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 ‘To give or not to give’ is the age-old question that parents of adult children often contemplate. When I am asked for advice on this topic my response is always the same: ‘neither a lender nor a borrower be’ especially when it comes to family and friends.  In my experience, the costs far exceed the monetary value given, as relationships tend to suffer irreparable damages.

Having said that, each situation is unique and so to give or not to give really depends upon the relationship between the parent and the adult child.  If you are contemplating such a request, consider the following factors before making a decision; your child’s financial history, the other siblings in the family, whether your gifting or lending the money and most importantly, if you can afford it.

Your adult child’s financial history

Before you hand out any money, you might want to ensure that you’re actually helping your adult child and not enabling them. Otherwise you’re just throwing good money, after bad. So ask what the money is for and what sacrifices or life changes they have already made themselves prior to asking for financial help? Get a clear picture of their current financial situation to see if they are living beyond their means. Is borrowing a chronic condition and your adult child needs help once again because they are not managing their money responsibly? Or is this a one-time situation in which they need temporary financial assistance?

Other siblings in the family

Giving money to one child and not another will often lead to resentment. So if you cannot afford to dish out equal amounts to all your children then either ensure to provide the financing by way of a loan so it is paid back, or make provisions in your Will to account for the money given.  If it is a large sum of money, you might start off as a loan and then evolve it into a gift as part of the child’s inheritance. Again, ensure to put this in writing to prevent family squabbles when you are long gone.

Gifting or lending

Be very clear, is it a gift or a loan? If it is a loan, set clear expectations. Specify whether there will there be interest charged, the terms of repayment, and put it in writing. Setting terms in writing allows everyone to know from the get-go where they stand and what their future responsibilities are.

Can you afford it?

Before dishing out the money, ask yourself earnestly ‘can I afford to’? Any money you give or lend should be beyond what you need to cover your day-to-day expenses without touching your emergency savings, credit cards/line of credit and your retirement savings. If giving your child money puts a financial strain on you today or in retirement the answer without question should be no.

Responsible money management is part of being an adult as is the consequences for poor management. You are better off helping your adult child improve their financial skills then by bailing them out. Saying no is never easy but it’s better to endure a little discomfort now then a major fallout later. Whatever you decide, just be sure that you think through the ramifications beforehand and seek out the advice of a financial advisor. Maybe the best way to help your adult child is with a little guidance, direction and some time with a financial planner. 

 

Filed under: Money tips for women, financial advice for women, giving money to adult kids, lending to adult children by admin
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The merging of two financial lives into one can create havoc on even the strongest of relationships and especially if money talks were never tackled beforehand. Ideally, financial discussions should have happened long before the marriage; however, it is never too late to try to understand your partner’s feelings about money and how compatible they are with yours. 

 The following quiz can help provide some insight into you and your spouse’s financial compatibility

1.       Do you have some sort of realistic budget or a spending plan in place that you are both accountable to?

2.       Are you comfortable with your spouse’s spending habits?

3.       Do you argue over monthly bills?

4.       Do you and your spouse discuss major financial decisions before they are made?

5.       Do you and your spouse have a plan of attack in case one of you should lose your job? (I.E. Currently live off of only one income and bank the other)

6.       Do you and your spouse share in the responsibility of managing your financial affairs?

7.       Do you and your spouse regularly discuss your finances including your short and long term financial goals?

8.       Do you and your spouse share the same views towards debt and savings?

9.       Are you and your spouse both actively saving for retirement?

10.   Do you and your spouse send the same message about money to your children?

Ideally, the answers to all the above questions should be yes. 

 To achieve complete financial unity may not be a realistic goal for many couples but to achieve greater financial compatibility is. However, this does require a lot of work.  Here are a few tips to help improve your financial compatibility:

·         Devote more time to financial discussions and to goal planning.

·         Define what each of your financial responsibilities is.

·         Start making joint decisions about how your money is to be spent.

If you are finding it a challenge to have these important money discussions you may want to seek the advice of an experienced financial planner. A financial planner can help you identify differences you may have and how you can work towards finding a happy medium, which is valuable and meaningful to you both. When there is mutual understanding about financial goals, couples most often will work together to achieve them resulting in fewer money confrontations. You can then redirect such valuable energy towards building a more positive and prosperous future together. 

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Filed under: Marriage and money, boomer women, financial advice for women, financial planning for women, kids and money, money advice for women by admin
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Whether you know it or not, you are teaching your kids every day about the value of money by how you spend it, save it, invest it or waste it. Qualified or not, you are their money coach and they will learn by watching and listening to your every move.

