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Category: Financial Lessons

Financial Advisor

Why You Don’t Need Assets to Work With a Financial Advisor

In the realm of financial planning, a common misconception persists: the belief that you need significant assets before working with a financial advisor. However, this notion couldn’t be further from the truth. Planning for your financial future is paramount, especially during your accumulation years when crucial decisions are made that can shape your later life.

Consider this: if you don’t start planning early, how do you really know that you can retire at that goal age you already have in mind? How will you know if you can afford insurance, to travel, or leave a legacy for your loved ones? The answers to these questions lie in proactive financial planning, regardless of your current asset level.

Working with a financial advisor shouldn’t be a step taken only when retirement is approaching. Instead, it’s about putting a unique-for-you, comprehensive plan in place to achieve your long-term financial goals. This proactive approach ensures that you’re equipped with the knowledge and strategies necessary to navigate life’s twists and turns.

One of the most significant benefits of early engagement with a financial advisor is gaining clarity on your financial trajectory. With a well-defined plan in place, you’ll have a roadmap outlining how to reach your goals, whether it’s retiring comfortably, traveling the world, or leaving a meaningful legacy.

However, it’s essential to understand that the role of a financial advisor extends far beyond occasional meetings at your workplace to discuss your employee 401(k). An effective advisory relationship should encompass ongoing guidance, regular touchpoints and meetings, education, and personalized support tailored to your unique circumstances and goals. A relationship with an advisor should be personal.

Many individuals underestimate the value of financial education and guidance, often unaware of what they don’t know. Yet, the importance of being informed about your financial options cannot be overstated. As the saying goes, “A goal without a plan is simply a wish.” By working with a financial advisor early on, you transform your unspoken retirement wish list into tangible plans, increasing the likelihood of seeing them come to fruition.

Ultimately, the decision to engage with a financial advisor as early as possible in your financial journey can yield invaluable benefits. It’s not about your current asset level but rather about setting a solid foundation for your financial future.

What fears are holding you back? What pain points do you have that need to be addressed? Perhaps, the thought of confronting your financial realities feels overwhelming or intimidating. Maybe there’s uncertainty about where to begin or skepticism about the value of financial planning. Though all these reasons are common and realistic, it’s crucial to recognize that the longer you delay addressing these concerns, the greater the potential impact on your long-term financial well-being. Procrastination can lead to missed opportunities and unnecessary stress down the road. By acknowledging your apprehensions and taking that first step towards financial empowerment, you can overcome obstacles and pave the way for a more secure future.

To learn more about our process and how to take the first step to work with an advisor at CapSouth Wealth Management visit our website at capsouthwm.com/what-we-do/ or Connect With Us.

CapSouth Partners, Inc, dba CapSouth Wealth Management, is an independent registered Investment Advisory firm. CapSouth does not offer tax, accounting or legal advice. Consult your tax or legal advisors for all issues that may have tax or legal consequences. This information has been prepared solely for informational purposes, is general in nature, and is not intended as specific advice. This article was produced with the assistance of ChatGPT (April 24 Version); Chat GPT is an artificial intelligence

Family Conversations About Money

Money can be a blessing and a challenge, and families of all shapes and sizes deal with this aspect of life. Some families handle this area more successfully than others, but as a parent, being able to have conversations about finances gives you the opportunity to impact your children, regardless of their age, in significant ways.

In general, discussing money can be one of the most challenging conversations, and the thought of talking about this with your children only adds to the problem. Even if you feel comfortable discussing hard topics with your family, knowing this topic can be daunting.

Whether you have regular discussions with your teenager about how much money they would like to have for their weekend activities, or you are talking with your adult children about dealing with college debt or a mortgage, these interactions can be prickly or even explosive.

Nevertheless, engaging in conversations about money is crucial for your family’s well-being and your children’s financial success. While there may be short-term challenges, applying some basic principles and helping your family put them into practice is a worthwhile endeavor.

Outlined below is a framework that addresses your Position, Principles to employ, and Practices you can utilize when your children live at home.

