Although many teens are loath to admit it, they rely heavily on advice from trusted adults in their lives—especially their parents. As these teens begin moving out and heading to college, it becomes even more important to set them on a good financial path. Below are seven key pieces of advice every college student should hear from their parents.

You Need a Budget

Encourage your child to create a budget to track their income and expenses. Help them understand the importance of living within their means and prioritizing essential expenses like tuition, housing, food, and transportation.

Avoid Consumer Debt

Without a solid budget, it can be easy to fall into the consumer debt trap—paying with plastic just doesn’t have the same impact as handing over hard-earned cash. With rising costs of food, housing, and college tuition, it’s increasingly easier for young people to take on too much debt when striking out on their own.

Discuss the dangers of taking on excessive debt, including student loans, credit card debt, or personal loans. Encourage your child to minimize the amount they have to borrow at a young age. Your child should also explore any available alternatives, like scholarships, grants, part-time work, or community college, to reduce the need for student loans and credit debt.

Build Credit Responsibly

Teach your child about the importance of building and maintaining good credit. The easiest way to do this is by paying all bills on time, keeping any credit card balances low, and avoiding unnecessary debt. If you have good credit, you can add your child as an authorized user on one of your cards to start building their credit history.

 

Save for the Future

Encourage your child to start saving for their future goals as early as possible. Discuss the benefits of compound interest and the power of regular contributions over time.

Invest in Career Development

Emphasize the value of investing not just in an education but in a lifelong career. The college years are the perfect time for your child to increase their future earning potential and expand the universe of job opportunities. Encourage your child to explore internships, co-op programs, volunteer opportunities, and networking events to gain valuable experience and skills.

Understand Financial Aid

Teach your child how to fill out the Free Application for Federal Student Aid (FAFSA). Filling out the FAFSA accurately and on time will maximize their eligibility for financial aid. You and your child should also understand their financial aid options, including grants, scholarships, work-study programs, and student loans, so you can make the most informed decisions about the cost of attendance.

Protect Personal Information

Teach your child the importance of safeguarding their personal and financial information, especially Social Security numbers, bank account numbers, and passwords. Remind them to be suspicious about being asked to share information online. Your child can also sign up for programs and services that will monitor their accounts for suspicious activity, including identity theft.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This article was prepared by WriterAccess.

LPL Tracking #588335

Money management and investment strategy are critical areas that deserve undivided attention, particularly for HENRYs – High Earners Not Rich Yet. This demographic often earns a significant income but has yet to amass substantial wealth due to various lifestyle choices or financial obligations. Moreover, they are usually in the early or middle stages of their careers, which leaves them vulnerable to market volatility and other uncertainties. Here, we outline eight vital tips for HENRYs on money management and investing in a volatile market.

Understand your financial situation.

The first step towards effective money management is understanding your financial status. Money management includes knowing your salary, savings, investments, debts, monthly expenses, and future financial responsibilities. Once you know your financial situation, you can work with a financial professional to create a plan responsive to changing market conditions.

 

Create an emergency fund.

An emergency fund is not just a financial safety net; it’s a source of security and peace of mind. It’s there to support you in case of job loss, medical emergencies, or unexpected expenses. Financial professionals recommend having at least three to six months’ worth of living expenses saved in an easily accessible account. This fund can provide you with confidence and financial stability, even during times of economic downturn or market volatility.

 

Manage debt.

Managing debt is a crucial aspect of financial responsibility for HENRYs. While they may have a significant income, it’s important to avoid accumulating debt without a clear plan for repayment. A high income doesn’t guarantee timely debt payment if it isn’t managed appropriately, which can lead to unnecessary financial stress.

 

Diversify investments.

One of the tried-and-true strategies for weathering a volatile market is diversification. Diversifying your investment portfolio across different asset classes, such as stocks, bonds, real estate, and commodities, can mitigate risk and improve returns. Diversification is not just about spreading your money across different investments; it should also consider geographical regions and sectors.