If this concerns you, not to worry as all is not lost… yet. If you want to raise financially healthy kids it’s better to start late then never at all and an allowance is a great way to start. Among other things, it teaches your kids how to manage their ‘own’ money. Even though it should be up to them to decide how to spend the money, it’s a great opportunity for you to teach some practical skills. I suggest starting with 5 simple money principles: earning, spending, saving, borrowing & giving.

Earning:

An allowance is your child’s ‘pay-day’. Establish the amount based on their age and the family finances. Be consistent and pay on time. The purpose of an allowance is really to teach your kids firsthand about money management. Don’t tie it to chores. If you are a member of the family then you are responsible to share in the household chores. This is not something you or anyone else should get paid for. However, give your child the opportunity to be able to earn extra money for taking on additional chores or responsibilities. Also, don’t pay or reward for your kids getting good grades. That is a personal accomplishment and should not be tied to a financial benefit.

Spending:

Have a discussion with your child about what exactly they are expected to pay for using their allowance. This is the start of them learning to live within their means. Something many adults don’t even know how to do successfully. Teach your kids age appropriate budgeting. For example, you have $5 to last one week and you are responsible to pay for any treats when we go to the grocery store. As your child gets older, their allowance increases as does the expenditures they are expected to use it for.

Savings:

Just as financial gurus advise you to save 10% of your income, so should you advise your kids. Teach them to pay themselves first by encouraging them to take 10% of their allowance and put it towards savings. If your child earns $2 a week, then suggest they take .20cents and put it into their piggy bank. If they earn $10 a week, again suggest $2 go towards savings. I often recommend creating ‘savings jars’ and act as the Bank of Mom. Open a ‘real’ savings account for each child and when the jars get full have the kids take the money to the bank to deposit. There will be nothing more exciting and encouraging for them, then to see their own money grow. Remember, it’s not the amount their saving that matters as much as the lessons and habits they are learning.

Borrowing:

You may think this is one aspect of money management you don’t want your kids to learn too early, if at all, but your child needs to be taught from an early age that ‘borrowed’ money is not free money. So teach your kids ‘age appropriate’ lessons on borrowing. If your child wants $10 to buy something and they have already spent their allowance, you now have a perfect opportunity to teach some valuable money management lessons.

You have the option to take a hard line, no money, no purchase. You can teach your child how to start a savings plan to build enough money to make this purchase - delayed gratification. Or you can lend them the money from the Bank of Mom. I suggest creating an ‘IOU’ jar and have your child sign an IOU. You may want to add interest on the borrowed amount to teach an authentic lesson on how the real world works. When allowance day comes, be sure you take the agreed upon amount off the top as payment for the loan.  When your child realizes they have little cash flow and nothing going towards their savings, they may think twice about the next item they so desperately need.

Giving:

Last but definitely not least, teach your child the importance of giving back. Whatever charities or causes the family supports encourage your child to take a portion of their allowance and ‘give back’ If they happen to love animals, your child can buy a can of cat or dog food and take it to the local shelter. Or buy a toy for a child who is not so fortunate. There are also many non-monetary ways to give back; donate unused clothes or toys or volunteer your time, just to name a few. It’s not about what or how much, just that you are giving back.

It’s never too late to teach your kids about money. Just remember 3 key points, lead by example, start young and let them learn by doing. Although making mistakes is a part of life when it comes to money, it’s better to make them early while the ante is still small.

Filed under: kids and money, teaching kids about money by admin
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Get the skinny on your financial ‘well being’ by taking the Summer Shape up Quiz.

 Quiz

        1.       I earn enough money each month to pay all my bills? Yes/No 

2.       I have enough money saved to pay for emergency or unexpected costs?  Yes/No 

3.       I have written financial goals?  Yes/No 

4.       I have a written savings and spending strategy that I follow? Yes/No 

5.       I know my net worth (what I own minus what I owe)? Yes/No 

6.       I know where ALL my important financial documents are located? Yes/No 

7.       I have a Will and Powers of Attorney in place? Yes/No 

8.       I know where and how my money is invested and I meet with my advisor at least annually to review? Yes/No 

9.       I have had my insurance needs reviewed within the last 2 years? Yes/No 

10.   My mortgage and loan payments are less than 30% of my overall income? Yes/No

 Please give yourself one point for every yes answer and then add up all your points to see how you did. 

