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Should we offer financial aid to our children now, or let them wait for their inheritance?

The key words to consider are “financial aid.” If adult children need help with financial stress and the parent is in a position to help, it makes sense to do so. Watching someone struggle financially when we have the ability to make things easier for them and relieve their stress seems harsh.

However, as with all financial matters, the pros and cons of helping one’s grown children with finances must be carefully weighed and thoughtfully considered.

We all have a desire to make life better for our children. Taking into account each child’s personality and lifestyle will help us make good financial decisions in their regard.

Is the individual in financial need because he has been living irresponsibly? Does he want to live the good life and spend in excess of his ability to earn? In this case, being too generous might cripple independence and enable a lack of motivation.

On the other hand, if an adult child has been plagued with legitimate hardships such as employment issues, medical bills or some other traumatic situation, and has previously displayed productivity and a good work ethic, a helping hand might be in order.

Assistance can be in the form of a loan or an outright gift. Only you can assess your financial picture and determine which is best for your situation. If you have recently retired and probably have many years ahead of you, a loan may be the appropriate way to offer help. Sometimes, however, an outright gift is more beneficial to eliminate feelings of guilt about ability to repay.

It is the parent’s money and his ultimate decision. However, a parent will want to guard against using money as a control mechanism in the parent/child relationship. To withhold assistance when a child is struggling with immediate financial difficulties in order to “reward” that same child with a larger inheritance could be motivated by a self righteous attitude or an attempt to “bribe” for attention.

I am reminded of the classic example in the original version of the movie, “Fun with Dick and Jane.” Jane asks her wealthy parents for a loan when Dick has been laid off from his job and they are struggling to keep food on the table. Jane’s father declines and tells Jane the struggle will be good for her and Dick. He reiterates his wealthy status and lords over his daughter how he is reaping the benefits of his frugal and wise life.

The movie is a comedy with some profound truth and wisdom interwoven into the laughter.

When a person is down and out, that would not be the appropriate time to preach, or wax philosophical about the benefits of frugality. If one can help, then do so. If one is not in a position to offer help, then sympathize and commiserate, but refrain from self righteously sharing personal good fortune stories.

It is not the parents’ role to teach children “life lessons” by withholding potentially available assistance in a time of dire need.

There is also no virtue to hoarding excess money in the bank when children and grandchildren are suffering or deprived. If you can relieve the stress without putting yourself in a financial shortfall, it is prudent to do so.

Your thoughtfulness and generosity will reap you immeasurable benefits. You will have the enjoyment of seeing your offspring thrive and the peace of mind which accompanies helping another. Your child will be filled with relief and gratitude and might even acquire a “pay it forward” attitude and one day follow your example by helping someone else avoid financial distress.

No inheritance can outweigh those immediate benefits.

Finding free financial advice is the first step in acquiring reliable financial advise. While not all free financial advice is reliable, some of it may be more reliable than costly financial advice and good free financial advice that is also reliable will assist in knowing the difference. This article will discuss some of the sources for free financial advise and then expand upon how to go about discerning the reliability of that advice. Moreover, section one will provide some sources of free financial advice, and section two will outline some ways in which the reliability of that advice may be determined.

SECTION I: SOURCES OF FREE FINANCIAL ADVICE

*Banking Service Providers:

Many banks offer free financial planning assistance as a complimentary service to holding an account and utilizing other banking services with that financial institution. The financial planning advice may vary from institution to institutions and there may be an element of cross selling involved. Nevertheless, if one is not obligated to purchase any additional products and services, the sessions offered may be both affordable and useful in managing and planning one’s financial future.

*Financial and Investment Seminars:

Many seminars are held at local hotels by investment gurus, and financial experts in various areas of finance. These seminars are often attended by financially minded people and can afford one the opportunity to learn new financial information, network, and become more engaged in the financial world. These seminars are often complimentary and may also attempt to sell financial and/or investment programs. As with the free financial planning offered by some banks, all one need do is be weary of the selling goals of the information providers and harvest the financial advice without worry.

