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6 HOLIDAY SPENDING TRIGGERS

It’s natural to overspend from time to time, and even more so during the holidays. The joy of giving is undeniable, but spending more than you should can put your future in jeopardy and ultimately stand in the way of happiness.  

The National Retail Federation 2014 Holiday Consumer Spending Survey projects that the average person will spend $804.42 this year.  This is an increase of 5% over last year.

Whether you spend more or less than this projection is a personal choice that is best made with intention. Here are six common holiday spending triggers that could cause you to spend more than intended.

  1. The Jones’. People who try to match the amounts spent by colleagues, friends, family or peers often spend beyond their means.
  2. Ripple Effect. When you overspend for one relative, there is a natural tendency to create equalization by matching the dollar value of gifts for others.
  3. Stress. Adding holiday shopping to the already long list of seasonal tasks can be stressful. If you don’t take the time to decide on the right gift and search for the best deals, you may end up overspending. In the end, you could trade the stress of getting it done for the stress and guilt associate with the knowledge that you’ve put your other financial goals at risk.
  4. Habit.  Sometimes we gift without considering whether the expenditure aligns with current realities. As families evolve, a discussion about how each member would like to celebrate the holidays may be worthwhile. For example, as your extended family grows, it may make sense to discuss a kids-only gift policy, put monetary limits on spending, or do a gift swap. 
  5. One for You, One for Me Mentality.  Well over half the holiday shoppers (56%) will purchase gifts for themselves this year. Whether they cannot resist the deals or simply want a reward during a hectic time, shoppers will spend on average $126.68 on themselves during the holiday shopping season.
  6. Free Zone. Many people enter the holiday season as if it is a free zone. They don’t take the time to put thought into spending parameters, nor do they have the discipline to respect those parameters. They buy until they get to the end of their list. They decorate until every square inch reflects the feeling of festivity in their heart.  And …. they hold their breathe while waiting for the bills to catch up with them.

Overspending and holidays do not … and should not … go hand-in-hand. Learn to spot your spending triggers, so you can devise strategies to prevent them from derailing you from achieving your One Best Financial Life ®. 

Holiday-Spending v2

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Supporting Boomerang Children without Jeopardizing Your Financial Future

A dynamic many of our clients now face is a request from their adult children to return home.   We refer to children who return to the comfort and security of their parents’ home as “boomerang children”. 

The boomerang child pattern is nothing new.  It has surfaced during other economic downturns. The number of young adults age 18 to 31 living with their parents increased four percentage points from 2007 to 2012.  Now, over one third (36%) of the young adults in that age category live with their parents1.  Many of these individuals have children of their own, adding both layers of complexity and expense. 

While a debate rages as to the merits of adult children returning to the roost, one point is irrefutable: boomerang children can potentially create a drag on retirement.  

It is natural to want to help your children at any age.  You can be supportive, yet protect your own financial future. 

The first step is to be clear about the conditions for staying in your home.  You should know the length of the stay, plans for employment, extent of financial support and expectations for financial or in-kind contributions around the house. 

You may also want to disclose the financial risks you assume if you agree to the arrangement.  Left unsaid, the financial impact to you will go unnoticed. It may be uncomfortable at first, but try writing up a lease agreement with those expectations laid out for all parties ahead of time. It can save headaches if issues do arise.  A recent study of Millennials who live with their parents showed that nearly half (45%) claimed their living at home had no financial impact on their parents.  An equal number didn’t know if there even was an impact.

Other interesting stats from the study:

  • Only 4% acknowledge their parents delayed retirement to accommodate the living arrangement
  • 8% said their parents did not request cost-sharing 
  • Only 9% of the parents put a pre-determined end date or set conditions for how long the adult child could stay

As parents, we instinctively want to steer our children along life’s path.  When they come to you looking for shelter, take advantage of the teachable moment opportunity.  You can help them develop an action plan and determine the steps needed to save money, move out by a certain date, get a job, pay off debt, or otherwise “get back on their feet”.  By virtue of the newfound proximity, you can easily monitor and influence their progress.

United Capital

1 http://www.lifehealthpro.com/2013/11/13/few-millennials-paying-their-way

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A New (and Better) Way of Understanding Your Financial Life

My wife and I have always detested the monthly statements we’d get from our brokerage firm and custodian. The information felt unnecessarily complicated, far too detailed and really not relevant to any aspect of our lives beyond whatever investment we had with that particular group. I’d look at the first page, ignore all the other pages and then place them on the mail pile and they’d eventually end up in some neat filing system my wife has run for years. Every few years, the drawer is emptied into a big box, dated and placed in the garage. And there they all sit molding away for several years until they finally end up in a recycling facility.

Imagine, though, if you could have a different way to look at your entire financial life. Imagine if you could have a financial report that was really meaningful — that you actually looked forward to receiving. What if it had an updated balance sheet, a list of your financial priorities and an ongoing score to ensure you were on track to living your best financial life; a consolidated list of planning needs met (like insurance and living wills); and a consolidated investment summary you could understand? What if you could actually have your entire financial life in one place? Imagine if it was actually easy to follow and was really engaging, and you could get it on-demand either as a hard copy or electronically whenever you wanted.

That idea is what began a multi-year, multi-million dollar process of inventing the nation’s first truly dynamic, engaging and all-encompassing financial report. With that first spark of an idea, we have now created a completely personalized dynamic report that incorporates our clients’ entire financial lives, which we call their Guidebook. We think it will change the industry, revolutionize what people expect from their financial institution and help United Capital maintain its position as one of the nation’s leading and most creative independent wealth management firms.

Just as important, the technology that drives the Guidebook frees up valuable time for our brilliant advisers to spend more time where they should be: in front of our clients, helping them tackle their toughest questions, and giving them comfort about how to deal with life’s financial surprises. In the first few months since the release, we are approaching 1,500 Guidebooks delivered to our clients, and the feedback has been overwhelmingly positive. Words like “Wow!” “Finally!” “I’ve never seen anything like this!” and “Thank you, this is awesome!” Nothing is more gratifying for all of us. This is innovation at work that helps us do what we love to do: improve lives.

So goodbye to those stacks of paper drifting around my house and welcome to a new age; I can’t say we’ll be missing them.

Joe Duran

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IMPORTANT DISCLOSURE

United Capital Financial Advisers, LLC (United Capital) provides advice and makes recommendations based on the specific needs and circumstances of each client. For clients with managed accounts, United Capital has discretionary authority over investment decisions. Investing involves risk and clients should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. The information contained in this blog is intended for information only, is not a recommendation, and should not be considered investment advice. Please contact your financial adviser with questions about your specific needs and circumstances. This blog is a sponsored blog created or supported by United Capital and its employees, organization or group of organizations. This blog does not accept any form of advertising, sponsorship, or paid insertions. Certain authors of our blog posts may be influenced by their background, occupation, religion, political affiliation or experience. It is important to note that the views and opinions expressed on this blog are that of the owner, and not necessarily United Capital Financial Advisers. As a Registered Investment Adviser, United Capital does not allow any testimonials on their blog, and any comments deemed as such United Capital will remove.

United Capital does not offer tax or legal advice; therefore all articles should not be taken as such. Please consult legal or tax professionals for specific information regarding your individual situation. All referenced entities in this site are separate and unrelated to United Capital. Any references to any specific commercial product, process, or service, or the use of any trade, firm or corporation name is for the information and convenience of the public, and does not constitute endorsement, recommendation, or favoring by United Capital.