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your money & your life | «us, A Gift That Will Help Your Kids Grow Rich Your adult children may need a hand charting a financial course.. 60% Feel they face more financial pressure t

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your money & your life | «us,

A Gift That Will Help

Your Kids Grow Rich

Your adult children may need a hand charting a

financial course So buy them time with a planner

> Around this time each year,

as the graduation season winds

down and the wedding season goes into

full gear, I get alot of questions along

the following lines: “Do you know of a

good gift for my niece/son/goddaughter

who just got engaged /got married/

graduated from law school landed that

first job?” Well, I can recommend good

values at Home Depot, where you could

geta whopper of atool kit, or at Bed

Bath & Beyond for sheets with a decent

thread count (newlyweds and grads

tend to need both) But here’s a better

idea How about a session with a finan-

cial planner?

‘That’swhat Maureen Rosenblum, a

psychotherapist in Sherwood, Wis

recently did forhertwo daughters, ages

20 and 28 “Iwanted to do thisbecause

my mother kept me entirely in the dark

about financial things,” Rosenblum

explains “She was wonderful, but even

when she was in oldage she was still

‘making outmy checks and paying some

of my bills It was my money, but she'd

come overand organize my checkbook

Irealized it was to my detriment 1 thought, I would like to make sure my daughters lear those lessons alot earlier than Thad.”

‘Turns out, Rosenblum isn’t the only

parent thinking that way There are no bigsurveyson the topic yet, but financial planners tell me they'veseen a large increase in the number of timesthey're

being asked to take adult children

(ranging from 20 to even 50) by the hand

June Schroeder, the Wisconsin planner Rosenblum sent her daughters to, has been in practice for26 years But it’s only

in the past five that people have started

calling and asking for gift certificates for newlywed couples or as birthday or graduation presents,

Larry Botzman, a planner in Somerset,

THE YOUNG AND THE ANXIOUS

‘When it comes to their finanoes, today’s twentysomethings are hardly carefree,

But most haven't tumed that conosm into positive action

60%

Feel they face more

financial pressure than

past generations their debts

sounce: USATODAY Naenl Endowment fo Franca Edueston

32 September MONEY MAGAZINE@35|1972-2007

30%

Worry frequently about

55%

Don’thave an IRA or a

401 (k) account

Ky, says that more clients have begun takinghim up on his longstanding offer

of free services for their children “It’s

because of the changing times," he says

“There's plenty of money out there to be lent, and we're provided with more opportunities to make mistakes.”

How can you decide if your child (or

granddaughter or nephew) is a good candidate fora session with a financial pro? And ifyou go this route, how can you drive a decent outcome?

BE CERTAIN THAT SHE WANTS THIS ASMUCH AS YoU Do It will ruin the surprise, of course, but you had better getbuy-in from the recipient of your gift

ou punk down money for

an appointment Why? Because, as Stacy

Francis, a New York City financial

planner, has learned from experience, changing behavior requires alot more

than simply creating aplan, About 80%

of the time, she says, adultkids really appreciate the gift The other 20%4? They don'teven bother to retum hercalls

“Ive seen parents who believe that this is

acure-all,” Francis says “They have a child whois absolutely delinquent with

managing money and they think this is going to change them, Its not Itcan give them the supportandthetoolsthey

need, but they have to want to use them.”

your money & your life

Here are three ways to find a guide who can help set your adult child on the right financial path

YOUR OWN PLANNER

(IE YOU HAVE ONE) THE GARRETT PLANNING NETWORK

THE NATIONAL ASSOCIATION OF PERSONAL FINANCIALADVISERS

Many will set upa starter financial

plan for a client's child free of charge

At the very least, you can negotiatea

good deal

T Advisers associated with this group of fee-only planners typically charge $150

to $300 an hour Expect a 2- to 3-hour

session garrettplanningnetworlccom

"" A financial checkup with one of their

member advisers, who are strictly fee-only, usually costs $1,000 or less

napfa.org

HAVETHEM COME PREPARE!

Plannerswho work with newbies (as

these adult kids tend to be) say a suc-

cessful session is a focused one Many

will give your child a written question-

naire to fill out ahead of time Make sure

they doit so that time isn't wasted on

preliminaries and they can get right to

work Also, encourage your children to

select at the most three topics they'd like

to delve into This may include gettinga

handle on their cash flow, figuring out

how to prioritize their debts and manag-

ing credit score Or it may be getting

started with retirement planning, buying

a first home and naming guardians

Make sure your child brings to the

‘meeting any documentation that he needs to discuss those matters, including recent pay stubs, tax returns and student- loan, credit-cand and bank statements

Abenefits book from an employer will

also be helpful

ss AND LEAVE WITH A TO-DO LIST Most

of the time, explains Southfield, Mich

planner Timothy Wyman, ini reveal that what new clients need most isa spending plan They need to start keeping track ofhow much is coming in, how much is going out and where it’s ending up Once they have that informa-

UNSCIENTIFIC SURVEY byenat SarahiMangla

A Little Parental Push

They get you financial planning sessions asa gift Your reaction?

1rd ike it, but rd be

worried because I'd think

they'retrying to send me

‘a message.”

