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Save Your Way Out of Debt

Posted By Communications Manager, Tuesday, November 15, 2016
Updated: Friday, November 11, 2016
Saving is the fastest way out of debt. Time and time again I see men and women in debt keeping themselves in deprivation mode saying things like, “I can’t buy new clothes until my debt is paid down,” or “I don’t deserve a vacation because I’m only paying the minimum on my cards.” A poverty mentality can be very depressing and might affect one’s self-esteem, relationships and ability to earn money. Worst of all, it can keep you in the debt cycle because the tension around keeping a lid on it has to be released eventually. It is possible to save money and pay down your debt at the same time. It takes some discipline, but the integrity and peace of mind you will experience through authentic guilt-free spending is priceless. Simultaneously, you will cultivate the skills and awareness you need to prevent future debt. According to my mentor, Karen McCall, here are four approaches to saving your way of debt.


1. Stop debting. The first step towards getting out of debt is to stop digging the hole. You must stabilize the situation before you can make shifts in your mentality and changes in your behavior. Make a decision to take your credit cards out of your wallet, change your primary card for all of your online shopping accounts to your debit card. If you’re a dramatic type, you can freeze your cards in a bowl of water or ceremoniously cut them up. I have a client who mailed one of her credit cards home to her dad with a letter saying, “Thank you for paying for my monthly car payments, gas, tolls, insurance and repairs for the last eight years. I’m taking on all the payments from now on!”


Put money aside every month into a periodic savings account. Periodic expenses are anticipated non-monthly expenses like vacations, holidays, tuition, vet bills and car repairs. These are expenses that can end up on a credit card if you’re not prepared. The periodic savings account is a foundational regular savings account with a revolving door and money that is meant to be spent. When a periodic expense comes up, simply transfer the money you proactively set aside into your checking account and pay with your debit card. It’s okay to deplete your periodic savings, and you should expect to from time to time. By making monthly transfers to your periodic savings account a consistent part of your budget, you can always build it up again. Map out your periodic expenses and divide the total on the bottom right by 12 months -- that is how much money you should be saving every month in this savings account.


2. Manage your debt. The next step is to live free from debt, mentally and emotionally, even if you are not debt-free. Once you organize every credit card balance, APR (annual percentage rate or interest rate), credit limit and current minimum in one place, then you can create a strategic debt repayment plan. The priority is to get each of your balances at least 33% away from the available credit. You may have to pay only minimums on all of your cards while you build up your periodic savings, get a handle on your monthly in and outflow and reduce your balances by a third.


The next level of savings is the safety net. The goal for this account is to have six months of living expenses set aside in cash. The intention behind the safety net is to prepare for a potential interruption of income -- critical for those of you with fluctuating incomes. Note that a separate tax-only savings account is equally important for self-employed folks. And, a safety net savings account is important for everyone regardless of your employment status. This is an emergency fund. Once some of your safety net is built up, you’ll have the funds to pay yourself the difference during a lower or zero earning month. Remember, being laid off or set back on disability is considered an emergency while quarterly tax payments are not.


3. Eliminate debt. This is the final stage of debt -- being free from debt financially and spiritually. Once all of your debts are cleared, it can take some time for your heart to catch up and integrate this new reality. The key to preventing a back-slide into debt is to take excellent care of yourself by respecting your money with personal money practices, routines, rigorous honesty, willingness and accountability.


The highest level of savings is for investments -- real estate, stocks, bonds, money market accounts and retirement accounts. This is truly do-not-touch money, and these accounts are designed to take care of your future, older self. In an ideal world, you would have multiple savings accounts to cover periodics -- your safety net, taxes and the long-term. I am a big believer in “build it and they will come”. Something very powerful starts to happen when you take action and open savings accounts on every level even if your initial deposits or monthly transfers are minimal.


