Your Money: Sharing Family Getaways Without Any Cottage Conflicts

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Picture it: 40 picturesque acres nestled in Wisconsin lake country.

That is the ideal getaway the grandfather of Chicago financial planner Tim Obendorf’s wife built around 50 years ago. Then the property passed to the next generation, with ownership shared by four people.

Now they are thinking about the next generation: 11 potential owners.

Without the right planning, that paradise could turn into hell.

As brothers, sisters, parents, aunts, uncles, cousins and grandparents gather this summer at family homes to go hiking, canoeing or swimming, there will also be arguments over schedules, property taxes or mortgage costs, and upkeep duties, along with the thousand other matters that come with shared homeownership.

“Whenever a number of families are under the same roof, conflicts are going to arise,” said Jill Shipley, managing director of family dynamics for Abbot Downing, a division of Wells Fargo that handles high-net-worth families and foundations.

That is why Obendorf’s family has already logged a couple of family meetings. “It’s never going to be perfect, but you have to decide you value the place, more than the hassles of working through family issues,” said Obendorf.

It is not surprising that vacation homes have become a point of contention. Many vacation homeowners are baby boomers: They possess the bulk of the nation’s assets and are projected to hold over 50 percent by 2020, according to a study by the Deloitte Center for Financial Services. They are now beginning to retire as they hit their 60s and 70s.

The potential problems are plentiful: Is the place big enough for everybody? Who gets it on July 4th weekend? Do they split costs equally? Who cleans up, handles repairs, or stocks the fridge?

And the big one: When the owners eventually pass on – who gets the place?

How can families get the most out of shared vacation properties this summer, without either going broke or killing each other? Some tips from the experts:

Draw Up a Calendar

Just like season tickets for a sports team, some dates will be in high demand. So if the property is not big enough to handle multiple families at once – or, let’s face it, you just do not get along – pick your spots. “Establish a rotating lottery each year, and allow each family member to pick their respective dates,” suggests Kevin Reardon, a financial planner in Pewaukee, Wisconsin.

Write Down a Policy

Everyone has different opinions of what a getaway should be, so hash it out and put it all down on paper. One key item: Whether ongoing costs like property taxes, homeowner’s association dues and repairs are split equally, or allocated based on usage.

Create an Opt-out

A sure way to guarantee family resentment: One member being forced into an arrangement they do not want. If a family cottage is being passed to the next generation, allow an escape hatch that permits one member’s share to be bought out by their siblings. After all, not everyone might be able to use the property to the same extent, especially if they have moved far away.

Bring in a Pro

Siblings, of course, do not always get along. In fact, 15 percent of adult siblings report arguing over money, according to a new survey from Ameriprise Financial. To make sure everyone is heard, bringing in a trained facilitator is probably your best bet, advises Shipley.

Have the Discussion Now

“I have been in many family meetings where the kids ask, ‘I wonder what mom and dad would have wanted?'” says Shipley. So if you are fortunate enough that the family matriarch and patriarch are still around, arrange a family meeting and find out what they envision for the property in the decades to come.

Maybe they want it to stay in the family, as a legacy for the grandkids. Or maybe, because of family circumstances like far-flung siblings, it would be wiser to just sell the property and split the proceeds.

Set up a Trust

One way to take future financial squabbles out of the equation altogether: If families have the resources, they should create a trust to “fund the maintenance and ongoing use of the property in perpetuity,” says Shipley. “That is one solution to reduce conflict, and keep the property in the family for generations.”

 

 

 

Written By: Chris Taylor
Source: Reuters

Raising Kids to Be Smart About Money

Young minds are programmed to absorb and copy the behaviors around them, which means the sooner you instill proper money management skills, the more prone your kids are to become mature and responsible stewards of their own cash-flow in the future.
“Becoming financially literate early in life is fundamentally important to your financial well-being as an adult,” says Micah Fraim, award-winning CPA and best-selling author.

