Blog 11: Teach Your Children Well Volume 2

Chris Gervat
Financial Advisor
cgervat@rwbaird.com
616.233.8724

I’m a coach and an educator at heart. I spend countless hours on fields with youngsters each and every year. I love watching kids grow. I love watching their progress and development. repitition.png

As a coach, I get to see the way sport builds an athlete’s character day in and day out. One minute, a task seems daunting and impassable. But when framed correctly, that task becomes an opportunity, and often, a success. When that hurdle is leaped over, a new apparent impasse originates. Again, and again, and again. The reps needed to get over each hump seem easier as you push that bar up higher and higher. Young athletes slowly realize there is no obstacle they can’t overcome, once they understand how to trust themselves and do the work. 

The repetitions needed to succeed in any field are great. Our heroes pour hours upon hours of repetition into their crafts.  Rep, Rep, Rep. The Greats, and even the Gods, understand that just one set, one day, one attempt will not constructively change or modify behavior. Rep, Rep, Rep. It takes thousands of reps to ensure  the proper outcome of what they want to accomplish. 

Repetition is all around us. If we study more diligently, we get higher marks. We work more productively, we accomplish more. If we intentionally make someone smile every day, they, in turn, are happier. 

Unfortunately, more of something isn’t always positive. Reps going the other direction can lead to bad outcomes. Consistently repeated bad behaviors are also habit forming. So are negative thoughts. 

Repetition matters. But it doesn’t just matter to us. The young people we are teaching and coaching and raising also reap what we sow. Their young minds are malleable. We choose how we will rep out with them.  We get to put them on a path of positivity and success, or a path of negativity. It’s on parents, teachers, and families to continue to put them back on that positive path to success. Are they going to hop off here and there? Sure, they’re kids! It happens. That’s life. But the repetitions you teach them now, will ensure they have the tools they need later when they stumble. How do you communicate to them consistently what is right and what is wrong? The only way to change is by changing a generation. Consistent and positive repetition is how we learn to overcome obstacles. Consistent and positive repetition.  Repetition creates habits, habits change behavior.

It’s on all of us to change a generation, one child at a time.

“Every kid is one caring adult away from a success story.” – anonymous

Blog 10: Junk Drawer Clean; Check!

Chris Gervat
Financial Advisor
How-to-Organize-Your-Junk-Drawer.pngcgervat@rwbaird.com
616.233.8724

Let me guess, over the last few months you’ve been organizing, cleaning, and straightening up areas you didn’t even know you could straighten up. The dust ruffle under your bed no longer hides a dirty shameful mess, but flaps happily in the freshly vacuumed breeze. The loose Q Tips that used to live in the bathroom drawer have been gently jammed into one of the 10 new boxes of Q Tips you bought at Costco back in March. A tidy stack of clothes and objects destined for Goodwill sits patiently by your door. Your yard hasn’t looked this good since the day you bought your house. Your garage went from a cluster of golf clubs, snow shovels, and a rather large collection of cans, to a place where you might just be willing to entertain guests.

You’ve never been this organized in your life, and it feels good. But, how much time have you spent organizing your finances? How much time have you spent making sure your family is protected and with an active plan in place? How much have you thought about how to prepare for the next unpredictable, black swan event? Chances are you have thought about it, but haven’t acted. Here are a couple of things you should be doing right now, in addition to cleaning out your junk drawer.

Protect Your Family:
As planners, insurance is your protection against the “what if.” Ideally, everyone stays happy and healthy forever. But that isn’t always the way things work. We view insurance as protection of income and so should you. If something were to happen to one spouse, the insurance will cover what that income would have been for said spouse. Your biggest expenses within your family are your mortgage and raising your children (or putting them through college). You should have enough insurance to, at a minimum, cover the cost of raising your children while they are still living under your roof, as well as pay your mortgage.

A simple way of thinking about the amount of insurance you have is 10-15 times your pre tax annual salary. Remember this will provide your family tax free dollars for the next 10-15 years. If you want more coverage, get more. Term insurance runs cheaper per year than car insurance if you’re in your 30’s. It gets more expensive the older you get so lock in some rates when you’re younger! They even now offer term insurance that returns the amount you put into it!

