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As You Teach Your Kids About Money, You Learn

According to research done in Britain, teaching your kids about money could also help improve your finances. Parents who took a two-hour course designed to encourage them to talk to their children about money and money management improved their finances a year after they’d taken the course. A control group who took a course on parenting that didn’t not cover financial topics did not report improvement:

“Researchers believe that the unexpected benefit to parents’ own finances is likely to result from the course encouraging parents to be more open about household spending and debt.”

More parents gave their children spending money after taking the course. Previous research done by the same organization found that children tend to be better with managing money when they are given money on a regular basis

Even if you don’t decide to give your children money on a regular basis, there is a lot you can do to increase their financial literacy such as having your kids help with making shopping lists or making the family budget, role-playing what happens when you go to a store to make a purchase, and talking regularly about money. Parents are encouraged to remember that they don’t need to be experts to teach their children about money; they just need tp be willing to discuss it (as opposed to never talking about it).

And the holiday season is a good time to talk about money. If you don’t discuss it openly but you shop and perhaps even express remorse later when the bills arrive, your children are paying attention. Why not talk to them openly about money and spending? It is no secret that teachers learn as they instruct. And if you are concerned that your curious children will ask questions that will make you uncomfortable, consider just why that is the case. Again, they are observing you no matter what so letting your children help with some of the financial planning could result in a better financial outlook.


Give Thanks To and For Your Professional Contacts

While we are encouraged to think of all we are grateful for at Thanksgiving, you may limit that gratitude to your personal connections but you don’t have to. In addition to thanking family and friends, you can also find ways to reach out to the people in your professional life as well.

In “The Power of Gratitude,” a Forbes contributor writes about expressing gratitude to co-workers and clients and how that can help you in your career. So as you are making your plans for what you want to do an achieve in the coming year, don’t forget to be grateful for and consider the ways that the people around you have helped you get to where you are:

“The trick to a gratitude practice is that you don’t wait for the people around you to do something to be worthy of gratitude. Instead, you push yourself to look around and be grateful for what the people around you have done.”

And  another Forbes article, This Thanksgiving, Tell Your Network ‘Thank You,”  poses the question, “When was the last time you thanked anyone in your professional network?” It is a reminder not just to thank people when you are job hunting but to find ways to keep in touch with people who have helped you along the way when you are not actively seeking work.

Some of the  advice in this article is tailored towards Baby Boomers but anyone can connect with someone to keep their network current. Suggestions include sending a handwritten note (preferable before a lot of other holiday greetings start to arrive), make a call to catch up, and inviting someone from your network out for coffee or a meal one-on-one, or if you feel it is appropriate invite a professional contact to a holiday party. 

Expressing gratitude to colleagues, clients, and professional contacts can boost morale and may also boost your earning power. It also paves the way for opportunities in the future.



Tips for Lowering Next Year’s Tax Bill

With all that is happening, you may have seen a few headlines or heard a little about the tax reform bill that was passed this year but are you really prepared for how these changes will affect you when you file taxes next year?

Overall, as CNBC notes “The new legislation put through sweeping changes, including roughly doubling the standard deduction to $12,000 for singles ($24,000 for married joint filers), eliminating personal exemptions and trimming individual income tax rates.”

Earlier this year, we discussed how telecommuters will lose their home office tax deduction but there are other changes for employees who have taken on certain work-related expenses. states that while before now “you could deduct the amount of your miscellaneous expenses exceeding 2% of your adjusted gross income (AGI) for the year,”  employees will no longer be able to write off expenses related to travel, work attire, tools, and union dues.

In, “Time is running out to use these 2018 tax-savings tips,”CNBC also offered tips for things you can do to alter next year’s tax bill as the year comes to a close.

If you were someone who withheld less from your paychecks because you were able to take advantage of so many deductions, consider changing  your withholding. You can check the current year’s IRS Withholding Tables to see if you are one of the estimated 30 million people who are not withholding enough.

