Personal-Finance - Bing News

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Personal Finance - San Luis Obispo Tribune
Teaching kids financial skills now sets them up for a ... - StarPhoenix
Personal Finance: Estate planning prevents family feuds - Sacramento Bee
Now is time to max out college aid PERSONAL FINANCE ... - Times-Leader

Personal Finance - San Luis Obispo Tribune

Posted: 11 Apr 2010 03:30 AM PDT

This is the season when high school seniors hope their families somehow can find a way to pay for the dream colleges that just accepted them, and parents spend sleepless nights worrying about the cost - maybe $200,000 for the next four years.

Five Filters featured article: Chilcot Inquiry. Available tools: PDF Newspaper, Full Text RSS, Term Extraction.

Teaching kids financial skills now sets them up for a ... - StarPhoenix

Posted: 11 Apr 2010 10:04 AM PDT

Most of us heard it from our parents: "money doesn't grow on trees," but was that where our financial education at home ended?

All too often, that's the case, according to Stacy DeBroff, a parenting author from Boston who recently wrote A Parent's Guide to Raising Fiscally Responsible Children (Simon & Schuster, $12).

Despite their good intentions, parents are setting their kids up for a life of financial failure by sheltering their children from hard financial realities.

"We have felt enormous pressure to have our kids succeed and to do the best that they can academically, in sports and their outside pursuits. And as a result we have shielded them from discussions about family budgets, about larger issues when it comes to spending, credit and debt, mortgages," she says.

In previous generations, children were expected to earn their spending money through part-time jobs. But in recent years, the bubble-wrap trend in parenting culture has pushed parents to give their children a leg up in an uber-competitive world by absorbing all of their children's costs, DeBroff says.

She figures all of these changes have led young people to believe they're entitled to all the latest gadgets and fashions.

"There's this immediate gratification: 'I really, really want this great pair of jeans,' not 'I can't afford this pair of jeans,'" she explains.

This disconnect from the need to budget sets teens up for a shock when they leave home. Suddenly, they face the harsh reality of paying bills for rent, food and often tuition at a post-secondary school. At the same time, their introduction to the joys of magic money — credit cards that only require you to pay off a minimal amount of your debt — can turn minor cash flow problems into long-term debt that sometimes leads to personal bankruptcy.

"They often find themselves digging themselves out of a personal finance hole in their 20s," DeBroff says.

Parents may think that their children are learning personal finance skills at school, but Darren Weeks, a personal finance guru from Edmonton, didn't mince words when asked if schools are doing enough to educate teens.

"Not even close," said the founder of the Fast Track To Cash Flow.

"The schools are often seen as a catch-all for education, but parents are the primary educators of their kids when it comes to personal finance," says Janet Sutherland, a spokeswoman for the Calgary Catholic School District. "It's up to parents to reinforce what the kids learn at the schools."

Weeks and DeBroff agree that parents are ultimately responsible — young people are much more likely to learn personal finance lessons when they are taught at home, they say.

"Oftentimes what you do with money is deeply tied into values," DeBroff explains.

So what can parents do to set their children up for a lifetime of good financial decision-making? Start teaching financial lessons as early as possible, say DeBroff and Weeks.

DeBroff recommends easing a child into the world of personal finance at age five with an allowance, which can be connected to chores done, so the child learns how much work is valued.

This introduces a child to budgeting, usually in the form of setting up a savings account and spending less on immediate wants (candy) in exchange for greater long-term happiness (a new bike). They also learn that bad behaviour or shoddy work (backtalk and clothes on their bedroom floor) can result in the loss of income.

Weeks has his own children — Ava, 4, and Connor, 6 — split every dollar they earn from chores into three categories: one-third for long-term savings, one-third for spending and one-third for charity. He also recommends parents encourage their children to play games that revolve around money. These include the classic Monopoly, along with The Money Savvy Pig piggy bank, which has four chambers: Save, Spend, Donate and Invest (msgen.com, $16.99) and The Allowance Game (Lakeshore Learning, $21.99).

It's around age 13, however, that finance education needs to ramp up, DeBroff says. How do teens manage money from their part-time job, for example, or those cheques they get every Christmas from Uncle Bob? At this age, it's important to impart a clear sense of what a child's spending habits require them to give up in terms of hours worked and future opportunities lost.