 

Manage risk.

Investing involves a certain level of risk. However, understanding and managing this risk is crucial, especially in volatile markets. To help manage risk, work with your financial professional to establish a risk tolerance level that helps guide your investment decisions. Always remember that high-risk investments can lead to high returns but can also result in substantial losses.

Another type of risk management to consider is having appropriate insurance coverage, such as property and casualty, liability, health, life, etc. Insurance coverage is imperative to protecting assets and avoiding premature liquidation if an unforeseen event occurs.

 

Keep a long-term perspective.

While short-term market fluctuations can be unnerving, HENRYs should maintain a long-term perspective as they work toward their goals. History has shown that markets tend to rebound over the long term, so emotion-driven reactions to market volatility can harm an investment portfolio.

 

Stay informed.

Staying informed about market trends, financial news, and economic indicators can help make informed financial decisions. Numerous online resources are available to learn more about personal finance and investing. Also, working with a financial professional can help HENRYs stay informed regarding how market volatility may impact their portfolio and goals.

 

Practice patience and discipline.

Finally, patience and discipline are pivotal in managing money and investing, particularly in a volatile market. It’s essential to stick to your long-term strategy and resist the temptation of short-term gains or panic selling.

 

In conclusion, HENRYs have a unique opportunity to accumulate wealth despite market volatility. By implementing these tips and working with a financial professional, HENRYs can navigate market volatility and set sail toward financial independence.

 

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing.

 

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

 

Past performance is no guarantee of future results.

This article was prepared by Fresh Finance.

LPL Tracking #588887

If you’re a high earner, you may be interested in partnering with someone with similar education, income, and goals. Becoming a financial “power couple” can help you both achieve your goals sooner. Because money disputes are one of the leading causes of divorce, finding someone with whom you’re financially compatible can smooth the path of your relationship¹. Below, we discuss a few tips to help guide your joint journey.

Open communication is the gold standard for any relationship. But it becomes even more important when both partners have high incomes (especially if those jobs involve high stress). It’s not uncommon for one partner to feel insecure or jealous about another partner’s earning capacity, especially in times of uncertainty. You can build trust with your partner by getting all your emotions—even the negative ones—out on the table.

2. Set Mutual Goals

You and your partner may want to set financial goals that you both aspire to, such as saving for a house, paying off debt, investing for retirement, or starting a business. First, break down these goals into smaller, actionable steps. You can then decide who is best suited to perform each step and hold each other accountable along the way.

3. Create a Budget

One of the biggest advantages of a dual-income household is the ability to save a significant percentage of your salary—expenses like rent or a mortgage don’t double just because two people live there instead of one. This makes it easier to avoid lifestyle creep, which is discussed below.

4. Live Below Your Means

Living below your means allows you to free up funds for savings and investments. Prioritize spending on things that bring value and happiness, not just instant gratification. One rule of thumb when contemplating large purchases is to wait a week and see if you’re still thinking about it. This can help you avoid impulse buys.

5. Maximize Income

You’ll build an unshakable partnership by supporting your partner’s career goals and aspirations and celebrating each other’s successes along the way.

6. Manage Debt Wisely

Work together to manage and pay off any debts like student loans, credit card debt, or mortgage payments. Each dollar that goes toward servicing high-interest debt is a dollar that can’t be used to support your lifestyle or save for retirement, so the quicker you knock out this debt, the better.

7. Protect Your Assets

For many high earners, especially those early in their careers, their biggest asset is their earning ability. This means protecting your assets by getting enough insurance coverage is crucial. This can include life insurance, health insurance, disability insurance, and long-term care insurance. You may also want an umbrella liability policy to protect yourself against claims that exhaust your other insurance coverage options.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

Becoming a parent is a life-changing experience filled with joy, excitement, and new responsibilities.