CNBC suggests, “If you’re just short of the newly doubled standard deduction, consider being a little more generous this year.”

In other words, you can use end-of-year gifts to charity to lower your tax bill. There are many organizations that would welcome a donation from you and they won’t scold you for waiting until late in the year.

You can also meet with a Fee-Only financial advisor before year’s end or early in the new year to plan for tax season.

Don’t Overspend on Experiences this Holiday Season

We have discussed how research has found that there is more happiness to be found in experiences than in buying objects. However, there is a temptation to overspend even when following the best financial advice. You may think that if you focus on experiences with your family and friends (as opposed to just buying a lot of gifts to hand out) that you are doing the best thing for your wallet but if you overspend, that may create difficulties for you.

If you and your family decide to travel this holiday season instead of staying home and exchanging gifts, you will need to budget for a holiday trip as you would for any other. Especially since vacations lend themselves to the temptation to indulge and a holiday trip may lead to even more indulgence.

Staying home doesn’t keep you from temptation either. The desire to have a wonderful spread for family and guests to eat or to make sure your home is beautifully decorated may lead you to overspend.

And while many of us may need to rein in our generosity towards others, in “Why you should plan ahead for holiday spending,” Forbes points out that “Nearly a quarter of adults say they usually buy themselves gifts over the holidays.”  The temptation to pick up something to treat yourself while you are doing so much work to make the holidays great for everyone else is strong so you should set a limit for spending on yourself. This is not to say you don’t deserve a treat; but too many of those “treats” can hurt later when funds are low.

If you are someone who feels overburdened with holiday shopping and planning, take a step back and consider what you can do differently. When you are footing the bill or doing all the work for family trips or dinners, ask yourself how others can contribute. Can you provide entrees and ask others to bring side dishes? If you are being asked to pay to take more people than you can afford on a trip or to an event, consider your own financial needs before you overextend yourself. 

Does the Halloween Strategy for Investments Really Work?

Have you ever heard of the “Halloween Strategy?’  Investopedia describes it as a theory that an investor can get better results for stocks between October 31 and May 1 than from May to October. There is also a saying that one should “sell in May and go away” which indicates you should not invest in equities between May and October. As Investopedia observes, “This technique is contrary to the buy-and-hold strategy, in which an investor may ride out down months.”

However, before acting upon sayings and taking this kind of advice, you should look into its history. This strategy may have started abroad in England where the wealthy spent their summers on their country estates and didn’t really keep up with their investments. While Investopedia notes that wealthy in the U.S. also spend their summers away, in some cities this time away is mainly just the month of August. And since these English summers spent away from investing concerns started in the 1930s, one might also question if this still works today when we are connected by the internet. You can ignore technology for months at a time but many of us would have a hard time doing that.

There may be some truth the idea that you can use the Halloween Strategy since some investment professionals also take vacation in the summer and return in the fall  ready to work but Investopedia points out that you can find evidence both in favor of and against this this strategy.

“The Halloween strategy is a timing strategy; and most individual investors are not equipped to implement a timing strategy. In truth, returns can be high (or low) any time of year and unless you know precisely when each will happen, a generalized approach to timing is based more on luck than anything else.”

If you’re not sure if investing advice that you’ve read or heard will work for you, contact a Fee-Only financial planner for help with a personalized investment strategy.

What You Might Not Know About College Financial Aid

Perhaps you imagine that the time to think about colleges and financial aid is in the spring but as Michelle Singletary points out in the column “Debunking the myths about college financial aid,” October is when the Free Application for Federal Student Aid (FAFSA) form is released and you need to fill out this form as soon as you can because college financial aid is first-come, first-served. Don’t let this task linger on through the winter holidays since leaving it undone can cost you money. 

In her column, Singletary looks at some of the misconceptions people have about financial aid. Some people figure that they won’t get anything because their income is too high. Others decide they don’t want student loans and don’t bother with the FAFSA.

