Protecting Your Financial Decision Making

By Kate Welker, CFP®

At the beginning of my career I began working with a new client and we bonded quickly. She was lonely, her kids moved far and wide and she was excited to talk about my growing family and hear about my children. We had a wonderful working relationship for several years and then our working relationship came to an end and I didn’t hear from her. Fast forward many years and I get a phone call from this past client, but the name of the person she was looking for was not my name; similar but a different person. The first day she called me to access her money, I explained that I had been her previous financial advisor years ago and I no longer had access to her accounts. The next day she called and wanted to upgrade her cable service, I again explained who I was and she got angry with me because she thought it was the cable company but finally said ok and hung up. This cycle repeated over several days but with increasing confusion and anger, each time it was a different provider she was calling for cable company, phone company, and a credit card company. I was concerned for her, and also at a loss as to who to talk to to get her the care she needed, but honor our creed for confidentiality. She had no close family or friends I could find, thankfully I was able to reach out to my local office of the aging and find a wonderful individual who knew the woman’s situation and followed up to get the proper medical, legal and financial care.

Stories like this are unfortunately common. What can you do to protect yourself and those you care about from falling into a similar situation? 

List a Trusted Contact. This is a person you name to your financial advisor or brokerage firm. If they are not able to reach you or have concerns regarding potential fraud or diminished capacity they can reach out to your trusted contact to inquire about you. The trusted contact will not be able to make any financial decisions or changes, but would be there to protect against signs of concern your advisor may see. Inform your contact that you have named them so they are not surprised if someone reaches out to them. 

Establish a Durable Power of Attorney. This is a legal document granting another person the power to act on your behalf financially and legally if you are no longer able to do so. Choosing who to name as your power of attorney can be a difficult decision. This should be someone close to you, but also a person you believe will follow through on your wishes and keep your best interests a priority.  We recommend working with an attorney to draft this agreement.

It is important to surround yourself with people who care for and about you. Many people find having conversations around mental decline and estate issues very difficult, but they are important to the aging process. Letting those close to you know what you expect from them and that it is ok to seek help makes it easier on all. It is also surrounding yourself with people who will be there to see the warning signs of dementia, poor decision making, and fraud.

Plan now for these issues that are likely to happen to your parents and to you. Many of our clients are familiar with a program called “Whealthcare” that we use to guide us through these difficult conversations and decisions, if this is of interest to you, give us a call to schedule a time to chat with one of our planners.

Estate Planning 101

By: Rachel Poe

Estate planning can sometimes come across as a section of planning that is completed later in life after retirement has begun and “it’s time” to start thinking of life’s next stage. Au contraire, estate planning is a part of one’s portfolio that deserves equal attention pre and post the date of retirement. The time is now! As net worth, investments, personal property, real estate, relationships, and other intrinsic items change in status, value, and possession over the years, it is important to consistently update (or begin creating) your estate planning documents. 

According to caring.com 2019 Will and Living Trust Survey, considering individuals between 35-54, more than 60% of people do not have wills. Out of individuals 65+, about 35% are without a will. The top two reasons why people do not have a will is “I just haven't gotten around to it” and “I don't have enough assets to leave to anyone.” 

Below are some introductory terms for those stepping into the estate planning process

CLICK HERE to download a FREE poster of the definitions listed!

Estate Planning - the arranging for disposition and management of someone's estate at death through the use of wills, trusts, insurance policies, and other devices. 

Estate Tax - a tax levied on the net value of the estate that amounts above the minimum threshold by the state of a deceased person before distribution to the heirs. This is important to consider and plan for throughout the estate process!

Will - Aka Last Will and Testament - A legal declaration of a person’s wishes regarding the disposal of his or her property or estate after death

Living Will - a written statement detailing a person’s desires regarding their medical treatment in circumstances in which they are no longer able to express informed consent, especially an advance directive. 

Executor - a person who is responsible for making sure all assets within the will are accounted for. In addition, this person is responsible for transferring these assets to the appropriate party as designated by the deceased.

Beneficiary - the person designated to receive the income of an estate that is subject to a trust; a person to receive proceeds or benefits. Beneficiaries are typically assigned within life insurance policies, retirement assets (401K, IRA), investments, real estate bank/brokerage accounts, etc. 

Power of Attorney - a legal instrument authorizing one to act as the attorney or agent of the grantor. This usually includes decisions regarding health care management. Hospitals and other third parties use POA to legally carry out decisions made by the appointed agent. 

Trusts - an arrangement whereby a person (trustee) holds property as its nominal owner for the good of one or more beneficiaries. A Living Trust can be open prior to or post death for a trustee.

Revocable Trust- A living trust that can be changed

Irrevocable Trust- A living trust that can rarely be changed

Testamentary Trust- Established after the death of the grantor through the will

Probate - the official proving of a will; the will is reviewed to determine validity. 

