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Meghan Markle and Prince Harry want to be financially independent — here’s what that means

Alizah Salario Published Thu, Jan 9 20205:09 PM EST
This article originally appeared in Grow Acorns.

This week, actress and activist Meghan Markle and her husband Prince Harry announced that they intend “to step back” from their duties as “senior” members of the royal family and “work to become financially independent.” In a break from tradition, the couple plan, going forward, not to receive funding from the Sovereign Grant, which is a lump sum of taxpayer money used for official royal duties.

The Duke and Duchess of Sussex have an estimated net worth ofbetween $30 million and $45 million. So in their case “financial independence” appears to mean relying more on their own funds in exchange for the freedom from the expectations and obligations of public life, as well as more flexibility around where they live and the work they do.

For the rest of us, though? It varies. “Financial independence means different things to different people,” says Tara Unverzagt, a certified financial planner at South Bay Financial Partners in Torrance, California.

Here are three kinds of financial independence and strategies experts suggest to help you achieve them.

1. The means to pay bills and cover basic expenses

For young adults, the core of financial independence often is self-reliance. “Some people just out of college are trying to get financial independence from their parents,” says Unverzagt. “They are working towards getting out of the family house and paying for all of their bills themselves. That’s financial independence for them.”

Striving to be more financially self-sufficient in your 20s is smart, but being fully independent, in practice, can be harder than it seems. The majority of Americans say young adults should be financially independent by age 22, but only 24% of them actually are by that age, according to a 2019 analysis from the Pew Research Center.

Among those who still rely on at least some financial help from a parent, 60% say that the assistance is related to basic household expenses such as groceries or bills.

If you’re working toward more self-sufficiency, start by getting a better understanding of what’s going on with your money, including both how much you’re making and how much you’re spending. The “first step to getting your financial foundation laid is tracking your expenses” using a budgeting app or a spreadsheet, says Unverzagt.

That can help you get a sense of where you are financially, she says, and knowledge is power: “If you don’t have a handle on your cash flow, you’ve relinquished control of your financial situation.”

2. Freedom from family expectations

If you rely on financial assistance from a family member, it’s not unusual to feel bound by obligation to them. That can mean having to make minor adjustments, like limiting your data usage if your parents pay your cellphone bill. Or it can mean compromising on major decisions, such as picking a college major or career in line with someone else’s expectations instead of your own desires.

“The primary benefit of financial independence is that you cut many of the emotional strings that tie you to family money,” says Justin Pritchard, a certified financial planner and the founder of Approach Financial in Montrose, Colorado. “The things you do in life can become more of a choice, as opposed to obligations that you might feel as a result of your good financial fortune.”

If you’re lucky enough to be in a position to receive “financial scaffolding” from your parents as a way to develop your skills or build a business, feel free to “take advantage of the window of opportunity” when you’re young and accept some financial support, says Michael Caligiuri, a certified financial planner and the founder of Caligiuri Financial in Columbus, Ohio.

The primary benefit of financial independence is that you cut many of the emotional strings that tie you to family money.Justin PritchardCERTIFIED FINANCIAL PLANNER

It can help to weigh the short-term compromises against your long-term goals. For Julia Peña, who graduated from Syracuse University in May 2019, living under her parents’ roof over the summer allowed her to achieve her goal of saving the majority of her $3,500 in earnings from her summer job.

“I basically put about 90% of what I made into my savings account, so typically I went back to school with about $3,000 to last me through the fall,” Peña told Grow last year.

The privilege of financial support from a loved one may come with compromises, but it can also have a positive influence on your long-term financial health. If you live at home in order to save up or pay off debts, for example, you may be even better poised to get a lucrative job or build a firm financial foundation when you do strike out on your own.

3. Increased flexibility and options

At advanced levels, financial independence is “having enough money that you can quit your current job any time you want,” says Unverzagt. “You could go part-time, change jobs, change careers, take a year off, etc. They can’t stop working forever but they have enough money to have a lot of flexibility.”

Typically, getting to this stage requires a combination of time and effort. FIRE devotees, or members of the Financial Independence, Retire Early movement, tend to set aside huge portions of their income, for example, and have extra streams of income.

But even with just a single paycheck, if you make contributions to your retirement fund consistently, you can stay on track to meet your financial goals. Consider setting up automatic withdrawals from your pay that go directly into a retirement account or a targeted savings account to make investing and saving even easier.

Caligiuri adds, “Financial independence to me is when you’ve created a situation where, whether it’s through support or not, you’re getting to where you’re doing what you want to be doing.”