Emergency Fund:
It’s hard for many but lock up 6-12 months of expenses for the next life-altering event. If you are in your 30’s or younger, it’s a given that something else will come along in our lifetimes to completely shake us up. It won’t look/feel like this current situation likely but it will put a damper on your finances. Prepare yourself.

Create a Financial Plan:
What is your family trying to accomplish? Do you have enough money to retire? What does retirement look like? How can I be proactive to get to where I need to go? What are the best practices for my family to save for college and prepare for retirement even though these seem so far away. How do we chip away? When you have a plan in place, these events become less and less stressful as you. Work with a professional to help you answer these questions.

Refi Your House:
Chances are if you bought a house over the last 5 years, your rate is north of 4%. With rates dropping recently, a 30 year fixed around 3% will save you thousands of dollars of interest per year! No one likes looking at your mortgage statements seeing the amount you pay in interest is 3 times the amount you pay towards the principal. Rule of thumb is if you can lower your mortgage rate by 1%, do it!

Put it in Writing; Estate Plan/Trust:
Things have changed over the past 10 years of your life. Whether you’re starting a family, have kids now out of the house, or have added to your bench with some grandkids, it's a great time to update or start up a trust. This legally puts in writing what you want to happen to your estate, as well as designate some decision makers if you cannot make decisions on your own behalf.

Talk to an Advisor:
Many people don’t know this, but most advisors will talk best- practices and give guidance for free. You don’t need a certain amount of money or need to be a certain age. Everyone is at a different stage in life, and they have different issues. Get ahead of the game by getting some advice!

With the proper plans in place to protect you and your family, you will feel less stressed, and know that you’re headed in the right direction. Your consistency in your approach will continue to get you through the tough times. So will the ease of writing down your plan and staying on top of it, because your pens are color coated and stacked neatly in that junk drawer of yours, for now.Junk Drawer Organized; Check!


Blog 9: Pad Your Cushion

Chris Gervat
cgervat@rwbaird.com
616.233.8724

Emergency fund, safety net, cushion. Call it whatever you want, it’s there to break your fall in a worst-case-scenario, and it needs to be padded. When I meet with new clients, one of the first things we talk about is their emergency fund. People always want to know if they can afford that new car, how much they should be investing, how much can they put into their house? The answer is different for everyone, but my question is always the same: How much padding does your cushion need?emergency fund.jpg

There’s a saying that goes like this, “It doesn’t matter until it matters.” No one can foresee a global pandemic or a housing crisis, but we are all too aware of the crushing reality of surprises like these, and the havoc they wreak. Establishing your emergency fund first is a big deal. Before you begin investing money or remodeling your kitchen, you should have a cushion of cash soft enough to support you and your family if you had to go income-free for 6-12 months.

The exact number you need in your safety net is different for everyone. It depends on your monthly expenses and debts. Grab a calculator and figure out how much you spend every month on things that are mandatory. I’m not talking about calculating your daily latte habit (although of course you can save for that too). Mandatory means expenses like rent or mortgage payments, electricity and water bills, gas, food, any debt you make monthly payments on that you couldn’t defer. Now times that number by six. This is the minimum amount you should have in your cushion before you start filling in your other buckets of savings, investing, and home improvements. That may sound daunting, but I’ve got some ideas for how you can easily begin to pad your cushion.

Put it on Autopilot
Most banks allow you to have as many accounts as you want. Starting simple, you can divide your direct deposit checks from your job into accounts at whatever percentage you decide. A good rule of thumb is 10% goes into savings, 90% goes into checking. Name your account something like “Cushion Account” Or “Emergency.” The money will be taken out of your check without you ever noticing. When you get to your desired cushion level, you can go back to all of it going into checking. It will feel like you got a raise. When you can see on your statement that you have 6 months of savings sitting in a separate account, it’s more tangible and it has an identity.

Keep the Change

Remember when you used to be able to scrounge for coins in your couch cushions or floor boards? That loose change was falling out of our pockets and most of the time, we never missed it. But when we collected them we found ourselves with a tank of gas or a basket full of clean clothes. The prevalence of credit cards, debit cards, and now digital payment options have made tangible spare change almost a thing of the past, and theoretic spare change a thing of the future.