If you want to manage your money better and didn’t fare so well on the quiz, don’t get discouraged. This is the time to make a new start.  Changing even a few of those ‘no’s’ to ’yes’s’ can make a real difference in your overall financial well-being.  Here are a few simple tips to get you started:

·         Educate yourself. There are many great websites and books available where you can find useful information depending on your needs. 

·         Find a qualified financial adviser/coach. If you wanted to lose weight, you might hire a trainer or join a weight loss program. Well if you want to lose your debt or build up your savings, get a good financial advisor/money coach who can create a plan and support you along the way. 

·         Stick to a plan. Why do diets fail? Because we do not stick with them. Make sure your financial goals/strategies are realistic and attainable. Most importantly, renew your commitment daily and follow through. 

Don’t worry if at first you find it a challenge to make sense of your financial health.  Like anything, it takes time. The most important thing is to just get started. Set some financial goals, follow a budget and save and you’ll be ahead of most.

Filed under: Money tips for women, emergency savings plan, financial advice for women, financial planning for women, lifestyle planning, money advice for women, reducing debt by admin
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Nobody takes pleasure in suddenly becoming unemployed. Just the ‘prospect’ alone can be very overwhelming and stressful. Often the worry or anxiety comes from feeling you have no control over the situation. This is partially true, you may not be able to control what your employer does but you can control to some extent how it will affect you and your family. The reality is, no one’s job is really secure but a layoff doesn’t have to be the end of the world. The key to survival is to be prepared, especially with regards to your finances.   Here are some things you can do in advance of being laid off:

1. Have emergency funds put aside to cover at least 3 to 6 months of your basic living expenses, such as your rent or mortgage, utilities, food and debt repayment.
2. If you are living paycheck to paycheck and do not have the extra funds at the moment to build up savings then set up a line of credit while you’re still employed. I am always cautious giving this advice, especially to people who have trouble staying out of debt. While you have an income, go to your bank and see if you qualify for more credit. If you lose your job and have no replacement income or not enough to cover your monthly costs, you will be in real trouble. This is when people get desperate and max out their 18% credit cards or potentially file bankruptcy. So get a line of credit now just in case you’ll need one later.
3. Get out of as much debt as possible. Transfer high debt loans/credit cards to lower interest rate vehicles and then start aggressively paying them down. By reducing or eliminating your debt, you reduce the amount of money that leaves your pocket each month. If you lose your job, you want to be able to survive on as little amount of money for as long as possible.
4. Develop a ‘laid-off’ budget before you lose your job. Figure out what sources of income you will have coming in such as EI and/or a severance package. Assess your basic living costs - mortgage/rent, utilities, loans, and food.  Ensure you have an emergency reserve and/or line of credit established that would cover any shortfall in income for a 6 month period.
5. Start living within your means now. Generally a good idea, regardless of whether or not a layoff is looming, but if a potential job loss is on the near horizon, avoid any unnecessary purchases for the time being, such as a new car, vacation, or renovating your home. Live as frugally as you can now and bank any extra monies.  We have heard it all before, leave the credit cards at home and pay cash for all purchases. Try to grocery shop only once a week. Eat out less. Re-evaluate your monthly bills and find ways to reduce them; call your phone provider and see if a better, less costly plan exists, let go of some of the cable channels. Get the whole family involved in the process. It will definitely teach your kids some smart money practices.
6.  Find ways to bring in some extra money now and then bank it. You could have a garage sale, sell things on ebay or assess your skills and see if there’s something you can do on the side for extra income or get a part time job now. Necessity is a time for creativity. Most importantly, bank all the extra monies you bring in.
    

 Losing a job can often be a harsh wake-up call to how financially on the edge we have been living. In other words, living paycheck to paycheck. 

If you are fortunate enough to be notified ahead of time of a layoff then I would highly suggest that you use that time to your advantage. Don’t just wait for the pink slip to be given. Even using one of the tips I have given will make a difference to your overall financial health. The reality is that a layoff could happen at any time and it’s best to be prepared. Hope for the best but prepare for the worst.

Helping Women Get Smart About Money!

Filed under: Money tips for women, emergency savings plan, financial advice for women, financial planning for women, lay offs, lifestyle planning, money advice for women, reducing debt, retirement for the baby boomer women, savings plans, wealth planning for the boomer women by admin
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Do you remember the good old days when spending our tax refund frivolously wasn’t such a big deal? Our jobs were stable, house values seemed to be on a never-ending climb and the stock market was booming. Things were looking pretty good.  Well, we are all feeling a little less wealthy these days; our portfolios have been beaten up, the wealth in our homes have taken a blow and on top of all that, we are worried about our jobs and the stability of our income.  There is a lot of insecurity or fear out there and so spending our tax refund on a great vacation or a new flat screen TV may not be the most financially savvy thing to do.