When they live at home 

Position: Teacher

When your children are at home, your primary role is to teach them wise financial principles, how they can put those into practice, and what are the lessons they can learn from their successes and failures. It’s important to note that teaching is not synonymous with telling. Great teachers ask good questions, because it helps the student (in this case your children) learn to think for themselves and apply what they learn.

Any conversation that is a dialogue, as opposed to a classroom lecture, is usually more enjoyable and effective. While it will take some extra preparation to devise a few good questions, planning with your spouse or seeking advice from those further along the journey can be beneficial.

Here are a few resources:

Regarding money

https://capitaloneshopping.com/blog/teaching-kids-about-money-9848d817c7fb

Asking open-ended questions

https://www.strong4life.com/en/parenting/communication/conversation-starters-for-kids-and-teens?s_kwcid=AL!15640!3!666932766224!b!!g!!conversation%20questions%20for%20kids

Principle:

Begin with the basics and start early as that’s when children are most impressionable and learn quickly. Make discussions about money a normal topic and try to craft a creative or fun exercise to teach them wise financial practices.

Addressing financial priorities involves allocating money based on what’s most important. In theory, this sounds obvious, but in actuality, many Americans can be short-sighted in their financial decisions. Even for parents who are strategic in handling money, it’s essential to impart wise principles to their children, because children don’t always see or understand what their parents do with their finances.

A helpful framework at any stage is:

Give | Invest/Save | Spend

Give

Even if giving isn’t a normal routine for you, it’s helpful for children to learn the value of helping others. In addition, it’s good for them; the physical and mental health benefits associated with giving (or serving) are well-documented. (Benefits of Giving: Cleveland Clinic article)

Some benefits include:

  • Boosting self-esteem
  • Elevating happiness and combating feelings of depression
  • Lowering your stress: by reducing your levels of cortisol, the stress hormone that can make you feel overwhelmed or anxious
  • Lowering blood pressure
  • A longer lifespan: studies show that people who volunteer tend to live longer than those who don’t.

Possible discussion with your child: “What would you like to give to? How can we give or serve together as a family on a Saturday morning or afternoon? “

Invest/Save 

Teach the Power of Compound Interest:

One of the most important and motivating concepts in investing is compound interest. It’s a fun lesson to teach your child, and you might enjoy learning more on this topic as well. Below are a few websites that can help. While you may need to adjust them for your child’s age, consider creating a trivia game or using coins or candy for a fun and engaging way for them to learn.

https://wealth.visualcapitalist.com/visualizing-power-compound-interest/

https://www.ramseysolutions.com/financial-literacy/teaching-compound-interest

Possible discussion for this topic: Ask your child what is a more expensive item they want and how much money they will need to save to be able to buy it. Having a separate “Save” category, distinct from “Invest,” allows them to set short-term goals as they save for something they really want.

Spend

Help Your Children Develop a Spending Plan:

For younger children, this is simply a fun discussion about what they would like to buy and how can they divide their money so they can buy several of those items.

When your children are older, and they start to ask for money to go to the movies or for gas, use this as an object lesson. Instead of giving them money when they ask for it, sit down with them a tell them how much you plan to allocate each month.

Then help them develop a plan for how much they need to set aside for gas or going out to eat with friends on the weekend or other events.

Help them realize there is flexibility with this plan. If they drove more than they normally do over a few weeks, remind them they can reallocate funds from their movie/events fund to cover gas expenses. Or maybe they can share rides with a friend and use the money they saved to go to a sporting event or a concert. (Without using the word, you’ve actually taught them how to make a budget, plus a spending plan sounds more fun anyway.)

Practice

Establish Ground Rules:

Consider giving them an allowance that’s tied to their chores. This teaches them the value of contributing to the household while also managing their finances effectively.

Guide them in dividing their money into categories to meet future needs. A suggested allocation template is 10% for Giving, 10% for Investing, 10% for Saving, and 70% for Spending.

For younger children, make their allowance a fun activity. Discuss their plans for giving or saving and after allocating the first 30%, they can choose how to use the remaining 70%.  A fun activity to accompany this is to ask them if they want to take some money from their spend category and go buy something fun as an afternoon outing.