Some banks allow you to opt into a “keep the change” savings plan. Anytime you add money in or take money out of your checking account your bank automatically rolls the spare change into your savings account. Your checking account will always have a round dollar amount and your savings account will grow without you even noticing.

Start Small With Big Habit changes

Putting any part of our paychecks into a savings account can feel hard, especially if you’re already on a tight budget. But it can be done. We’ve all heard stories of people with little to no income who were scraping by but still managed to save thousands of dollars. There are always ways to cut down our expenditures. The good news is that you don’t have to part with huge chunks of your income to build a safety net. Commit to $10 a week. $10 a week may mean making coffee at home a few days a week, packing a lunch, walking/biking instead of Ubering or paying for parking. It might feel uncomfortable, but it isn’t impossible.

When you take out your normal weekly eating habits; 2 coffees you bought from starbucks, two lunches you ate at jimmy johns, and the egg mcmuffin from you know where, it can add up a small fortune that you can add to your savings/emergency fund. Consistency and forming habits will hand you thousands of dollars down the line. You can get crazy and save $20/week. Heck, even reward yourself by staying on track.

Having a 6-12 months cash cushion doesn’t just give you protection, it gives you peace of mind. You’ll sleep better, stress less, and allow you to focus more on your family, when they need your attention the most.

Blog 8: Juggling Belongs in the Circus

mom juggling.jpg
This message goes out to all of us parents feeling like ringleaders of a circus who found out half-way through opening night we’re no longer just jugglers and MCs, we’re also now the acrobats, lion-tamers, magicians, and obviously, the clowns. This is no cake walk. This is a high-wire walk. As if juggling our careers with the physical, emotional and financial needs of our families wasn’t impressive enough, now we’re the educator and child-care provider too. And, this is the stress we’re dealing with if we’re fortunate to still have our jobs, never mind thousands of parents who are suddenly finding themselves unemployed.
 
This is not an easy time for anyone. Making sure your children are getting the education they need can be as stressful as putting your head inside a lion’s mouth. We, as parents and ringleaders, need all the help we can get. Because even when the acrobats’ leotards don’t fit, and the concession stand is out of peanuts, and the lion-tamer smells like a brewery, the show must go on. 
 
That’s where I come in. I may not be able to take over as ringleader, but I can give you a chance to catch your breath.  For the next 2 months I will be offering 20-30 minute virtual class tailored to middle school and high school aged students.
 
HS Parents:
 
I’m a coach and an educator at heart. I have developed lesson plans about investing, savings, and the power of time for your high school and college students! The biggest asset your kids/young adults have in regard to life and savings, is time. On top of that, this can give your young ones a distraction and think constructively about something other than when they’ll get to see their friends again. Your children have decades of financial decisions ahead of them. Don’t you wish you knew then some of the things you know now? These talks are engaging and fun. It’s about giving them the right perspective in a manner that makes sense and is immediately applicable.
 
Elementary/Middle School Parents:
 
It’s never too early to teach children the importance of good financial habits.  Let me help your young ones prepare for the future by arming them with basic financial concepts, vocabulary, and implementable tools. They’ll learn how to earn money via chores and allowances (parent participation necessary), how to ask for a raise or an advance (look out!), and how to understand and manage the money they have via long and short-term saving, spending, or donating. They’ll learn about apps for saving so they can watch their accounts grow.  My lessons can be tailored to all ages and levels.
 
Even the ringleader needs a break. So if you’re looking for a 30-minute side-show act to entertain the kids, I’m here to help. We’ll discuss any specific areas you’d like me to focus on and the educational level of your child or children. We’ll hop on a call, and have a conversation. How much is 30 minutes of my time you ask? Free….Clown make-up is extra. Just reach out by email and we’ll set up a virtual call!

Blog 7: Just Keep Swimming & A Few Tips From Your Lifeguard


dory.jpg
In Disney’s Finding Nemo the world fell in love with Ellen DeGeneres’ affable character, Dory. She reminded all of us that no matter what we’re up against we have to just keep swimming. I’ve been thinking a lot about Dory lately, that amnesic fish. Not only because of her simplistic wisdom, but because she reminds me of something that is never far from my mind right now: the stock market.

More so, I think she’s in my head because I’ve watched my fair share of cartoons the past few weeks. And, can't forget about Lego Masters! Great show! I digress....