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‘Being objective is incredibly hard’: top financial advisers reveal their strategies for 2020

Published: Jan. 6, 2020 at 10:01 a.m. ET

Andrew Keshner

This article originally appeared in MarketWatch.

Experts discuss inflation rates, investment ‘wish lists’ and the perils of market timing based on the 2020 presidential election

Self-care, simplified finances and unemotional investing choices are some of the ways financial advisers are planning to better themselves in 2020.

Despite their differing goals, the advisers who answered a MarketWatch question about their New Year’s resolutions repeated a common theme in their replies. 

They all want to achieve 20-20 vision on their personal and financial well-being in the New Year, regardless of all the noise and distractions out there. 

An estimated 99 million Americans are making financial New Year’s resolutions this year and the top goal is saving more, according to a WalletHub survey. 

Like regular consumers, many advisers also want to save more. They just might have different approaches on the annual rite of attempted self-improvement, talking about inflation rates, investment wish lists and the perils of market timing based on the presidential election.

Financial advisers make a living doling out money and investment advice, so here’s the recommendations they want themselves to follow this coming year: 

Taking care of yourself (and those around you)

Advisers said they wanted to take better personal care of themselves this year. “2020 is the year I’m making sure to take care of myself and my relationships, face to face, not online,” said Tara Unverzagt, founder of South Bay Financial Partners in Torrance, Calif. 

She spent five years building up her firm and “2020 is the year I start riding my bike regularly, do my yoga every week, and take a few moments every day to meditate and clear my mind. I expected my financial life will be no worse off and who knows, my business may thrive even more because of it.

2020 is the year I start riding my bike regularly, do my yoga every week, and take a few moments every day to meditate and clear my mind

Sometimes, the self-care entails spending some money to show gratitude for the support of others.

Ian Bloom, the owner of Open World Financial Life Planning in Raleigh, N.C., plans to keep building his business with a growing client list and his visibility with a forthcoming book in a series. But he’s also going to get his wife the new couch she’s been eyeing. 

“As an entrepreneur’s wife, she’s gone without a few of the luxury goods she’s been wanting in order for me to start my business,” he said. “It’d be cool to be able to give her a significant item that she’s been interested in over the last year and relieve a little of that ‘belt-tightening’ feeling that is required when one launches a new business.”

See also: All the ways your burnout is costing you money

He also hopes to sneak some more vacation time with her and pour more money into his retirement account. “Given that we didn’t buy the couch, you can imagine we also haven’t been saving as much as we’d hoped over the last year. Again, that was a calculated decision. Starting a business requires capital and going without for a while. But it would be nice to get back to growing our net worth instead of just breaking even next year,” he said. 

Ron Strobel, the founder of Retire Sensibly in Nampa, Idaho, is planning on buying cars. That’s not going to be as easy as it sounds. “I’ve always been a proponent of buying cheaper used cars. I’ve repeated that advice hundreds of times to clients and friends,” he said.

The 12- and 13-year-old vehicles he and his spouse drive are now on the fritz and he’s worried about an unsafe breakdown in a remote spot. A new Toyota TM, -1.980% RAV4 and 4Runner would cost a combined $1,300 monthly payment, he said. That’s without insurance costs, too. 

“We can afford it, but I just can’t stop thinking about what else I could do with that $1,300 each month. I could save more, I could make an extra payment on my mortgage, I could buy a rental property. I could take several fairly luxurious vacations each year,” Strobel wrote. “I suppose you could say that my goal for 2020 is to stop being so frugal and treat myself occasionally, especially when it comes to my own well being.” 

Simplify, simplify, simplify!

Leibel Sternbach, the founder of Yields4U in Melville, N.Y., knows money matters can be complex and emotional. That’s why he’s going to hire a financial adviser to grow his own money in 2020.

‘One of the hardest lessons for me to learn was that when it comes to yourself being objective is incredibly hard.’

“One of the hardest lessons for me to learn was that when it comes to yourself being objective is incredibly hard,” he said. Despite his education and expertise, “as I sit here helping my clients get their end of year finances in order, I realize how much I have missed for myself over the year.”

He wants “a financial adviser who can help keep me in line and check with my own finances, just like how I work to help my clients stay on track.”

Don’t miss:This financial planner racked up $12,000 in credit-card debt — ‘I went a little overboard’

Jennifer Weber, vice president of financial planning at Weber Asset Management in Lake Success, N.Y., said one might assume that because she’s a financial planner, she abides by a strict budget. “I wish I could say this was true! In reality, it’s much easier to give advice than follow it,” Weber said. 