4. Watch for signs of deprivation including making do, doing without or overdoing. If you notice one of these limiting beliefs in your life, it’s an opportunity to uncover an unmet need. It’s not always obvious. Unmet needs have amazing ways of hiding themselves. I have a client who is a chronic over-spender. Her weaknesses are clothes, bags, shoes and jewelry. She has very expensive taste and virtually can’t say no to sales people who know her by name. I gave her a tool she could carry with her at all times -- a shopping journal! It helped her connect to her underlying thoughts and feelings before, during and after a spontaneous purchase. Through this process, she realized she was feeling lonely and bored on the way home from work and frequently stopped at Barney’s to pass time and have social interaction. The unmet need was in her social life and relationships. She compensated for that void by overspending on her wardrobe. Anyone who has been in debt knows about the snowball effect and how quickly things can get out of control. Be mindful of slippery slopes, hot spot areas of spending and money fog. Protect yourself today by proactively building and sustaining multiple levels of savings.


Carrie Friedberg, SF Money Coach is a certified financial coach and financial behavior specialist. She guides individuals, families and small business owners through a holistic process of aligning your spending, saving and earning with your values. Carrie works in downtown Palo Alto and with clients around the world via Skype.

Tags:  finances 

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Considering the ‘Burbs? Here’s What You Need to Know

Posted By Administration, Wednesday, April 13, 2016

Countless families consider making a move to the San Francisco ‘burbs each year. With young kids, skyrocketing rents in the city and a craving for a little more space, the pull is natural — but the Bay Area suburbs come with their own unique considerations when it comes to actually making the move. From balancing costs to considering communities to pulling your family’s own lifestyle into the mix, there is a lot to weigh if suburbia’s on your mind. Besides the basics, here’s what area families should be thinking about when they think, “It’s time to go…”

Can you afford to keep renting?
Bay Area and Silicon Valley housing prices are high right now — no one can dispute that. The average Palo Alto tear down is fetching close to $2 million, which doesn’t take into account the cost to actually build a house to live in afterward. But, at the same time, rents continue to increase year after year — and that means many renters are getting priced out of the market, too.

A good solution? While you might not be able to afford THE house right now, consider a first, or “starter,” home or just to get your feet wet and get your family into the Bay Area market. Not only will you begin building equity, but you’ll dodge the rent hikes and establish a jumping off point for a potentially bigger purchase down the road.

Remember, it’s about more than just the home price
When home prices are high, it can sometimes be hard to see past the dollars and cents. But remember, this is a long-term purchase and it’s important that you and your family focus on the town’s lifestyle, too. Certain that Los Altos, Palo Alto or Menlo Park, for example, are the perfect spots? You might even find different personalities within neighborhoods, believe it or not. Maybe one is more walkable or bike-friendly than another, or has a different personality or reputation. Or maybe one corner of the community tends to send their kids to a local private school versus the area public school, or has a higher concentration of stay-at-home versus working moms. It’s important to navigate individual communities and, through hands-on exploration, engage with locals for a more authentic experience, so that you can learn what a town is really like. Weigh it all and make sure you aren’t just picking for price but, instead, for the community experience as a whole.

Dig into the schools
Just like a town can have a variety of personalities from area to area, one school district can have even dozens of schools feeding in, each with a distinct vibe. Before jumping into a home purchase, take a look at the schools your kids will attend and see if they align with your family’s needs and expectations. Are test scores important? API scores? Would seeing CAASPP (California Assessment of Student Performance and Progress) reports be helpful? Do you want a school with top scores, or is the culture of the school more important? What is the likelihood of getting into a charter or choice/lottery school with a Spanish or Mandarin immersion program? Or are you heading the private school route? You can look online, contact the school district or talk with local experts who can help you understand school populations, test scores or specializations. And remember, there’s no right or wrong when it comes to your school priorities — but it is important that where you decide to settle down aligns.

