Money Sense on Fortune and Survey Results

Senior adults with their adult children.Last week, I asked my newsletter subscribers and some of my Twitter and Facebook fans to take a survey about how they feel when discussing money — if they talk about money at all, that is. In this week’s FORTUNE column, I go over my survey findings and discuss how couples can break down the barriers that prevent us from having regular talks about our money.

You can head over to Fortune.com to view the column, but below are some additional results from Talking Money in Your Social Circle: A Do, or a Taboo?

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Q: Please rank the following conversation topics (sex, money, politics, religion and health) on the level of discomfort you experience, lowest to highest (1-5), when discussing them in your social circles.

A: Out of the above, you’re more likely to break a sweat when the conversation turns to what happens behind the bedroom doors. Over the weekend, politics replaced money for second place.

Q: Now, tell us how you feel discussing money with each of the following groups.

A: When discussing money in specific social circles, you’re more uncomfortable having the conversation with your colleagues and siblings than you are with your friends, parents and partners.

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Q: In general, how often do you avoid having conversations about money?

A: Roughly 38% of you answered “sometimes,” while 33% answered “rarely.”

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Q: Why are you less likely to talk about money in your social groups? Check all that apply.

A: With colleagues, it’s privacy and competition. With family, you said it either turns into a conflict — or conversely, it’s not a problem at all. And with friends, it’s both privacy and jealousy.

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Q: Which of the following money-related topics do you avoid discussing at all costs? Check all that apply.

A: Total assets and income top the list.

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Financial Resources for Caregivers

stressStepping in to help your parents with their finances is no easy undertaking. Here’s a list of resources that you may find helpful – as many people before you have:

Benefitscheckup.org. Do your parents qualify for special programs to help pay for medications, healthcare, food, utilities and more? This site, run by the National Council on Aging, can help you find out – and guide you through the process.

Eldercare.gov. This site, run by the U.S. Administration on Aging, can help you search out resources in your community for a wide variety of needs including Alzheimer’s, financial assistance, fraud prevention, housing options, legal assistance, long term care, and many more. If you’re more comfortable speaking with a person, lines are open from 9 a.m. to 9 p.m. M-F ET at 800-677-1116.

AARP’s Planning Guide For Families. A downloadable guide to walk you and the rest of your family through the ins-and-outs of stepping up to provide care, financial and otherwise.

SHIP or the State Health Insurance Assistance Program. The program provides one-on-one counseling about Medicare to Medicare recipients and their families. If you’re confused about your parents’ options, SHIP counselors can work with you face-to-face or on the phone.

Alzheimer’s Association. If you’re concerned about the warning signs of Alzheimer’s or have a diagnosis and need to explore options for care, financial planning or find other local resources, the caregiver center on the Alzheimer’s Association website is a good place to begin.

My Weekly Meal Plan

healthyFor those of you who recently attended my Mom Corps webinar — or for anyone looking to save a little extra money on groceries — I share with you my Weekly Meal Plan worksheet. As always, making a plan, and sticking to it, will help you save. Enjoy!

Download here!

Wednesday Welcome: The Benefit of Being a Big Fish in a Small Pond

Today’s guest poster is financial planner Neal Frankle, who writes about how his daughter got a great college education — and a wide network of contacts — for a fraction of the cost of an Ivy League school. If you’ve got your eyes set on a pricey school for your kids, this may help change your mind.

headshotAre you concerned about the astronomical cost of a college education? If so, I have some very good news.  My daughter just finished her degree in Finance and received a world-class education for a fraction of what it would have cost had she attended an Ivy League school.  Oh and by the way, she had a far better educational experience at the same time.

Before she started college we learned that graduates of high-priced schools don’t necessarily earn more than state school grads.  Still, we were concerned about the social scene at the state school.  We knew that it was important for her to be around other high achieving students in order to keep her motivated and working hard.