She and her husband have their financial goals like saving for retirement, travel, home improvements and college savings for their kids, she said. “To help keep things in perspective, and keep ourselves on track, I plan to go back to advice I give and want to follow: The simple 50/30/20 rule. 50% of take-home pay on necessities. 30% of take-home pay on wants. 20% of take-home pay on savings and debt repayment,” Weber explained.

‘To help keep things in perspective, and keep ourselves on track, I plan to go back to advice I give and want to follow.’

She’s going to go through the household budget and re-automate accounts as much as possible to meet the 50/30/20 rule.

David Haas, owner of Cereus Financial Advisors in Franklin Lakes, N.J., is taking a simple, but crucial step. He’s compiling a list of all his personal financial accounts and making sure his wife can access them if Haas becomes incapacitated or dies. 

“It is so important that loved ones can have access to your accounts and information when bad things happen, but increased security means this can be very difficult. Like everyone, I put these things off, but I really need to do it in 2020,” he said. 

Others say it’s critical to plan ahead for all sorts of account access. For example, one grieving man needed a court order before Apple AAPL, -1.944% would give him access to cloud-stored photos on his dead husband’s account.

Investing wisely 

For Mike Silane, the founder and managing partner of 21 West Wealth Management in Irvine, Calif., the holiday season means a review and update of his “investment wish list.” These are the companies, funds and ETFs he wants a share of, but are too expensive right now. “I check it twice too!” he added.

Silane also says around this time, he’s reviewing liquidity needs “so that I’m not letting cash sit around uninvested, earning close to zero.”

To make all his money work for him, Silane starts by thinking about how much cash he might need quickly and then considers putting money in a money market fund, a certificate of deposit or a short-term bond or ETF. “For longer term investing, I of course consider if I want to add to equities at this time. With constant inflation, even very low inflation, uninvested cash is always a money loser.”

Don’t miss:This strategist picked two blockbuster stocks in 2019 — here’s what he likes for 2020

Some advisers are already thinking how they will handle the hard-fought presidential election in November 2020 and vowing not to mix politics with investing choices. 

Money on the side lines does little in the context of achieving long term goals, no matter the party that gets elected.

It’s understandable why they’d want to think it through. President Donald Trump’s impeachment for his alleged pressure on the Ukranian government so far hasn’t rattled investors based on expectations that any trial in the Senate wouldn’t result in removal.

Democratic challengers, like Sen. Elizabeth Warren and Sen. Bernie Sanders are vowing more taxes on the super rich and the effects could be tough on the stock market, some well-heeled observers argue. 

Far from the political fray, Ashlee deSteiger, the founder of Gunder Wealth Management in Birmingham, Mich., said she is trying to educate her clients — and remind herself — about how important it is to keep money in the market and have a long-term focus despite any volatility.

“Money on the side lines does little in the context of achieving long term goals! No matter the party that gets elected, tactical portfolio changes are likely to be made based on emotions versus fundamental investment principles,” she said. “For that reason, I’m a proponent of reminding my clients about staying the course and not letting the election alone change their investment allocations in 2020.”

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Advisors’ Advice: 10 Biggest Tax Mistakes Clients Make

By Ginger Szala | March 04, 2020 at 10:50 AM
This article originally appeared in ThinkAdvisor.

With tax time upon us, we tapped our best resources — advisors themselves — to learn about how they’ve helped their clients correct some big tax mistakes. Many were willing to share their horror stories, but here are 10 of the top mistakes by clients.

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How to Teach Delayed Gratification to Kids

By Donna Freedman — Jan 7, 2020

This article originally appeared in Fabric.

In the famous “marshmallow experiments” of the early 1970s, researchers at Stanford University gave preschoolers a choice: Eat one marshmallow now, or wait 15 minutes and you’ll get twomarshmallows. (Spoiler alert: More than half of them couldn’t wait.)

You might be thinking, “Ha! My kids wouldn’t last 15 seconds!”

That’s totally normal. Take it from Sigmund Freud: Your kid is driven by id. When kiddo sees that new brand of cereal or an awesome Lego playset, the rest of the world ceases to exist. The craving must be satisfied. Now.

As parents, we need to teach our kids to tame their impulses—and not just because it’s annoying when they keep pleading for more Legos. It’s to help them become competent, successful humans, rather than little gremlins driven solely by their desires.

Learning to control our immediate impulses means the ability to pause and figure out whether a purchase is really worthwhile. Taming that id also helps us understand that we can have (almost) anything we want, but we can’t have everything we want. 

