Personal Finance

56% of Americans say their parents never discussed money with them.

Published

1 month ago

November 27, 2024

Business Finance News

10’000 Hours | Digitalvision | Getty Images

As families gather for Thanksgiving this year, money is one topic that likely won’t be discussed.

Yet experts say it’s a perfect time to start the conversation, particularly with aging parents.

More than half of Americans — 56% — say their parents never discussed money with them, according to a recent Fidelity survey of 1,900 adults ages 18 and up.

One reason is that many people have a complicated relationship with money and wealth.

Most Americans — 89% — said they do not consider themselves to be wealthy, Fidelity found. For many, the definition of being wealthy is just not having to live paycheck to paycheck.

For the wealth they do have, most Americans say they accumulated it on their own, with 80% identifying as self-made and only 5% saying they inherited it, Fidelity found.

The fact that many people have relied on themselves, especially older Americans, may help explain why many don’t feel the need for more formal financial planning, according to David Peterson, head of advanced wealth solutions at Fidelity.

One-third of baby boomers don’t feel having a financial plan is necessary, Fidelity’s survey found, which is the most of any generation.

“They have sort of go your own way mindset, and that’s probably why they keep a lot of this just to themselves,” Peterson said.

Yet experts say that not having a plan in place can leave individuals and their families vulnerable when unexpected events happen.

If you know what your parents want, have it written down and know where things are, it makes things much smoother in the event a parent passes, gets sick or starts showing signs of dementia, said MaryAnne Gucciardi, a certified financial planner and financial advisor at Wealthmind Financial Planning in Cambridge, Massachusetts.

“You want to catch things early and proactively and preemptively, so that you know what they want and you can advocate for them,” Gucciardi said.

The holidays are an excellent time to start conversations about family finances, Gucciardi said. But those discussions can also take place whenever there’s a group gathering where siblings and children can also be involved, she said.

How to get the family money conversation started

Research has found money is consistently one of the topics Americans would rather not talk about.

A recent U.S. Bank survey found more people would rather reveal who they were voting for in the presidential election than talk about their finances. Other research from Wells Fargo find discussing personal finances almost as difficult as talking about sex.

To get the conversation started with aging parents, experts say it helps to start small.

“Don’t go into it thinking that you’re going to solve it all this particular holiday,” Peterson said.

To kick off the conversation, you may want to talk about your own estate plan and ask for their advice on anything you’ve missed, he said. That way, you can get a sense of how far along they are in the process, Peterson explained.

It can also help to bring up examples of friends or family who died with estate plans that were either organized or in disarray, and how that affected their loved ones who were left behind.

“What I like to do is start with small topics and build up to the bigger topics,” Peterson said.

Peterson explained that wealth can be transferred through asset titling or beneficiary designations. But for assets that do not pass that way, you need a will, he said.

Without that planning, you leave it up to the state probate process. When someone dies without a will, also known as dying intestate, a state’s intestate succession laws determine what happens to their assets.

“The question is, do you want to be the one making the decisions?” Peterson said. “Usually, when you ask it that way, you get an answer that suggests that they want to be the ones in charge.”

Family Matters: Successful Estate Planning

In addition to a will, it helps to have other documents in place, such as a health care directive, power of attorney and HIPAA authorization in the event a parent’s health declines, Gucciardi said.

If those documents were not established recently, you may want to revisit them to make sure they’re up to date, she said.

Often, people have accumulated assets over their lifetimes and lose track of them, such as savings bonds or insurance policies, Peterson said. It helps to create a central location where all of that will be stored, either physically or digitally. Bank safe deposit boxes should be avoided, since they can be difficult for loved ones to access, he said.

With more assets stored online, it’s also important to ask about access to online financial, subscription and social media accounts, Gucciardi said. Using a password manager can help ensure those assets are secure, she said.

As families engage in these conversations, it may be best to start small with one area, such as health care preferences, and then build from there, she said.

To help start the conversation, books can be a great way to break the ice, Gucciardi said. Among the titles she recommends to clients include, “Who Gets Grandma’s Yellow Pie Plate?” “Crucial Conversations” and “Being Mortal.”

During those discussions, try to listen more than talk and ask open-ended questions, Gucciardi said.

Personal Finance

Here are steps you can take to avoid overspending next holiday season

Published

14 hours ago

December 31, 2024

Business Finance News

Ezra Bailey | Stone | Getty Images

Opening presents during the holidays is of course a lot of fun. But for many, opening those credit card statements will be just the opposite.

Months before the holidays hit, consumers were already bracing for the anticipated costs.

More than half of 2024 holiday shoppers, or 55%, felt stress at the costs associated with the season, according to a survey conducted online in September by The Harris Poll on behalf of NerdWallet.

Still, 32% of consumers thought it was important to purchase holiday gifts and experiences to show their love for family and friends, despite the expenses, the survey found.