So, how is Dory, a cartoon fish with short-term memory loss, like the stock market, you ask? Simple. For one, she isn’t real. She’s a fictitious representation of a bigger picture. The stock market isn’t a real “market” either. 

“There is no market. All there is, is people. And people have feelings. And, so the emotions tend to get people to buy, buy, buy at the top, until the last potential buyer has bought and spent all his money—at which point the top is reached and sell, sell, sell at the bottom, until the last person who’s going to panic out does so.” - Howard Marks - Oaktree Capital

Dory has short-term memory loss. That means that the things that affected her yesterday, have little or no impact today. That’s also true of the stock market. To reinforce this point again, the market can change on a dime, regardless of what it was doing last week, yesterday, or one hour ago. Why is that? Because, like Dory, every decision that affects the market is based on the emotions of the people buying and selling stocks, and boy are we emotional.

In the midst of this pandemic many of us are feeling more feelings in an hour than we have in the last month! When we are emotional, we seldom act rationally. Just as you struggle with making decisions when you’re emotionally hijacked, so does the stock market. The bounces of highs and lows are exaggerated because humans are involved. So what do we do?

We do what Dory does. We just keep swimming.

In the context of finances, swimming means saving. If you’re putting money into your 401k or other retirement savings each week or every other week, you’re buying low right now. That’s great!  Consistency is your friend. Seek the help of a qualified advisor who can help you understand if you should be swimming with floaties, or if you’re ready for the deep end.


A few tips from your lifeguard:
  • Don’t pull money out of the market and go back in. You can’t time the market. You should have proper allocation to begin with based upon your age, goals, etc.
  • Don’t listen to your neighbor/friend/cousin’s brother-in-law when they say they pulled their money out 4 weeks ago and they’re laughing at you. Everyone’s heard a story like this, from someone who is usually no better off financially than you.  No one shares the part of the story where they got it wrong in 2009, or where the stock he pulled his money from pivoted and has now doubled in price.
  • Don’t listen to anyone who is not YOUR financial planner about what they’re doing with their money. They’re not you! They aren’t in the same situation as you and no matter what they say, no one is giving you their full financial picture.
  • Don’t follow the herd - If everyone jumped off a cliff would you? If you do, chances are you’ll get burned, or drown.
  • Don’t get sucked into the sensationalism of every bit of news on TV, facebook,or the internet.
  • Stay on course, stay square. Use this time to be with family and friends. Build stronger relationships, take a breath, and keep swimming

Blog 6: Covid-19 & Financial Impact


First off, I’m not here to comment on what I think is going to happen with the Coronavirus. I left the prognostication game almost a decade ago when I hung up my career as a meteorologist.  Coronavirus, or COVID-19, is a very tragic reality for people all over the world, and a scary possibility for everyone else. Please be empathetic to those around you. My thoughts and prayers are with everyone dealing with this, in every way it is affecting us. But, my area of expertise is finances, so I do want to take a few minutes to discuss this hot button and how it may affect you and your finances.  wash your hands.jpg

Financial Picture:

At some point in our long financial lives, phenomena arise that are unprecedented and earth-shaking. When something as present and polarizing as COVID-19 comes around, it’s hard to look three months into the future because we are living through every news article and breaking news story.

Why is the market fluctuating like it is?

Stock prices are based on future earnings potential. When future earnings potential is even more unknown, and there is a likelihood that earnings will be lower than projected, the price of the stock will drop.

When you start to quarantine people at a large scale, the economy gets impacted for a certain period of time. At one point, China had 400,000,000 people on lockdown. They had more people in lockdown than the entire population of the United States. In the most simplistic of explanations: When people are stuck in their homes, they aren’t shopping, eating at restaurants, attending concerts, movies, etc. They aren’t spending their money to the same extent.

Flipping gears to the United States, the economy is driven by the US consumer. We are a consumer-based society. US consumer constitutes 70% of the US economy. That is a huge number! We like to do the things listed above just like China, but to a much larger scale. Imagine; if the US goes into lock down for 2-4 weeks, the amount we spend will dramatically decrease. We just don’t know the timeline of the impact and that’s probably the biggest issue of uncertainty. That’s why the stock market is in a tizzy.  There are huge economic impacts related to the supply and demand of oil, supply chains, and interconnecting economies, but that’s a conversation for a different day. Let’s get to the heart of this post: Are we about to be in an economic recession and how do I prepare?