More complex personal finance ideas, such as building a credit rating and investing, can also be better understood by teens. Options such as parent-supervised debit and credit cards, and secured or prepaid credit cards, can ease teens into the perilous world of plastic by helping them track and manage their spending. Some even allow parents to set daily, weekly and monthly limits.

Even if your child makes some financial mistakes, such as losing all their savings in high-risk investment schemes, it's better they learn their hard lessons before they leave home.

"Just like investing, an earlier start leads to a higher finish," Weeks says.

Sure, money doesn't grow on trees. But it pays to start early if you want to grow a money tree with deep roots.

Making your kid money-wise

Here are a few ideas from parenting author Stacy DeBroff to help parents raise children that are financially responsible:

- Use the news: Use newspaper headlines to jump-start dinner table conversations about how a lot of people are out of work now and what world leaders are doing to help people find new jobs. These conversations can grow more sophisticated when discussing the economy with tweens and teens.

- Tie allowance to chores: This teaches the value of a dollar. Make clear what you expect from your child to earn allowance, what items you expect allowance to cover (movies, treats, online games), and what your child can do to earn extra allowance (special help needed around the house or garden).

- Set a savings goal: No matter the amount, nothing speaks to kids more than their very own savings account.

- Start young: Let kids know early on that a trip to the store doesn't always mean a treat for them. Explain that you go to the store together each week to buy food for the family, and you can't afford to buy a new toy each time you shop.

- Separate necessities from luxuries: Help kids understand the difference between needs (think: food, water and shelter) and wants (think: new fashions and electronics).

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Personal Finance: Estate planning prevents family feuds - Sacramento Bee

Posted: 11 Apr 2010 01:07 AM PDT

The irate sister who smashed a crystal vase in her attorney's parking lot, rather than hand it over to her sister after mom died. The squabbling siblings who spent three years and $15,000 battling over a few hundred dollars worth of JC Penney and Kmart knickknacks. The brother who shot his deceased sister's beloved dog in order to collect his inheritance.

Talk with enough estate planning attorneys and you hear the distressing, sorry sagas resulting from no – or poor – estate planning.

"Family, money and death are a combustible combination," said Toronto-based attorney Les Kotzer, who co-authored a new book – "Where There's an Inheritance …" – a compilation of 80 real-life vignettes taken from his law practice and radio show callers.

Some of the tales are horrifying. Many are heartbreaking.

"A lot of time they will spend more on lawyers than the value of items they're fighting over," said Kotzer, who said he wrote the book to warn families about the perils of family feuds. "Once you send a lawyer's letter to your brother, the relationship will never be the same."

Those who witness the ugly aftermath say many of the situations could have been avoided with a properly executed will or trust.

"Generally parents are the glue that holds a family together and by the time estate planning blunders become apparent, the glue is gone and the family can fall apart," said Trudy Nearn, a longtime Sacramento estate planning attorney.

The recession has apparently kept even more Americans from completing any basic estate planning documents – a will, trust or financial/medical powers of attorney, according to a December survey by Lawyers.com. Only 51 percent of adults reported they had such estate planning documents, compared with 64 percent in 2007. Most cited their need to focus on paying bills and other "essential" money priorities, the survey said.

Amid all the distressing estate planning tales, there are some lessons to be learned:

Earmark the stuff

Too many families get torn apart by who-gets-what disputes: who gets mom's china, who keeps dad's signed Joe Montana football, who gets the lawn furniture.

It's often stuff that's not even particularly valuable, says Sacramento estate planning attorney Michelle Goff. She had clients who argued for years over their mother's personal effects. It finally got resolved around a lawyer's conference table where the disputed items, many with their JC Penney's and Kmart price tags still attached, were spread out. Taking turns, each sibling got two minutes to pick two items, until the table was emptied. But that was only after three years and $15,000 in legal fees.

Kotzer recalls a sister who was incensed that a crystal vase she'd given her mother was to be divvied up in the estate, rather than handed to her outright. Her angry solution: smash it to smithereens in the parking lot "so nobody will get it."

