Raising Smart Spenders and Savers

Key financial lessons to teach your children as they grow.

Talking to kids about money can be awkward, but it’s important. That’s the takeaway from a recent T. Rowe Price survey, which showed that parents consider topics like death and politics easier to discuss with kids than saving for a goal. A full 85% wanted to avoid the issue by signing their kid up for a personal finance course.

Though a class might help – and your advisor can be a valuable teacher’s aide – your kids are still taking their cues from you.

“Parents are the number one influence on their children’s financial behaviors,” Beth Kobliner, author of “Make Your Kid a Money Genius,” told Forbes. “It’s up to us to raise a generation of mindful consumers, investors, savers and givers.”

Here we offer essential financial lessons to teach your kids at each age and stage.

Ages 3-6

Don’t underestimate them – at 3, your kids can grasp basic financial concepts, and by age 7, they have already formed money habits, according to a Cambridge University study. Start with the basics, including the idea that you work to earn money in order to pay for what you want and need – and help your kids understand the difference.

Create a wants vs. needs collage: divide a sheet of paper in half and have your child cut and paste photos from magazines into the two categories.

Other money milestones mapped out by the experts at the Consumer Financial Protection Bureau include the ability to focus and persist through tasks. Saving for retirement takes large amounts of patience and self-control, so we might as well start teaching them early.

Recognizing tradeoffs is another important early milestone. Try thinking aloud when you’re grocery shopping about the amount of money you’re exchanging for a product, or have them help you compare the unit price of similar goods. Whether a trade involves money, treats or time, discuss with your child how every decision has consequences.

Around age 5, it’s important to give kids some cash to manage. A regular allowance allows them to start thinking in terms of financial tradeoffs, and you can offer them a three-part piggy bank (save, spend and share) so they begin to understand the different functions of money.

By age 6, your child should be able to focus on completing small chores to earn money and understand the value of different coins and bills well enough to sort and count them.

Ages 7-12

As your child grows, help them develop values such as empathy and gratitude. Knowing that some families live in poverty and need assistance is part of financial literacy. Using a site like Dollar Street that shows photos of different families around the world living on a variety of incomes can help. So can letting your child have a say in where the family’s charitable dollars will go.

It’s also a good idea to pass down family stories to the next generation – how your parents pitched in to help you build your business, your first big purchase, or how spending habits helped you weather the ups and downs of life. These tales can help them understand their place in the world and develop perspective on what has value in life.

These years are also a good time to have your child open a bank account, which can help them claim the identity as a “saver” and associate positive emotions with it. You should also help them track what they are earning in interest. “There’s nothing like receiving an interest payment (even if it is a few cents) in your name for the first time,” Asheesh Advani, CEO of Junior Achievement Worldwide, told Inc. magazine.

Ages 13-18+

Credit cards, investing, taxes: As your child becomes a young adult, it’s time to step up your game to help them with these complex topics and more. You can help them get started with the SIFMA Foundation’s annual Stock Market Game simulation, let them take control of buying their school supplies on a budget, or help them calculate credit card interest.

Before your teen racks up any credit card debt of their own, consider adding them as an authorized user on your card. Show them that interest accrues unless the balance is paid off – and that any late payment hurts your credit score.

Talk about which data sources can be trusted. Share how you vet financial decisions, and urge your teen to keep digging if what they’re being told doesn’t add up. For example, if your child is researching colleges, encourage them to do research beyond reading a school’s brochure.

Many successful people trace their money skills back to a formative moment: getting a job as a teen. There’s no better way to experience firsthand the effect of taxes, having a boss, being part of a team and managing your time to fit in schoolwork. A seasonal job during school holidays or a part-time gig could help your teen better grasp the working world – and how they picture themselves in it.

Finally, come up with a savings plan for long-term goals, like a car or college tuition. You can use a budgeting app (try Goalsetter or Mint) that helps them visualize their progress, keeps spending in check and gives them a sense of ownership and confidence in their future.

Start the conversation

Whether your kid is 7 or 17, they are ready to hear money talk from their parents and grandparents. After all, financial literacy is not just about dollars and cents. You’re really showing them how to think for themselves, develop values and make sound decisions. In the space of a few teachable moments, you can empower them to take control of their future – a worthy investment.

Sources: T. Rowe Price 2019 Parents, Kids & Money Survey; Forbes; Inc. magazine; CNBC Millionaire Survey; U.S. Consumer Financial Protection Bureau; Sallie Mae’s 2019 Majoring in Money report; mtmfec.org

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.