Amidst the preparations for welcoming your little one, it’s crucial to review and update your various insurance policies. This can potentially provide peace of mind and financial security for your growing family.

 

Health

Before welcoming your baby, review your existing policy to ensure it covers things like maternity care, and assess what coverage you’ll need for pediatric services and subsequent checkups for your baby. Having a child is a qualifying life event, so you’ll be able to add them as a dependent and adjust or upgrade your coverage as needed. Just make sure to check with your provider about deadlines and specific requirements.

Life

Life insurance is a vital component of financial planning for new parents. The primary purpose is to provide a financial safety net for your family in the event of an untimely death. So if you don’t currently have a life insurance policy, now is the time to get one. Assess finances to ensure you purchase a policy, whether it whole or term, that adequately covers the obligations you would leave behind, including mortgage or rent, student loans, and other debts.

Homeowners or renters

With the addition of baby-related items or home upgrades, your home becomes even more valuable. Update your homeowners or renters insurance policy so it covers the increased value of your possessions and property, and be sure to add any new items, including baby gear, furniture, and electronics, to your personal home inventory. Additionally, evaluate your liability coverage to protect against potential accidents or injuries that may occur on your property, such as those involving pools, trampolines, or playground equipment.

Auto

If you’re considering upgrading your vehicle to better accommodate your growing family, make sure to check with your insurance provider about premiums. Depending on the age and size of the car you purchase, your monthly cost could end up being higher or lower. It’s also a good idea to review your current auto insurance policy to ensure it provides adequate liability, collision, and comprehensive coverage, especially if you plan to partake in carpools in the future. And you’ll want to check that your policy provides coverage for a car seat, meaning your insurance provider would likely pay for the cost of a replacement should you ever be involved in an accident.

Disability

Disability insurance can help replace a portion of your income if you become unable to work due to an illness or injury. This can be a valuable tool for new parents since your ability to earn a living is crucial for supporting your child. You can purchase short-term or long-term disability insurance, either of which can go a long way toward helping you and your family through any challenging circumstance.

As new parents, it’s incredibly important to protect your growing family’s financial security. Consider consulting with an insurance professional or financial advisor who can provide valuable guidance in choosing the right policies and coverage amounts for your family’s specific needs, allowing you to better focus on the joys of parenthood without unnecessary financial worries.

 

Important Disclosures

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. For information about specific insurance needs or situations, contact your insurance agent. This article is intended to assist in educating you about insurance generally and not to provide personal service. They may not take into account your personal characteristics such as budget, assets, risk tolerance, family situation or activities which may affect the type of insurance that would be right for you. In addition, state insurance laws and insurance underwriting rules may affect available coverage and its costs. Guarantees are based on the claims paying ability of the issuing company. If you need more information or would like personal advice you should consult an insurance professional. You may also visit your state’s insurance department for more information.

This article was prepared by ReminderMedia.

LPL Tracking #1-05374815

For those unfamiliar with the “baby boom,” it is the period that stretches from 1946 to 1964, children born at the tail end of the trials and tribulations of World War II right up to the start of the Vietnam War. It is true that baby boomers are working longer than before; however, as they retire, the impact may be noticeable across the economy.

As baby boomers retire and leave the labor force, their departure could impact the economy in several ways, including:

·       Productivity rates could decrease

·       There could be a shortage of workers

·       The costs associated with an aging population may put a strain on the economy

·       Their exit may create a “talent gap” as decades of industry experience go out the door with them.

 

Despite the uncertainties of the economic future, baby boomers with retirement on the horizon are not sitting idle. They are taking proactive steps to prepare for this new phase of life. Here are a few measures they are implementing:

 

1.      Postponing their retirement

It is becoming more common for baby boomers to put off retiring for a few years to put a little bit more money away. The uncertain economic landscape leaves many wary of how long their money can stretch if faced with unforeseen financial surprises like a recession or depression, consistently rising cost of living, and high interest rates.