Teaching your kid to tame that voice that says now-now-now is important, as long as the lessons are age-appropriate and consistent. Certified Financial Planner Tara Tussing Unverzagt calls this “a series of practice decisions.” 

Here are some ways to pull it off.

1. Give Kids Their Own Money

One of the most fundamental ways to teach a kid how to make smart decisions is to actually let them make decisions. Often, this means encouraging your kid to manage their own money . . . within a parent-defined framework. 

Unverzagt  used the “three jars” concept with her kids, splitting the funds among saving, spending and giving categories. “I was surprised how quickly they learned to save for what they wanted,” says the financial planner, who’s based in Torrance, California.

If you have older kids, you might give them a debit card. Two years ago, retail expert Trae Bodge started a bank account for her 11-year-old’s allowance and gift money. While Bodge takes care of necessities (clothes, new shoes), her daughter is responsible for buying everything else. “She has to make very thoughtful decisions. And sometimes that means she has to wait for things,” Bodge says. 

If you want a higher level of control, companies like Greenlightgohenryand FamZoo say that their cards let adults observe and guide their children’s spending. Parents can create a virtual three-jar setup or specify a percentage of money to go to charity. They can also set limits on withdrawals or the types of places where the cards can be used (for example, ATMs and stores but not online). FamZoo and Greenlight let parents opt to pay “interest” on their children’s accounts, to incentivize saving. 

Unverzagt notes that she doesn’t think kids younger than 10 should have debit cards. First teach them what money is—how it’s earned, how it’s spent—and gradually introduce the idea of cards.

2. Help Them Learn From Their Successes and Failures

No bailouts, ever. Unverzagt suggests a hands-off approach to letting kids manage their own money. Instead of, say, setting a “no more than $5 per day” boundary, let your kid figure things out on his own. Suppose he spends everything on the first day before finding out his friends are going to the movies on Saturday. Guess he’s staying home.

“Let them make those mistakes,” she says.

Fabric’s editor-in-chief Allison Kade remembers when she forgot her lunch in elementary school and her mom refused to bring it to her: “It seemed pretty hardcore at the time, but you can be sure that I never forgot my lunch again.” In the end, forcing her to own up to her own mistakes changed her behavior over the long haul.

Celebrate successes, too. Let your kids know that you’re aware of how tough it can be to resist all those bright and shiny objects in the store in order to get that one toy they actually wanted.

3. Do the Math Together

Personal finance writer and author Emily Guy Birken has two sons, ages 6 and 9. Each one has not just a piggy bank but also a physical ledger for keeping track of money. 

“We’re hoping that the combination of the loss of physical money in their bank and the numbers in their ledger getting small will help them recognize that money is a finite resource,” Birken says. 

Her older son seems to be catching on. His school created a book of student poems and made it available for sale. When Birken asked whether he wanted a copy, his first question was if they’d get it for him or whether he had to pay for it. 

Incidentally: He has $300 in his piggy bank.

4. Make It a Rule: No More Getting Anything for Free

Personal finance blogger J. Money likes to visit garage sales with two of his kids. The boys, ages 5 and 7, would often get free stuff as a gift from the garage sale host, or they’d pluck items from the “free” box. 

In an effort to make them more discerning and to avoid piling up junk, he implemented a rule: “No more getting anything for free.” 

Now, even if they find something in a box labeled “free,” they have to offer some kind of payment to the garage sale host. This forces them to engage in their own version of cost-benefit analysis—is that object worth paying real money for? 

Indeed, learning how to say no to kids is one of the most important skills a parent can have.

5. Teach Them ‘the Pause’

When personal finance writer and author Cameron Huddlestoncontributed to a school fundraiser, her 8-year-old asked her to give more so he could “win” a prize. She said no—it isn’t really “winning” if your parent buys it.

She told him he could buy the prize for himself online, with his own money. But first, he’d have to wait a week to make sure he still wanted it. For two days in a row, he reminded her just how much he wanted the toy. Then he forgot all about it, and the money stayed in his piggy bank.

This technique is also very effective for adults: Give yourself a cool-off period of a week to see if your desire for that newest tech gadget or kitchen appliance continues to burn bright. Modeling this behavior shows kids that grownups also have that voice demanding buy this now! but part of being an adult is learning how to take a breath and make a calm decision. 

6. Put Your Money on the Table . . . Literally

If your kids don’t understand that you have bills to pay, try this: As an exercise, cash your paycheck instead of depositing it right away, and spread the money out on a table. 

