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4 priceless money lessons for kids

4 priceless money lessons for kids

Financial literacy is a gift that lasts a lifetime.

Financial tradeoffs, interest rates and the importance of having an emergency fund: Our current economic circumstances are full of teachable moments we can and should share with our children. After all, they’re probably not learning these topics in school. Only 1 in 6 students will be required to take a personal finance course before earning a high school diploma, according to nonprofit Next Gen Personal Finance.

That’s why we’re equipping you with money tips and topics to discuss with the children in your life, plus independent study materials (ahem, videos and games) that will hold kids’ attention while teaching them money management. Keep reading to get to the head of the class.

Being in charge of the budget

Are your children constantly asking you for money? One Florida father found a way to nip that in the bud: He had his teen and preteen sign a contract stating what expenses he would pay for, then gave them a set amount of money to spend each month for clothing, cellphone bill and extras. “My son’s hard lesson came when his friend pushed him into a pool along with his cellphone. He learned why it’s important to build a reserve for unexpected expenses,” the father said. Giving your kids a paycheck allows them the chance to make financial decisions – and experience the consequences firsthand.

The economics of higher ed

We’ve all asked a kid, “What do you want to be when you grow up?” Instead ask what their interests are, and help them explore how they might be applied in a future career. This teaches them adaptability, something of value in a changing economic landscape.

As they get closer to making a decision about whether to attend college or trade school, help them think through the costs and benefits. Junior Achievement’s Access Your Future app can help them crunch the numbers. And if you have a child already attending college, know that timing is everything. Yale researchers have found that graduating from college in a bad economy has a lasting negative impact on wages – and many students are considering gap years and grad school because of this.

The roots of retirement

Raise your hand if you want to raise a child who will hit the ground running when it comes to saving for retirement. Personal finance experts say we should let our children know that retirement is the biggest expense they’ll ever save for, and it’s important to start early. To help them understand the value of compounding, help them open a savings account (or guardian-type brokerage account) where they can experience the power of this phenomenon for themselves.

Extra credit knowledge

When you’re young and don’t have much money, it’s easy to rely too much on credit and jeopardize your financial future. Help your child understand the importance of a good credit score, and explain how you keep yours up. Share stories about how you financed your first car or house, and explain in concrete terms how the interest rate affected the overall purchase price. Finally, consider adding your teen as an authorized user on your credit card and teaching them how to read a statement and pay the balance in full each month.

Homeschool resources

For teens:

  • Search ngpf.org/arcade for web-based games like “Money Magic,” “Payback,” “Stax” and “Credit Clash”

For younger kids:

  • Schoolhouse Rock! vintage videos like “Budget” and “Dollars and Sense”
  • Cha-chingusa.org offers Money Smart Kids videos like “Do it Passionately” and “Saving for Success”

In giving your child the gift of financial literacy, you’re helping set them up for a brighter future. Through a purposeful approach, we can all do our part to raise the next generation of resourceful citizens.

Next steps

  • Have family or friends share stories of how they thrived during a recession or found creative ways to stretch a budget.
  • Consider helping your child get started with investing, keeping in mind their investments will change calculations for college aid.
  • Introduce your family members – even the younger ones – to your advisor, who can act as a teacher’s aide for financial literacy.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

Spiced Salmon Kebabs

Spiced Salmon Kebabs

Active Time         25 minutes

Total Time           25 minutes

Here's a little trick: Thread salmon pieces onto two skewers so they don't flip and spin every time you turn them on the grill.

Ingredients

4 servings

2 tablespoons chopped fresh oregano

2 teaspoons sesame seeds

1 teaspoon ground cumin

1 teaspoon kosher salt

1/4 teaspoon crushed red pepper flakes

1 1/2 pounds skinless salmon fillet (preferably wild), cut into 1" pieces

2 lemons, very thinly sliced into rounds

2 tablespoons olive oil

Special Equipment

16 bamboo skewers soaked in water 1 hour

Step 1

Prepare grill for medium heat. Mix oregano, sesame seeds, cumin, salt, and red pepper flakes in a small bowl to combine; set spice mixture aside.