 

2.      Create a retirement spending budget

One way of managing your spending in retirement is to determine how much you could have on the date you want to retire. Then, determine how much you can comfortably spend versus your household income after you stop working, such as Social Security benefits, your pension (if you get one), withdrawals from a retirement account, and any other sources of income. You have a number that for your future expenses, you can focus on working toward a lifestyle where you can make that work, for example, downsizing and reducing expenses like utilities, lawn service and landscaping, excessive HOA fees, and more.

 

3.      Review your investment portfolio

As you near retirement, there is a good chance you will have a nest egg built up. You may have a significant amount of that money in a traditional savings account, for example, but you have been interested in something that provides a higher interest rate. Consider reviewing your investment portfolio and modifying it if necessary in pursuit of your financial goals. There is no guarantee that you will earn the returns you anticipate, as all investments have risk.

 

4.      Establish an emergency fund if you don’t have one

It is impossible to predict the future and medical care for people after retirement can be expensive. Having an emergency fund and cash available when needed can help mitigate the risk of insufficient money to cover costs such as medical events. According to Bankrate, more than 1 in 5 Americans have no emergency savings. An estimated one in three had some emergency savings but not enough to cover three months of expenses.

 

5.      Consulting with their financial professional

Nearing retirement can be stressful, especially during uncertain times with a perceptively unstable economy. Whether you feel confident that you saved up enough over the course of your working years or not, consider consulting a financial professional to help you redesign your retirement and savings strategy and stay aligned with your long-term goals.

 

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

 

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

 

Sources:

Bankrate’s Annual Emergency Fund Report | Bankrate

Boomers’ Thoughts About Money? It’s All Going to Be OK (investopedia.com)

1 in 5 Boomers are Delaying Retirement Due to Concerns of Recession | Kiplinger

As Boomers Slow Down, Will the Economy Follow? (investopedia.com)

 

This article was prepared by LPL Marketing Solutions

 

LPL Tracking # 577572

In golf, as in finances, there are a few rules of thumb that may improve your game: keep a level head, avoid traps, practice before trying something new and stay the course. Applying lessons from the golf course to your financial life and vice versa may help you improve your game in both arenas. Here are three tips that may help you work toward success on and off the golf course.

Avoid Hazards

Getting bogged down in a sand or water trap may cause frustration and add many strokes to your ultimate score. While it may not be possible to avoid financial hazards, it is important to do your due diligence before making new investments or any major changes. Before taking a financial step, consider the potential outcomes and the probabilities of each. It may make sense to take several smaller steps toward your goal in some situations instead of taking a long shot that could put everything at risk. In other circumstances, the potential upside of hitting the green on the first shot might overcome the risk of missing.

Find a Good Caddie

When you are on the course, your focus should be on the game with no distractions. Just like a caddie may help you keep your gear safe and accessible and provide you with sage advice on how to work toward your goals, a financial professional might be your partner on your journey in seeking to build wealth. Consider using their assistance for things like rebalancing your portfolio, analyzing your risk tolerance and asset allocation, preparing financial statements, tax documents and other key tasks. Having the help of a financial professional may free up your time to focus on what matters, like playing more golf.

And just like with a golfer and caddie, compatibility between you and your financial professional is the key to a successful relationship. You may need to interview several financial professionals before you find one whose style and methods match well with your own.

Do Not Let a Bogey Send You Off-Course

In life and golf, mistakes are inevitable. But it is important not to let one bogey (or even one bad game) send your attitude into a tailspin. Complications inevitably arise, whether it is an investment that soured, an interruption in income, or a sudden unexpected expense that sends your budget off the rails. What matters is that these problems do not take you away from your short- and long-term goals.

Whenever you encounter a financial bogey, consider what led to it, what it means, and what actions you may take to prevent similar situations from occurring in the future. In some cases, these slips may occur due to no fault of your own, and there may not be much you may do to prevent their recurrence. Instead, you may need to plan and prepare for it. In other cases, there may have been red flags or other warning signs leading up to the mistake, which you may be better able to spot and avoid in the future.