First, remember: You can never, ever predict, you can only prepare. Market theorists and economists make predictions every year. Their predictions are correct roughly 45% of the time. A coin flip would be better! 

What do I do with my finances? I’m really scared and don’t want what happened in 2008 to happen now. 

1.  25-50 year old’s – You thought you’ve done a great job since the financial crisis, and maybe lost sight a little bit of what happened 12 years ago, or for you millennials, you were new to investing and didn’t have much money to lose. Investing is easy you say. For some, this is your first reality check. Time is your best asset and your consistency to save 10-15% of your income to your future self is everything. Stop being a stock picker, diversify your portfolio with the proper allocation, and get wealthy, slowly.  And wash your hands.
2.  10-15 years from retirement – A financial plan is crucial. You’re not going to know your exact living expenses, but you should have a good estimate. That being said, with kids likely out of your house, you have a lot more disposable income. The financial plan will help you narrow down on what you need to save. Again, riding the wave of risky investments may have worked well over the last 10 years, but, can you handle your portfolio losing 30-40%? Diversification & proper allocation is crucial.  And wash your hands.
3.  5 years from retirement – Buckle down the hatches. You need a full financial plan to understand what you need to do to proactively control the things you can control! This plan will help you understand how much you need to save to cover the expenses and lifestyle you want in retirement. Your investments should also be reviewed and strengthened. Proper asset allocation and diversity is essential to protect you.   And wash your hands.
4.  2 years out from retirement/ in retirement – With the help of a good advisor, you should have been ready for this with a well-constructed financial plan. But even if you’re brand new to this, we’ll help you understand your portfolio. Your portfolio should consist of “safe money” as well as money invested in the stock market. What’s safe money the young crowd asks?  This is cash, CD’s, treasuries that you hold. These are dollars that are not going to fluctuate. This is your near-term money you will be spending for the next 3-5 years. You know exactly what you need to draw from your plan to handle your living expenses. The stock market investment is your long-term money, 5 years plus.  And wash your hands.
 
If you want help, or even just some education, please reach out. I dove into this profession because I want to educate others and teach financial literacy. It’s a powerful tool when you use it correctly!!  Stay safe out there and WASH YOUR HANDS!



 

Blog 5: They Say We're Young and We Don't Know


Let’s be honest; Everyone has that one movie that always gets you when you’re flicking through the channels. It’s that movie that no matter how many times you’ve seen it, if it’s on the tube, you’re watching it. What’s yours? Mine- no question -is Groundhog Day. It doesn’t get as much airplay as it used to, but I can’t get enough of it.ground hog day.jpg

Why are we talking about Groundhog Day? I mean, any chance to bring up a film by the late great Harold Ramis is a good day. But what's the takeaway? I think, it's that Bill Murray's character went through his life with blinders on, not seeing the bigger picture. But as luck would have it, he got caught in a seemingly endless time loop and was given the opportunity to change his ways. He had thousands of “yesterdays” and no tomorrow.  It took him whole other lifetime to figure out what was important in this life. Only when he made the choice to become a better man than he was the day before did he break free from the time loop. Unfortunately, or should I say fortunately for you, time is linear.

Not that we’re looking at you to find the better version of yourself, but, it’s time to match the already great version of you and your family to the financial you. Do they line up? What are you doing to catch up and what does catch up mean for you? Life is expensive, and you might not have saved as much as you should, or could have. Those darn kids will drain yah! Luckily for you, Uncle Sam lets you start saving extra as soon as you turn 50. You might already know this, but are you taking advantage of this? AND, how do you know how much you should be putting away?

In short, if you’re in your 40's and 50's, it’s a great time to think ahead. Yes, living in the moment is important, but planning for tomorrow is imperative.

Let us start working on the tomorrow that will inevitably come for you by putting together a “Comprehensive Financial Plan." We'll look at the current and future needs, wants, and wishes of you and your family. We'll devise a game plan to get you in order for the present, and show you how to get where you want to be in the future. It’s never too early for advice and structure.



