This Week In Your Wallet: The Mother’s Day Numbers Game
This morning as I was putting the last-minute touches on this newsletter, Skype let me know my daughter was online. “Morning!” I said as she picked up. “You look really tired,” said Julia. (Maybe Skype isn’t better than the phone.) Well, I’m not the only one.
The American College of Physicians just released new guidelines on insomnia — and their recommendations dovetail with Arianna Huffington’s recommendations to us on HerMoney with Jean Chatzky. In short: No tech in the bedroom. Read (an actual book) — as with investments, boring in this case is better (more on that in a moment). And, if you can’t sleep 20 minutes later, get out of bed and try again later. If you haven’t listened, check it out (and please subscribe/leave us a review).
Boring Is Better
Now, as for those boring investments. In the world of money as in so many others, bells and whistles often translate into higher costs, which equals less money in your pocket. “People always underestimate the power of [investment] fees,” says Russ Kinnel, director of manager research at Morningstar, Inc. And, unlike the direction of the markets — or any particular investment — fees are very predictable. That means that although we don’t know exactly how much a particular stock or bond will return in the next 10 years, it’s very likely that an exchange fund that’s half the price of another is still going to be cheaper to own five years from now. (If you’d like more on this topic, check out this week’s podcast with CNBC investing whiz Karen Finerman. We dish about how and why investing provokes anxiety, plus how and why she believes multitasking is a major waste of time).
So if investment fees are so important, how do we find out how much we’re paying — and reduce our out-of-pocket? If you’ve invested in a fund, plug in the name to a website like Fidelity, Schwab, Morningstar, Merrill Lynch, etc., and the expense ratio should be one of the first data points to pop up. “The lower expense ratio you pay, the better your results are going to be,” explains Kinnel.
If you’re working with a financial advisor, Jason Zweig, investing columnist for The Wall Street Journal, advises asking him or her how much you’re paying — and warns that you might get a qualitative answer back, e.g., “My services are really cheap for all the value I provide.” Press them for a dollar or percentage amount and ask where to find it on your account statement. “Don’t settle for a qualitative answer because that’s your judgment to make, not the person who’s providing it,” he says. Then, as you would do with your cable company, ask the four most important words in the history of negotiating: Can you do better? Then sit back and evaluate the alternatives.
The Mother’s Day Numbers Game
Mother’s Day is just a few days away (May 8, in case you needed a reminder) and according to the recent Mother’s Day Survey by Offers.com, people are splurging less on gifts for their own moms (about $62.33) than they are on gifts for wives ($81.21) and mothers-in-law ($65.30). Although moms are getting more inexpensive gifts on average, they’re still much more likely to receive a gift than mothers-in-law (98% vs. 62%).
Another interesting tidbit? Men seem to be spending more than women these days ($70 vs $62, respectively). If you’re at a loss for what to get your mom, personalized gifts top the wish list, followed by a massage/day spa package and jewelry. (Note to my kids: I know you’re both studying for finals, so you’re off the hook. Just call — or Skype — me Sunday)!
Riding In Cars With Teens
So your kid’s all grown up — or at least “grown up” enough so that you’re considering adding another car to the family fleet. Choosing the right vehicle can help keep them safer and save auto insurance money over time. A few tips? Avoid high-horsepower cars in favor of larger, heavier vehicles with good crash safety records, and make sure the car has electronic stability control (ESC) to reduce the risk of rollover.
When it comes to car insurance, covering teens can be expensive (I know from experience). But there are a few things you can do to help reduce the costs, starting with explaining the risk infractions and accidents can have on both your teen’s health and the price of coverage. Shop around, and remember it’ll probably save you money to insure your teen on your own policy rather than buying a separate one. A B grade point average will usually earn you a discount (you may have to send in the report card) as will enrolling your teen in a recognized driver’s training course.
All of these things, by the way, should be dinner table conversation — but they’re often not. The latest T. Rowe Price Kids and Money survey says nearly three-quarters of parents are reluctant to talk about money with their kids. As Julia Roberts said so memorably in Pretty Woman: “Big mistake. Big. Huge.”
The thing to realize is that it can be fun. When your kids are young, collect spare change in a family jar and decide together what you’ll do with it (movie night maybe, or a charitable contribution). Count it once a week for reinforcement. Or, this summer, help your child start a small business, growing and selling herbs, for example (they’re pretty easy to maintain and so expensive in the grocery store). Weeding and maintaining gardens for neighbors is also an option. Deduct the cost of materials so that your kids understand the cost of doing business, and listen to their creative ideas for setting up shop as well.
Have a great week,
Jean