 

Important Disclosures

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.

Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.

Asset allocation does not ensure a profit or protect against a loss.

This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.

This article was prepared by WriterAccess.

LPL Tracking #1-05244868

Small business owners face many challenges, which may become even more significant during inflation. As inflation hit new highs in recent years, small business owners are being tested and challenged by high costs and high interest rates that have caused some to close their doors. So, how do small business owners weather the storm of inflation? Here are a few tips to help you get through it.

1. Know Your Numbers

One of the most important tips for small business owners is to know your numbers. As a small business owner, you should know the numbers on your financial statements and balance sheets and understand your cash flow. You also should always have budgets and projections, so you have a basis for comparison and should spot when things start going askew before it is too late to get back on track.1

2. Optimize Your Goods and Services

When costs and interest rates are high, supply chain issues may occur. Managing your goods and services to make a solid profit is vital. Take the time to calculate the revenue and costs of each product and service you offer to determine their gross margin and net profit. Find any poor performers and consider eliminating them so you don’t waste valuable time, material, and resources on products and services that yield little profit.1

3. Know How Inflation Might Impact Other Areas Outside Your Business

Your business is likely to be your top priority, but it is equally important to understand that inflation also affects other areas outside your business. Inflation may affect your ability to borrow, lead to a business slowdown, and drastically affect your pricing models for your products and services. Understanding all the peripheral areas affected by inflation may make your business more resilient and better able to withstand the ups and downs.1

4. Know the Difference Between Strategic and Non-Strategic Spending and Cost-Cutting

In times of disruption, it is easy for business owners to panic and begin cutting costs or spending without developing a plan to either lower company costs or outdo the competition. In either case, spending or cutting costs without following a strategy may lead to severe problems, especially during times of inflation. Always do your due diligence before implementing new spending or cost-cutting measures to ensure they align with the company’s goals and needs.2

5. Automate if Possible

The more work you automate, the more efficiently you can run your business. Perform a time study of each operation in your business. If any operations take longer than they should, or if there would be a more time-saving way to automate them, see if the cost would be worth the time it would save. You may even want to look at your daily tasks to see if there are ways to automate some of your processes to free up time to develop more business for your company.

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.

This article was prepared by WriterAccess.

LPL Tracking # 553066

Footnotes

1  How Small Business Owners Can Navigate Inflation and High Interest Rateshttps://www.uschamber.com/small-business/how-small-business-owners-can-navigate-inflation-and-high-interest-rates

2 6 Strategies to Help Your Company Weather Inflation

https://hbr.org/2021/09/6-strategies-to-help-your-company-weather-inflation

Investing is not just about the numbers; it’s about understanding yourself. Two key factors to consider are one’s ability to take risks and willingness to take risks. While both play pivotal roles in shaping your investment strategy, they cater to different aspects of your financial life.

Ability is an objective measure based on financial standing, while willingness is a subjective reflection of personal comfort and experiences. This blog aims to demystify these concepts, offering insights and a self-assessment tool to help you gauge your own risk profile.

The Ability to Take Risks: A Financial Assessment

Your ability to take risks is determined by your financial resilience—the capacity to absorb losses without derailing your financial independence or lifestyle. It’s influenced by several key factors:

• Debt Levels: High debt can constrict your ability to weather financial storms, as obligations may necessitate the premature liquidation of investments at a loss.
• Emergency Savings: Adequate emergency reserves provide a financial buffer, allowing you to endure investment volatility without needing to cash out investments, especially during down markets.
• Time Horizon: The length of time until you need to access your invested funds can significantly affect your ability to take risks. A longer horizon allows more time for recovery from market downturns.
• Insurance Protection: Proper insurance coverage (health, life, disability) shields against unforeseen financial hits, indirectly supporting a higher risk capacity.
• Income Stability: Consistent and reliable income bolsters your ability to take on investment risks, providing regular contributions to offset potential losses.