According to Investopedia.com, probate also refers to the general administering of a deceased person’s will or the estate of a deceased person without a will.

Guardianship - a person who is appointed to obtain custody of a minor child, protect the child's emotional and financial well-being, provide growth and protection to the child, and maintain assets left in their name. 

Financial literacy around some of these specialized planning topics can be muddy and overwhelming. It is important to partner with a planner and attorney who you can be transparent with, share experience, and build trust. Here at Rooted Planning Group, both our Nourish and Deepen program allows us to review a few basic estate planning documents to prepare for your estate planning attorney’s needs. We communicate with your attorney while continuing to share and educate the power of planning with you. It is our desire to break down the process and help you feel confident with your future.  

While it may seem uncomfortable to plan for death while alive, strategic planning while living will ensure that the legacy you have built during your lifetime will pass to those you value.

Raising Children Who Understand Money

By  Kate Welker, CFP®

One of my goals as a parent is to raise my children to be aware of the value of money and as they age to develop healthy financial habits. I have had friends ask my advice on this and have seen social media posts from parents of young children asking for input. The hardest part of this is just like everything else in parenting, you will need to find what works for your family and for your children or the children in your life. We are so excited we have become a Sammy Rabbit official partner and have been able to bring Sammy’s Dream Big story program to you! This is geared towards children ages 7-10 and is a storybook coloring book and activities to teach financial literacy.

I had a specific experience that really impacted me and has made this issue important to me. I was working a merchandise stand for an organization that had a special event for 3rd-6th graders. The kids had come with money they were anxious to spend, but it quickly became apparent that a simple understanding of the value of money was missing. They might have brought ten dollars and asked for a more expensive item like a performance wear sweatshirt, when I said the price they would be flabbergasted that things could cost that much. It was across the board obvious these children had no concept of the monetary value of things, how much they should cost. Quite literally I had three children state they thought a postcard and a hat would cost the same. The other thing I saw happen was the child would find something in their price range (after they asked me if they had enough) and then just throw all their money at me to figure out, and many many times didn’t know they had change coming back or didn’t wait for it and I was chasing them down with money.

So what are some things you can do to work on awareness and behaviors over time? Here are a few thoughts.

Let children regularly pay for items. This is something that can be started with very young children and I’d recommend keeping the transaction to one or two items. This helps them connect in their head that you don’t get an item unless you pay for it, and starts to build awareness of values. Let’s use a matchbox car as an example with a price of $1.42 after tax. The child will hear the total, have to give the cashier 2 one dollar bills, and wait for the change back. When they are learning about money children need to use actual physical money to build that bridge in understanding, a debit/credit card does not provide that mental connection.

Discuss prices. When you are shopping don’t be afraid to point out prices. My kids love weighing and printing the labels for produce, I like that it saves me a step but more so that they see the price on that sticker as they print it. Sometimes I even hear the comment of “I didn’t know those cost so much!” or “wow, those are pretty cheap.”  Those are the moments you are building toward. Side note: a small bag of bulk candy costs much more than a bag full of bananas, that is a visual learning lesson on multiple levels. This can be done with everything you shop for. If you are buying new winter hats, mention the price of several items you are comparing and maybe talk about brand and quality, point out menu items with the associated cost, repeat out loud the price of a movie ticket. This will not be something that turns into immediate results, but over time will help children really understand what price means and develop that internal calculator of value.

Have children manage their own money. There are many schools of thought over giving children money and many resources out there. Allowance, earnings, gifts wherever the money is coming from allowing them to have some spending money to manage is important. You can absolutely still guide them and have ultimate veto power over their purchases. As there are things they want to purchase they will need to learn: how much it costs, how much they will need to save for it and how long it will take to get that. If they are of an age where they are earning money for work they will need to think how long they will have to work to make that much. We made a decision a few years ago to give our children a certain amount of money each week to manage, but the condition was they had to pay for their wants. I was tired of the “can we get this,” “I want that,” and “Why can’t I have this” whining when we shopped and I was really struggling with how to make them understand. For my children this has worked really well. Those whiny questions happen rarely now and the number of items coming into my house to be played with once and set aside has gone down because they are really thinking through their purchases and how much they will value that. I’ve been excited to see them stop and look at a price and the item and make a thoughtful decision. They’ve also been more motivated to go above and beyond to find ways to earn money now that they are learning how much items cost and how long it takes to save.

As I said in the beginning each child and family will be different in how they learn and teach, but start with small things and see where it takes you. I think so many people are afraid to talk about money with their kids or don’t know when or how to start. I encourage you to just start, wherever you’re at, and build that financial literacy foundation with them.

Five Money Moves for Graduates

By  Kate Welker, CFP®

Graduation, the day you’ve worked towards for years. Once you walk across the stage (or should we say proverbial stage this year) and take that diploma a new stage of life begins. There will be many new decisions and actions ahead of you, but here are a few simple moves to take as you enter that next stage of life.

