Most of us will care for our aging moms at some point in our lives, but helping our parents maintain their independence as they grow older can be a juggling act, particularly when it comes to their finances.
Before we are thrown into the overwhelming responsibility of managing Mom’s investments, it’s important to do some advance planning. For many, starting the conversation with Mom is the biggest hurdle, and what better time than on Mother’s Day?
Whether it’s day-to-day or long-term investments, here are a few things to consider when helping Mom with her finances:
Get a holistic view
Start by getting a complete picture of Mom’s current and expected cash flow needs. Look at her sources of income (like pension and CPP) and her living expenses to get a better idea of any cash shortfall her investments will need to cover.
Next, get a holistic view of her investment portfolio, including what investments she holds and where. Continue Reading…
My actual words in the lead to the piece were “as big or bigger” but no matter. That’s the gist of a new book by author and technology guru Don Tapscott, and his investment banker son, Alex.
The duo launched their co-authored new book, Blockchain Revolution, to a standing room only audience at Toronto’s Rotman School of Management on Thursday evening. It was the first stop in a ten-city book tour.
Blockchain is the Trust Code
The famous Bitcoin is based on blockchain, which meant that for the first time in history two or more parties don’t need to know or trust each other in order to transact or do business online. They don’t need powerful intermediaries because “Trust is programmed into the essence of the technology so blockchain is the trust code.” The book (shown to the right) says big banks and some governments are implementing blockchains as distributed ledgers to speed transactions, improve security and lower costs. These ledgers reside on millions of computers provided by volunteers, so there is no central database that can be hacked. Using heavy cryptography, transactions are time-stamped and validated by a community of miners who are rewarded with more bitcoins. Every time a new block is added to the chain, it must refer to a previous block to be valid: hence the term blockchain.
Your loving gives me a thrill,
But your loving don’t pay my bills
“Money (That’s What I Want)” –- The Beatles
Financial planning for one person can be complicated enough. When you get into a long-term relationship with someone else and combine your households, you join your financial lives as well.
Just because your beloved is a great kisser and you have lots in common doesn’t mean that he or she is financially compatible with you or responsible.
Friction over how we spend and save is one of the leading sources of conflict in a relationship. Numerous studies have shown that money is the number 1 reason why couples argue – and often is the main reason for untying the knot.
It’s inevitable that money issues will come up between you and your spouse.
Your credit, financial reputation, and overall economic picture is closely tied to this person who may or may not have the same feelings and thoughts about money that you do. As a married couple, you and your spouse have a tremendous impact on each other’s financial picture and both of you are affected by the other’s financial situation.
The money talk
Ideally you should have the money discussion once your relationship starts to get serious and before you co-sign a lease on an apartment together or walk down the aisle. However, most of us don’t know how to talk about money and tend to shy away from it.
We’ve been told it’s impolite to discuss money with others. It’s embarrassing to admit that our own finances aren’t in the best shape. People tend to get emotional and reactive.
Each of us tends to view money a little bit differently, depending on the role it played in our lives growing up, and often your partner will have a different take on it than you do. Many couples lack clarity regarding their financial compatibility. But every couple needs to discuss these issues.
Many times a lack of communication is to blame. One has dreams of travelling the world, whereas the other’s goal is to save for a comfortable retirement. Couples may initially talk about where they want to live, or how many kids they want to have, but almost never consider financial compatibility.
Sarah and Jerrod fell madly in love when they met 5 years ago. They married in 2012 and Sarah was pregnant a year later. Sarah wanted to quit her job to be a full-time mom after the baby was born. In her mind that was always the plan.
On the other hand, Jerrod just made the assumption that Sarah would return to work after the baby was born. In his mind he wanted to continue enjoying the lifestyle their dual incomes provided.
Then – surprise! Sarah had no idea that Jerrod had over $40,000 in student loan and credit card debt and he was worried he might not be able to support the family on his own.
Jerrod and Sarah simply had different expectations about what their lives should look like. They made assumptions that turned out to be wrong.
It may be easier to start out talking about a common goal, such as planning an upcoming vacation or wedding. You can bring up how you will save for it and your views on debt. Gradually, as you become more comfortable and trusting, you can discuss your current financial situation, dreams and goals.
The things that promote financial health have a lot in common with the things many people say promote a healthy relationship. A key part is having an open conversation about what their future plans are, and where each spouse stands in terms of income and debt. Confide in your partner. Discuss your worries. Keeping financial problems to yourself is destructive.
You need to know how each of you envisions your life together, how you’ll pay for it and who’s responsible for what.