A better solution: Ask your kids if there are things they'd like after you're gone. Type up a list designating who gets important items, like wedding rings, silver, family mementoes.

"If parents make the list, the trustee is obligated to follow (it). It removes the emotional battle," Goff said.

Sacramento estate planning attorney Mark S. Drobny said he's had families whose list has only three items on it; others run 30 pages long, "down to the socks in the drawer."

Naming the executor

Deciding who will handle your affairs after you're gone can be tricky. Lawyers say parents often select their oldest adult child, but that's not always the person best equipped emotionally or organizationally to handle the task. And it can create resentment among other siblings. Similarly, naming all your children as co-executors can result in deadlocks.

Every family is unique and parents should consider their choice thoughtfully. Sometimes an outsider – a trusted family friend or a private fiduciary (an individual licensed in a county to act as an executor or estate trustee) – is preferable.

"It takes the emotion out and gets the house listed, the items distributed and lets family members go through the grieving process," said Goff.

Watch the money

Beware of unintended consequences. Drobny had a client who set aside $75,000 in her will for friends, family and charities, with the remainder going to her only child. But when she died, the value of her assets had plummeted so significantly that once the $75,000 was disbursed her daughter received almost nothing.

In another case, Kotzer recalls a client who had dutifully taken care of her mother for years, while her sibling was largely absent. The mother wanted to leave nothing to the absentee daughter, but was persuaded to give a token 5 percent. The arrangement backfired. The devoted daughter, who was executor of her mother's estate, became shackled financially for years to her resentful sister, who disputed every financial decision. In that case, Kotzer said, the mother's wishes would have been better served by specifying a small, set amount for the distant daughter.

To ensure there's something left for everyone you care about, be specific about your bequest; i.e. the charity will receive "the lesser of $75,000 or 20 percent of the estate."

Think it through

Many parents build incentives into their trusts for their children's inheritance: reaching a certain age in adulthood, completing college, mandatory drug/alcohol testing in cases of substance abuse. Those can be worthwhile goals that keep young – or even adult – children from squandering their parents' bequest.

But some take it too far, says Drobny. He had local clients whose will stipulated that the first son to provide them a grandchild would get $1 million. The sons, both in their 50s, soon sired children. "Neither son had any business becoming a parent at such a late age, let alone ever," noted the attorney, who said he tried talking the parents out of it, but they were adamant. The sons subsequently left the mothers of their offspring.

In another case, a local elderly woman had set aside part of her estate to care for her beloved pet dog until its death, when the remainder would go to her brother, a retired policeman in Ohio. The brother subsequently contacted Drobny's office to discuss his sister's money and property. When the attorney explained that there was no estate to settle while the dog was alive, the brother declared the unthinkable: "He said he'd taken the dog out in the country and shot it."

Obviously, Drobny noted, the sister wouldn't have wanted her brother "to inherit a dime" under the circumstances, but there were no provisions for the dog's unnatural death.

In their book "Trial & Heirs," Danielle and Andrew Mayoras, Michigan-based husband-and-wife estate attorneys, chronicle the lessons learned from notorious estate battles of Hollywood celebrities, rock stars, athletes and political figures. Like the years of costly lawsuits stemming from rock guitarist Jimi Hendrix's death in 1970 at 26, without a will. With his father and half-siblings locked in disputes over his multimillion-dollar legacy, it took 34 years, many court proceedings and several million in legal fees to sort it out.

All of it could have been avoided, say the authors, if Hendrix had left a simple will.

Poor estate planning can drain families emotionally and financially. A little prevention – good planning, thoughtful choices and a clear discussion among family members – can sidestep an ugly aftermath.

As the Mayorases put it in their book: "The only good legal battle is the one that never happens."

Have a personal finance question? Contact The Bee's Claudia Buck at (916) 321-1968.

Five Filters featured article: Chilcot Inquiry. Available tools: PDF Newspaper, Full Text RSS, Term Extraction.

Now is time to max out college aid PERSONAL FINANCE ... - Times-Leader

Posted: 11 Apr 2010 02:18 AM PDT

PERSONAL FINANCE

Posted: 1:00 AM
Updated: 1:30 AM