Fortunately, our daughter solved the problem herself. She got an expensive college education without the price tag.  How?  By becoming immersed in student government and an honors business fraternity (yes, the fraternity accepted both men and women).  She learned that the students involved in these groups were highly motivated, uber-achievers, super responsible and strong role models.

In order to excel in these organizations she had to be:

  1. Punctual.
  2. Responsible.
  3. Professional.
  4. Results focused.
  5. Work well in a team.

What more could any parent want?  Most of what I learned in college wasn’t taught in class.  My guess is that was your experience as well.  My daughter  flourished in college .  And she had that successful experience because she set herself up to succeed from day one.

My daughter told me that she never would have had the chutzpah to undertake student body politics and honors business organizations had she gone to an Ivy League school.  That’s  because she felt intimidated.  The state school gave her more opportunity to do well than the pricier schools.

Sometimes being a medium size fish in a small pond works out great.  My daughter had to deliver even though she had great demands placed on her.  She spent time with and learned from the best students on campus.  She also has fantastic networking opportunities that will help her for years to come.  As a result, she’s highly equipped to succeed in her professional life .  And best of all, she doesn’t have any college debt to worry about. Neither do we.

Before you decide on which school to send your children, take a look at the extra-curricular activities.  Look for academic opportunities that your kid will feel comfortable getting involved in yet pushed at the same time.  I am convinced that dollar-for-dollar, this is a far better way to go.

About Neal: Neal Frankle is a Certified Financial Planner in Los Angeles.  He helps clients make smart financial decisions so they don’t have to worry about their future.  He also is the editor for WealthPilgrim.com and MCMHA.org.  He is a regular contributor to Forbes, Huffington Post and other mainstream media publications.   

Mailbag Monday: Overwhelmed by College Costs

gradI have two children in college (and one in high school). We have exhausted their 529 accounts. I have already taken out Parent Plus loans to the extent I can afford at this point due to other financial setbacks. After financial aid, we still need to borrow to cover all the tuition/room and board costs. What are the best options, or what should we look for in obtaining loans for our children? Anything you can provide would be appreciated. I’m overwhelmed at this point.

– Nicolette

Hi Nicolette. I get where you’re coming from – it is overwhelming. And you’re smart to recognize when you’ve come to your own limit in terms of borrowing. At this point, the borrowing will fall to your children and the rule to stick to is to make sure they’ve exhausted their ability to take out federal loans before even considering private ones.

I also want you to take another look at your financial aid situation and call the financial aid offices at the schools your children are attending. Talk to a financial aid officer about the financial setbacks you’ve faced – particularly if they occurred after you originally applied for aid – and ask if there’s anything the school can do to help. Then have a very frank talk with your children about borrowing and how much they will have to repay when they graduate from school. Break it down for them so they can see what their monthly loan payments will look like. And if they’re overwhelmed by the thought, talk to them about the fact that they have options. They may want to consider transferring to schools that will offer them more in aid or working while they’re in school (and perhaps taking a lighter course load) to minimize borrowing.

Finally, the website fastweb.org has a terrific database of scholarships and grants and you’ll want to pore through it together. And when your next child goes through the process of selecting a college, make sure a good value is one of the criteria on your list.

Mailbag Monday: Choosing an Executor

iStock_000019551430SmallHow do you choose an executor when you have a blended family? Previously, we made wills and named executors of our wills and healthcare. How do we assign someone to be executor and not offend the other family. Any tips on how to be fair?

– Gretchen

I think you’re looking at this situation the wrong way — I don’t think you want to consider how to be fair. You want to pick the best person for the job. This is a heavy responsibility. It’s complex and time-consuming, and family politics shouldn’t come into play.

So I would start by simply making a list. I find it’s the best way to sort out any difficult decision. Write down the names of people you might choose, then list the qualities that would make each person a good executor. List negatives, as well — you’re essentially making a pros and cons list about each candidate. You’re looking for someone who is organized — there is a lot of paperwork involved — honest, and understands your intentions. You want to select only one person, which as you noted, can be difficult for parents who are selecting among children. But it may be easier than you think — parents often assume that everyone is going to fight over this role, but you’d be surprised by how many people would rather avoid the pressure altogether. In the end, you want to settle on one executor and a couple alternates, then ask those people to take on the job. You don’t have to explain the reasoning behind your decision.