Be open and aware of each other’s financial situation. Get to know each other’s spending habits.
Only by having a clear picture of assets and debts can a couple make the most of their financial resources and make a solid spending and investing plan.
Schedule regular meetings
Hashing out money matters may not be romantic, but a little communication can do a lot for your love life down the line.
Schedule regular “money meetings” monthly or quarterly to go over your budget, vacation ideas, children’s upcoming activities and plans for the future.
Use this time to set financial goals together, monitor progress, brainstorm creative solutions to problems, generate ideas to improve your future, and celebrate your successes.
As long as you’re making progress, don’t judge your partner for playing a round of golf or buying a new sweater. Finger pointing and blaming doesn’t help your balance sheet. Even if you’re spending your own hard-earned money, your decisions affect both of you.
Working together
For many couples, your financial life together evolves over time. As a couple you tackle these goals as a team, often getting ahead financially much more quickly than a single person could. But you need to work together to come up with a game plan.
Rank your financial priorities and make a list of the steps it will take to accomplish these goals and where they coincide. When they collide you need to figure out which you can delay or even live without.
It’s important to understand each other’s money personality and work with it. One of you makes decisions instantly while the other deliberates for days. One of you hates paperwork, while the other lives for detailed spreadsheets. Focus on the positive outcome.
Assess your individual strengths and weaknesses on money management and then figure out who should take the lead and be accountable in which financial responsibilities. Who will be responsible for paying bills? Researching large purchases? Managing investments?
No matter who takes the lead in managing a couple’s money, both parties need to participate in the process and know where your household stands financially. This will keep you both committed to your financial plans, eliminates misunderstandings, and minimizes the blame game when something goes wrong.
Identify areas where you might have differing approaches to money management. We all have different spending styles, expectations and approaches in the way we manage money.
You can figure out how to sort through and resolve those differences, but you can also celebrate them. If one of you is a saver and the other a spender, create a budget that allows for both. If your partner is a bargain hunter, put him in charge of the spending while you invest the savings.
Don’t ignore your partner’s needs. It may not be important to you, but if it’s important to your partner – it’s important to your relationship. Learn how to compromise so both of you feel satisfied. A plan should work for both of you even if it’s not what you had in mind initially.
Final thoughts
It all comes down to communication. Many couples find it hard to talk about money and this can lead to problems down the road. Don’t let small problems or assumptions grow into larger problems.
From the onset, be open with each other and talk about your money concerns. No two people have identical values when it comes to money so open communication will help identify what is important to each of you. Then you can make the best decisions about your money as a couple.
A good relationship is one in which each party helps the other make better choices – and you may be able to help each other become smarter about handling money.
Work together to achieve financial success.
Marie Engen is the “Boomer” half of Boomer & Echo. In addition to being co-author of the website, Marie is a fee-only financial planner based in Kelowna, B.C. This article originally ran at the Boomer & Echo site on April 26, 2016 and is republished here with permission.
The Canadian financial advice industry is facing some existential challenges. Over the past decade, the investment sector has seen a slow decline in best practices and value-driven client service.
Consumers have taken note of this industry shift and the results are worrisome: investor trust in financial professionals in Canada has taken a sharp turn downwards from 2013 to 2015. Recent surveys further demonstrate this erosion in trust— a 2015 survey by the CFA Institute and Edelman indicates that only 61 per cent of Canadian retail investors and 57 per cent of institutional investors trust the financial services industry to do what’s right. It’s time the investment industry engaged in some much-needed introspection on what its future will look like.
Outdated advisor-client model
The outdated traditional advisor-client model is largely the cause for shortcomings in client satisfaction and trust. Continue Reading…
In the relatively dry world of finance, one of the valuable functions that bonds (fixed income) provide is to increase the diversification and resilience of balanced portfolios — by serving as a fire extinguisher when times get tough, rather than an accelerant.
They’re designed to make money, but also to manage any potential sparks or flare-ups lit by their flashier equity counterparts. While no one has pulled the alarm in this new realm of negative interest rate policy imposed by certain central banks, it’s still a good idea for fixed-income investors to be aware of their bond holdings; they should check to ensure that, like a fire extinguisher kept in the kitchen, they’re still appropriate and ready to do the job they’re meant to should the need arise.
What’s happening with negative interest rates?
In 2014, the European Central Bank became the first major central bank to shift interest rates into negative territory. The central banks of Sweden, Denmark, Japan and Switzerland followed suit soon after.
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By Josh Miszk, Invisor.ca
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