All Things Financial Planning Blog

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Christmas is Only One Day of the Year

In a recent phone conference with a client, I learned that “George” and his wife “Kay” were at wits end. They felt financially strangled, trying to come up with enough cash to pay the bills. Since our last meeting, the hot water tank broke down, Kay’s car needed major repairs, and the dishwasher was ready for the heap. They also committed to an out-of-state wedding with their children, since they had no family vacation in years. Credit card debt ballooned and $9,000 was needed soon for an array of various expenses. 

This couple worked very hard to reduce their credit card debt over the past few years. It took time, discipline and many small steps to progress. Now they considered taking money out of their IRAs to pay the bills. (NO!) They were not yet saving enough to build an emergency cash reserve or for retirement. 

As we reviewed the list of upcoming expenses, Christmas was prominent among them. It was the only discretionary item they could reduce. I asked whether George and Kay would consider buying their children less expensive gifts and engaging in an out-of-the ordinary family activity together to reduce the Christmas price tag. Initially, that was not an option they would consider. After further discussion, they decided to make the wedding trip part of the family Christmas gift. They would explain to the children that gifts under the Christmas tree would be less expensive this year and why.

I asked parents with children in the same age group how they decide on Christmas or Hanukkah spending. One mother said “Christmas is only one day of the year. In our family, it’s Christmas all year long. We buy gifts for birthdays and small ones for the other holidays. For Christmas, my husband and I decide on a budget, set the money aside in envelopes, and only spend what we have.” 

Another mother told me about paying thousands of dollars for ten years of her son’s year-round hockey games. One year he asked why they couldn’t go to Europe for spring break, since “EVERYBODY was going”. At home one day during the break, he asked his mother’s permission to visit a friend. She told him he could not go, because certainly his friend wasn’t home. After all, “EVERYBODY went Europe” for spring break!

At a time when much of the country, in fact the world, is tightening its belt, certainly we can and maybe should, lower expectations of ourselves, our children’s expectations and our spending. If this causes parental stress, the children will feel it too. Discussing the practicalities of finances with children (without laying a guilt trip on them) demonstrates financial health. Overspending and hoping it will resolve itself “later” or not discussing it at all, lays the seeds for their financial dysfunction.

Before the holiday frenzy takes hold, consider thinking about how you can make it joyful, while modeling financial responsibility to your kids. Years from now, they won’t recall the gifts you gave them. They will likely continue the example you set, and hopefully, all of you will remember a happy day.

Constance Stone, CFP®
Co-Founder, President
Stepping Stone Financial, Inc.
Chagrin Falls, OH

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October Means Open Enrollment

Put on the coffee and roll up your sleeves! Deciding on employer benefit choices can be a daunting task, especially when the plans change from year-to-year. And continue to change they will! The Affordable Care Act signed last year phases in a variety of regulations over the next eight years, if it remains standing after the 2012 elections.

Next year, the value of your group health insurance will appear on your W-2 form, although it is not taxable income.

Compared to last year, you will likely find your premiums, co-pays and deductibles higher, with some lower health care benefits. You may also see “family” coverage replaced with “individual plus dependent(s),” now that children under the age of 26 can be covered by a parent’s employer plan or through COBRA coverage. Individual policies for young people in their twenties may be cheaper than your employer’s dependent coverage. Comparative quotes for individual are available at or through an agent.  Before making any changes, be sure to read the fine print concerning pre-existing conditions, dependent eligibility and geographic areas covered.

If both spouses work, it may take you several hours to compare networks, expected premiums, co-pays and total out-of-pocket costs before deciding which employer health insurance is the better alternative.

Older adults with pre-existing conditions can now access high-risk pool policies. Contact your state insurance department via for more information.

For retirees, a well-written explanation of the Medicare enrollment changes was posted by Joe Pitzl, CFP® on September 15, 2011.

Want to lower your health care costs?  Kiplinger has thirty tips that can save you substantial bucks.

One of the most important and often overlooked or misunderstood employer benefits is long-term disability insurance. Its significance is highlighted because earnings are usually your greatest resource. If you became disabled, long-term disability would pay a portion of your regular earnings. Most group policies cover you for your own (current) occupation for two years, and then any occupation thereafter (usually making the coverage inapplicable). If your employer pays the premiums, the disability income is taxed, leaving you with a smaller amount of your former income. It’s important to take time to read and understand what is covered, for how long and under what circumstances. Most advisors also recommend supplementing your employer group plan with privately owned disability insurance. It is portable in the event that you change jobs and the benefits are exempt from tax.

Life insurance is usually offered by employer group plans in multiples of your base wages. Group term is often, but not always the least expensive alternative. Life insurance is primarily intended to replace your lost earnings for a period of time that others will depend on you in the future. If you are single, you may not need life insurance. If you are married, you may choose to cover yourself, your spouse and dependent children. Again, owning your own policy to supplement your employer group term may be advisable.

FPA’s Brochure Choosing the Right Insurance for Your Life’s Stage can be a helpful tool as you consider all your insurance needs.

Constance Stone, CFP®
Co-Founder, President
Stepping Stone Financial, Inc.
Chagrin Falls, OH


Finding a Financial Advisor Who Complements Your Style

To enjoy a successful financial advisory relationship, both the client and financial planner have expectations and styles that need to fit like a glove. This article is intended to help you identify your expectations, so you can match with an advisory style most beneficial to you.

 Advisors often profile prospective clients as “delegators,” “validators” or “do-it-yourselfers.”

Delegators want little involvement in their financial affairs due to a lack of time or interest. Delegators are happy to give up control and authorize their financial advisor to implement strategies on their behalf, either with or without prior approval. Delegators may work with brokers or high-touch fee-only financial advisors who charge based on assets under management. Delegators with significant wealth may also use family office services for bill-paying and personal financial bookkeeping. 

Validators often have a vision of their financial future and are simultaneously uncertain exactly how to reach their destination. Their financial acumen may range from very limited to experienced, yet they often feel confident in their decision-making ability. They also recognize that, as a professional with wide experience, a financial planner can supplement the valuator’s own knowledge and understanding. Validators are willing to pay reasonable fees for services. They want both advice and the ability to maintain control over their finances. Validators are eager to learn and participate in the planning process. They typically chose fee-only (no product sales) financial advisors who may or may not charge a percentage for assets under management. 

Do-it-yourselfers (“DIYers”) are highly involved with the details of their personal finances. They regularly comb through the financial news and publications. They may even read prospectuses! DIYers often feel they can captain their own financial ship better than anyone else. They keep good records, often track their spending and prepare their own financial forecasts. A DIYer foregoes the following benefits of financial planning services: uncovering “blind spots,” objective feedback and advice free of emotion, access to cutting edge knowledge through continuing professional education, and experience based on working with many clients. Financial advisors recognize that DIYers are not willing to accept help at any fee. DIYers may interview many financial professionals, yet ultimately decide to rely on themselves.

As well, financial planners and advisors come with a variety of educational backgrounds, certifications, philosophies and fee arrangements. You can find descriptions of many types of advisors.  In addition, there are checklists for interviewing potential financial planners and a summary of how planners charge.

CFP® practitioners and members of the Financial Planning Association (FPA) are distinguished from other financial advisors by adhering to a required fiduciary standard. In essence, this means the advisor must always place the client’s interest first and fully disclose any potential conflict of interest. This is higher bar than the suitability standard required for brokers and other sales representatives. Their recommendations need only be suitable for you as a client. 

If you’re looking for the right financial planner, be sure to check out PlannerSearch!

Constance Stone, CFP®
Co-Founder, President
Stepping Stone Financial, Inc.
Chagrin Falls, OH


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