Blog 4: How Can I do a Quick Check of How We're Doing? Retirement Self Diagnosis

You’re a do-it-yourselfer. If you had a blog it would be called “Duct Tape & Determination.” The shelves in your kids’ rooms aren’t exactly level, but they do the trick. Your wall-mounted TV perfectly covers the six holes you made on the way to hitting that stud.  You don’t need to spend money on things like levels and stud-finders, after all, you’re married to a stud-finder aren’t you?  
do it yourself.jpg
Alright, look, not all people want to come see a financial advisor or planner. We get it. Talking about your finances is not how you envision spending a Thursday evening. It’s personal. It’s awkward. It’s boring. And you can do it yourself, right? Wrong.  

I don’t want to sound alarmist, but ignoring your financial health is like waiting to get that mole checked; it may not be a big deal now, but it could be disastrous later.  Instead of thinking about your finances as a home-improvement project you can duct tape together, think of them as an important piece of your family’s health.  You wouldn’t skip a child-wellness check-up, so why skip a financial check-up?

But never fear do-it-yourselfer, we know you’re not going to run to a professional with every little question you have.  Sometimes you need a quick diagnosis. Sometimes, on a Tuesday afternoon, when your inbox is overflowing and you’ve had it up to here, you need to know right now: how much money do I need to retire? In the same way that beauty blogs and magazines can offer quick tips and tricks to keep you healthy (hello green juice and sunscreen), we can give you some quick and easy information and tools to make sure you’re financially fit.  

This is your WebMD for finances. It’s not a replacement for a professional, but it’s a good starting place. 

There are plenty of retirement calculators online. Just type in retirement calculator in your search bar! This is a quick way to check your baseline.  It allows you to toggle some of the variables to see if you should make some changes. *Don’t forget to change variables in investment returns, inflation and the social security section!

 Great, what do I put in for some of these variables??
You can make your plan look good by putting in high returns, low inflation and not needing a lot in retirement. That’s great and all, but if you’re going to lie to your doctor, why bother going? It’s better to overestimate your expenses and underestimate your future returns.

  • A good estimate is you need 70-80% of your income in retirement to live off of. This considers less money spent on your kids (until grandkids come around), having mortgage hopefully paid off before retirement and generally less spending as you age.
  • Over inflate your expenses, underinflate your returns!  We recommend estimating 5-7% returns during your working years and 4-6% returns in your retired years.
  • Plan for 2% - 2.5% inflation. We’ve stayed below this for quite some time, but things change!
  • Plan for average returns. Anything above that mark is gravy! This helps you understand what levels you should be at with average returns in the market. If you put in 10% it’s going to look really good… don’t bank on that. 
Again, this is just a ballpark estimate. We haven’t talked social security, dental and medicare costs (yes you will probably pay monthly healthcare expenses out of pocket), travel, charitable donations etc. Are you sure you want to do this yourself? 

The more prudent you are at understanding where you currently are, the more prudent you can be about getting where you want to be with some proactive steps. Have fun playing with calculators! Once you get bored with that, come in and talk to us. We promise we’re more fun…..

Blog 3: Teach...Your Children Well

First off, if you don't know who Crosby, Stills, and Nash are I want to commend you for taking an interest in your financial future at such a young age. For everyone else, you may be wondering what Crosby, Stills & Nash has to do with your financial independence. Spoiler alert: nothing. But they gave me a catchy title to Blog Post 3 and sent me down a 30+ minute sentimental YouTube time-warp.
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My older brother is in his fifties, and though I'm only 38, my parents are so close to being part of the Silent Generation that I can't even say, "OK, Boomer" without not only wondering if I'm too old to use the slang phrase, but if my parents are too old. Somehow, "OK, Silenter" doesn't have the same ring. Regardless, as you can imagine, I grew up with an appreciation of a range of musical styles and genres. And while my family taught me well when it came to music (Suite: Judy Blue Eyes is one of my favorite songs of all time), I wish they had been taught to teach their children well about their finances.

Financial literacy is a big problem. I truly believe there should be mandatory classes in highschool and college to discuss the importance of saving, budgeting, compound interest (the good and the bad), the stock market, economy, and of course taxes! I mean, we don’t have to bore students to death, but we can show them real life examples and help them understand what to do and what not to do. 

