By Jean Gruss| Last Updated
It’s never too late to learn about personal finance, and it doesn’t have to be a lonely exercise.
Consider Marty Reid, a certified financial planner at Reid Financial Consulting in Lincolnton, NC. Like many financial planners, he helps educate people of all ages about money matters.
Every year, for example, Reid meets with an elderly widow and her adult daughters. “We have a meeting once a year with her daughters where we sit and go through her questions and her planning options,” Reid says. “They always ask: Is this what you would like to do? The daughters help their mother filter and digest all the information.”
That’s not because the mother is incapacitated. “She’s very alert and she doesn’t have trouble understanding, but it’s a way to make sure she has a nice comfort level,” Reid says.
Traditionally, one spouse in a household handles financial matters such as investments and the checking account. But if that financially savvy spouse dies or becomes incapacitated, the other spouse may be bewildered by the complexity of the family’s financial situation.
Even at an advanced age it’s important to get up to speed on personal-finance matters. Caregivers and trusted financial advisers are especially important in this regard because they can help to educate a loved one.
“The change in mindset is the most important thing,” says Charles Sachs, a certified financial planner in Miami. He encourages clients to take up personal-finance education as a hobby.
Start with a Budget
The first step of any plan is to figure out what a person is spending and develop a budget. “We make it a big deal,” says James Burns, the CEO and president of JJ Burns & Company in Melville, NY.
Burns says it’s common for one person in an elderly couple to be unaware of expenses, and sometimes both aren’t sure how much they’re actually spending and what they need to maintain their lifestyle. “Most people spend more time figuring out a family vacation than a budget,” he says.
Fortunately, the widespread use of credit cards and electronic banking makes it easier to track expenses and figure out where the money goes. Understanding spending habits is the first step in financial education. “We’re not even talking about what’s a stock and what’s a bond,” Burns says.
For those who prefer not to do it themselves, or for caregivers who may not have the time to help a loved one, Burns suggests hiring a bookkeeper or accountant. He estimates this might cost $1,000, but it’s money well spent. “It’s not really a lot of work to put a cash-flow statement together,” he says.
“The cash flow is really key,” Burns says. That’s because a spreadsheet that shows a couple their spending habits sets the stage for discussions about making up any shortfalls with investments based on tolerance for risk.
For example, Burns recently helped an active and healthy 84-year-old widow track her spending and discovered that the $58,000 she was spending annually on home-health aides she didn’t need might cause her to run out of money before she dies. This helped settle a dispute among her children on her spending habits. “The individuals have to start making their own discoveries,” Burns says. “They have to have ownership.”
Consider using a service such as Quicken software to monitor expenses. With this program, spending can be tracked by downloading bank and credit card information. That makes it easier for caregivers, too, because they can be granted online access to the same information to keep tabs on their loved one's financial situation. “Every single day a cash-flow statement is available at the click of a button,” Burns says.
Sometimes these conversations can be uncomfortable, but a financial planner can be an independent voice in discussions about spending habits. To find a certified financial planner, visit www.letsmakeaplan.org. The website is maintained by the CFP Board, which maintains rigorous ethical and professional requirements for financial-planner certification.
There are plenty of excellent resources for retirees to learn about personal finances, but television and cocktail-party chatter shouldn’t be among them. “Listening to Jim Cramer is not getting good financial advice,” cracks Burns, referring to the television stock picker.
“There are some excellent websites to get financial skills,” says Julie Hall, director of financial planning at Planning Alternatives in Bloomfield Hills, MI. Two she recommends are Money Management International and Jumpstart Coalition for Personal Financial Literacy.
Money Management International bills itself as the largest nonprofit full-service credit-counseling agency in the U.S. The organization offers seminars online and the ability to search for local education workshops in your area. Jumpstart is geared toward young people, but the information that the organization provides is useful for individuals of any age.
Sachs recommends a publication from the Federal Reserve Bank of Dallas called Building Wealth. “I’ve used that for 15-year-olds to 70-year-olds,” he says.
Local universities and cooperative extensions in rural areas frequently offer personal finance courses to anyone who needs them. If you live far from campus, some colleges even offer online classes. For example, North Carolina State University Cooperative Extension offers a home study course online.
There are even financial-education programs for those who own businesses. For example, if your family owns a farm, the Cooperative Extension offers a useful online class called Investing for Farm Families.
Once someone becomes more familiar with personal-finance topics, a subscription to the American Association of Individual Investors (AAII) can be helpful for continuing education. A basic membership costs only $29 a year.
The nonprofit organization publishes a monthly magazine that contains unbiased educational information about investing and retirement and it accepts no advertising. In addition, AAII has organized local chapters that bring together individuals for educational programs. You can search by zip code on their website to see if there’s a chapter near you.
Make it Fun
Personal finance doesn’t have to be boring. If you have the resources, consider combining a fun trip with financial education.
Still, weigh any investment ideas with a critical eye. Discuss strategies with a trusted adviser, such as a financial planner or estate-planning attorney, before making any significant decisions. Fact is, many investor conferences are designed for the financial-service industry to sell you a product.
But investment conferences can be fun and educational for savvy couples or families who have the time and the money to spend for travel. They can also help spark a conversation with your financial planner about your goals and aspirations. For example, MoneyShow.com holds conferences in popular tourist destinations such as Las Vegas, Orlando and San Francisco. These gatherings feature expert-led educational workshops and panel discussions on a wide range of topics.
New Orleans is always a popular destination, and there’s an investment conference there, too. The New Orleans Investment Conference takes place in the fall and has been held each year since 1974.
If you have the money to spend and enjoy ocean cruises, Forbes magazine sponsors a cruise for investors. This year, the Forbes cruise takes place off the coasts of Alaska and British Columbia, but it carries a hefty price tag with tickets from $4,150 per person.
Although money is typically something that people refrain from discussing, family members can help each other improve their financial health and knowledge.
It is crucial for couples to share in their financial affairs or at least become educated and stay aware of their situation together. For seniors, it is even more important to name a financial power of attorney and make sure the person they entrust with these tasks is well aware of the financial responsibilities they may be handling down the road. Without these proactive steps, a widower, family caregiver or adult child may end up starting at square one.