So what should we do with this year’s tax refund- spend it or save it, invest it or splurge? Read more…

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What the heck is a recession?
Well we now know that we are officially in one, so what the heck is it? In simple terms, a recession is when the economy stops growing and for the most part, starts going in reverse. Technically it is described as two or more consecutive quarters of negative growth and job losses.

Why does a recession get worse? Read more…

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I always advise women of two things, first take care of your personal finances throughout your years ‘as if you had to’. And  second, save regularly regardless of your financial health. This was the adage of a client I dealt with years ago. A lesson learned when her husband of 25 years walked out and left her and their 3 kids in a state of financial shock. As she said, “how I wished I had paid attention to our finances over our marriage”.  Twenty years later she is retired and fulfilling her dream of travel.  Read more…

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As women, we are likely to outlive our spouses or partners by an average of 5 years. Although this may seem financially insignificant when planning for a 20 to 25 year retirement, it could potentially be our most expensive years.

Things Women Need To Know Read more…

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One of the most frequent questions I am asked is whether one should pay down their mortgage or invest in their RRSP’s. Although I am a big believer that financial freedom is achieved first and foremost by being mortgage free, there are a few factors that play into the equation such as, the return on your investments, your marginal personal tax rate and your current mortgage rate. Read more…

Filed under: boomer women, financial advice for women, financial planning for women, lifestyle planning, lyfestyle planning, money advice for women, reducing debt by admin
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By the time we have surpassed our late thirties, early forties and ventured well into our mid-life years we will have likely experienced many life defining events.

   ‘We merged our lives with others, married and had children. We’ve survived divorce. We became empty nesters. Or perhaps we stayed single but had meaningful relationships along the way.  We started careers, changed careers and ended careers. We saw friends come and go. We’ve experienced the pain of bereavement as well as the joys of new life.’ Read more…

Filed under: Money tips for women, boomer women, financial advice for women, financial planning for women, lifestyle planning, lyfestyle planning, money advice for women, reducing debt, retirement for the baby boomer women, savings plans, wealth planning for the boomer women by admin
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Things to know about the new Tax Free Savings

• Starting January 1, 2009, the Tax Free Savings Accounts are available for Canadian residents who are at least 18 years of age.
• You can contribute up to a maximum of $5000 a year. Any unused contribution room gets carried over to the following year.
•  Withdrawals from your Tax Free Savings Account will not affect your ability to qualify for Federal income tested benefits like the Child Tax Benefit or the Guaranteed Income Supplement.
• You can open a Tax Free Savings Account and invests in GICs, mutual funds and other investments and not be taxed on any of the growth or earnings.
• You can have more than one Tax-Free Savings Account with different institutions but you cannot exceed your allowable contribution limit. Read more…
  

  

  Filed under: boomer women, financial advice for women, tax advice, tax savings by rhonda
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Are you living the life today that you envisioned you would be living 5, 10 or even 20 years ago? Are you content with most, if not all, of the many components that make up your world: your family, friends, career, health, finances, spirituality and community? If yes congratulations, that is no small feat to accomplish and probably didn’t happen by chance. Most likely you achieved this through purposeful goal setting, hard work and perseverance. Read more…

Filed under: Money tips for women, boomer women, financial advice for women, financial planning for women, lifestyle planning, lyfestyle planning, money advice for women by rhonda
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 In the last few issues of ‘itsHERmoney’ we discussed the importance of organizing the 5 rooms of one’s financial house; our personal debt room, our savings plan room, our retirement plan room, our estate plan room and our insurance needs room. Last month we tackled the topic of managing and understanding our ‘debt room’. In this issue we will deal with our ‘savings plans room’ or more specifically the importance of establishing an emergency savings fund.  

Why are emergency savings so important? Read more…

Filed under: boomer women, emergency savings plan, financial advice for women, financial planning for women, savings plans by rhonda
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In the last issue of itsHERmoney, we discussed the importance of decluttering your financial house, as clutter and chaos tend to go hand in hand. Hopefully you have had the chance to tackle the mounds of paper that represent your financial house and separate the ‘must keep’ documents from the ‘shred now’ stuff. And even further, file those ‘must keeps’ according to each financial room they represent; personal debt, savings plans, retirement plans, estate plans and insurance needs. Read more…

Filed under: boomer women, financial advice for women, financial planning for women, money advice for women, reducing debt, wealth planning for the boomer women by rhonda
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