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What Does MOM Stand For?

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The other day, my teenage daughter related to me a quip she received by way of Twitter.  It goes something like this… a child was pestering his mother about his urgent need for a new cell phone.  The mother continued to answer “NO,” without an end to the requests.  She finally asked in frustration, “Do you think I’m made of money?”   The child replied, “Isn’t that what MOM stands for… Made Of Money?”

My first response to this story was to chuckle; it is a very clever play on words.  However, after my own children continued to use the Made Of Money reference over the next several days, I realized that this is a clear indication of a real problem.  Most school age children and younger adults are receiving little to no financial education at school or at home.  They see the kids on TV and their friends at school ask and receive anything they ask for, without understanding what it takes to earn the dollars that are being spent.

As a parent, what can you do to begin to teach your children about the value of money?

  • Help them learn the difference between wants and needs. 
  • Pay them an allowance, but make them earn it with specific weekly responsibilities.
  • Put them in charge of something (financially) at home; put them in charge of something at home (like food for their pet).  They are in charge of buying it when it runs out…using part of their allowance.
  • Encourage saving (i.e. if they can save ½ of something they want, you can match it to make up the difference).

For list of Financial Education Resources for Parents and Children, visit the Certified Financial Planner Board of Standards, Inc. website at http://www.cfp.net/learn/resources_children.asp

Gold Sparkles, But For How Long?

There has been much interest in the media over the past year regarding gold as the bullion price per ounce has gained nearly 30% this year.  As a result, investor interest in gold has increased as a diversifier to portfolios because many view this as a "safe haven." Gold is a “fear” asset class, and uncertainty in almost every risk asset class has intensified gold’s price increase.  Much of the gains this year can be attributed to growing uncertainty surrounding U.S. Treasuries and European Sovereign debt.  Investor demand has also increased because the asset class has become more accessible through new products such as ETF’s (Exchange Traded Funds). 

In the past gold has shown itself to be a good hedging instrument against inflation and a weakening dollar and tends to have almost no correlation to stock and bonds.  Other investments also serve as a potential hedge against inflation and a weakening US dollar such as TIPS (Treasury Inflation-Protected Security), commodities, and foreign currency bond funds.  Naturally, gold has been part of our research efforts on this front.  The run up in the price of gold over the last few years is a concern to us (see chart below). 

The cost to extract gold from the ground is roughly $740 per ounce.  With gold trading over $1,882 per ounce as of 9/2/11 that is a $1142 premium.  This could indicate a supply and demand imbalance and perhaps, panic or speculative buying.  Gold’s price has often been driven more by speculation or its role as investment portfolio “insurance” than by fundamentals.  As a result, gold is subject to market risk. 

Sources:

No-Load Fund Analyst July 2009

Geoff Considine Ph.D., Advisor Perspectives, Sept. 2010

 

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.  Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation.  Any opinions are those of Center for Financial Planning, Inc., and are not necessarily those of RJFS or Raymond James.  Investments mentioned may not be suitable for all investors.  Past performance may not be indicative of future results.  Gold is subject to the special risks associated with investing in precious metals, including but not limited to:  price may be subject to wide fluctuation; the market is relatively limited; the sources are concentrated in countries that have the potential for instability; and the market is unregulated.

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Back-to-School Shopping -- 5 Financial Lessons for Your Kids

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It’s that time again – the first day of school is right around the corner!  You likely received your supply lists weeks ago and stores have been advertising back-to-school items since the Fourth of July.  If you’re like me, you’re dreading the last-minute crowds…and the bill at check-out.

I have read several articles recently telling parents that the easiest way to save money on school supplies is to leave your children at home.  As tempting as this may be, I urge you to take your children on this shopping trip.  Back-to-school shopping can be a great opportunity for financial education. 

 

Here are 5 financial lessons you can teach your children:

 

1.  Take inventory of what you have.  Before you leave the house, make sure you know what you have and what you need to avoid purchasing duplicate items.