Finally, I want to point out that you don’t even have to select a family member. You can select a close friend you trust, who may be able to act as an outsider in this situation. And if you can’t find someone within your circle, you can name an accountant or attorney to the job, though it will cost you a few hundred or thousand dollars, depending on the complexities of the will.

Wednesday Welcome: The First Steps in College-Bound Cost Cutting

This week we’re happy to have Nancy Berk as our guest poster — Nancy is a pro at college planning, and author of the book College Bound and Gagged: How to Help Your Kid Get into a Great College Without Losing Your Savings, Your Relationship, or Your Mind. Here, she addresses college expenses that aren’t often considered — preparation courses, campus visits, and application fees.

 

Nancy New HeadshotWhile many parents worry about the cost of their children’s college education, it’s not unusual for college admission anxiety to override financial sensibility even before a tuition bill surfaces. I highlighted plenty of these money drains in my book, and they’re everywhere. While this is just a small piece of the fiscal puzzle, college search and prep costs and school selection mistakes don’t help the college fund. If you’re the parent of a college-bound teen, consider these cost-cutting suggestions to save a chunk of change before dorm drop-off.

Analyze Your Family Situation. When it comes to the college admissions process, it’s easy for parents and teens to become starry-eyed and make emotional choices with bad economic repercussions.

Before the wish list gets drafted, communicate and explore family concerns and limitations including tuition, transportation costs, and special needs. Applying to a school that is incompatible with the budget isn’t a wise move. However, always investigate the financial aid and scholarship data of schools before ruling one out.

Identify Great College Prep Bargains. Never dive into a test prep spending spree, until your teen’s strengths and weaknesses are identified. Is preparation required? If so, what areas should be addressed (i.e., content vs. process)? Math deficits and test anxiety don’t typically involve the same approach. Save money on test prep by asking friends with college students for those unused or gently used SAT, AP, and ACT prep books, CDs, and flashcards. Online study and tutoring options like those offered by the College Board and InstaEdu can also be more cost-effective than “live” options.

Create A College Visit Strategic Plan. Before you gas up and head off for a little collegiate bonding, do some virtual legwork and tour online. Explore college-specific websites and comprehensive sites like CollegeProwler.com and Unigo.com. Then tour local colleges and universities in order to identify your teen’s general preferences (e.g., big school vs. small school). Narrow down the list or increase exposure to options by building college visits into other, already paid for family activities like vacations, business trips, reunions, weddings, and bar mitzvahs.

About Nancy: Nancy Berk, Ph.D. is a clinical psychologist, author, comic, professor and entertainment analyst. Her book College Bound and Gagged: How to Help Your Kid Get into a Great College Without Losing Your Savings, Your Relationship, or Your Mind can be seen in the feature film Admission starring Tina Fey. Nancy co-hosts The College-Bound Chronicles podcast with broadcaster Lian Dolan and writes about higher education and entertainment for sites including Parade Magazine, USA TODAY College and The Huffington Post. The host of the showbiz podcast Whine At 9, Nancy digs a little deeper as she chats with fascinating celebrities and industry insiders. Sometimes they even talk about college.

Try-It-Out Tuesday: Stop the Sports Equipment Wallet Drain

iStock_000016671923SmallTo say that Americans spend a lot of money on sports is to understate the point only slightly. A sampling of sports spending statistics reveals some whopping figures: the Professional Golfer’s Association (PGA) says that we spend $600 million every year on golf balls alone, while the Fantasy Sports Trade Association estimates fantasy football teams are worth $55 billion due to the time and resources people pour into them. And that’s just for adults. Spending data from 2012 found that parents can spend nearly $700 per child-athlete every year. Multiply that by a couple of siblings, and you’re looking at over $2,000 per year, just for your kids.