*Family and Friends:

The more sources one obtains financial advice from the greater the chance one has to draw comparative conclusions, cross reference information for validity and gain multiple perspectives. If one’s friends and family are trained and/or knowledgeable in financial matters this can provide additional credibility to the financial information being received. As with all information, being aware of personal motives, misinformation and bad advice is always important whether the advice is free or not.

*The Internet and financial websites:

There are many resources on the internet containing free financial advice from trained and experienced professionals.

Goal-setting is the starting point of any task or journey to be undertaken. This is applicable to the realm of finances as it is to most other endeavours. Some may argue that people can survive without goals since life is uncertain anyway. Those who claim to have no goals set may prefer to have hopes and dreams. However, if you have no stated goal, how would you know if your hopes or dreams have a chance? Without the power of goals, there will likely be hopes instead of expectations and dreams instead of reality.

Financial goals are no different in terms of function and purpose. They help you achieve or cover tangible and intangible needs like a healthy bank account, financial security and peace of mind. The power of financial goals resides in the fact that they establish our future in our present. Our goals in this context would specify what we want to achieve, when we want to achieve it and how we want to reach it. Truly powerful financial goals would incorporate why we want to achieve a particular objective. The following points demonstrate the power of financial goals:

a) Budgeting is empowered by them.

Arguably, one can do a proper budget with no real goals in mind if one uses acceptable arbitrary figures. However, budgeting in the context of financial goals adds meaning to a budget. The budget comes alive, as it is now a roadmap to success. You would know that you’re saving 25% of your income, because you want to own your own home in six years. This is important, since we often have difficulty establishing needs and wants. If you fully value the financial goals you set, you may be able to make wise budgeting decisions, like eliminating superfluous activities or reducing luxuries from your expenses.

b) Financial goals help us exercise self-discipline.

This is where the “why” of financial goals come in. We have the micro view before us in terms of the budget. Our financial goals helped us to form this budget. Would we stick to it? Referring to the bigger picture again is what will help us to balance current and future needs. We would be less likely to deviate from the daily/monthly plan because we understand that the budget we set is governed by the bigger picture- future comfort. In times of financial strain, financial goals would help us prioritise and exercise necessary discipline when it is most needed.

c) Choosing the right financial instruments is another power-point of financial goals.

Knowing that goals involve knowing quantity

TRAITS OF A BOGUS FINANCIAL ADVISOR

It has become a common occurrence for people, especially those in the middle and upper class brackets to solicit the services of financial advisors. Financial advisors, like any other professionals fall into two main categories: the true expert and the bogus. The begging question is: how does one tell the two apart? I personally think there is a fine line between the two categories and one will have to keep his eyes open, ears attuned and wits alert, in order to realize the difference.

Essentially, a financial advisor is supposed to ask his/her prospect necessary and sufficient questions to unveil his/her personal circumstances and actual’ financial needs and objectives. It is important that the level of risk the prospect is comfortable with is ascertained during the diagnosis’. A qualification’ of the prospect by the expert, after the gathering of relevant information is critical. ‘Qualification’ is the process of establishing whether the financial advisor has access to the appropriate financial tools with benefits that will perfectly match the personal circumstances and financial needs of the prospect, giving regard to various factors, including the prospect’s budget. It embraces a decision as to whether or not the financial advisor is dealing with the right prospect. This is a stage that can distinguish the true expert from the fake.

Integrity and trust must underpin the financial advising role, and one has to be really wary of who he/she asks for advice from. A good financial advisor is supposed to be your helper, your guide and your teacher, in your journey towards your financial goal. Needless to say he/she must have and be seen to have sufficient knowledge in the field of finance and investments, and must be abreast of trends in the financial markets.

There are several tell-tale clues of a sleazy financial advisor. One who has picked up skills from the field and not certified is very likely to be unprofessional in his/her dealings. The chances are good that securities/shares recommended will be appropriate, if the financial advisor or the company he/she works for is not tied to or totally independent of the company whose securities/shares are offered.