The upside to all of this? The Bay Area and Silicon Valley are incredible places to live. The weather is fantastic — even warmer and sunnier than San Francisco. You’re a few hours from Lake Tahoe if you want to hit the slopes. And, from a business perspective, you’re never far from many major corporations like Google, Facebook and venture capital firms on Sand Hill Road (no more taking the company commuter bus!), plus Stanford University, among other elite institutions. The schools — both public and private — are strong, and there are countless cultural offerings right around the corner. What’s not to love?

Alison Bernstein is the founder of The Suburban Jungle Realty Group, a real estate firm exclusively focused on buyers leaving the city for the suburbs. When she’s not helping families in their suburban explorations, Alison enjoys traveling and spending time with her husband and four children.

Tags:  finances 

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What Do You Know About Identity Theft?

Posted By Administration, Wednesday, April 13, 2016

Have you ever received an email from a “friend” urging you to send them money since they are traveling in a faraway country and they are now stranded? Their story recounts how they’ve been robbed and how they desperately need your help –and of course, that “help” is in the form of a wire transfer, right away.

Chances are, you’ve received this frantic message from a friend and have considered sending the money. But, then your better judgement kicks in and you realize it’s probably a scam — an effort to gather your personal information in order to steal your identity. Unfortunately, some people don’t realize this until it’s too late.

IRS Scams
Be on the alert. A phone call (or email) from someone impersonating an IRS employee is becoming more commonplace. These calls usually involve threats of arrest and financial penalties, followed by a request for payment to avoid charges. For the record, the IRS never contacts taxpayers on the telephone or by email, only via regular mail with a letter. If you are the target of one of these calls, you should report the incident to the Treasury Inspector General for Tax Administration or call the TIGTA hotline at 1 (800) 366-4484.

Identity Theft and Credit Card Fraud
These steps can make it more difficult for thieves to steal your information:

1) Place a freeze on your credit. Each of the four consumer credit bureaus (Equifax, Experian, TransUnion and Innovis) allows you to place a freeze on your credit. This means that if someone attempts to open a line of credit, bank account or any account that requires your Social Security number, they are blocked. This actually also includes you, which some might consider a blessing as you’re standing in Banana Republic, trying to decide whether or not to open that new credit card. In the event that you do need to open a new account, you must contact the credit agencies and unfreeze your credit for a specified amount of time. Each agency charges a fee to freeze and unfreeze your credit (typically $10 each time). However, peace of mind and protection from fraud are well worth any inconvenience or associated fee.

2) Request a copy of your credit report. Annually, you are entitled to a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian and TransUnion). The website to obtain this free copy is www.annualcreditreport.com. You may also request a copy by phone at (877) 322-8228.

3) Guard your SSN. Do not give out your Social Security number unless absolutely required and do not carry your Social Security Card in your wallet.

4) Sign up for credit monitoring & identity restoration. LifeLock and similar services help detect identity-related incidents, alert their members to suspicious activity and address fraud-related issues on behalf of victims. They will also help you restore your identity should it ever be compromised.

5) Use a token for online financial passwords. Financial institutions sometimes offer a token (a small device that creates a unique six digit number each login) that serves as an additional password every time you log in to view your account. 

6) Request a tax return PIN. While none of the above steps will prevent thieves from filing a tax return fraudulently in your name, these actions may reduce its likelihood. To prevent a fraudulent tax return, you would need to contact the IRS and request a tax return PIN. The IRS does not approve all PIN requests, particularly if you have not previously experienced fraudulent activity. You should consult with your CPA or tax preparer for more details on requesting a PIN from the IRS.

One Final Recommendation
While on vacation, either here or abroad, do not log in to any public computers or use unsecured wireless hotspots. Scammers are just waiting for you to go online and show them your personal information.


Kaleb Paddock
 is an Associate Advisor at Stanford Investment Group. Kaleb specializes in helping young families make smart financial decisions, typically involving questions about their equity compensation. He and his wife enjoy jogging along Stevens Creek Trail with their one year old son and serving others in their local church.