Step 2

Beginning and ending with salmon, thread salmon and folded lemon slices onto 8 pairs of parallel skewers to make 8 kebabs total. Brush with oil and season with reserved spice mixture.

Step 3

Grill, turning occasionally, until fish is opaque throughout, 5-8 minutes.

Nutrition Per Serving

Per serving: 390 calories

22 g fat

1 g fiber

#### Nutritional analysis provided by Bon Appétit

URL to article:  https://www.epicurious.com/recipes/food/views/spiced-salmon-kebabs-51169490

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

From the Desk of Dale Crossley and Evan Shear

From the Desk of Dale Crossley and Evan Shear

Keeping Emotions in Check Despite the Current Market Volatility

“If you cannot control your emotions, you cannot control your money.”  Warren Buffet

The annual inflation rate hit 9.1% in June, the highest it has been in more than 40 years. The market is continuing to experience high volatility and uncertainty, as it has since the beginning of 2022. Unfortunately, not much has changed. We understand – letting your emotions not get the best of you is easier said than done, especially since the markets seem to fluctuate almost hourly. It’s not the first time in history we’ve had volatility, and it certainly won’t be the last.

What History Has to Say About the Current Market Volatility & Uncertainty

BlackRock, the world's largest asset manager, recently downgraded its stock market outlook in response to the ongoing market volatility and uncertainty. As a result, the firm is currently reducing its stake in equities and re-allocating the money to investment-grade credit. However, the ongoing market volatility and uncertainty will not persist forever, and history can prove it. For example, the 1970s oil crisis caused a dip in the market's performance between 1973 and 1974, but it still recovered and grew. The 2008 banking and credit crisis also caused a significant dip in the market's performance, but it passed, too. Likewise, we believe the current decline is only temporary.

Fortunately, the Fed is taking measures to curb the current inflation by raising interest rates. The Fed's move to raise interest rates will affect inflation and investments in the following ways:

  • Inflation – A higher interest rate reduces the availability and circulation of money, thus reducing spending and helping curb inflation.
  • Investing – A higher interest rate also affects companies' cash flow and ability to raise capital, lowering their current and future performance outlook. This (coupled with the reduced money supply) makes many investors cautious about buying more stocks.

Interestingly, a change in interest rates impacts the stock market almost immediately. However, changing interest rates usually take longer (up to 12 months) to impact the economy.

Inflation's Impact on Earning & Spending

Unfortunately, inflation is also starting to erode spending and investors' earnings, and Wall Street is indicating that it may scale back its earnings forecasts. The forecast on S&P 500 companies' aggregate earnings has appreciated by 2% for 2022 and 2023.*

However, runaway inflation may likely erode this forecast, and there are credible concerns about a looming recession. Wall Street reduces its consensus call on aggregate EPS in the S&P 500 by about 15% in 12 months in a typical recession. Considering that the current expectation of aggregate profits is $239, a decline of 15% could bring the figure down to $206. The S&P 500 index may also drop from 3783 to 3200.

Geopolitical Tensions May Persist

Geopolitical tensions, not new of course, affect the economy's and the market's performance. For example, America's withdrawal from the Iran nuclear deal in 2019 caused a notable dip in the market's performance.

Unfortunately, the world is experiencing multiple geopolitical conflicts, and the BlackRock Geopolitical Risk Indicator suggests that they may persist. The most notable geopolitical conflicts include:

  • The Russia-NATO conflict
  • S.-China strategic competition
  • Gulf tensions, most notably the stalled Iran nuclear deal
  • North Korea's nuclear buildup
  • European fragmentation
  • Climate policy gridlock
  • Terrorist attacks
  • Major cyberattacks

Some of these geopolitical tensions pose a greater risk to the market than others. For example, the Russia-NATO conflict is more pressing than the ongoing European fragmentation. However, overall the market and investors are currently the most focused on inflation.