“Seeing is believing”: If they can see their money growing it’s tangible and more motivating. For the younger children, a helpful idea is to give them a piggy bank that’s clear and also has 4 compartments (readily available online). As they see their money grow, it reinforces the importance of saving. This also allows you to be creative, as you can add money to their invest and save categories to reinforce the previous lesson of their money earning interest.

As they enter the Tween or Teenager stage, continue their allowance. Their needs will increase but so does their ability to contribute to the household. Help them apply these principles on a larger scale by opening a checking or investment account with them. As you give them their weekly or monthly allowance, assist them in planning so they have what they need at a later date.

As they grow older, teaching opportunities transition from primarily instructing to asking questions that prompt them to reflect on their decisions and consider alternatives for improvement. While setting ground rules at home can be challenging, it provides an opportunity to witness their development and prepare them well for the next phase.

While these are some beginning steps to take, throughout this process you are helping your children learn to handle money wisely. You are also building a solid foundation of having meaningful discussions on the topic of money.

To learn more about CapSouth Wealth Management and our services, visit our website  or call 800.929.1001.

Article by:  Clay Cook, Associate Advisor

CapSouth Partners, Inc, dba CapSouth Wealth Management, is an independent registered Investment Advisory firm. Information provided by sources deemed to be reliable. CapSouth does not guarantee the accuracy or completeness of the information. CapSouth does not offer tax, accounting or legal advice. Consult your tax or legal advisors for all issues that may have tax or legal consequences. This information has been prepared solely for informational purposes, is general in nature and is not intended as specific advice. This article contains external links to third party content (content hosted on sites unaffiliated with CapSouth). CapSouth makes no representations whatsoever regarding any third party content/sites that may be accessible directly or indirectly from this article. Linking to these third party sites in no way implies an endorsement or affiliation of any kind between CapSouth and any third party, including legal authorization to use any trademark, trade name, logo, or copyrighted materials belonging to either entity.

 

 

 

 

 

 

 

 

The Twelve Days of Financial Wisdom: A Holiday Guide

The holiday season is in full swing. Throughout the years our family has grown to include new family members from different cultures and traditions. As we navigate a growing family and offer flexibility around busy holiday schedules, we want to embrace the joy and wonder this time of year without succumbing to the humbug feeling that can easily overtake us if we cling too tightly to old rhythms in this new life-phase.  This year I find myself smack dab in the middle of a home remodel with no kitchen and zero furniture downstairs. In fact, I even found myself cooking dinner in our Master Bathroom the other night! It would be easy to focus on the inconveniences of a remodel, so we’ve chosen to stay positive and be thankful for all that we have been blessed with.  Like the Grinch, I’m having my heart melt by connecting with people this season.  An extra smile at the grocery store, a friendly wave and a thank you to the hard-working delivery people. I can see joy and wonder surrounding me this time of year if I just look around. I recognize this season isn’t the easiest or merry for many. It can be full of tough memories and lost loved ones. There is conflict all over the world reminding us that not everyone is safe and happy this year.  Elvis knew what he was talking about when he sang about a blue Christmas. There especially seems to be a healthy tension this year for holding space for both hurt and hope. If you find yourself in a season where jolly and laughter elude you, then it is my sincere hope that my feeble attempt at some holiday humor brings a smile and a laugh. There’s a reason that I’m a Wealth Advisor and I’m not a stand-up comic, so let’s just keep that in mind too! Without further I do, I give you, “The Twelve Days of Financial Wisdom.”  (P.S. If you can’t help but think of me singing this, let’s just pretend that I’ve got the voice of Mariah Carey belting out these great lines!)

Day 1: Diversify Your Assets Wisely

🎵 “On the first day of Christmas, my Wealth Advisor said to me: Diversify your assets wisely!” 🎵

Just like a well-balanced fruitcake, a diversified investment portfolio is a key ingredient for financial success. While fruitcakes might not be everyone’s favorite, diversification is almost universally adored by savvy investors. Spread your investments across various asset classes – stocks, bonds, real estate – with a goal of reducing risk and increasing potential returns.

