Friday, September 23, 2016

How Financially Literate Are Your Clients’ Kids?

This recent piece in USA Today got me thinking, What Schools Teach Kids About Money Is Scary. I know many of you won’t admit to reading USA Today unless you’re stuck in a long airport delay. But a LOT of people DO read this paper and it tends to have a good finger on the pulse of the American public.

Guest author, Peter Dunn, suggests a hypothetical 13-week money skills course for teens and pre-teens. Perhaps it’s too basic for many of your clients—but not too basic for their kids and grandkids. And if your clients review Dunn’s tips, they might pick up a refresher or two for themselves.

Week 1 is very important because Dunn stresses the importance of one key point: “Your financial life is not about money; it’s about behavior.
Our client Gary Klaben frequently reminds followers of his blog that “Saving First, Spending Second” is the most valuable money habit you can have.

Dunn also stresses the importance of budgeting and goal-setting in the early weeks of the course—how to manage debt and how to watch out for all the little nickel-and-dime luxuries we pay for that can blow a big hole in our budgets. Around week 7, Dunn would introduce the power (or danger) of compound interest. I would personally introduce compound interest earlier in the course since compounding is your friend as a saver/investor but your bitter enemy as a debtor. Also, most middle- and high-schoolers can do the basic compounding math ( I have one of each).

Our own blog and website has more.

In Weeks 8-10, Dunn would devote a fair amount of time to student loans. That might be too much, other than helping them kids understand that you want to avoid student loans as much as possible. If for no other reason than you don’t want to take on debts on bad terms that can stalk you throughout your adult life. I don’t think students younger than high school juniors and seniors can grasp this concept until they may have to face the reality of NOT being able to attend their first, second or third choice of colleges for financial reasons—not because they didn’t have the grades or extracurriculars. We do give Dunn kudos for this point however:  
Saving for a purchase almost always makes more sense than borrowing, especially on lower-price items.”

Finally, the topic of insurance. Life insurance is a tough concept for kids, teens and young adults to wrap their heads around. They think they’re invincible, so why pay a lot of money for something they’ll never need? However, we do like Dunn’s suggestion of teaching kids about insuring their material possessions because at that age, loss of a mobile device, ear phones or even a car can appear to be a life shattering event.
For more good resources to share with kids and grandkids of clients, we recommend Gary Klaben’s Grown Up Money blog and The Financial Awareness Foundation website founded by our good friend Valentino Sabuco, CFP®, AEP®.


Even if kids, teens and young adults in your lives know how much their parents make or what their house is worth, you can’t expect them to know how little of that wealth can be utilized as spendable cash—my dad makes $100K, why can’t he buy a $100K used Ferrari? But, you can teach them about the value of delayed gratification by working and/or saving for the things they really want. When a price tag is expressed in terms of hours bussing tables or how many lawns need to be mowed, then we assure you, financial literacy will kick in—fast!

And remember, the 3rd week of October is
National Estate Planning Awareness Week, courtesy of Val Sabuco. And if for pre-teen kids in your life, consider giving them a Savvy Piggy Bank which has separate compartments for Saving, Spending, Donating and Investing.


TAGS: teaching kids financial literacy, Peter Dunn, Gary Klaben, Valentino Sabuco

Tuesday, September 06, 2016

Entrepreneurship: Best Thing for Your Health

Hopefully tropical storm Hermine didn’t disrupt your Labor Day weekend plans. Based on the volume of emails I received over the long weekend, I know many of you were catching up on work last weekend and it wasn’t just because you were cooped up inside riding out the weather. Kudos for your dedication. Shame on you for not giving yourself a mental break.

Most of you reading this post are successful business/practice owners. You’ve long known that long hours, unpredictability, high stress and marital strain are part of the entrepreneurial lifestyle. And while that may sound like a recipe for poor health, you might be surprised to learn that entrepreneurs WAY FEWER sick days than their corporate paycheck cashing neighbors. How can that be?

Health of entrepreneurs vs. employees

According to the Journal of Occupational and Organizational Psychology, entrepreneurs have what workologists call “active jobs” and may benefit from positive health consequences. The research compared entrepreneurs' health with employees' health in a national representative sample studying mental disorders, blood pressure, well-being (life-satisfaction) and behavioral health indicators such as sick days, physician visits, etc. Researchers found that entrepreneurs showed significantly lower overall somatic and mental morbidity, lower blood pressure, lower prevalence rates of hypertension, and somatoform disorders, as well as higher well-being and more favorable behavioral health indicators.
Entrepreneurship is not easy, but we control our own destiny. “Being one’s own boss means almost unlimited decision autonomy, freedom of choice in the tasks we take on, schedule flexibility, and the utilization and development of skills,” researchers concluded. And in today’s corporate world, you have almost the same amount of stress, uncertainty and anxiety as you do in the entrepreneurial world, without the autonomy, pride and sense of fulfillment. Consider these stats:

  • 41 percent of American employees didn’t take a single vacation day in 2015, according to a Skift survey
  • 55 percent of American employees didn’t use all of their vacation days in 2015, according to a recent Project Time Off study.
  • More than one-third of employers require employees to work on Thanksgiving, according to a 2015 Bloomberg BNA survey
  • Nearly two in five organizations (39%) will require some employees to work Christmas or New Year's, BNA reports.
  • 41 percent of employers will have some staff working on Labor Day.

  • About a quarter of Americans feel that corporate budget cuts/corporate restructuring will limit their job growth potential over the next five years, according to a Labor Day Job Growth Survey published this year.

All this for the “security” of a steady paycheck in a world in which the vast majority of American workers are “at will” employees who can be terminated with or without cause (i.e. for just about any damn reason your employer stats) on two-weeks’ notice? Now that’s a risky career path!


You may have been toiling at your desk on Labor Day, but at the end of the day you chose to do so—you weren’t been forced to do so. BIG DIFFERENCE! It wasn’t so much work as it was growing or maintaining the enterprise you’ve built. Our advice: don’t work for the man—be the man! And never forget to show your grit.

If you’re energy’s sagging a little bit today, that’s to be expected. Don’t reach for another can of RedBull or coffee. Check out Lolly Daskal’s insightful piece for Inc. Magazine recently 10 Things That Mentally Tough People Do.

Our blog and website has more.


TAGS: Lolly Daksal, grit, working on Labor Day, owners don’t take sick days, Skift Survey, Project Time Off