Imagine being 18 and understanding the power of time and what it has to do with savings. Our team has developed short talks to have with people in different life stages to understand the best practices and important things to know at each intersection. Chats include:

·      Recent Grads/New to the workforce
·      Early 30s/Starting a family
·      40s/50s Growing family

We talk about things that you don’t confront until you’re in that situation. Who the heck knows what PMI is until you go to buy a house?!. If you’re like me, and most of the adults in the US, your parents never sat you down and talked to you about the birds and the bees of financial home ownership. If you don’t know what to say when your kid asks, “where do homes come from?” Let us do the talking.  We’d love to help you teach your children well. 

Here are a couple of tips to encourage financial literacy at home!

Younger Kids Topics:
1.     Start early – have young kids understand the value of money. Chores are a great way to explain money to kids. Pay each child by age. The older they get, the more responsibility they have, the more they get paid!
2.     Talk about your money situation with your kids – You don’t have to tell your kids your exact life savings but let them know what you had to do to get to where you are, good and bad!
3.     Two Words: COMPOUND INTEREST! Explain time and the power of compound interest on money in a retirement/savings account. Time is the biggest asset you have when saving for retirement. Tell your children their money doubles in value in roughly 8-12 years when the interest they’re making is making interest… Pretty crazy concept…..
4. Telling your kids no. Make sure they understand that they, and you, can’t afford everything. Explain what earning money is and what you do to provide for your family.

College/New to the workforce Topics:
1.     Budget, budget, budget - College. Here are your bills each month. Here is how much money you have. This leaves you with “X” dollars for the next 4 months. Figure out what you can spend each week because we’re not giving you more money…..
2.     Talk taxes– out of college – Not many people entering the workforce really think about what $50,000 salary actually means. What it actually means is $31,000 take home (and yes, I took out 10% for the 401k)
3.     Explain what a Roth IRA is. If you don’t know, look it up! If you can pay the gov’t less taxes, do it!

Starting a Family
1.     PMI – Wait, the house we’re buying is $250,000. Why did my monthly payment go from $800 to $1,400/month???? PMI, homeowner’s insurance, and taxes! It’s a totally different picture than just searching houses on Zillow to see what you can afford! PITI (principal, interest, taxes, insurance) is a different talk all in itself!
2.     529’s –It’s a different world than it was when we were growing up. Cost of college is a much more serious problem. This doesn’t mean you have to fully fund your child’s higher education, but you should start doing something to help ensure your children aren’t saddled with debt. These are a great way to save because even if Junior decides college isn’t for him, the funds are transferable to different kids/family members. They’re also a great way for grandparents to give to their grandkids.

Blog 2: Emtpy Nester, Now What?


You’ve been dreaming of this day since you had your first kid. You’ve been excited to have some time to yourself. More importantly,  actual time with your spouse, other than the date night you schedule twice per year. Now, you don’t have to worry about the kids hogging the TV remote or their teenage drama. Don’t expect to see anyone serenading your daughter to Peter Gabriel “your eyes” with a boombox over their head in your front yard. By the way, where has John Cusack been since Hot Tub Time Machine? say-anything.jpg

Ok, changing gears... Actually, this is a rather tough time in your life. The energy in your house is deflated. You have time now, but you have no idea how to fill it. Here comes the mid-life crisis you’ve heard so much about. You need that jovial feeling back, some youthful zest. 

Let’s look at the following scenario.  You’re an empty nester, with no college bills left to pay.   But, You are still paying for cell phones and health insurance for Kelly and Sam. They are for sure still on your Netflix account and using your Amazon Prime.  Who else gets annoyed when you have to change the address and the billing on Amazon Prime all the time? Why is your son’s girlfriend’s cousins address on there? 

This is a time to reflect and make sure you control the things you can control. First off, you’re still 10-15 years from retirement. With the kids now out of the house, retirement is really in sight. How do you measure financially when you can retire? How do you know if you can afford that trip to Greece? I mean our dollar is worth $50 there right? It would be if the Drachma wasn’t replaced by the Euro about two decades ago. 

