Money Smarts for the Real World

September 8, 2011


Budget Talk

After a brief summer hiatus, $mart Talk returns ready to tackle the world of family finances; and we all know there is a lot to talk about!


The painful lesson that is the U.S. economy is actually a conversation-starter with your kids.  Often, children think that there is a magic wand that lets all the complicated things in life make sense when they are older.  If it doesn't affect them (or if they don't realize how it affects them), they are even less interested.  This week, make sure to discuss how our current problems have resulted from violating basic common sense:  You cannot spend more than what you have.  You need to cut spending or increase your income (or both).  When the government is forced to cut spending, that results in less programs, financial aid, grants, etc. and when they need to raise money, taxes go up (which makes household take-home pay decrease).  Show them that just being an adult doesn't mean you automatically know how to handle these responsibilities.  Age, position or political office doesn't guarantee financial competency, either. 


This is your prime opportunity to start them off with good habits.  Help them make a budget so they can start tracking their expenses and income -- even they are only working with a $5 a week allowance.  Then, make sure to do the same for your household so that you are making the best use of your resources.


mom help homeworkSchool Year's Resolutions 

  September may be the ninth month, but for anyone with children, it feels like the start of school marks the beginning of the year. Why wait until January to make resolutions that you know will benefit you and your family right now? An added bonus is that you can get the kids on track by setting a good example. While each family has its own challenges, there is a common theme that most families struggle with: planning and organization. These two issues permeate every aspect of our lives and also greatly impact personal finances and household budgets. By taking steps in the right direction, you can start to feel more in control which begets calmness. Isn't that a wonderful way to start the school year? Below are some of the most common School Year's Resolutions and tips on how you can take steps in achieving these goals.


Eat Healthier.

Getting dinner on the table while juggling extra-curricular activities and homework can often lead to poor choices (as in unhealthy and expensive take-out). TIP: The simple act of meal planning before you shop for groceries can greatly decrease what you will buy and what you will spend. Using the local flyer as your guide for sale items, make up a week's worth of healthy dinners and lunches. Shopping with Pea Pod and other delivery chains may also save time and money, as old shopping lists are saved and a running tally of the grocery bill is ever-present. There will be time to gather your coupons, further reducing the bill. Whether you order on-line or physically go to the store, the one simple step of meal planning with the flyer will ensure you buy the best-priced items and will have ample food for all your meals. Furthermore, when you have a menu pre-set, you are less likely to pick up a pizza.


Organize Closets, the Garage and Pantries.

 Wherever stuff lurks there is the potential to save a lot of money. How many times have you had to run to the store to buy something you know you have but couldn't find (such as scotch tape, a hammer, a flashlight, etc.)?  TIP: Group like items as you would in a store. You don't need to spend a fortune on organizing supplies. Old shoe boxes, clear storage bags, over the door hooks and bags can all help consolidate items based on their use. Gift wrapping supplies, from scissors, tape, paper, bows, and generic cards can all be placed in one shopping bag; common household tools like measuring tape, flashlights, screw drivers and hammers can be placed in a box. Designate a space in the coat closet for umbrellas, hats, scarfs, and gloves so you are not left scrambling the first morning there is inclement weather. Don't forget to extend this exercise to the food pantry, as well.   Then you will know what you need (or don't need) next time you food shop. When you are organized, less time and money will be spent by your household, guaranteed!

Purge Papers.

From school handouts, to artwork, to junk mail and personal files - paper piles up and things get lost. TIP: Set-up a binder book or expandable file for each child that will house the class contact list, book orders, assignments, handouts, invitations, and artwork that you want to keep (consider framing or hanging a bulletin board to post larger items).  Toss junk mail as soon as it enters the house and get removed from mailing lists. Keep an eye on your financial files, as well. Here's what to keep and what to shred:  Click here to read more. 


Finding Financial Strength:

Planning for a Child With Special Needs 


 The daily demands of caring for a child with autism or another developmental disability are daunting enough without worrying about future care. That may be why, in a recent survey, 62% of parents with disabled children said they hadn't established a plan for what would happen when the parents were no longer around. Moreover, about half of the surveyed parents said they planned to leave assets directly to the child, and 58% expected to designate the child as a beneficiary. Those decisions could make the child ineligible to receive public assistance, which could be crucial for the child's long-term welfare.

A better approach may be to create a "special needs trust" that can be funded now or through your will. (The money often comes from life insurance death benefits.) Structured correctly, this irrevocable trust will enable a special needs child to receive public assistance benefits while the trust covers other expenses-including for travel, recreation, and rehabilitation-that aren't fully paid for by government funds. Click here to read more



$mart Question

We've cut back on just about everything, and money is still a little tight.  There's one area of the budget I hate to cut back on, and that is entertainment.  We love to invite people over, but we'd like to make it more affordable.  Any ideas?


I've got lots of ideas on this one!  Pot-lucks can be fun, especially if you pick a theme.  You can choose to do a certain type of cuisine (Italian, Mexican, Chinese, etc.) or your theme can center around a location, such as down home cooking on a ranch (chili, corn bread, etc.).  Everyone brings a dish to share and the host also supplies drinks and paper goods.  If you want to prepare the meal yourself, make cooking the meal an event itself.  You can host a "make your own pizza"

 night.  Supply guests with dough (making it or buying it is cheap), and then put out sauce, cheese and other toppings and let everyone decorate to their hearts content.  Taco bars also work well.  If a full-blown meal is too expensive, consider doing just appetizers or desserts (building ice cream sundaes or decorating cupcakes can be fun), or breakfast/brunch (omelets to order).  What I like best about these ideas is that it's not about the food as much as it is about the social experience.  I hope these ideas inspire you to have company over while staying within your budget!  Good luck. 

In This Issue
School Year's Resolutions
Finding Financial Strength
$mart Question
$mart Move
 $mart Move:

Take a Meeting and Tune Out


I'm all for being aware of what is going on in the world, but if you find yourself so pre-occupied with the markets that you are wringing your hands and stressed out, it is time to meet with your financial professional, make sure you are on board with the strategy and then stop watching the day-to-day fluctuations.  ATI Investment Consulting, Inc. is available for a free initial consultation, if you want a second opinion.


Not sure what to ask?  Here are some points to raise with your financial professional: 

  • What is my overall risk relative to the S&P 500?  In other words, if the S&P loses 1 point, will I lose more, less or the same as that? 
  • What is my overall portfolio allocation? What percentage is in stocks, bonds, cash and what are the specific types of securities within these categories?
  • Are there any categories that are not represented that should be, which can hedge against market fluctuations?
  • What is the strategy going forward, if the market continues to be volatile?  What types of holdings would be sold?  What would be bought?  And, is the portfolio gradually shifting towards that new allocation? 

Remember, nothing should be absolute in a portfolio.  Selling everything and holding all cash (or any one type of investment) is an incredibly risky strategy.  If an asset is going up wildly, it is volatile and can easily plummet just as dramatically.  There is no substitute for a well-crafted asset allocation strategy; just be sure you have one.














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