Tags:  finances 

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9 Situations In Which a 529 Plan May Not Make Sense

Posted By Communications Manager, Wednesday, March 30, 2016

As a parent, you’ve probably by now heard the conventional wisdom: If your children plan on college (or you’re planning on college for them), a 529 college savings plan is a great way to save for tuition and expenses. In many states, contributions to 529 plans win you a tax deduction for state tax purposes, and the earnings are federal and state tax-free.

That’s the conventional wisdom—and it may be right in some cases. But changes in the investing environment and the high fees of some 529 plans have made two key alternatives, Coverdell plans and Roth IRAs, more attractive alternatives than they once were. A 529 plan can also affect your kids’ chances of receiving financial aid.

Here are 9 situations in which a 529 plan may not make sense:

1. High Fees Bug You
529 plans can be broadly grouped into two categories: prepaid tuition plans, which lock in tuition costs at particular colleges and universities, and college savings plans, which are more like tax-free savings accounts that can be used for a broad range of educational purposes. College savings plans often are sold through brokerages and offer a range of investment options within the tax-free accounts.

The SEC’s primer on 529 plans includes a good explanation of the fees, but the bottom line is that college savings plans sold through a broker may be loaded with commissions and fees,just like other investment products. You’ll have to do the math to figure out if the tax deductions outweigh the fees. Or you can look into prepaid tuition plans, which have lower fees and are easier to understand.

2. You Want Control Over the Investment Strategy
The IRS rules say that you can only adjust the investments in your 529 plan once a calendar year. That’s a significant downside in a volatile market. In addition, college savings plans often offer a fairly limited selection of investment options.

3. You Can Only Save a Few Thousand Dollars a Year
Along with the state tax deductions on the contributions, another big attraction of 529 plans is that there is no annual limit on the amount you can contribute. If you don’t have that much money to put aside, a 529 plan loses some of its appeal. Two other savings vehicles, Roth IRAs and Coverdell Education Savings Accounts offer powerful tax advantages, and more spending flexibility. You can save $2,000 a year in a Coverdell, and use it for pre-college education costs as well as that big college tuition bill, and $5,000 or $6,000 annually in a Roth IRA depending on whether you’re younger or older than 50.

4. If You Want to Maximize Your Child’s Financial Aid
One of the downsides of a 529 plan is that it, if it is owned by the student, it counts as an available asset when the federal government and individual schools calculate financial aid. This is a situation where using a Roth IRA also makes sense because parent-owned retirement assets are entirely ignored by financial aid calculations.

5. If Your Child is Independent or Married
Money in a 529 plan owned by the student is counted as a parental asset if the student is considered a dependent of her parent for tax purposes. But if the student has declared independence or is no longer a dependent for other reasons, the 529 plan is counted as her own asset. Any asset the student owns can seriously affect financial aid. Some schools will consider students to be independent if they are married as well.

A student who has decided to save her 529 assets for graduate school, or who is going back to school later in life, might be shocked to find out how much it will negatively impact her financial aid eligibility. In other words, if you want to help fund the education of an independent student, contributing to her 529 could actually hurt more than help if she’d otherwise qualify for substantial aid.

6. If You Have More Than One Child
Because beneficiaries can be easily changed on 529 accounts, most schools will count the value of all 529 accounts within the family as being for the benefit of the student applying for aid. If you have multiple children who each have their own 529, the balances of all the 529 accounts will be considered as parental assets.

You may want to consider having grandparents establish 529 accounts for the benefit of younger children, or transfer ownership to them if the transfer of plan assets won’t incur gift taxes. You’ll only want to do this, however, if you have a tight relationship with grandparents and trust them with your children’s education money.

You can alternatively invest in assets not counted in financial aid calculations, such as increasing principal payments on your mortgage or investing in an insurance policy for the benefit of your child. This helps to avoid bumping up 529 balances and penalizing the child who is currently seeking financial aid.