Steer clear of financial advisors who do not spend enough time to get to know what your real financial needs are. Such advisors will come off as wanting to just get the commission they are entitled to in their dealings with you, and not actually interested in helping and guiding you to achieve your financial goal. If you are not the right prospect, a true’ expert will candidly let you know, hopefully at the qualification’ stage or otherwise, as soon as it dawns on him/her.

A thorough research into the company the advisor works for, will be a step in the right direction. It will be a bonus if you will be chanced to have a chat with some of his/her customers chosen at random, to assist you to get a feel of the kind of service you may get. Note that it is not just the service you get during the sale or dealings that matters, but more so the after-transaction service.

The financial markets are very dynamic, and it is necessary that one’s personal circumstances and financial situation are regularly reviewed by the advisor, and any necessary changes to the financial strategy implemented with ample speed and agility, to guarantee the attainment of financial objectives. A good advisor must progressively add value to the client.

Your twenties were the party years. During your thirties and forties you raised your family. Maybe your fifties if you were lucky you enjoyed an increase in financial freedom as your children became less dependent on you for financial support. Then suddenly you are heading towards your sixties and it dawns on you that there is so much more to consider with regards to your financial situation and your pending retirement from the workforce.

The light at the end of the tunnel is getting brighter, but are you ready for it?

Of course the above scenario does vary depending on whether you had your children in your early twenties (like my parents did) or you waited until you were in your forties like my Aunt did. Regardless of where you fit in with your current situation, it can never be too early or too late for financially plan for your sixties.

First things first, if you are not comfortable with financial planning don’t hesitate to hire a Financial Planner. They all should be good with figures, the current taxation laws in state, budgeting and balancing of investments that you may already have or may choose to delve into.

Maybe somebody in your family has offered to provide you with some advice, and although they may be a very close family member, unless you are very comfortable with them knowing your financial situation, I’d steer clear of family, and go with the neutral option of the professional. Oh and make sure you get yourself a Legal Will, if you haven’t already done this.

Before you hire a financial planner, it would be wise to have a good idea of a few things, such as your employment status. Are you planning to retire around 65? Or do you want to continue working? Of course this may depend a lot on what sort of work you do, whether you work for yourself and whether financially you need to continue to work. Maybe you are already retired.

Your desire to continue to work may be based on a lifestyle choice or it may be based on a financial need. Which leads to the next thought to ponder; how much money do you think you are going to need for the next say 40 years? Do you intend to travel the world, the country or just have a few trips here and there? Or are you more likely to spend your retirement on the Golf Course, Tennis court, or in your garden doing all the things you just never had time for. Are there any large purchases you were planning to make at this stage of your living? Depending on the way in which you plan to spend your retirement

Fee-only financial planners don’t receive a dime in commissions on the investment products they advise you about. If you think that makes them objective, and therefore trustworthy about what the best investment are for your portfolio, you’re right.

When you go to a no-fee financial planner you are getting less than you pay for. Because that financial planner has an incentive to steer you into investments that will pay him or her a big fat commission.

Most financial planners who work on commission are interested, not in getting the investment products that best meet your needs, but instead in setting up an income stream for themselves that will keep paying them big fees for years into the future.

This is because mutual fund companies pay a percentage of the cost of your mutual fund investment to the financial planner who sold them to you. And they keep paying the financial planner, year after year, so long as you stay invested.

And don’t kid yourself. Even though you don’t pay the financial planner directly, you’re still paying every cent that he gets. It comes from the management fee your mutual fund company charges, you know the MER that lops 1% or 2% off your investment each year. That may not sound like much, but when you reach the point where you have a couple of hundred thousand of dollars invested – which isn’t that much in a retirement account – you’re looking at three to four thousand dollars per year just for management fees.

Do you remember how long it took you to save your first four thousand dollars?

Now, not all of that money goes to your financial planner of course, but rest assured, he’s well rewarded.

A fee-only financial planner never gets a commission from any of the investments they recommend for you. They may, for example, instead of recommending a mutual fund for your two hundred thousand dollar investment, recommend a basket of stocks similar to those in the mutual fund. Instead of paying 1% or 2% per year in MERs, you’ll be receiving 1% or 2% a year in dividends. That’s a difference of four to eight thousand dollars in savings to you, every single year, before the capital return on your investment even starts.