“The holidays are hyped 24/7 for weeks before the actual days,” said Carrie Rattle, a financial therapist in New York. “This builds a level of almost manic euphoria and gives us permission to ignore a spending plan, achieve instant gratification and worry about the aftershocks later.”

Those aftershocks are likely being felt right around now.

To that point, 10% of holiday shoppers this year were considering tapping their emergency savings for gifts, according to NerdWallet. Meanwhile, 9% said they’d prioritize their gift purchases over debt payments or other bills. (Some 2,000 adults ages 18 and older were polled.)

To avoid overspending during the holidays, people need to plan ahead and create a spending budget, experts say. There are steps you can take now to avoid a repeat next year.

Plan ahead and ‘bookend your shopping time’

It’s best to start thinking about big purchases, such as for the holidays, “when you are calm and rational,” Rattle said. That will likely be far in advance of when those events take place.

“Before the tide of emotional shopping overtakes you, know what you want to spend,” Rattle said.

This way, you can also take your time deciding what gifts you want to get people and to research the costs.

It can be a good idea to save throughout the year for the holidays, said Kristen Euretig, a certified financial planner and founder of Brooklyn Plans.

“You can simply set aside a monthly amount to a dedicated savings account and reserve it for holiday expenses,” Euretig said.

Starting early will also allow you to take advantage of different sales that pop up throughout the year, Euretig added.

Rattle recommends people make a list of the gifts they want to buy far in advance, and then space out their purchases to avoid breaking your budget.

“Buy once a week,” she said. “Bookend your shopping time by having an obligation before shopping, and right after your targeted completion time.”

“When you control your purchasing time you also control browsing,” Rattle added.

You can also be on the lookout for which of the gifts you bought people were actually put to use, she said.

“Reflecting on this helps you realistically separate what is truly valued by the receiver,” Rattle added.

Don’t miss these insights from CNBC PRO

Personal Finance

5 advisors offer important tips for managing your money in 2025

Published

15 hours ago

December 31, 2024

Business Finance News

Personal finances are top of mind for many households as they get set to ring in the new year.

About 38% of Americans ranked financial stability as their No. 1 focus area for 2025, according to a recent Allianz Life survey.

CNBC reached out to certified financial planners on its Financial Advisor Council to list their top resolutions for households as they look ahead to the coming year.

Here’s the financial advice they offered.

Kamila Elliott, Co-founder and CEO of Collective Wealth Partners

Kamila Elliott, CFP, is co-founder and CEO of Collective Wealth Partners in Atlanta.

Kamila Elliott

Create and stick to your budget! Max out on retirement contributions and create one personal financial goal such as paying off credit cards or investing an additional $100 a month in an investment account.

Barry Glassman, Founder and president of Glassman Wealth Services

It starts and ends with knowing where the money is going. I encourage people to track their spending for a period of time, maybe going back to three months’ worth of credit card and Apple Pay payments. It’s incredible what behaviors will change once people just know the truth.

Marguerita Cheng, CEO of Blue Ocean Global Wealth

Courtesy Marguerita Cheng

I’m going to say estate planning. It’s important for everyone to address — even for an 18-year-old heading off to college in Fall 2025. I had my daughter complete a health care and financial power of attorney before I sent her off to college.

If people feel overwhelmed with the estate planning process, I remind people that it’s a process. Start with a financial and health care power of attorney.

You can then focus on beneficiary designations. Next, a will and trust, if the trust is appropriate for your situation. This process also helps individuals track down retirement plans from former employers. Estate planning is a wonderful opportunity to revisit life insurance as well.

Lee Baker, founder, owner and president of Claris Financial Advisors

1. It’s not a popular subject but take the time review all your insurance coverages:

Auto and home in particular have jumped significantly for many people. Don’t forget about disability and life insurance. As long as you can get up and earn a living, you can replace your car or rebuild your home. What happens if you can’t generate an income?

Why so many young adults are still living with their parents

2. Spend some time reviewing your tax strategies and retirement planning:

Required minimum distributions: Do you ‘need’ them? Would making Qualified Charitable Distributions improve your overall picture?
Tax loss harvesting: Here’s an opportunity to improve your overall portfolio performance.
Employee benefits: Are you fully taking advantage of a health savings account (if available) and retirement plan contributions?

3. Review your cash flow:

If you spent more than you should have over the holidays, now is a good time to make a plan to get rid of that financial hangover as well as making a plan to avoid it next year. Take a look at your personal interest rate environment. We have gotten a few rate cuts from the Federal Reserve so far. There may be more but either way take stock of your situation.

Cathy Curtis, founder and CEO of Curtis Financial Planning

1. Automate savings:

One of the best features of company retirement plans such as 401(k) plans and 403(b) plans is that the contribution amounts are automatically taken out of a person’s paycheck each month, and then the funds are automatically invested in a pre-selected selection of funds.

Since it’s important to save outside of retirement as well for other goals, setting up an automatic withdrawal from a checking account to a savings or investment account is a smart move. First step is to determine how much to save each money based on cash flow and then set up a monthly or quarterly transfer. Once it is set up, it is out of sight and out of mind and the savings will grow.