7. If College Is Coming Soon
529 plans are intended to be long-term investments that allow funds to grow and be withdrawn tax-free when used for education. If you open a 529 account just as your child enters college, you forego many of these tax advantages since the account won’t have much time to produce earnings. You’ll also have limited your options both in terms of investment choices and what you can use future earnings on.

For example, if your child decides to join the ROTC or gets a merit-based scholarship halfway through school, you won’t be able to withdraw earnings for something else without a penalty being assessed. Further, investment options in a 529 plan are heavy on long-term investments like stocks and mutual funds, but have limited offerings in the way of short-term investments like money markets and CDs.

8. If You Live in a “No Income Tax” State Or A “No Deduction” State
If you live in a state that doesn’t assess income taxes, or a state that doesn’t currently allow deductions for 529 contributions, you won’t get that nice tax break for contributing to your child’s 529. For more information, see this list of states that allow deductions. California currently does not offer a deduction from state income taxes for contributions to any 529 plan.

9. If Your Child Is Planning on an Alternative Education
Not every child has their sights set on college. For example, they may prefer to develop skill at a trade for which traditional education would be inappropriate. Withdrawing money from a 529 account without spending it at a qualified educational institution can mean incurring a 10% penalty, plus paying income tax on the earnings. That can add up to a significant amount, especially if you’ve invested over a long period of time.

If you want to allow for flexibility and not create a “college or bust” situation, complement a 529 plan with other savings vehicles, such as a Roth IRA and ordinary brokerage accounts with long-term investments. In this way, if college costs are less than expected or non-existent, or if an alternative education needs to be funded, you won’t need to worry about incurring a penalty for withdrawing 529 funds for “non-educational” purposes.

529 plans are helpful and appropriate in many situations. But in some cases like those detailed above, there are better ways to invest that don’t reduce financial aid, limit investment flexibility, or result in high fees and taxes based on tax calculators and estimators. Consider your situation and goals to best determine which approach makes sense for you and your family.

Kira Botkin contributes to the Money Crashers personal finance blog and specializes in financial topics like saving for retirement, finding commonly overlooked personal tax deductions, living a frugal lifestyle, and getting out of debt. A version of this article appeared on The Upfront Blog, produced by Weathfront; The Upfront Blog answers questions from investors about finance and investing. Questions for the blog can be addressed to Editor Betsy MacBride.

Tags:  finances 

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DIY Estate Planning: Wills and Durable Powers of Attorney

Posted By Communications Manager, Tuesday, March 22, 2016

Having a new baby ranks right up there with the world’s most disruptive personal transitions. There’s just nothing like major new responsibilities, sleeplessness, arguing with your spouse, placating your other children (and pets) and dealing with caring for someone 24 hours a day who can’t even hold up her head.

On top of that, there’s planning for that new person’s future.

Any parent of young children needs three basic estate planning documents: a Will, a Durable Power of Attorney and an Advance Health Care Directive.

Here’s why: A Will allows you to nominate guardians to care for your children to age eighteen in case you die before they reach adulthood. A Will also allows you to put a management plan in place so that the money you leave your children can be managed for them until they are old enough to manage it for themselves.

A Durable Power of Attorney appoints someone to act as your Agent in case you are incapacitated, so that someone can pay your bills, take care of your property and pay for your care. Finally, an Advance Health Care Directive appoints someone to make medical decisions for you if you can’t do so, and allows you to state your wishes for end of life care.

If that sounds daunting, don’t worry. These three basic estate planning documents are definitely ones that you can do yourself, using forms that are available on the internet. While it’s true that an estate planning attorney can help you to prepare them, the self-help versions are legally valid, accomplish the basics and are way better than doing nothing at all.