How Cyber Savvy Are You?

Cyberattacks are America’s fastest-growing crime. Review these tips for keeping your personal information safe.

Do you know the difference between a vishing and a smishing attack? Or that spear phishing doesn’t happen in the ocean? Cyberattacks are the fastest-growing crime in the U.S. – and they cause personal and business devastation every day.

Because technology – and the schemes to manipulate users – changes so quickly, it’s important to be in the know. See how well you stack up:

What’s the No. 1 type of cyberattack?

Ransomware, and experts say it’s a growing concern. A type of malware that encrypts a victim’s files, ransomware allows the attacker to demand money to restore access to important documents or photos saved on your hard drive.

What’s the difference between phishing and spear phishing?

Phishing is the attempt to gain usernames, passwords and credit card numbers by impersonating a trustworthy sender in an email or other digital communication. This might entail disguising their email to look like someone you know or including a link to a fake website to trick you into entering private information.

Spear phishing is tailored to one individual and may mention an upcoming trip or a child’s name, for example.

How many different versions of phishing are there?

Unfortunately, there’s a growing list of phishing scams. But there are two popular ones to be aware of:

Vishing is a voice version of phishing. The caller pretends to be from law enforcement, the government or a bank and will try to gain access to Social Security numbers, account numbers or other personal information by asking the victim questions for “verification” purposes.

Smishing is an SMS (or text) version of phishing. You know those automated alerts from the credit card company or PayPal? It might be disguised in that way.

Next steps: How to protect yourself

Criminals are getting more sophisticated. But you can combat the risk by putting these protections in place:

• Be diligent about not sharing information. It might be fun to answer a silly quiz on Facebook, but criminals can use this to gain access to security question answers, like your first dog’s name or the street you grew up on.
• Use multifactor authentication, which requires two or more authentication factors to access devices, applications or online accounts.
• Browse in “incognito” mode so local search history is not stored and cookies are blocked.
• Use secure passwords that include a mix of uppercase and lowercase letters, numbers and symbols. Make sure each password is at least 12 characters and doesn’t contain personally identifiable information. Pro tip: Use a password management app to help you create and organize them.
• Use a virtual private network (VPN) to create an encrypted connection between your devices and the internet that hides your online activity.
• Regularly back up files to a local external server or a cloud server. At least you’d have access to all your files in case of an attack.
• Look for the “s” in “https.” It stands for secure, and it must be there when you’re entering your credit card or banking information to make a purchase. This alone does not mean a site is secure, but it certainly should be a red flag if it is not there.
• If you are unsure if a call you answer is a vishing scam, hang up and dial the company you believe is trying to reach you – for example, your bank – directly.

Sources: pcmag.com; us.norton.com

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.

Day One of the Rest of Your Life

Visualizing what you want in retirement before you get there may lead to greater fulfillment.

Like all major life events, transitioning to retirement will be an adjustment. It’s important that you’re ready for that change, so you can step into your new life with confidence. One day you may go from your seat at the top as a powerful executive to a lounge chair in your living room. Without your career to define you, you’ll want to discover new meaning.

Finding the answer takes a lot of preparation – emotionally, physically and financially – and a lot of thought. While the financial component is critical to a sustainable retirement, so is your quality of life. Too few people consider the psychological factors. If you can start visualizing your ideal retirement now, you’ll set yourself up for a more satisfying and fulfilling day one.

Thinking ahead

Experts say a steady transition into retirement makes for a more successful one. One psychologist suggests focusing on these key areas to consider the life you’re looking for.

Focus on enhancing relationships. Establish weekly game nights with friends or Sunday dinners with family, for example. Be sure to maintain or expand your social life and stay connected. Studies show having friends and family for entertainment and support significantly enhances a retiree’s quality of life.

Keep your mental and physical health a priority. Set up and keep wellness appointments and exercise daily. And don’t forget to relax. You’ve earned it! Take time for yourself when you need to, and nap when you feel like it.

Make sure you feel as financially secure as possible. Ideally, you’ve been working toward this goal throughout your career. If you need to clarify your retirement income stream, do that now with the help of your professional advisor.