2.  Comparison shop.  Search printed newspaper ads or shop the internet to find sales and compare prices on the items you need.  Coupons are also a great savings tool!

3.  Set a budget.  Set the maximum dollar amount you can afford to spend, and stick to it.  This is a basic cash flow planning principle we should all stick to!

4.  Stick to a list.  Make a list of the items you need, and don't deviate.  Just like a trip to the grocery store, straying from your list can be detrimental to your wallet.

5.  Make smart choices.  Within your budget, there may be items you choose to spend more on.  Consider buying store brands for basic items, and spending a little extra for others (backpacks, clothes, etc.) to enhance quality or style.

Prepare a plan and stick to it for the start to a successful school year!

Phone Scams Catch Unsuspecting Grandparents Off-Guard

 

A family member calls and says “Grandma, I need your help and please don’t tell mom and dad.”  The reality is that the request can be real or it can be a line used by a criminal posing as the victim’s grandchild.  Differing versions of the same scam have been around in one form or another for years. Unfortunately, when the caller is a con artist looking to pull off a phone scam; deceit and lies are designed to catch the caller off guard.         

Recently, I was talking with friends and uncovered an ugly story that bears repeating even if it saves one grandparent from financial loss (not to mention the emotional aftermath of being scammed). 

The criminal called posing as a grandchild and convinced the well-meaning grandmother that he was in serious trouble.  The circumstances sounded plausible in a moment where fear for the safety of a family member was heightened.

The “facts” heard by the unsuspecting grandmother:

  • My grandson is in Mexico attending the wedding of a friend
  • He was driving a rental car and was sideswiped
  • The hit and run driver left the scene
  • The police took my grandson to jail
  • An attorney is going to save the day and free my grandson
  • I can help by wiring $3,000 ASAP  

While most of us would like to believe we would never be trapped in a scam like this, it is does happen.  Awareness is one important key to stopping phone scam criminals from preying on family trust and loyalty.  

Please pass the word among your family members to be on alert for calls like this.  If calling an immediate family member is not an option, then consider contacting a trusted financial advisor to talk through the situation before taking action.

Who, What, When, Where & Why

 

WHO…WHAT…WHEN…WHERE…WHY.  The “five W’s” - we all learned about them in elementary school, but why am I mentioning these “W’s” in a financial planning BLOG, you ask?

It turns out that the five W’s can help you to take control of your financial life.  Whether you are new to financial planning or well established, it is important have a clear understanding of YOUR five W’s:

WHO are your key financial advisors (financial planner, CPA, attorney, insurance agent, etc.)?

WHAT do you have (assets, accounts, policies, benefits, etc.)?

WHEN did you acquire each piece of your financial puzzle (maturity dates, etc.)

WHERE are your assets and important documents held or stored?

WHY do you have what you have and how does this fit into your overall financial plan?

Taking an inventory of what you have and recording the information in document form is important for a couple of key reasons:

  • For you, it is a reference guide so that key information is not lost or forgotten.
  • For your family and or future durable power of attorney/executor, it is an invaluable guide to assist in handling your financial affairs when you are unable to handle them yourself.

HOW do you get started on your “five W’s”?  For a free copy of the Center’s Personal Record Keeping Document, go to https://static1.squarespace.com/static/54341a03e4b08690c01bc8de/54dcf260e4b018fb5adfbec4/54dcf263e4b018fb5adfcdbe/1303923614337/record_system.pdf

Center Planners Present Educational Workshop for Gilda's Club in Royal Oak


Sandy Adams, CFP and Laurie Renchik, CFP recently presented a retirement and planning workshop for members and families of Gilda's Club Metro Detroit. Discussions included: HOW TO prioritize retirement objectives, create a withdrawal plan, and maximize your current financial resources.

Gilda's Club is a non-profit organization that provides tools and resources to help those whose lives have been impacted by cancer. They recently partnered with the Financial Planning Association of Michigan (FPA MI) to provide a series of financial education sessions over the coming months.

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