“I was pinching pennies at five years old, calculating the cost of grocery items per ounce, refusing to buy expensive clothes unless they were on-sale and foregoing scoops of ice cream from the ice cream shop, so I could buy multiple gallons at the grocery store,” Fraim says. “Now as an adult, I still have that same mindset and live well below my means.”

The following kid-approved strategies help you teach the core tenets of being financially savvy; in terms they’ll understand and appreciate. Consider how you can use them to teach your little ones to be smart about money.

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Find Opportunities for Lessons

At some point, your child will inevitably deplete their allowance on impulse purchases, rather than holding out for the more expensive item they’ve been asking for. Instead of giving them more money, or buying it for them, use this as an opportunity to demonstrate that money is a finite resource, which must be allocated over an extended period. Once you spend, it’s gone until you can make more.

Have a conversation about what else they could have done with that money, or how much longer they would have needed to save to get the big-ticket item they wanted. Perhaps give an example of when you spent foolishly, or better yet, saved enough money to buy something important, like your house or car.

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Demonstrate that Income Is Earned

Chores are an easy way to teach children that money must be earned. This tangible incentive for contributing to your household shows them that have to work for what they want, and even do things they may not want to do—i.e. vacuuming and doing the dishes.

The concept of having to earn your money is a positive outcome of rewarding children financially for completing chores. However, some parents find that this method doesn’t necessarily teach money management, making it a bad way to teach children how to be smart about money. The key to avoiding the latter is the set-up.

Susan Borowski, mother and author for Money Crashers, shares how she set this up with her teenage son:

“As a contributing member of the family, my 13-year-old son is expected to do certain chores around the house for free. He can earn money for tackling larger tasks, many of which he can choose, some of which he cannot; the amount he earns depends on the difficulty of the task or how long it takes. This forces us to discuss money each time he takes on a larger task.”

This shows them that they have control over how much they earn, rather than it being a given.

Secondly, keep chores focused on money management with an app like Chore Monster so children can track what they’ve done and earned. This is an easy way to establish a record-keeping system, for both chores and allowance, seeing increases or decreases in money earned over time.

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Establish a Record-Keeping System

When your child is consistently earning allowance or money for chores, it’s important that they’re able to account for what happens with that money. The more emphasis you put on this piece of the earning, the more they’ll see the value of managing their funds. They’ll start to notice wasteful spending habits and identify which pitfalls to avoid during their next allowance payout.

Designate a folder where they can stockpile receipts and a notebook where they can track all purchases. This simple method of financial reporting is an ideal precursor to balancing a checkbook, analyzing bank statements, or creating a monthly budget.

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Use Visual Aids to Your Advantage

Although the “piggy bank” is a time-honored childhood favorite, this approach to money management doesn’t allow your child to see the positive outcome of their coin stashing. For a more functional alternative, use a transparent mason jar or clear plastic Tupperware container, both of which gives them an unobstructed view of the progressive financial increase that comes from diligent and habitual saving. This tool makes the abstract concept of saving easy to see and understand.

You can also open a bank account for older children. This gives them a chance to become familiar with bank statements, which act as a visual aid. Each time a new statement comes in, they can sit down and look at how much money was put into the bank account and how that’s changed month-over-month. Many banks now offer online portals, as well, where your children can see progress represented in bar and pie graphs; these may be easier to understand and digest.

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Encourage Them to Set a Savings Goal

There’s a sense of accomplishment and empowerment in reaching a goal with no shortcuts taken or assistance received. Channel this mindset when encouraging your child to practice economical behaviors. Next time they express interest in the latest gadget, suggest they purchase it themselves and develop a step-by-step plan together, so they feel equipped for the undertaking. This process of setting aside money with a specific goal in mind reinforces the gratification gained from being smart about money and purchasing the item without any help.

It’s never too early to start teaching your kids about how to be financially savvy. Too many people don’t learn about personal finance until it’s too late — like when they’re buried in student loans — so teaching these skills early on is important for setting your children up for success later in life.