So having a fee-only financial planner can make a big difference to the success of your investment account. Sure, you’ll have to pay them up front, and you’ll have to write the check yourself. But if you go with a no-fee planner instead, the mutual fund company will be writing your financial planner’s paycheck. It’ll still be your money, though, and it will be a whole lot bigger.

Money is the root of….., well you know the rest. I have heard so many different conversations about money throughout my life. Some conversations demonize money, making it seem as though wanting to accumulate it is an evil sin, while others champion the notion of accumulating it, making it seem as though this pastime is humanity’s sole purpose for existing. There are other conversations about money that infer that only a small percentage of society will ever have the ability to accumulate money because of privilege, while the masses will be destined to simply chase it to no avail. There are many differing views as to what money is, how to or who can amass it, and whether it is right or wrong to do so. Well, I am not going to get into the morality issue involving the accumulation of money, instead I would like to focus on the following question: Does the accumulation of money equate to wealth? In order to properly respond to this inquiry, I will have to address some of the conversations we just touched upon by answering the following questions:

What is money?
Is money necessary?
Are some people destined to accumulate money while others are doomed to simply pursue it to no avail?
What is wealth?

What Is Money?

Money is a form of currency. It is a physical representation of value used for exchange in the marketplace. Money was not always the preferred means of exchange, however. Bartering (a economic exchange rooted in trading one set of items or services for another) was the means of exchange long ago, as the marketplace was far simpler, consisting of fewer products and services for sale, as well as fewer people in which to sell these products and services to. Prior to the formation of large villages and international trading, the marketplace did not require a complex currency/exchange system. However, as the numbers of buyers and sellers grew, it became more apparent that a more complex form of exchange would be needed. Hence, the creation and utilization of monetary-based exchange systems.

Now, while you and I can read the worth of a dollar bill on its face, as a dollar, its true worth may not be that, as a currency’s value is never stagnant, as all of the values of the different currencies’ around the world are constantly fluctuating. This fluctuation is most often based on the stability of the market(s) that a given currency supplies. Therefore, as with other currencies around the world, America’s dollar fluctuates based on the stability of the marketplaces it serves. However, there is one changing dynamic fundamental to this economic theory that seems to currently be upsetting the apple cart, and that is globalization. As the world moves closer to a global economy, each nation’s currency will be more interconnected with one another, meaning that instabilities in markets outside of one’s physical borders will have an ever increasing impact on one’s currency.

I say all of this to show you that money is simply a fluctuating commodity used for the buying and selling of products and services in the world’s various marketplaces. However, the problem is that many of us put far too much emphasis on money as a tangible good, which often leads to unsuccessfully chasing an intangible theory.

Is Money Necessary?

Yes, it is. One cannot deny the necessity of money, being that it is the primary means of exchange around the world. Money is necessary for living a life that most would deem acceptable, which includes obtaining and maintaining the basics such as shelter, food, and clothing. However, where we often begin to get ourselves into trouble is when we start to acquire some of the niceties such as big screen televisions, sports cars, or elaborate vacations. I try to be very careful when talking about these niceties, because this is where a lot of people often get carried away with the “power” of money. Be clear that niceties or luxuries are not necessities, nevertheless many people often incorrectly lump the two together, causing them to relentlessly pursue money in what some would deem a sinful way. Again, I am not here to make any moral determinations about the pursuit of money, because what one may demonize as the evil pursuit or accumulation of money, another may deem as the positive result of his/her hard work. Therefore, that determination rests in the eye of the beholder. Nevertheless, there is no getting around the necessity of money to fulfill our most basic needs.

Are Some People Destined To Accumulate Money While Others Are Doomed To Simply Pursue It To No Avail?