Illustrating Ability with Real-World Examples

Consider Anna, a young professional with minimal debt, substantial emergency savings, and a long-term investment outlook. Her stable job and comprehensive insurance coverage position her with a high ability to take investment risks.

In contrast, Brian, nearing retirement with significant debt and limited savings, faces a constrained ability to absorb financial volatility.

Willingness to Take Risks: The Psychological Dimension

Willingness to take risks reflects your psychological comfort with the uncertainty and potential for loss in your investments. It’s shaped by:

• Investment Experience: Familiarity with market dynamics can temper fear, potentially increasing your risk tolerance.
• Financial Knowledge: Understanding how markets operate can empower you to take calculated risks.
• Personal Experiences: Past financial successes or traumas significantly influence one’s comfort with risk.
• Risk Perception: Your view of the current economic and market conditions can sway your willingness to invest aggressively or conservatively.

 

Personalizing Willingness Through Stories

Jennifer, an experienced investor who has weathered several market cycles, possesses a high willingness to take risks, trusting in the market’s long-term growth.

Conversely, Jack, who suffered significant losses in a past downturn, exhibits a cautious approach despite having a solid financial foundation.

Finding Your Equilibrium: Balancing Ability & Willingness

An effective investment strategy aligns your ability and willingness to take risks. Discrepancies between the two can lead to discomfort or missed opportunities. Striking a balance ensures that your investment choices resonate with both your financial reality and your personal comfort level.

Self-Assessment Questionnaire: Gauging Your Risk Profile

To better understand your own risk tolerance, consider the following statements and rate your agreement on a scale of 1 (low) to 3 (high):

1. My debt-to-income ratio is low, giving me financial flexibility.
2. I have emergency savings that cover at least six months of living expenses.
3. My need to withdraw from my investments is more than 10 years away.
4. I have comprehensive insurance coverage to protect against significant financial losses.
5. My income source is stable and expected to remain so.
6. I am comfortable with the potential of losing money in the short term for the possibility of higher returns in the long term.
7. I have experienced market downturns before and remained calm.
8. I actively seek to expand my financial knowledge and understanding of investments.

 

Scoring Risk Tolerance:

• Ability to Take Risks: Sum scores from questions 1–5.
• Willingness to Take Risks: Sum scores from questions 6–8.

 

Interpreting Your Scores:

• High Ability and Willingness: You’re suited for potentially higher-return, higher-risk investments.
• High Ability but Low Willingness: Consider educating yourself on risk management to possibly become more comfortable with taking calculated risks.
• Low Ability but High Willingness: Focus on strengthening your financial base to align your investment strategy with your risk appetite.
• Low Ability and Willingness: Conservative investments might be more aligned with your current financial situation and risk comfort.

Conclusion

Understanding the distinction between your ability and willingness to take risks is crucial for crafting a personalized investment strategy. By assessing both aspects through honest self-evaluation, you can navigate the investment world with confidence, making decisions that align with both your financial objectives and personal comfort level.

A seasoned advisor can offer expertise, perspective, and customized solutions that cater to your unique circumstances. At Gatewood Wealth Solutions, we stand ready to assist you in understanding and striving to optimize your risk profile.

Our team of experienced advisors is equipped to analyze your financial situation comprehensively, taking into account both your ability and willingness to take risks. We work collaboratively with you to develop a robust investment strategy that aligns with your goals and comfort level. Whether you’re seeking to maximize returns or prioritize capital preservation, we’re committed to helping you seek to achieve financial success.

Take the first step toward a more confident financial future. Reach out to Gatewood Wealth Solutions today to schedule a consultation with one of our knowledgeable advisors. Let us guide you toward a path of confidence and prosperity in your investment journey.

 

Important Disclosures:

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investing involves risk including loss of principal.  No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.