—Kelly Sherwood, 21,

Freehold, NJ

34 September MONEY MAGAZINE@35]1972-2007

“It's something | wouldn't take the initiative to đoon my own, so it would

be helpful

—Ben McDuffee, 23, Miami

*1would love it At my age,

I need it—| wart to plan tơ buy a house

—Cristal Boulden, 27, Harlem, N

tion they can become more disciplined

with their cash management and can start buildingan emergency cushion A year ortwodown the road when those spending and saving habits have had time

tw set, the kids should come back to the

office “Once they've conquered these challenges,” Wyman says, “then we can really move into other areas, whether it’s education planning for their kids or

ment planning for themselves.”

FINALLY, STAY OUT OF THE PROCESS

YOURSELF Thisis for allof you helicopter parents out there—the ones who hover

over your kids so much you're pulling

crazy stunts like calling your grown chil prospective employers The goal her foster children who are able to stand on their own two feet financially rather than

relying on you That means giving them

spacealone with the planner to speak frankly, without worrying the information willbe passed along to you A good planner—who by the wayhas an ethical

responsibility not to share information,

despite the fact that you're paying the bill-willsee it the same way “The children seem to feel like they're getting it straight from the hip when I give them

an answer,” says Schroeder, “And besides,

I don't have the same baggage with them

that their parents do." $

wo

Editor-at-large Jean Chatzky appears regularly on NBC's Today Contact her at moncy-life@moneymail.com,

PHOTOGRAPHS BY RACHEL SMITH.

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‘doif you lost Rote tin

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© PHOTOGRAPHS BY JEFFERY SALTER Ụ "sẽ số

plan | Insurance

covered Co-pays were $40 a pop “It was

beyond frustrating.” says Gordon, 41 But

making a combined salary of $90,000

from their dog-training school, “we were

in this pocket where we made too much

to get assistance but couldn't afford a

good plan,” says Babette, 38 Soin 2002

the couple decided to drop their policy

and go off the health insurance grid

Itseemed likea reasonable gamble at

the time: Pay outof pocket and maybe

spend lessthan premiums and co-pays

combined, For awhile it worked too

When Babette became pregnant with

their second child in 2004, she negoti-

ated with her doctor for delivery costs—

and spent $2,000 less than insurance

would have charged in premiums alone

‘Then baby Sarah was diagnosed with

Leber’s amaurosis, a congenital eve

disease that leaves her legally blind Over

the next few years, the doctors say, she'll

require about $1,500 a year in ongoing

care, a test that will cost $20,000 and

possibly surgery costing $5,000 or more

With Sarah’s pre-existing condition,

the Brennans feel like they won't getan

38 September MONEY MAGAZINE@35]1972-2007

affordable insurance

policy at this point

Yet with lite sav- ings, they face the

prospect of borrow- ing money from fam-

ily to pay for Sarah's care or gettinga corporate job just for the benefits

Odds are you're comfortably covered

bya group plan subsidized by your

employer, as are more than 155 million

Americans But lying awake at night it’s

all too possible to imagine yourself in the Brennans’ nightmare scenario, What if

you were downsized, say, or left yourjob

tw start your own business? Could you afford the kind of policy you'd need? If amember of your family had a chronic condition, could you find an insurer

who'd take you at any price? These

are tough questions: Premiums on the average individual-market family policy jumped 5.5% between 2005 and 2006, deductibles 8.5%; and in most states an

insurer can reject you for almost any

reason Even so, you probably would

source US Cents

TAKE COVERAGE

health insurance

not have to go with-

out coverage Your options might not be great, but you'd have

some, Here's what you'd have to do

First, avoid a coverage gap

If someone in your family has a health condition and you let existing coverage lapse, you could find it very hard to getback on a plan on your own Except

in five states—Maine, Massachusetts, New Jersey, New York and Vermont— individual health plans can reject applicants for pre-existing illnesses In

‘many states, insurers can choose to exclude treatment for a year or more,

or indefinitely Avoid this scenario

entirely: If you're about to lose

employer-sponsored insurance, sign up

for COBRA, which will extend your company benefits for 18 months You'll pay the same rate your company does now, plus up to 2% in administrative

fees, (That's cheaper than you'd likely

find for a comparable individual poli

Gordon and Babette Brennan must pay the full cost of health insurance for their family Financial planner Tracey Baker, co-author of Navigating Your Health Benefits for Dummies, and Bob Hurley, senior v.p of eHealthInsurance, prescribe this plan

1 2

Divide and

conquer

Sarah's eye condition will make It difficult for the Brennans to get an affordable family policy that covers them all To keep costs down, Hurley suggests that they split up: Get a state-sponsored plan for Sarah and an Individual-market plan to cover Gordon, Babette and Ryan,

Raise deductible,

lower premiums

The SCHIP plan for Sarah costs only $160 amonth

But for the other policy, the Brennans are waty of paying a lot up front, as thelr cash flow isn’t consistent For now, says Baker, they should hold thelr premium to a level they can afford by choosing a policy with a high deductible

3

Build a medical

emergency fund

The Brennans could manage a policy with a

$10,400 deductible But they'll need to make sure they can cover at least that amount in case of an emergency They should open a health savings account, max It out (they

‘can contribute $5,650 this year) and save more In a money-market account