Stay young at heart. Take up an old hobby or find a new one, learn welding or Spanish, play a new instrument. Or, if you really want to dive in, consider that Harvard and Stanford have established learning programs for leaders who had distinguished careers. The point is to plan and embark on a new adventure every week, even if that’s tutoring an elementary student in math or trying a new restaurant. Find something that keeps your brain firing.

Be kind. Acts of kindness make everyone feel good. Volunteer, donate time or money, or contribute to your community in another way.

As you work to home in on the activities that will help you live well on a day-to-day basis, you’ll want to make sure your family and advisors can picture your vision too, and that the details are included in a well-documented financial plan. Being able to clearly articulate your vision helps to prioritize your needs, wants and wishes in order to figure out how to make them a reality.

Next steps

As you approach retirement:

• Visualize how you’d like to spend your days in retirement without a schedule to dictate your day
• Consider each psychological/emotional aspect of your life to ensure it’s being fulfilled by your retirement plans
• Speak to your advisor to ensure the financial plan you have in place will make your vision a reality

Sources: ucsfhr.ucsf.edu

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.

Rigatoni alla Carbonara

Cooking Time: 30 minutes

Serves: 4

Difficulty Level: Easy

This is a classic Roman recipe. It’s impossible to go to a random ‘trattoria’ in Rome and not find Carbonara on the menu. Nevertheless, did you know that this dish was actually born in the US? In fact, its first recipe appears in “An Extraordinary Guide to What’s Cooking on Chicago’s Near North Side”, in 1952! If you think about it, the combination between bacon (Guanciale) and eggs, it’s something really American. Here is the recipe for the authentic Carbonara, the only one, that you need to follow carefully to turn out perfectly for your guests!

Ingredients

380 gr (13.4 oz) Rigatoni dry pasta

 150 gr (5.2 oz) Guanciale DOP – whole piece best; alternatively, 0.25 inches thick slices. If you can’t find Guanciale, go for Pancetta or Bacon.

 5 egg yolks

 30 gr (1 oz) Pecorino romano DOP cheese

 20 gr (0.7 oz) Parmesan Reggiano DOP

 Black Peppercorns (half tablespoon)

 Mediterranean Sea Salt

Directions

Bring the water to a boil in a large-sized pot.

On a cutting board, cut the Guanciale (or Pancetta) into strips of about 0.5 inches long and ¼ inch thick, taking care to dispose of the rind.

With the help of a meat mallet, crush the black peppercorns to get a coarsely ground black pepper.

Separate the yolks from the egg whites. Pour the 5 yolks into a bowl and add almost all of the Pecorino Romano DOP cheese (leaving about a tablespoon for the final garnishment), the Parmesan Reggiano DOP and the black pepper. Mix the sauce with a whisk until you get a thick cream.

In a large-sized sauté pan, add a tablespoon of EVOO and the Guanciale strips. Cook over medium heat until the Guanciale is golden brown. Turn off the burner and set aside.

Salt the boiling water, and add the rigatoni. After about 3 minutes, add half of a ladle of cooking water to the yolk sauce and mix with a whisk until a semi-liquid sauce is reached.

Drain the rigatoni when it is “al dente” (firm to the tooth) with the help of a skimmer (do not dispose of the cooking water) and put the pasta in the pan with the Guanciale, add one or two ladles of cooking water and stir on high heat for about 1 minute. Now turn off the burner (the rigatoni must have absorbed almost all the sauce). Let it cool for about 45 seconds, then pour the yolk sauce and stir with a wooden spoon (this will prevent the egg yolks from becoming scrambled).

Serve and enjoy your Carbonara immediately with the final garnishment of Pecorino and ground black pepper.

This dish pairs perfectly with Chardonnay or Frascati Superiore.

URL to article:  https://www.lacucinasabina.com/recipe/rigatoni-alla-carbonara/

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.

3 Ways to Help Loved Ones During Uncertain Times

Maximize your generosity in the current environment with these gifting strategies.

World events can strike dif­ferent chords for different people, even within our own families.

If you find yourself wanting to help your loved one through economic uncertainty, you’re not alone. CNBC’s Millionaire Study, a recurring survey, found that 22% of mil­lionaires had provided assistance to their adult children since the start of the COVID-19 pandemic and 21% had given help to other family members.

It goes the other way, too. Among millennials, the oldest of whom are approaching 40, 19% provided some level of support to a parent even before the pandemic, CNBC reported. In total, about 13% of Americans provide financial assistance to a parent.