It starts and ends with knowing where the money is going … It’s incredible what behaviors will change once people just know the truth.

Barry Glassman

Founder and president of Glassman Wealth Services

2. Manage overspending:

In order to get a handle on overspending, the first step is to identify the spending weaknesses. It could be household furnishings, electronic equipment, clothing, travel, or jewelry, etc. Then, write down how much was spent in the problem category. A good way to find the numbers is to look at the year-end credit card statements. Then, write down a number that is 20-30% below the amount spent in 2024 and make that a new budget and target for 2025. Track spending each month on a spreadsheet or app to keep the spending goal top of mind.

3. Stay invested no matter the headline news:

If the end of 2024 is any indication, 2025 is likely to be a turbulent year in the stock market. With a new presidential administration coming in, global wars, inflation and uncertainty around the projection of interest rates, that is much to worry about. But decades of history show us that the market will go up over longer periods and the smartest move a long-term investor can make is to keep investing and stay invested.

Personal Finance

As ETF assets top $10 trillion for first time, here are trends to watch

Published

1 day ago

December 30, 2024

Business Finance News

Pedestrians walk in front of the New York Stock Exchange, decorated with a giant U.S. flag, in New York City, Nov. 6, 2024.

China News Service | China News Service | Getty Images

Assets in U.S. exchange-traded funds in November topped $10 trillion for the first time, according to the latest data from Cerulli Associates.

ETFs — funds that invest in stocks, bonds or other assets and trade on national stock exchanges — reached $156 billion in flows for November, surpassing previous monthly flow records.

The activity is “on par with elevated activity typically seen toward the end of the year,” Cerulli reported.

Research from Morningstar pointed to a “Trump bump” that helped U.S. funds — including both ETFs and mutual funds — take in $115 billion in November, the highest total since April 2021.

As 2024 comes to a close, these are a few of the ETF trends that dominated the year, based on the latest data.

S&P 500 among 2024 fund winners

Year to date, the S&P 500 index is up almost 24%, as of Monday.

The S&P 500 rally, buoyed by the Magnificent Seven stocks — Apple, Microsoft, Google parent Alphabet, Amazon.com, Nvidia, Meta Platforms and Tesla — helped account for about half of the index’s gains for the year, according to data and analytics company VettaFi.

Four of the top 10 ETFs for 2024 by flows track the S&P 500 index, according to Cerulli.

The Vanguard 500 Index Fund ranks No. 1 for 2024 year-to-date inflows, according to Cerulli, followed by iShares Core S&P 500 ETF, iShares Bitcoin Trust, Invesco QQQ Trust, Vanguard Total Stock Market Index Fund, iShares Core US Aggregate Bond ETF, SPDR Portfolio S&P 500 ETF, Vanguard Total Bond Market Index Fund, Invesco S&P 500 Equal Weight ETF and Vanguard Growth Index Fund.

Malcolm Ethridge, a certified financial planner and founder and managing partner at Capital Area Planning Group, said he often uses S&P 500 ETFs in client portfolios because they allow for access to company names that would be in any large-cap growth strategy for significantly reduced costs.

While an actively managed fund may charge 50 or 75 basis points, a passive S&P 500 ETF may only charge 10 basis points, he said.

The S&P 500 index, which has had a record run, may be poised to continue to do well as the index rebalances to reflect current market leaders.

“I think this is a case where SPY [SPDR S&P 500 ETF Trust] probably outperforms the majority of fund managers in 2025,” Ethridge said.

S&P 500 could get close to 7,000 in the first half of next year, says Fundstrat's Tom Lee

Alternative ETFs see record growth

Meanwhile, alternative ETFs in November crossed $400 billion in net assets for the first time, according to Cerulli.

Moreover, the year-over-year asset growth rate for alternative ETFs — at 93% — was highest among all asset classes.

Most of the total alternative ETF market share — 80%, or around $325 billion — comprises digital assets, trading-leveraged equity and derivative income ETFs, according to Cerulli.

Financial advisors reported having just a 3.6% allocation to alternatives in 2024, though that is expected to increase, according to Cerulli. Within existing alternatives allocations, 14.4% is done through the use of ETFs, the firm found.

Crypto ETFs are ‘here to stay’

In January, bitcoin ETFs began trading on U.S. exchanges.

Now, spot bitcoin ETFs hold more digital currency than bitcoin founder Satoshi Nakamoto, VettaFi noted. Despite a “more lackluster” rollout for spot ethereum ETFs this year, crypto ETFs are “here to stay,” according to VettaFi.

The top five new ETFs by assets in 2024 are all bitcoin ETFs, according to Cerulli, based on data through November.

They include iShares Bitcoin Trust ETF at No. 1, followed by Fidelity Wise Origin Bitcoin ETF, ARK 21 Shares Bitcoin ETF, Bitwise Bitcoin ETF, and Grayscale Bitcoin Mini Trust ETF.