The Market Has Proven to be Resilient

Not much has changed since the beginning of the year. The ups and downs in the market, sometimes hourly, are still enough to cause angst. During this market downturn, the best defense is to make informed, not emotional decisions. Voyage, our proprietary investment process, especially helps during times like these. Investors who make long-term investments can remain confident — and upturns have always been stronger and more rewarding than pullbacks.

If you have any questions, please reach out.  Especially during this time, that’s why we’re here.  

*https://www.barrons.com/articles/earnings-forecasts-stock-market-51655931777

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. All opinions are as of this date and are subject to change without notice. Past performance is not a guarantee of future results.

Why contribute to a Roth IRA?

Why contribute to a Roth IRA?

Consider the benefits and limits associated with making post-tax contributions to an individual retirement account.

Thinking about opening or contributing to a Roth IRA? Learn more about the benefits of this type of retirement account and your possible eligibility to contribute.

Consider the positives

The key benefits of Roth IRAs include:

All distributions from the account can be tax free. Although contributions to a Roth IRA are not tax deductible, earnings grow free of taxes. When you reach age 59 1/2, if the Roth IRA has been in place for at least 5 years, any withdrawal from the contributions and earnings is tax free. Avoiding the tax bite at the time of withdrawal in retirement can be attractive – particularly for investors who anticipate having a higher marginal income tax rate at the time of withdrawal than they do at the time of contribution.

No required minimum distributions. While distributions from a traditional IRA must begin upon reaching age 72, there are no similar requirements for a Roth IRA.

No age limit on contributions. You can continue contributing to your IRA – Roth or traditional – as long as you have earned income.

Withdrawals may be made without penalty for a first-time home purchase. As with a traditional IRA, you can withdraw funds from your Roth IRA (up to a lifetime maximum of $10,000) to make a down payment on a first-time home purchase. A first-time homebuyer is defined as someone who has not owned a home for 2 years prior to the purchase of the new home.

Roth IRA

  • Contribute after-tax dollars
  • Withdrawals in retirement are tax-free
  • No required minimum distributions
  • Income limits apply
  • Traditional IRA

Contribute pre-tax dollars

  • Withdrawals in retirement are taxable
  • Required minimum distributions at age 72
  • No income limits

Learn your Roth limits

In 2022, an individual may contribute up to $6,000 to their IRAs – $7,000 if they are 50 years of age or older. Keep in mind that modified adjusted growth income (MAGI) phase-out limits apply.

Single filer or head of household: The full Roth contribution limit is available to individuals filing as single or head of household with a MAGI of less than $129,000. The amount is phased out for MAGIs between $129,000 and $144,000.

Married filing jointly: The full Roth contribution limit is available to married individuals filing joint returns with MAGIs of less than $204,000. The amount is phased out for MAGIs between $204,000 and $214,000.

Married filing separately: If you have not lived with your spouse at any point during the year and file separately, MAGI limits mirror those for single filers and heads of household. If you lived with your spouse at any time during the year and file separately, no Roth contribution is allowed unless MAGI is less than $10,000.

Your financial advisor can answer any questions you may have about the features and benefits of IRAs and help determine which type may be appropriate for addressing your retirement needs.

Please note that changes in tax laws or regulations may occur at any time and could substantially impact your situation. While familiar with the tax provisions of the issues presented herein, Raymond James financial advisors are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional. Material created by Raymond James for use by its advisors.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

Sorting through complicated compensation plans

Sorting through complicated compensation plans

Managing earnings tax efficiently may be just as important as the compensation package itself.

You’ve worked hard to rise through the ranks. As a corporate executive, you know all too well the demands on your time, the importance of decisions you have to make, and the stewardship required to keep your company thriving. It’s a demanding job. And managing the significant wealth that accompanies it takes skill, attention to detail and a lot of planning.