Luckily, recent changes to tax laws surrounding gifts, in conjunction with historically low interest rates, make it easier now than almost ever to help your family members in the short term – and set them up for the long term – once the economic volatility settles. The fol­lowing strategies may help you meet your goals.

1. Simply cash

Few solutions can quell an immediate financial hardship like the U.S. Mint’s finest. Since 2018, individuals have been permitted to give a person up to $15,000 annually without accruing a tax liability. These annual limits generally apply to single gifter-giftee pairs, so if you are married, your spouse could give an additional $15,000 and remain below the annual exclusion limit. Further, if you want to share your generosity with the recipient’s spouse, partner, child or other trusted relation, you could gift them $15,000 as well.

Giving over $15,000 per recipient won’t necessarily bring you new tax liabilities, at least not now. You will be expected to file the gift form with your tax return and it will count against your lifetime gift limit, currently $11,580,000 for an individual and double that for a mar­ried couple, which has implications when it comes to your estate. Tax laws change, of course, and this life­time limit is set to expire by the end of 2025, so consult your financial advisor and tax professional to run through scenarios that might be more advantageous in the current climate.

2. A loan between friends (or family)

While you may want to loan your family member what they need and have them pay it back when it’s convenient for them, the IRS is a bit more rigid when it comes to transactions that could look like gifts, so it’s best to have the appro­priate documentation in place.

Now may be an opportune time to issue a loan to a family member without feeling the point of the tax­man’s sharpest pencil (and his rules regarding below-market loans). The reason? The minimum interest rate, known as the Applicable Federal Rate (AFR), is historically low. In July 2020, the short-term AFR hit 0.18%, which applies to loans with a term shorter than three years. For mid-term loans – which will be paid back between three and nine years – the rate was 0.45%, and for long-term loans with a repayment schedule longer than nine years the rate was 1.17%, lower than what you’d expect to see from a commercial lender.

Just make sure the loan is a bona fide creditor-debtor agreement with payment schedules, record-keeping, a promissory note and, optionally, a collateral agreement, Forbes maga­zine recommends. Consult with your attorney to draw up the documents and oversee the process.

3. Transferring with equities

If market volatility has taken a bite out of your investments but not your lifestyle, there’s another way to offer your family members a long-term opportunity, especially if they’ve had to dig into their retirement support.

During volatile market periods, there could be moments when your good stocks are facing the same kind of down­ward pressure as all the others. On the bright side, though they may have higher value later, they could serve as an undervalued gift. This means the annual gift exclusion limit of $15,000, and lifetime limit of $11,580,000, could go a lot further than it did at the hottest point in the market.

For example, say Bradley bought XYZ for $20/share a few years ago. In December, it was priced at $50/share but hovers around $35 now. If Bradley gifts his adult daughter Mary those potentially undervalued shares, he can remove the current value from his estate and Mary will get time to, hopefully, benefit from the stock’s future growth.*

Gift recipients rarely need to worry about paying gift taxes, but they may need to pay income taxes depending on the change in value of a gifted equity when they sell. Many times it makes sense to gift appreciated assets instead to avoid rules around dual basis. The IRS also has par­ticular rules around gifting to those in negligible tax brackets (like minors or children in college), which could trigger the so-called kiddie tax. Because this area can get a little complicated, it’s best to consult a tax professional and your financial advisor first.

Family money matters

Even with a number of practical options, as the adage states: The mixing of money and family should be treated with care. But open com­munication, well-defined limits and expectations, and third-party advice can help slacken the natural tension of the situation. Here are some tips from professionals:

• Know what you can give. Though it might feel worth it to delay your own retirement to help your family member, for example, know that you may be giving up years when your health, wealth and time are at their peak.
• Be clear. Setting terms, goals and timelines up front clears up confu­sion and creates expectations. For some types of financial assistance, like an intra-family loan, these terms will be in writing – but have a plan if things don’t work out as expected. For less structured assis­tance, like cash, it will be up to both sides to prevent future resentment.
• Bring in a professional. When it comes to decisions like these, it’s always best to have a cool-headed, objective third party to help out. Consult your financial advisor, tax professional and/or attorney to get things started.

*This is a hypothetical example for illustration purpose only and does not represent an actual investment.

Raymond James does not provide tax or legal services. Please discuss these mat­ters with the appropriate professional.

Sources: CNBC; IRS; Kiplinger; NerdWallet; NPR; U.S. Treasury; Forbes.com; RaymondJames.com

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.