1) Keep your cost of living below your income. As your income increases it will be easy to start spending more. You might feel like you deserve to splurge after those years of living like a “poor student,” but if you try to keep that mentality for a few years you will be able to build a solid financial foundation. Housing is one of the largest expenses you will encounter so look at ways to keep this low. Consider a roommate or even moving back in with your parents for a period of time. This will allow you to spend less each month and put that money towards your financial goals.

2- Make a plan for your student loans. Take the time to research your loans and to find out the details of each. Reach out for help if this is something  that you are struggling to understand. There are resources such as Loan Buddy (https://www.loanbuddy.us/), loan counselors, or financial planners like the team at Rooted Planning Group (don’t miss out on Becky Eason’s monthly blog on this topic) to help you work through these. Making moves early on these will get you on the right payment plan. If you are able to pay more on these early and lower your principal this will lower your interest paid over time. 

3- Start an emergency savings account. Get in the habit of putting away some money from each paycheck. Check with your bank to see if you can set up an automatic transfer into a separate savings account with each deposit. I also encourage people to make this money harder to get to so it is not tempting to spend it. Even a small amount will start to add up over time and will be available in the case of an emergency (so that expense does not go on a credit card) or the start of long term savings goals.

4- Take advantage of retirement plans. If your employer offers a 401(k) enroll as soon as you are able. If your employer offers a match your first goal should be to defer as much as they will match, for example if they match the first 3% defer at least 3%. That is like free money into your retirement plan. If you don’t have an employer plan you can open your own IRA. Set up transfers into your IRA to correspond with each paycheck.

5- Track your expenses. Just tracking where your money is going will be beneficial. It will make it easier to build a budget when you are ready for that step. Getting in the habit of looking at your expenses and seeing where your money goes naturally makes you more aware of your money. There are numerous apps to track this automatically or if you like to be more hands on you can create a spreadsheet or just write it in a notebook.

While it is tempting to start bumping up your standard of living after school, slowing that process down and being disciplined with your money will help build a strong financial foundation to take you into your future. If you find ways to keep your expenses low and work towards saving and paying down debt you will be ahead of your finances, less stressed over money, and develop long term healthy money habits.

Women Rocking Business

March is women’s history month and we want to take some of our space this month to recognize that. I love working with small business owners so I wanted to share some thoughts on women as business owners. Rooted Planning Group is owned by women so this is certainly special to us. 

by Kate Welker, CFP®

What are the traits that help women succeed in business? I thought back on some conferences I’ve attended, drew on personal experience, and looked at our team to see how the ways we think or act differently can be beneficial.

Women tend to be more emotionally intelligent, this makes us more attuned to social cues and emotions. This article from Forbes refers to a study listing all the various categories where women outscore men. This can help a woman read a room to pick up on what’s not being said. When working with a client you might better pick up on something that is causing an emotional response. Being able to understand and empathize with employees makes for a better work environment.

As women many of us have had to face hurdles in our careers because of the fact we were women, and to push through that builds determination. Running a business comes with many challenges that are going to be aided because of that. By overcoming the different walls and barriers thrown at us we are cultivating the traits that help to be good leaders- tenacity, resolve, and maybe a little stubbornness. 

In the business world women tend to be better collaborators, aka “team players.” We are not afraid to share ideas and work together to build something better. This also tends to mean women are more often open to mentoring opportunities, to pass on their knowledge, and encourage others. 

Of course the pendulum swings the other way too and there are some traits we need to be aware of that can impede success.

Women tend to be more nurturing and can have the feeling we need to take care of things. This can lead to burnout. Sometimes I think women can be worse at delegating because we want to just handle everything and make sure it’s taken care of or we don’t want it to look like we’re not doing enough. Self care is a buzzword, but it really is essential.  Evaluating where you tend to take on too much or get too involved and focus on ways to manage that is going to be a healthy step for you and your business.

Impostor Syndrome, that feeling that you don’t know enough or aren’t competent. You might doubt yourself and your accomplishments. Both men and women can associate with this, but I hear it more from women. Acknowledging this is important, that way when it's happening you can face it and deal with those feelings. Remind yourself of how far you have come and how much knowledge and experience you have. I once had a very respected person in my industry with lots of letters and designations after their name tell me they sometimes walk into a meeting and still feel like it’s their first day on the job. When I feel this way I like to repeat the phrase “fake it ‘til you make it,” paste on a smile and go in with confidence, because here’s the secret- you’re not really faking it. You ARE the person with the expertise, you just need to remind that little part of your brain of that.

Fun History Fact: In Holland women were treated more equally than in other countries in the 17th century and this carried to New Amsterdam (roughly modern Manhattan). For years women held more rights than in other parts of the country and many owned businesses. They were referred to as she-merchants.*

*Summarized from womenhistoryblog.com