Religion, Politics, Sex and Money

By:  Charles Webb

Which of these subjects are Americans least likely to want to talk about? Based on several surveys, including ones from Northwestern Mutual Life, Wells Fargo and T Rowe Price Group, the subject of money is the least desirable topic that Americans feel comfortable discussing with friends or family.

 

The subject of money is a funny thing. After all, money is the one thing that we can pretty much all agree on - more is better, we're all working hard to acquire it and it buys us the things we like to show off to others. However, when it comes to openly talking about it, taboo is the word. We frown at others who talk about money in polite company, we keep our wealth a secret from our children, and we hide the truth (either better or worse) from our peers.

It's not that money isn't on a lot of minds. Those surveyed by Northwestern Mutual rated personal finance a top priority (second only to personal health), and the majority felt their financial planning could use improvement. Yet according to the survey, 42% have never spoken to anyone about their retirement and only 39% have spoken to their spouse or partner about the subject.

In our business, we see this phenomenon in many ways almost every day. On one end of the spectrum, you have very wealthy people who are worried that they'll be a target for others. On the other end are people who may feel ashamed of their situation. Then there are the countless situations in between.

While it's generally a good idea to keep your cards close to the vest as the saying goes, when it comes to your family, it is a good idea to be more open about things. This is especially true with adult children and aging adults.

From the adult child's perspective, understanding the parent's financial situation can alleviate uncertainty as to whether the parents will need support from their children in the future. Without planning, the burden of supporting one's parents can lead to significant marriage problems for the benefactor and resentment among siblings. Proper planning ahead of time can give all those involved time to discuss how the giving will take place and what the tradeoffs might be. For example, one sibling may contribute financial resources and another may provide personal resources such as directly caring for an ailing parent.

From the parent's perspective, early conversations are always helpful when it comes to estate planning. However, few parents want to dwell on their mortality-a subject that may also make the children uncomfortable. Parents may also dread sparking family squabbles about who's getting what, or worry that once the children know what's coming to them they'll become entitled, unmotivated heirs. But the benefits of getting everything out in the open can be enormous, both emotionally and financially.

Telling children ahead of time what to expect allows parents to explain their decisions and it allows the children to plan their lives accordingly. Plus, feedback from the children can be an eye opener, prompting parents to make wiser decisions about their wills, and there may even be a tax benefit in some cases.

When it comes to multiple children, there is plenty of room for resentment among heirs over the terms of a will. Those resentments can last their lifetimes, too. But talking things out while the parents are alive may help soothe hurt feelings. Parents can use this opportunity to explain things in their own words instead of the cold legal language of a last will and testament.  

Parents may choose to speak with each child individually or in a group, depending on family dynamics. Sometimes the individual approach makes it easier to discuss potentially sensitive issues such as unequal distributions, the use of trusts versus passing on wealth outright, or selecting one child over another for a fiduciary role.

Another huge benefit is to inform the children what they'll be dealing with. This can range from who the executor is to where all the accounts are located. That last thing a grieving family should have to deal with is hunting tax returns and bank statements trying to figure out where their parents held all of their accounts. The business of death should be minimized to the fullest extent.

Lastly, the children may actually have a better idea as to how the estate should be divided. Parents often think they understand the family dynamic but could be completely wrong when it comes to adult children. If the kids can agree among themselves ahead of time, those changes can be easily implemented while the parents are still alive.

The bottom line is that money conversations are an important part of maintaining healthy family relationships. All too often these conversations are overlooked or just avoided. While the benefits are obvious for the wealthy, it's also important for those of more modest means, too. Choosing when the kids are mature enough or responsible enough may be a challenge, but the subject eventually needs to come up.

Another Retailer Data Breach

By Lori Eason, CFP(R)

I’m sure you’ve heard about the latest large retailer affected by a security breach, Home Depot.  I personally received a text from my credit card company on Tuesday asking about a “business services” purchase of $49.95.  It was a fraudulent charge and I’m thankful Chase caught it and declined the charge right away.  Of course this meant I had to cancel my credit card effective immediately, and everything I have on auto-pay has to be updated.  But this is a small price to pay considering the alternative.  I took a close look at my statement and had another fraudulent charge for the same amount on 8/13.  This prompted me to double check all of my statements since the beginning of the year, but fortunately didn’t find any other suspicious charges.  I’ll never know if I was a victim of the Home Depot breach, but considering we have spent the month of August remodeling our kitchen, there’s certainly a good possibility!

Clark Howard has some good pointers on this subject in the following article:

6 Things You Need To Know After Any Retailer Data Breach

By Clark Howard

ClarkHoward.com

It's the latest in a string of high-profile breaches that has included Target, the Heartbleed breach, eBay and Lifelock, and the Russian hackers getting 1.2 billion usernames and passwords.

And now, in the midst of a severe case of "breach fatigue," we're getting word of the Home Depot data breach.

This one is still a moving target (no pun intended!)...but it could be larger than the Target breach that impacted more than 100 million customers late last year. Regardless of how the final numbers shake out, there are some things you need to keep in mind whenever you hear about these increasingly common data breaches.

Expect news of more breaches for the next 2 years

Our nation's banks were woefully behind the rest of the world when it came to investing in secure chip and PIN technology. We're the last place on Earth that uses '60s era magnetic strips on our cards; that's why all the criminals target us! The banks are only now making the wholesale switch to new safer technology, but that will take at least 2 more years. That's just the sad reality.

I think it's particularly important to know the retailers -- whether you're talking about Target, Home Depot, or anybody else -- are not at fault here. The blame lies with the banks.

Watch your statements carefully

If you're among those hit by the Home Depot breach, you need to go through your credit card and debit card statements this month and next month with a fine tooth comb. Identify any bogus charges the crooks may have pushed through and dispute them immediately with your bank or credit card company.

Use an abundance of caution

This is a time when you need to beware of anyone calling or emailing you trying to impersonate a breached retailer or your bank. The cons may ask you to click a link or to verbally confirm additional personal information over the phone.

When in doubt, hang up the phone or close out the email. Then call your bank or visit the merchant website to verify the legitimacy of the request.

If you remember one thing, it should be this: Do not click on any links in emails that come related to this or any other breach!

Limit the risks from debit cards by setting up a separate account

The reality is customers who use debit cards are hit hardest by any breach. If you wish to continue using debit in the future, be sure you tie it into a separate account that's only used for debit transactions. I like to call it your "walking around" money. That way, only that money you transfer to your separate account is at risk in a breach. Not the money you need to pay your mortgage or a car note, or to put food on the table.

Understand the real dangers of debit vs. credit

To understand just how bad debit cards are, you first have to look at the consumer protections afforded to credit cards. In a case like this breach where crooks potentially have your credit card number but not the physical card, normally that means zero dollar liability. In the worst case scenario, your maximum liability would be $50…and some issuers will waive even that.

If you used a debit card though, it's a whole different story. Debit cards are dangerous to your wallet. They don't have the normal protections under federal law offered by a credit card.

With a breached debit card, you have only 2 days after you notice that money is gone from your account...or else your liability rises to $500. And under some circumstances, your liability with a debit card can be unlimited.

You should do a credit freeze right now

You'll pay zero to $10 per bureau, depending on your state. This will shut a criminal down cold when they try to apply for new lines of credit in your name. You can find my credit freeze guide here; it will walk you through the easy process.