Making Your Will
Your Will doesn’t have to be fancy to accomplish two main goals: appointing guardians and managing your children’s money to a reasonable age. If you don’t have a Will and you die, a judge is going to appoint a custodial guardian to care for your children to age eighteen and a property guardian to manage their money to the same age. There are two things wrong with this picture: 1) the judge doesn’t know your family (and your sister-in-law, for example) as well as you do, so not nominating guardians means giving a stranger the power to make a decision that you are best equipped to make; and 2) most eighteen-year-old kids are just not mature enough to manage significant money, and any judicially appointed guardian’s role has to end at eighteen when your child (believe it or not) becomes a legal adult.

To make a simple Will, you have to decide four things:

1) Who to nominate as a guardian. It is best to pick at least two people, so if your first choice can’t do it, you have a back-up.

2) Who to name as an Executor. The executor is the person who will administer your estate. The executor will pay final taxes, outstanding debts, collect and value your property, and distribute it as directed by the Will.

3) Who to name as a Trustee. If you are going to leave your children money in trust to a certain age, the Trustee is the person who is going to manage and distribute their money to them until they reach that age. It can be the same person as your executor, or someone else.

4) When your children should inherit their money outright. Since your children are young, you can’t know how well they’ll manage money yet, so just use yourselves as an example: how old were you when you could manage money responsibly? For some, twenty-five is a good age; for others, it’s thirty-five.

Once you’ve got those four things figured out, you can put together a simple Will, sign it in front of two witnesses who don’t inherit anything, and you’re done. Do not notarize a Will. Store it somewhere safe. Tell your executor where to find it.

Here are two online resources that you can use:
1) The California State Bar offers a free statutory Will. This is a quite basic, fill-in-the-blank form, but it does cover the essential things and is legally valid. This Will allows you to name a custodian to manage your children’s money to age 25. Download the statutory Will at the State Bar’s website.

2) Nolo offers two inexpensive ways to create Wills that are more comprehensive than the State Bar’s basic one. First, for $34.99 you can create an Online Will that you can print out and will allow you to nominate guardians and executors, set up a trust for your children and forgive any debts that people owe you. Second, for $49.99 you can purchase Quicken WillMaker Plus 2015, which will allow you to create and print out a Will as well as Durable Powers of Attorney and Advance Health Care Directives.

There are other online options out there, but these two are the ones that I recommend. The State Bar is entirely trustworthy and so are the editors at Nolo, all of whom are attorneys.

Both the Durable Power of Attorney and Advance Health Care Directive appoint an Agent to act for you if you become incapacitated. They are both important parts of every estate plan, since all of us may become sick or hurt over time.

Your Durable Power of Attorney
The Durable Power of Attorney applies to your property—your Agent can write checks on your account, hire people to take care of your house, withdraw money from your retirement accounts to pay for your care and file your tax returns. Younger persons may want a Durable Powers of Attorney that only becomes effective when the person is incapable of managing their own affairs. This is called a “Springing” Durable Power of Attorney because it “springs” into effect when you need it, but not before. Usually, two doctors must sign letters stating under penalty of perjury that you are incapable of managing your own affairs before your Agent can act.

The alternative is to sign a document that is effective upon signing – this can be appropriate for people who are traveling, who want to minimize the hassle of making the document effective or who are old or sick now and need immediate help managing their property.

Your Advance Health Care Directive
An Advance Health Care Directive names Agents to make health care decisions for you and lets you state your end of life wishes.

You may have already signed an Advance Directive, since that’s part of every hospital’s pre-admittance paperwork. If you are a member of Kaiser, or other large health care organizations, you may already have signed one with your doctor.

If you don’t have one yet, here are two excellent online options:
1) The California Office of the Attorney General makes a fill-in-the-blank Power of Attorney available for free.

2) If you want more advice and information about what to do, the California Medical Association sells an Advance Directive kit online for $6 that provides much helpful information.

Feel Good, Not Guilty!
Too many people waste their energy feeling guilty about not having an estate plan when they could be using that energy to go ahead and get the basics done. Trust me, if you need an estate plan (because you have kids, a spouse, a job, and some assets) you have the skills needed to get this done.