Remember, just as a fruitcake brings together different flavors for a delicious outcome, diversification brings together different assets for a well-rounded and resilient investment strategy.

Day 2: Compound Interest, Oh What a Joy!

🎵 “On the second day of Christmas, my Wealth Advisor said to me: Compound interest, oh what a joy!” 🎵

Imagine compound interest as the holiday gift that keeps on giving. Much like a snowball rolling down a hill, your savings can accumulate and grow over time with the magic of compounding. The earlier you start, the larger the snowball – uh, I mean, your savings – becomes.

So, this holiday season, give yourself the gift of an early start on savings and watch your financial snowball grow into a winter wonderland of wealth.

Day 3: Budgeting Bells Are Ringing

🎵 “On the third day of Christmas, my Wealth Advisor said to me: Budgeting bells are ringing!” 🎵

While the holiday bells may be jingling, it’s essential to keep your budget from jangling out of tune. Create a realistic budget that includes your holiday spending, but don’t let it snowball into a financial avalanche. By tracking your expenses, you’ll avoid the post-holiday blues when the credit card bills start singing a less festive tune.

This season, let your budget be your guiding star, ensuring a harmonious and stress-free celebration.

Day 4: Hark! The Herald of Emergency Fund Angels

🎵 “On the fourth day of Christmas, my Wealth Advisor said to me: Hark! The herald of emergency fund angels!” 🎵

Life is full of surprises, and having a robust emergency fund is like having a team of financial angels ready to help when unexpected expenses arrive. Whether it’s a car repair or a sudden medical bill, your emergency fund can be a guardian angel, ensuring your financial stability in times of need.

This holiday season, let your emergency fund be your silent protector, allowing you to enjoy the festivities without worrying about unforeseen financial hiccups.

Day 5: Five Golden Retirement Rings

🎵 “On the fifth day of Christmas, my Wealth Advisor said to me: Five golden retirement rings!” 🎵

Retirement may seem like a distant future, but like the five golden rings in the classic song, it’s a valuable gift that requires careful planning. Help your retirement plans shine brightly by regularly contributing to your retirement accounts. The magic of compounding (Day 2, remember?) can work wonders over the long term, making your golden years truly golden.

This holiday season, make a resolution to invest in your retirement future and enjoy the sparkle of those golden rings in the years to come.

Day 6: Let Tax-Efficient Reindeer Lead the Sleigh

🎵 “On the sixth day of Christmas, my Wealth Advisor said to me: Let tax-efficient reindeer lead the sleigh!” 🎵

Just as Santa relies on his trusty reindeer to navigate the skies, you can rely on tax-efficient strategies to guide your financial sleigh. Take advantage of tax-deferred accounts, tax-free investments, and strategic tax planning to reduce your tax burden. It’s like leaving milk and cookies for the IRS – they get less, and you keep more.

This holiday season, let your financial sleigh be led by tax-efficient reindeer, ensuring a smooth ride toward your financial goals.

Day 7: The Magic of Giving – Charitable Contributions

🎵 “On the seventh day of Christmas, my Wealth Advisor said to me: The magic of giving – charitable contributions!” 🎵

This holiday season, let the spirit of giving extend beyond wrapped presents. Consider incorporating charitable contributions into your financial plan. Just as the warmth of a cozy fire spreads throughout the room, your generosity can create a positive ripple effect in your community and beyond.

Whether it’s supporting a local charity, contributing to a cause close to your heart, or volunteering your time, the act of giving not only makes a difference in the lives of others but also adds a meaningful dimension to your financial journey.

This holiday season, let the magic of giving be a guiding light, illuminating the path to a more compassionate and fulfilling financial future.

Day 8: Making a List, Checking It Twice – Financial Goals, That Is!

