This Week In Your Wallet: New Beginnings, New Money Habits
Happy fall! It’s official, even though it doesn’t feel like it in many parts of the country. Personally, I’m hoping for some scarf-worthy weather soon — especially since I don’t live far from Sleepy Hollow. (Yes, that Sleepy Hollow. The Halloween-themed tours there are better when there’s a bit of a chill in the air.) I’ve always viewed fall as an unofficial “New Year’s” — a time for cementing new habits and trying new things. It’s probably because, like many of you, I grew up with September marking the start to a new academic year. Sending my two kids off to school every year brought me back to that way of thinking.
So, in the spirit of new habits, especially when it comes to money — The Wall Street Journal’s Jason Zweig has two useful columns this month if you’re looking for a financial adviser. One covers questions to ask to narrow down the prospects, and one gives tips for making the final choice. The first thing to remember: Regulators and trade groups still haven’t settled on a way to officially compel those who give investment advice to act in their clients’ best interests. Until they do, it’s up to you to both ask good questions and trust your gut. So, if you’re looking for a financial adviser, note that you should meet with at least three before deciding. And before you set up any appointments, Google their names and check them out on BrokerCheck.FINRA.org and AdviserInfo.SEC.gov. Financial professionals who do pledge to act in their clients’ best interests — over their own — are called fiduciaries. A good first question to ask any financial adviser you’re considering is: “Are you always a fiduciary, and will you state that in writing?”
It’s also a good idea to ask a potential adviser if anyone else ever pays them to advise you — and if they earn more to recommend certain products or services. Make sure they’ll itemize all fees and expenses in writing, and ask them to disclose their conflicts of interest. (If they say they have none, that’s likely a red flag.) Zweig lists more questions to consider asking here. One way to keep score? Rate each potential adviser’s response on your questions from one to five, including a score for your gut feelings about them. Once you’ve done this for all the prospects, choose the adviser with the highest score. (And note: If you’ve got kids in their junior and/or senior year of high school and you’re doing the college tour thing, a scoring system like this one — including a ranking for value — might be a good way to narrow that list as well.)
On Diving In (And Second Acts)
While we’re on new beginnings… Carl Richards, The New York Times’ Sketch Guy, wrote that getting in “over your head” might be the key to learning something new fast (and discovering what you’re capable of). Being in over your head is usually scary, but it can also force you out of the shallow end of the pool pretty quickly. “I go from thinking I’m capable of ‘x’ to very quickly performing twice or three times that amount — and sometimes even 10x,” he writes. I think this idea is especially relevant when it comes to career “second acts.” Exhibit A: Some people are learning to code in their 60s, 70s or 80s and using the skill to pursue personal or professional interests, reports The New York Times.
It can be frightening to even think about a new (or semi-new) career path, let alone make it happen. But if it’s something you’re considering, here’s my view: If you’ve saved up enough and your instinct is telling you “full steam ahead,” it can be a good idea to go for it. (Drop me a line at Jean@JeanChatzky.com if this is on your mind, and we’ll hash out a few scenarios on a future episode of my podcast, HerMoney. What? You haven’t subscribed? Hurry up! Our episode with the fabulous Hoda Kotb drops tomorrow!)
Kids And College Savings
In the category of disappointing news… Parents who just have boys are going to greater lengths to support their kids’ college education than parents who just have girls, according to a survey by T. Rowe Price. The research looked at families with kids of only one gender, ages eight to 14, and found that parents of all boys tended to be more willing to save more, pay more and borrow more for college. With the average student loan tab climbing toward $40,000 for recent grads, this seems like a wake-up call to try to save a little more for all your kids. A great way to do this is a 529 account — contributions grow tax-free, and withdrawals for qualifying educational expenses aren’t taxed either. Making the choice to save in your own state’s 529 plan could get you an additional income tax break, but you can compare different states’ 529 plans here. If you’re looking for more resources, you can watch the Fidelity debt webcast I recorded here (we talked about paying off student loans).
Have a great week,
Jean