A financial plan is a holistic approach to help you be proactive. This plan does two things. First, it’s meant to help you understand your inflows and outflows in retirement.  We look at what your wants and needs are. 
  • NEEDS:  Expenses/liabilities - paying your taxes, paying your utility bills, everyday living costs
  • INCOME: Collecting social security and living off of distributions from your IRA, etc. 
  • WANTS: Going on vacation each year,  snow birding, buying gifts for your grandkids/soon to be grandkids and donating to your charity of choice.  

From there we actively manage year by year to track your progress. This is a living/changing plan. 

Second, it acts as a bucket strategy pre-retirement to make sure you’re filling up the right way. This allows you to understand what you CAN spend as those buckets are being filled. 

Bottom line, if you’re an empty nester or even someone younger, get a financial plan done. You’ll sleep easier at night knowing that you’re doing all you can for your family and your future. Do it yourselfers who think they can handle all of this (yes men I’m talking to you), just get it done. It’s just like self-diagnosing that weird rash you had and yet it didn’t go away after two weeks when you swore it was poison ivy. You finally had to go to the doctor. DON’T FINALLY go get help when you’re 66 and there’s not a lot of time left to be proactive. Rely on the experts. A lot of places do it for free and most advisors are happy to talk. Look for someone with a CFP (certified financial planner). After all, Greece is calling.

Talkin' Bout My Generation - Blog 1 - Chris Gervat


I know what you’re thinking. legoclass2.jpg

“Another blog, GREAT. Just what I really want to devote 5 minutes to when I only have 5 minutes off between getting my kids from Lego class to swim.”

Yes, there is such a thing as Lego class and it’s pretty awesome.

Ok, so what’s the point? Why blog? Well, like most of us, I wasn’t taught the value of money. This proved true when I was 18 in college and got a call from a flirtatious telemarketer. $600 worth of magazine subscriptions later……. yes, that really happened. Or how about that used jet ski I bought with a friend four months after the infamous magazine-gate because my friend said it will be the best summer ever. It was a great summer but the jet ski wiped out every penny I had, and it broke a year later!!! Experience teaches us no question, but experience is what you get when you didn’t get what you wanted. I obviously didn’t get what I wanted from either of those events.

Life is crazy and ever changing. Because of that what you know now and understand is completely different than what you need to know in 5-10 yrs!

Here’s a quick synopsis of your first half century;

We are all running around with our heads cut off most of our 20s doing some soul searching, self-discovery, and trying to prove ourselves to our peers.

We think we have it figured out in our late 20s and 30s and WHAM, married with kids and a family and the goose chase is on. All new challenges and all new experiences. Just getting through our day is hard enough. Sometimes work is our break from our crazy (but rewarding) life at home.

40s go by in the blink of an eye as our kids go through school and enter college. 50s hit and we look back and say to ourselves what just happened??? You’re 50 and you feel like you should be 35, but you look 50.

Twice per month I’m going to touch on a topic. Figure a 3-5-minute quick easy read.
 
In short, I’ll cover topics that have to do with growing families and empty nesters. Blogs will include but are not limited to:

  • We’re empty nesters now and we just got a pay raise. We’re thinking the same thing, right? Adding on that four seasons room is what we always wanted! Well maybe we’re not thinking the same thing. Tips on what to do with that money.
  • I didn’t have my college paid for; my kids need to earn this like I did! Need to figure out the value of money! It’s a bit different now…. things to know about picking schools and saving for schools.
  • 401k – Who wants free money from the company? But in all seriousness, how much should I be putting in and what is the catch-up provision?
  • Look at your Trust! It’s gathering dust and chances are life has changed since the last time you glanced at it.
  • What is this 4-5% rule?
  • Budgeting is fun! No, no it’s not. But we’ll give some perspective on this
  • So, what if I pay more for car insurance than I do on insuring my own life. That makes sense, right? 
  • My aging parents didn’t save right and a little nervous what is going to happen to them. Will I have to tap into my life savings?

We’ll put some quirkiness in there mixed with some dad jokes. It’s sad when you become a dad and your jokes really do get worse. Probably has to do with the fact for the first few years of your kid’s lives you’re trying to entertain kids under 5. Then they hit 8 and the coolest guy ever is now a giant dork to them and they work hard to avoid being seen with them in public.

I DIGRESS! First of many. Please enjoy. Questions are welcome!

BAIRD HIGHLIGHTS