 

 

 

Written By: Jessica Thiefels
Source: PBS

12 Great Things About Retirement

© Monika Lewandowska/Getty Images
© Monika Lewandowska/Getty Images
© Monika Lewandowska/Getty Images

Some people wonder what they will do with all their extra time after they retire. They fear they’ll become irrelevant, aimless or out of sorts.

There’s no doubt there are some pitfalls of retirement, such as boredom, loneliness and even depression. That’s why retirees should decide what’s important to them, plan out their future and appreciate retirement for the exceptional opportunity that it really is.

To get you started, I recently spoke to a variety of retirees about their lifestyles. Here are the dozen favorite things about retirement retirees cite most often.

1. I’M FREE OF THE DRUG OF AMBITION

Suddenly you don’t care whether or not you get promoted, and the jockeying for a better title or an office with a window seems so petty. A weight is lifted from your shoulders when you quit the rat race.

Despite financial concerns, retirement is often a lot of fun.

2. I CAN CATCH UP ON MOVIES I’VE ALWAYS WANTED TO SEE.

Maybe you were too busy with your career and kids to follow some of the great directors like Alfred Hitchcock, Woody Allen and Robert Altman. Now you can go on Netflix or Amazon or just borrow CDs from the library and enjoy some of the great stories of our time.

3. I KEEP UP ON CURRENT TV PROGRAMS

Whether you’re watching cable or Netflix, you can join the conversation about “House of Cards”, “Orange Is the New Black”, “Better Call Saul”, “Grace and Frankie” and the other smart TV shows.

4. I JOINED A BOOK CLUB

Some groups alternate between classics like “Anna Karenina” and modern stories like “Gone Girl”. Others keep up with the bestseller lists from “The Girl on the Train” to “The Boys in the Boat”. And still others are theme oriented, whether it’s mindfulness and spiritual issues or history and politics. Regardless, a book club is both socially engaging and intellectually stimulating.

5. I CAN STILL WORK PART-TIME

Just because you’re retired doesn’t mean you can’t pick up a job here and there. A lot of people carry over assignments from their old company, while others parley their personal interests into a moneymaking gig.

6. I BABYSIT MY GRANDCHILDREN

Many retirees feel both useful and appreciated when they make it possible for their children to pursue a career, and they relish the opportunity to create deep and lasting memories with their grandchildren, memories that will last long after grandma and grandpa are gone.

7. THERE’S TIME TO GIVE BACK

Many retirees find it enormously rewarding to volunteer their skills to worthy charitable organizations, whether it’s the Lions Club or the Kiwanis Club, their condo association, the local food pantry or a community college.

8. TRAVEL, TRAVEL, TRAVEL

Almost everyone’s bucket list includes a trip to some special place, from the Pyramids or the Great Wall of China to the Grand Canyon or the Empire State Building.

9. I HAVE THE TIME TO DO NOTHING

Finally, there’s time to enjoy the pleasure of sitting on the front porch or the back deck and soak up the atmosphere, reflecting on your life and enjoying the cool breezes wafting across your face.

10. I’M LIVING MY DREAM

Some people have a half-written novel in their study, or a half-finished piece of woodworking in the basement. Retirement gives you the time to write the rest of your story and even publish it online, complete the projects in your workshop or make jewelry or crochet sweaters and sell them on Etsy.

11. THERE’S NO PRESSURE, NO STRESS AND NO PROBLEMS

It’s the freedom that many retirees appreciate so much: Freedom from the pressure to get ahead at work, get your kid into college and keep up with the neighbors.

12. I DO WHAT I WANT TO DO, INSTEAD OF WHAT OTHER PEOPLE WANT ME TO DO

In retirement there are no more expectations. You no longer have to please your parents or bear responsibility for your kids. You can move to the city or the country. You can do something or do nothing. No matter how well-financed you may or may not be, you can live the lifestyle of the truly wealthy: You can do what you want and answer to nobody.

Written by Tom Sightings of U.S. News & World Report

(Source: U.S. News & World Report)