So how do you plug (or at least slow) the leak in your wallet that sports spending induces? Losing fewer golf balls and refraining from a fantasy team can be a good start, but beyond that, you might want to take a look at Play It Again Sports, a store that lets you sell gently-used sports equipment and use your new cash to buy new (or even better, discounted used) goods.

“You come into the store, you bring in last year’s gear, we’ll give you dollars for trading that in,” said Steve Murphy, president of franchising at Play It Again’s parent company, the Winmark Corporation.

Murphy says that the store will take “pretty much everything,” assuming the quality is good and the item isn’t too old.

“If you have a five-year-old golf club, that’s probably not something we’ll be able to resell, because the technology is different,” he said. “Five-year-old baseball  gloves haven’t changed, so we’re [more] likely to buy it.”

Murphy says that it’s hard to give exact prices for different prices of equipment because the Play It Again staff will need to see and feel the glove (or the helmet, or hockey stick) in order to determine its quality and how much it’s worth. But in general, Play It Again offers to buy old equipment for 30 to 40 percent of its original value.

This means that if you want your old stuff to net you enough money to completely pay for 2013’s equipment, you’ll need to bring more to sell than you want to buy. “If you want this year’s glove for $100, you’ll have to bring in a little more than just last year’s glove [to sell]. If you bring in last year’s glove and a bat and a pair of cleats,” you could net enough money that you don’t have to dip into your wallet for that $100 new glove, he said.

Murphy noted that even if you don’t have any good equipment to sell, it’s still worth taking a look at Play It Again stock, because the savings can be significant. “In general on used sports equipment if they’re buying used from us, you save 50 to 75 percent off what it would cost them new,” he said, further emphasizing that all equipment is “used, but gently used. It’s like buying a used car.”

While fall means the height of football, soccer, and lacrosse season — and a decreased appetite for baseball cleats and field hockey sticks — Murphy says that Play It Again will take any type of sporting good, any time of year. So if you need to save money on the fall sports season, bring in whatever you can now, and don’t worry if your stockpile consists of surfboards, flippers, and other items that people won’t be looking for until the tulips pop up in 2014.

“We’re pretty much buying all seasons all the time, all year,” he said. “If you [come] in end of summer and wanted to unload all the summer stuff, we’ll buy it.”

Today’s Money: Raising Kids to be Money-Smart

New research indicates children are developing life-long money habits by the age of seven. Check out the video below to see me break down the important money lessons by age groups and activities with Al Roker and Willie Geist on TODAY.

Visit NBCNews.com for breaking news, world news, and news about the economy

After this segment aired this morning, a viewer wrote asking me this: “Can you elaborate on the debit card system you mentioned for 11-14 year olds on the Today Show this morning? Is it an actual debit card linked to their own account that is linked to the parent account? Any articles on it or further information on the best way to make it work? Thanks for any information you can provide!”

It’s hard to get all the details on in 4 minutes, so I wanted to elaborate for this viewer and others: I opened accounts at my bank for my kids linked to my checking account. Since I maintain the minimum balance they don’t have to worry about it. The accounts each came with debit cards. Then I set up automatic transfers into the accounts every week for their allowances. They’ve learned to monitor their balances online (they have separate passwords), all about the fees when you use an ATM other than your own bank’s, and how fast money can go when it comes automatically out of a machine. Before they have their licenses, you may have to be the bank for them. So, when they need cash, you give it to them, then have them watch you transfer the money back out of their accounts into yours. It’s worked really well. And when my son took off for college, I didn’t have to add this to the skills he needed to learn.

I hope that helps!

Jean

Thought-Provoking Thursday: Raising Money-Smart Kids

iStock_000024738476SmallWhat do you think is the ideal age to start teaching your kids about money? If you’re thinking junior high or high school — and I’m sure many of you are — you may be late to the game.