Executive compensation packages usually consist of short-term and long-term incentives that come in a variety of forms, above base salaries. They might include annual bonuses and stock options--both of which come in many forms. It might feel like a lot to wade through, especially when you start thinking about the next chapter for you, whether that’s preparing for retirement or a new phase in your career.

How should you draw upon your income options in the most tax-efficient way? Do you need to consider how your investments in company stock will affect you years down the line? These are questions best to ponder while you can adjust how you’re managing your bonuses, stock grants and stock options.

Here are some tips for sorting through these complex compensation plans.

Ask for an accounting of your total benefits and compensation. It’s becoming more common for companies with generous perks to share total compensation package figures with employees. As an executive, you’ll want to know the rules around exercising stock options, vesting schedules and policies about how to draw deferred compensation. Understanding these policies will help you avoid equity concentration down the line as well.

Tip: Pay close attention to the vesting rules. Your window to exercise vested stock options may accelerate upon retirement, and unvested restricted stock and performance shares may be forfeited when you are no longer an employee. If you have unvested awards, consider including them when negotiating your retirement package.

Consider if you can delay lump-sum payments until you’re no longer drawing a salary. When you retire, you’ll likely be at your maximum earnings, and adding lump-sum payments from your nonqualified deferred compensation plan and accumulated stock awards could significantly boost your adjusted gross income as well as your tax obligations. You may be given the choice to take a lump-sum payout in the near term or push payments out five to 10 years, essentially creating a predictable income stream. Your decision is irrevocable, so think through the implications carefully with your accountant and professional advisors.

Work with your advisor to determine your cash-flow needs in the near future. If you’re going to be exiting the organization, whether it’s to retire or do something else, you may be relying on cashing in stock to bolster your income. In your calculations, be sure to include your tax liability when exercising stock options. If you’re planning to retire, think about what you’ll need to fund health coverage or other insurance as well.

Concentrate on equity concentration. Executive compensation often includes substantial equity in your company’s stock. And you may be attached to it. After all, you helped build the company and are proud of what you’ve accomplished. It could be hard to imagine a time when the stock may falter. But there’s no sure thing in investing, so it makes sense to diversify your holdings to limit overexposure to just one investment.

Work with your accountant to sell your stock over time so you don’t trigger unnecessary tax consequences, violate any insider trading regulations, or infringe on any holding rules established by your company. Then work with your advisor to invest the proceeds in a more diverse range of securities. Putting strategies in place for diversifying is best done sooner rather than later, before the situation becomes an issue.

Tip: The Securities and Exchange Commission’s Rule 10b5-1 allows you to strategically sell an established number of shares at regular intervals to avoid perceptions of insider trading.

Delay Social Security. If you’re retiring in the near future, consider delaying Social Security as long as possible so that the payments don’t coincide with years when you have to take large, deferred compensation payments. Avoid unnecessarily increasing your marginal tax bracket and, therefore, your overall tax burden if you can.

Take into account proposed tax code. Every year there is the potential for tax changes that affect executive compensation. You may need to make changes to your income or investment strategy to reduce potential tax burdens. It’s worth revisiting every year and pulling in your advisor and accountant to recalibrate if necessary.

Keep in mind that these are general guidelines. Depending on your unique situation and the plans you’re making for the future, there may be specific actions you could take to minimize your tax consequences. Consult with your accountant and advisor to determine what will work best for you and your family.

Next steps

If your executive compensation package is getting complex:

  • Bring together your accountant, financial advisor and attorney for a meeting to discuss your vision for the future
  • Keep an eye on tax code changes that may affect your tax responsibility year to year
  • Enjoy the wealth you’ve worked so hard to earn; be sure to write that into your plans

Sources: The Wall Street Journal; Harvard Law School Forum on Corporate Governance and Financial Regulation

Raymond James and its advisors do not offer tax advice. You should discuss any tax matters with the appropriate professional.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

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