This question plays right into the “woe is me” conversation that many people seem to have about the accumulation of money. While it is true that some people have a leg up on money accumulation, they do not have a lock on it, because remember, money is a fluctuating commodity (an intangible theory in essence). Money is based on a perceived value. Therefore, no one is doomed to be poor or penniless. However, whether you accumulate money or simply chase it resides in your perceived self-worth. Now, I know some of you may be saying this guy is crazy, but I am telling you the truth. If you were not born with a silver spoon in your mouth, then you have to shift your thinking in regards to your self-worth. Once you do that you can begin to accumulate money if that is your desire. What do I mean by shift your thinking?

Every product or service bought or sold on the world market has a value that fluctuates based on what consumers are willing to pay for it. As I previously explained, even the value of money which is the marketplaces means of exchange fluctuates. This goes to show that everything is a commodity. Everything has a value, even you. You must now ask yourself a couple of important questions to get yourself in the proper mindset if you want to accumulate money:

What talents or skills do I possess that can be of great value to others?
What talents or skills could I learn that can be of great value to others?
Am I willing to develop my talents and skills to the best of my abilities?
Am I willing to wait until my talents and skills are honed before I put them on display?
Am I willing to put myself out there to demonstrate my talents and skills to the public?
Am I willing to demand that my talents and skills be compensated based on their value in the marketplace?

I hope you are beginning to get the picture. Just like every other product and service in the marketplace has a monetary value, so do you. The question is what do you bring to the table that is of great value to others? Many people don’t realize that they are a commodity or don’t want to acknowledge it. But whether you want to acknowledge that fact or not, we all are, and those of us that realize this early on and take the appropriate steps to develop our talents and skills before our peers tend to accumulate money at a much easier rate than those who don’t realize, refuse to accept this fact, or develop late.

Does this mean that individuals that don’t realize, refuse to accept this fact, or develops themselves late are doomed to simply live a life pursuing money to no avail? Unfortunately, the answer is most likely yes. Just look at the wealth disparity in America, a place where one is afforded the freedom to pursue his/her dreams. The masses have the wrong mindset, because they are chasing money as though it is a tangible asset. One final point on this topic, for those who fall into this category and somehow accumulate money, chances are it will be short lived if you do not realize that you must have some service or talent to contribute that society values if you want to keep the money flowing, because if not, the money will eventually run out with no way of replenishing it. Just look at the numbers of individuals that have obtained riches through the lottery or inheritance only to squander it over time.

What is Wealth?

Unlike money, wealth is not relegated to that of a fluctuating commodity used primarily for the purpose of exchange in the marketplace. Wealth represents an accumulation of any and everything dear to an individual. This can include people that you value, possessions that mean a lot to you, the remembrance of experiences that played a key role in your life, the attainment of a quality education, a high level of self-esteem, good health, happiness, and not to be left out, money (if you value it). A key difference between wealth and money is that the accumulation of wealth implies that the person doing the accumulating has some level of wisdom, self-worth, and maturity, as it is often very difficult to accumulate items of wealth if one does not understand what, why, and how to gather and maintain items he/she values.

Does The Accumulation of Money Equate to Wealth?

We have finally arrived at the overarching question: Does the accumulation of money equate to wealth? Well, after having read up to this point, what do you think? No, as the accumulation of money is only one aspect of wealth, and actually the lesser aspect in my view. Money can really only provide greater power in the marketplace, but if you realize your self-worth (which is what wealth requires), you can accumulate and maintain the money as well as all of the other things that we spoke about in regards to wealth. Remember, money is only one aspect of life and not life itself. You are life itself, and from you everything manifests. Therefore, I would pursue wealth over money any day of the week. A final thought, money without the development of self is hollow, empty, fleeting, while development of self (inside of the realization of one’s worth) breeds wealth for a lifetime.

 

In this day and age, there are many reasons to be concerned about your personal information. Who you give your information to and what kind of information you give are important factors to consider. Identity theft is rampant, and therefore, your personal information needs to be constantly protected. However, if you want to accomplish certain things or obtain the services of certain organizations, you have to divulge certain amounts of particular information.