According to new research from the University of Cambridge (published by the Money Advice Service, a UK organization), many money habits are set by age seven. At that stage, the study says, most children are able to “recognize the value of money” and “understand that money can be exchanged for goods, as well as what it means to earn money and what income is.” They are also capable of complex functions such as “planning ahead, delaying a decision until later and understanding that some choices are irreversible.”

Does that mean your ship has sailed if your kids are older? Not at all. The building blocks are set early on, but there’s always time to impart a few good financial lessons. Here, how to do that at every age:

Ages five to seven. At this stage, your kids should be able to understand that money is a limited resource, and that if you spend it, it’s gone. That means we all have to make choices about where and how to spend our money. And once we choose, we don’t get to choose again. How do you pass this on? An allowance is a good start — after all, it’s difficult to learn how to use money if you don’t actually have money. Give your kids an amount that increases as they age. Simultaneously, increase the list of things that they now need to pay for out of that allowance — things that used to go on your tab, like candy and some toys, can now fall on theirs. How much should you give? $1 or $2 a week is plenty at this age.

Ages seven to nine. Delayed gratification is the name of the game. If you can teach your kids to save for a goal, rather than blowing all of their money on small things here and there, it will go a long way to helping them become a financially-successful adult. Explain that saving leads to a bigger reward down the road, and make it a rule that your kids have to save a portion of every allowance. Then help them decide what they are saving for. You don’t want to delay the gratification too long, because actually getting the reward after some hard work is an integral part of the lesson. “It’s not talking to a seven-year-old about saving for the future, because for a seven-year-old, the future is next week,” says Jack Kosakowski, President of Junior Achievement. If they seem frustrated, show them how they can boost savings even further by putting away birthday money or tooth fairy gifts.

Ages nine to 11.  By now, kids should be able to understand value, and you can teach them by having a dialogue when you shop together. Show them how unit pricing works (I actually remember this lesson from my mom, and the fun I had doing the math in my head to find a better deal. Kids will do anything to pass the time when they’re being dragged around the grocery store). Explain that similar products are sold under different brand names, and may be priced differently, and have them spot the sale or pick out the one that keeps more money in your pocket. And give them the job of couponing as one of their chores. They can search for coupons online, clip them from the Sunday circulars, and as a reward, you can pass on a small portion of the savings.

Ages 11 to 13.  Kids are now ready to work, which research shows helps turn them into more responsible adults. When they’ve earned their money, it’s going to hold a greater value, and they’ll be more reluctant to spend it, which is a good lesson in and of itself. How can they bring in some cash? Outside of the home, babysitting, dog walking and yard work are good options for this age range. In your own home, give them a few jobs that you might otherwise pay someone else to do — they can weed or wash your car.

Ages 13 to 15. It’s time to introduce the power of plastic, because the earlier your kids learn about debit cards, credit cards, and the difference between them, the more likely they are to use them wisely. To get the job done, consider using an electronic allowance. You can open savings accounts linked to your own account (you’ll avoid fees if you maintain the minimum required balance in the main account) and transfer the allowance each month. Then give them a debit/ATM card that they can use to purchase things, and show them how to check their balance online.  Finally, use your own behavior as a model: They see you swiping your credit card, but they probably don’t see you paying the bill. Take them through the process with you next time so they understand that there’s real money involved, and if you don’t pay up, the interest quickly gets expensive.

Age 15 to 18. Use college applications as a learning tool — as you and your kids weigh your options, be realistic and honest about how much you think you’ll be able to afford and how much will fall on their shoulders, which means borrowing to make up the difference. Show them how much a loan of the size they’re likely to need will cost in monthly payments after graduation, and encourage them to apply to schools in a variety of price ranges — especially those that may offer scholarships and attractive financial aid packages.

Age 18+.  Now’s the time to tackle budgeting, says Kosakowski, and you can do so by sitting down and helping them write one out for the semester. Break the budget down into months and then weeks, so they know exactly how much they can be spending within a given time period. And don’t bail them out if they run into trouble — if you do, I can almost guarantee that it will happen again.

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