🎵 “On the eighth day of Christmas, my Wealth Advisor said to me: Making a list, checking it twice – financial goals, that is!” 🎵

Santa isn’t the only one who needs a list. Outline your financial goals clearly and revisit them regularly. Whether it’s saving for a dream vacation, a home, or your children’s education, having a well-defined list keeps you on track. Checking it twice? That’s reviewing and adjusting your goals as life evolves.

This holiday season, take a cue from Santa and keep your financial list in order – it’s a key to turning your dreams into reality.

Day 9: Wise Men (and Women) Seek Professional Advice

🎵 “On the ninth day of Christmas, my Wealth Advisor said to me: Wise men (and women) seek professional advice!” 🎵

Even the three wise men sought guidance when following the star. Similarly, seeking advice from financial professionals can provide you with the direction needed for a successful financial journey. Whether it’s investment strategies, tax planning, or retirement advice, a wealth advisor can be your guiding star.

This holiday season, be wise and seek the expertise of financial professionals to navigate the complex constellations of the financial world.

Day 10: The Gift of Education Keeps on Giving

🎵 “On the tenth day of Christmas, my Wealth Advisor said to me: The gift of education keeps on giving!” 🎵

Investing in education is a gift that lasts a lifetime. Whether for yourself, your children, or future generations, education is a powerful tool for personal and financial growth. Like the knowledge passed down through generations, the gift of education can open doors and create lasting legacies.

This holiday season, consider the gift of education as an investment in a brighter and more informed future.

Day 11: A Partridge in a Pear Tree – Invest in Your Home Nest

🎵 “On the eleventh day of Christmas, my Wealth Advisor said to me: A partridge in a pear tree – invest in your home nest!” 🎵

Just as the partridge nests in a pear tree for security, your home is your nest egg. Invest in your property wisely, keeping it well-maintained and considering home improvements that can enhance its value. Your home is not only a place of comfort but also a significant part of your financial portfolio.

This holiday season, let your home be a cozy and well-nurtured nest, providing both emotional and financial security.

Day 12: Drumroll, Please – The Beat of Financial Independence!

🎵 “On the twelfth day of Christmas, my Wealth Advisor said to me: Drumroll, please – the beat of financial independence!” 🎵

As we wrap up our Twelve Days of Financial Wisdom, let’s revel in the grand finale – financial independence. Just as the drumroll builds anticipation, the path to financial independence requires steady and disciplined beats. By saving diligently, making thoughtful investments, and planning for the future, you orchestrate the melody of financial success. Picture the day when you can confidently march to the rhythm of financial freedom, knowing your efforts have created a harmonious and secure future.

There you have it – “The Twelve Days of Financial Wisdom!” May the holiday season bring not only cheer and laughter, but also a renewed focus on your financial well-being.

As we close the chapter on this financial carol and wave goodbye to the year that’s making its exit, let’s hold on tight to the everlasting beat of relationship wisdom in our lives. Think of it like the cozy soundtrack of laughter we share with our favorite people, the easy flow of understanding that feels like a familiar tune, and the big, exciting moments we hit together – they’re all part of the warm symphony of our collective journey. Just like a family dinner where everyone’s got a seat at the table (that you hopefully didn’t prepare in your Master Bathroom), our connections make the kind of music that gives life its colorful rhythm. So, here’s to the echoes of good times, the easy chats, and the solid support that keep our shared story sounding just right.

Wishing you and your loved ones a wonderful holiday season filled with warmth, joy, and a financially sound future. Cheers to a prosperous New Year ahead!

To learn more about CapSouth Wealth Management, visit https://capsouthwm.com/what-we-do/

Article by: Jennifer Fensley, CFP®️,CRPS®️

CapSouth Partners, Inc, dba CapSouth Wealth Management, is an independent registered Investment Advisory firm. CapSouth does not offer tax, accounting or legal advice. Consult your tax or legal advisors for all issues that may have tax or legal consequences. This information has been prepared solely for informational purposes, is general in nature, and is not intended as specific advice. This article was produced with the assistance of ChatGPT (Version 3.5) in December 2023; Chat GPT is an artificial intelligence model owned by OpenAI. CapSouth is not affiliated with OpenAI.

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