The amount and type of financial and personal information that you have to give a financial planner depends on the services and advice that you want to receive from your financial planner. Your social security number is probably one of the most important pieces of personal information that you possess. As such, you should not willingly hand it over unless the need for such is mandatory given the current situation. Sometimes, for tax reasons or for other reasons (such as obtaining a copy of your credit report and your credit scores) your social security number is required. Of course, you do not have to hand over this information. Just know that if you refuse to hand over this information, the services that a financial planner can provide to you may be severely limited.

As I stated, depending on the services that you want a financial planner to perform, you may not have to divulge any personal information. If, for example, you want a financial planner to review your assets and expenses situation, you probably do not have to hand over much personal information (with the exception of your monthly bill amounts and your monthly revenue).

The truth is, regardless of the amount of services that you ask of a financial planner, you are going to have to divulge some amount of personal information. The financial planner has to know what he/she is working with before he/she can help your situation. As such, personal information is required.

The good news is, you should not be too worried about handing over this information to a financial planner. If the financial planner with which you do business works for a reputable firm, you can rest assured that your personal information will be kept in the utmost confidence. This should give you some relief over the fear of identity theft.

No matter what, some information needs to be divulged. Do not worry about handing over public information, such as your name, address, and phone number. However, information of a more personal nature (such as your social security number and financial condition) will be held in confidence. Therefore, do not worry about your information when it is in the hand of a reputable financial planner.

A financial asset is anything that carries an implied or actual value and can be converted to cash. While cash is considered the most fundamental financial asset, there are many other examples such as stocks, bonds, gold (or other precious metals), savings accounts, real estate, vehicles, and collectibles. Just about anything that can be sold for currency cash can be considered a financial asset.

One important factor to bear in mind when assessing your financial assets is liquidity. Liquidity refers to the speed at which you can convert your financial assets into cash. Your savings account is a more liquid asset than your house is. Your house would take some time to sell and it would likely be a matter of months before you could turn your house into cash in your hand. The savings account is virtually the same as cash since you could venture to the bank and withdraw the money very quickly, therefore your savings account is considered to be a more liquid asset than your house.

Knowing what financial assets are can help you in assessing your net worth, which is defined as the amount of assets you have, less the liabilities (debt). If you have a house worth $100,000 with a $75,000 mortgage, a checking account containing $500, and a savings account with $1,000, your net worth is $26,500 ($100,000 – $75,000 + $500 +$1,000 = $26,500).

Knowing what your net worth and financial assets are is very important to help you when considering applying for a credit card and when purchasing a home, car, or other large item requiring a loan. Keeping a close account of your financial assets is also vital to help you asses your household budget, savings, and retirement planning needs.

Not only can financial planners sell stocks, they are actually one of the best intermediaries to use in this regard. In the United States things are especially easy in this regard. There are a lot of unaccredited organizations posing as financial planners, but legally there are usually requirements for an organization promoting itself as such, and many of these requirements directly pertain to the selling of stocks. So the answer to this question, in a word, is yes.

There are many countries in which financial planning is completely unregulated. Even in those where it is regulated this can be an uncertain thing as the exact nature of financial planning is left somewhat nebulous and unrefined. Thankfully in the United States there has been legislation enacted that require financial planners to register as investment advisers, regardless of the exact service they offer. These new provisions require a planner within the organization to pass the series 66 Registered Investment Adviser Exam. This ensures that financial planners in this country specialize in stocks by default.

There are financial advisers who do not sell stocks at all but there are many who offer this option and usually these types offer bonds and mutual funds for you to invest in as well. Financial planners are allowed to sell a wide variety of banking and investment services. There are also those planners who usually handle the affairs of one wealthy individual and these are called relationship managers or private investors.

Remember that it is best to stick with planners who work for regulated financial service companies. They will have to meet the legal requirement listed above… and the industry has its own standard accreditation system that denotes the designation “Chartered Financial Planner” which involves completion of an extensive educational program and passing numerous tests. Anyone who does not fit the classifications listed could well be a fraud and following the guidelines listed above is the only way to be sure about the nature of who you are working with.

Even thought the industry is for the most part deregulated the recent legislation mandating that financial planners register as investment advisers to me has really helped define the lines in this industry. Selling stocks should be one of the main thing a financial planner does. If they do not offer this option, they are not legal.