Liza Hanks is an estate planning attorney at Finch Montgomery Wright LLP and author of the free e-book The Family’s Guide to Wills and Estate Planning. She writes two blogs:The Palo Alto Estate Planning Blog, and Ask Liza: Nolo’s Estate Planning Blog.

Tags:  finances 

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Dad’s Rules for Talking with Kids about Money

Posted By Communications Manager, Tuesday, March 22, 2016

This Father’s Day, you may want to spend some time with your kids having a family conversation about money and values. If this makes you feel a little uncomfortable, don’t worry — you’re not alone. Many parents feel uneasy talking with their kids about the family’s finances.

“But once we talk to the kids about money, it will be like opening Pandora’s box. Who knows where the conversation will go?”

Well, first of all, the box is probably open already. Second, it will be soon, no matter what you do. And third, it might be better for you to go ahead and open the box now. When we turn money into a taboo subject, we’re teaching our kids that there is something scary about it, and that we don’t even talk about it. If that’s the lesson we teach our kids, we’re not starting them off on the road to forming a healthy relationship with money.

Here are three suggestions for talking with kids about money and, perhaps, just as importantly, ideas for acting consistently with what we say.

Rule 1: Money is like sex
Just as with sex, when it comes to money, kids know more than we think they know. But they’re probably confused about what they think they know. Most of them will figure out money eventually by watching adults. Or they’ll figure it out from their friends who have either sorted things out themselves or observed their own parents.

But while kids may know more than we think they do, they’re often confused about what they think they know. That’s because, irrespective of their age, kids often don’t have the right context to make sense of what they know.

Rule 1 should help us get over any delusion that we can keep our kids in the dark about everything. And it also helps us to define one of the tasks ahead of us. We want to help our kids begin to create a context for their knowledge so that their knowledge is helpful and empowering, not dangerous or frightening.

Rule 2: Think before you talk
Determine your own values about wealth before you discuss money with your kids. Many parents have a fairly clear sense of the values that they’d like their kids to develop with respect to money, but they may be less clear about knowing what their own values are. Therefore we need to be honest with ourselves and examine our own values about wealth.

It’s one thing to say we want our kids to understand that material possessions are not the source of happiness and fulfillment. But if our own lives are driven by conspicuous consumption, our kids will quickly come to see that the values we say that they should develop are not aligned with the values that shape our own behavior.

Kids are the most sensitive lie detectors on Earth. If there is a discrepancy between what we say and what we do, they’ll be quick to see it. The more clear we are about our own values before we talk with our kids about money, the more successful we’ll be in managing the conversation and delivering a message that is consistent with the way we live our lives.

Rule 3: Talk with them, not to them
“Mom? Dad? Are we rich or poor?” Are you worried about being asked this question by your kids? Well, now you can look forward to it because it gives you a chance to engage your kids in a conversation about the meaning of money and happiness.

You can ask your kids, “What makes you the happiest? What makes you the saddest? Does any of that have to do with being rich or poor?”

You may want to say something like this to your kids, “Rich means different things to different people. It means some things that we measure with money and other things like having a happy and healthy family that can’t be measured with money and that no amount of money can buy.”

“As far as money goes, we are fortunate to have enough to buy all the things we need and many of the things we want. And we have enough money to take care of you, so that you don’t have to worry about money. So many people would say that we are rich.”

It’s best to be honest. We make so many sacrifices for our children, and we devote so much attention to giving our kids the best opportunities we can. If we neglect having ongoing conversations about money and values, we are denying our children an opportunity to think about how their values drive their actions.

This Father’s Day, see what your kids have to say about the subject of money. What they say may surprise you.

David Enemark, CFP® is a Family Wealth Advisor at Morgan Stanley who specializes in helping families achieve financial security both for themselves and future generations. Now that his newborn son is finally sleeping through the night, David is once again riding his mountain bike whenever he can.

Tags:  finances 

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