB) advises, you can also use children’s books that feature fictional stories to get your kids to think about money.

The CFPB’s Money as You Grow book club offers guidance to “…help you get started reading and talking about money choices like saving, spending, and more.” Reading about and discussing the choices fictional characters make regarding money can help children to think about what they have done or would do in a similar situation.  The bureau offers guides online so parents and other caregivers can work with children in the home and also provides tips in case you want to start a book club using these materials.

Some of the titles such as The Berenstain Bears’ Trouble with Money, in which two siblings save up for a video game, have money as the central challenge of the plot. Other titles, like A Chair for My Mother weave financial issues into stories where characters are dealing with other challenges. In A Chair for My Mother, a girl and her family save for a comfortable chair after losing their belongings in a fire.

In addition the books recommended, you can talk to you children about the money matters that play into the movies and TV shows they watch.

And don’t forget that adults can benefit from reflecting on the financial matters they read about. We have highlighted lesson that adults can find though non fiction (Happy Money: The Science of Happier Spending) and fictional titles such as (The Nest and A Christmas Carol).

Spend Money on Experiences Instead of Shopping for Happiness

In “Mourning Toys R US? Think about this,” Kara Alaimo offers thoughts on why the end of this and similar retail stores may not be such a bad thing for consumers:

“It’s easy to get nostalgic about these stores and to feel their closings as a loss. It’s also worrisome to think that, instead of taking their kids to a store to play together, parents may order their toys online — or, even worse, hand over electronic devices so kids can do so on their own. But there’s a silver lining here: parents can use the time they would have spent shopping to do healthier activities with their families.

Teaching children that happiness comes from shopping was never the best lesson anyway.”

If you find that a lot of your personal or family time is spent looking for or buying things, you may want to examine why you spend so much time this way. It is not always easy to go out for a day and spend no money. You will not always want to pack and lunch and go to a park and that is okay. What may not be great for your budget or financial future is if you find that you shop often for entertainment and are not sure what to do if you are not shopping.

We’ve discussed spending money in ways that increase happiness and examined the book Happy Money: The Science of Happier Spending. The book notes that research has found that purchasing objects has diminishing returns: you are happy with your purchase but feel less certain when you see something you think is better. When you pay for experiences like concerts or vacations you are left with memories that may make you happy. Even unpleasant experiences like a missed flight that delays your vacation leave you with a story to tell and you can bond with others over this shared experience.

 

 

Spring Cleaning for Your Finances

Many of us like the idea of spring cleaning but we are overwhelmed at the prospect of cleaning the entire house. Someone might suggest tackling one room at a time or even on section of a room at a time. It can be the same with cleaning up our financial house. MoneyTalksNews suggests setting a goal:

“Decide what you want to accomplish…Some ideas include:

Clear out two years’ worth of old tax documents.

Sort through one or two boxes of old papers of file cabinet drawers.

Clean out the closet stuffed with old papers.”

Getting rid of documents. While MyCreditUnion.gov suggests that you streamline and purge old documents, MoneyTalksNews goes into more detail. You do need to figure out what you need to keep and what can go. You don’t want to be overzealous and toss something you may need. MyCreditUnion.gov says you need to keep your tax returns and documentation that supports your tax claims for six years and some experts have even said seven years. Once you decide what records you no longer need, you need to shred this documentation and not simply throw it away.

If you decide to keep some records in digital format via saved files or also because you scan and save them, then you can also shred the paper copies but be sure you have backed them up adequately to feel secure that you can access them if needed.

Shop for new bank accounts. Just as you assess and clear items from your home, you can also examine your banking relationships. If you have bank accounts you no longer use, you can close them. And then consider if the interest rates and services offered with the accounts you decide to keep are the kid of value you want. If not, research other financial institutions to see if you can get better rates or better services.

You can undertake a financial spring cleaning before you visit a Fee-Only financial planner so you have a better idea of the state of your finances. You can also consult with a Fee-Only financial planner beforehand and then return home to streamline, purge, and get ready to exercise greater control over your financial life.

 

 

Don’t be an April Fool…Plan for Retirement

If you have reached adulthood then you are already aware that plans go awry. Your plans for one day can be derailed so it goes without saying that your plans for retirement may not play out the way you think they will. Still, many of us remain a little too optimistic that we’ll be able to retire when and how we want.

In “3 April Fool’s Jokes for Your Retirement Plan,” TheStreet.com observes “There are many disparities between the expectations of a worker aged 50+ and the reality.” Rather than be a April fool, consider how you can plan for retirement in such a way that you are ready even if your well-laid plans don’t come to fruition as you thought they would.

The article examined “The Current state of Retirement: Pre-Retiree Expectations and Retiree Realities,”  which found that only 16% of respondents retired early due to being financially able to retire. Even though people were able to select more than one option in this survey, it still means that an overwhelming majority of the people asked retired for reasons other than being ready financially. The idea that we will all be able to retire when we’re ready is one of the mistaken notions discussed, two more are–

I’ll work in retirement.

The survey found: “The disparity between 54% of pre-retirees expecting to still be working and only 5% of retirees actually working is a huge cause for alarm for financial planners.”

You may not work in retirement because you are unable. It is also possible that you may not be able to find employment.

I’m going to wait until full retirement age to start getting my Social Security benefits.

Ideally, you would wait until full retirement age and that way receive more. However, many people reach 62 and find that life circumstances dictate that they apply for those benefits earlier than planned.

Rather than just believing that you will be able to retire as you wish, work with a Fee-Only financial planner to ensure that you are prepared.

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