The FAFSA does not just qualify you for no-cost money; it can also be used by those granting school and private scholarships. And if your family has multiple children in college, this affects how the parent contribution is calculated, so your income considered differently when you have more than one college student in the family.

If you already have determined that you don’t want any loans, you should still fill out the FAFSA because 1. you just never know and 2. the form can help your child get grants or a work-study. Ignoring the form may lock out student out of these options.

If you have concerns that your credit rating will affect financial aid, don’t let that keep you from applying since “There’s no credit check for most federal student loans.”

Singletary also addresses non-monetary concerns, noting that your child does not need the best grades in get financial aid. However, she is honest about the fact that your child will need to perform at a certain level to stay enrolled.

And since the financial-aid calculations change each year, you need to fill it out every year in case some change in the formulas or modification of your income works in your favor.

Consider Interest Rates When Tackling Credit Card Debt

This holidays are approaching and this is the time of year when many of us pull out credit cards and push away thoughts of how we will feel when the bills come later. 

The author of “Most people are paying off their credit card debt all wrong — are you?writes that researchers from England found, “People were simply splitting their payments up between cards more or less evenly, regardless of the interest rate. As a result, many were losing hundreds of dollars or more to interest payments annually.” 

This surprised them since, as you’ll see, this may not be the best way to pay down multiple credit card balances. They thought that perhaps people were following the oft-quoted financial advice that one should pay off the card with the smallest balance first. The idea behind this is that the achievement of paying off one balance will motivate you to move on the larger debt.

However, it wasn’t clear that this is what people were doing either. It seems that they were doing something that has been labeled as “balance-matching,” which is paying an amount that corresponds to the card balance, no matter what they interest may be.

The article advises consumers to pay attention to the interest rates on their credit cards because you could pay less in interest if you put more money towards the credit cards with the highest interest. If you pay the minimum on all of your credit cards and then put the rest of the money you have for credit card repayment towards the card with the highest interest rates you will hand over less money to your creditors.

This advice doesn’t mean that you should never consider paying off a small debt first and it doesn’t mean that the “small debt first” advice is wrong. It is a reminder to pay attention. You have more control over your money than you think. You can control your spending and when you do use credit cards, you can opt to pay less in interest if you choose to do so.  Why pay more to borrow than you have to?

Estate Planning: Get Help with Designating Beneficiaries outlines “7 Common Mistakes to Avoid When Naming Your Beneficiaries” to give readers some ideas about just how even the most well-intentioned estate planning can go awry.

You may already know that if you leave no will or estate documents, the courts will decide who gets your assets, but did you know that if you name your estate as the beneficiary your money will still go through probate?

And those parents who decide to name the child they consider to be the most responsible as a sole beneficiary have no way to guarantee that this child will distribute the wealth among all heirs. In the same vein, a parent who puts a different child’s name on different accounts may not realize that value of these accounts could vary significantly when it is time to inherit.

People who don’t periodically check and update beneficiaries may leave money to someone they didn’t intend to inherit (such as an ex-spouse). Or they may unintentionally leave someone, such as the youngest child who was a surprise, with no inheritance.

Even if you create a trust with your will, making a minor child the sole beneficiary on some accounts or life insurance policies will mean that the child gets a lot of money at 18 or 21. This may not be a good thing, depending on the child. On the other hand, there could be a very capable minor who won’t be able to access needed funds. You can make a trust the beneficiary for things like a life insurance policy with stipulations for how the money will be distributed.

Perhaps you’ve seen TV shows or movies where someone write their own will and then goes to a notary. Often it is not as simple as that. As states:

“Designating beneficiaries incorrectly, among other mistakes, can have far reaching negative consequences.  Beneficiary designations are an important part of your overall estate plan and should be reviewed and updated as part of a well-coordinated estate plan with the help of an estate planning specialist. “

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