Let your kids get an eyeful: Wow, we’re RICH!

Then start subtracting. “We need X dollars a month for rent/mortgage,” and take that much away. “We need X dollars a month for our car payment, gas and insurance,” and take that away. “We need X dollars a month for our emergency fund…” and so on and so on. 

The idea isn’t to get them worried about how their family’s financial wellbeing, but to reinforce money lessons:

  • It’s important to budget for commitments (monthly expenses, saving, giving) before buying fun stuff.
  • Make sure your expenses don’t exceed your income.
  • Since expenses can vary, it’s important to have an emergency fund.

“Showing that you are in control and have choices is a powerful message to send,” Unverzagt says.

7. Start Thinking Long-Term, Early

It’s human nature to prioritize short-term wins over the long-term slog toward prosperity, but we all know that focusing exclusively on today will have negative effects when we finally reach tomorrow

So, one way to teach your kids the importance of very long-term thinking—and to actually give them a leg up on getting there—is to start them off saving for retirement now, while they’re still kids. Yup, it’s super early. But since children have a much longer time horizon, they have many years to build wealth. Plus, watching their accounts grow teaches them to think about and save for the future. 

Here’s how: If your child has a source of taxable income (that includes things like babysitting or mowing lawns), then they can have a Roth IRA. This kind of account has the same benefit for kids as it does for adults: tax-free growth. 

If you want, you can choose to contribute to the Roth on their behalf, as long as it doesn’t exceed the annual maximum. (For minors, that’s $6,000 or their total earnings, whichever is less.) 

Certified Financial Planner Kimberly Foss started a Roth IRA for her 4-year-old son, Jack, who was being paid to do chores at her business: emptying wastebaskets, dusting, vacuuming, shredding documents.

“He thought it was cool that he could earn real money, and even cooler that the money could grow all by itself, without him having to add to it,” says Foss, founder of Empyrion Wealth Management in Roseville, California.

Bonus: Pre-retirement withdrawals can be made penalty-free under certain circumstances, including paying for school or buying a home. Jack, now 15, has his eye on both. “After watching his older sister and brother go into debt, he’s really eager to keep his education as debt-free as possible,” Foss says. 

The Bottom Line

Parenthood is about loving our kids, but it’s also about teaching them to (eventually) leave us. That means learning how to take care of themselves. 

A crucial life skill is knowing how to handle money—and sometimes that means knowing how to not spend it. This isn’t an easy lesson, so you need to model it consistently. If you don’t, your kids might grow up thinking that debt is both normal and inevitable.

Delayed gratification is a key component of financial independence. And, possibly, to bigger and better Lego sets.

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Talking about money improves marriage satisfaction. So why don’t we do it?

By Anna BahneyCNN Business

Updated 12:28 PM ET, Tue March 3, 2020

This article originally appeared in CNNBusiness.

(CNN)Research shows that talking with a spouse or partner about money increases relationship satisfaction. But many people still don’t do it. Couples typically don’t talk about money because they’re embarrassed or fearful, said Tara Unverzagt, a certified financial planner with South Bay Financial Partners in Torrance, California. Money is more attached to emotions than most people realize.

“When two people come together, you end up with two sets of money stories, values and experiences,” she said.A recent study showed that married people have the fewest number of conversations about money out of any type of couple, including people who are co-habitating, dating or separated.

“We thought married couples would talk about money more because there is less taboo in the relationship and there would be some shared goals,” said Megan McCoy a marriage therapist, and co-author of the study. “We were shocked about how few were talking about money.”The obstacles are significant, but not impossible to overcome and doing so could even boost happiness in your relationship.

Define your terms

Money is never just money, said McCoy. It’s connected with an idea or a feeling that is often established early on in your life. “We often don’t realize that other people see money differently than we do,” she said. “Some see it as safety and protection, others as something to give away. For some it is something to do fun things with.” Talking with your spouse about what money means to you is a good place to start, said McCoy. From there, she said, focus on shared financial goals instead of the nickels and dimes. “Don’t get bogged down with how much one spends on biking and one spends on dining,” said McCoy. “Talk about, what are we doing to save for retirement? When will we pay off our student loans? How much do we want to fund our kids’ educations?”Keep in mind: People can be embarrassed about their habits or lack of money knowledge, so it’s important not to judge, she said.

Talk values

Natalie and Dan Slagle, a married couple who are both certified financial planners with Fyooz Financial in Rochester, Minnesota, specialize in young couples who are blending their finances. But that didn’t make their own money conversations any easier. “We found ourselves arguing about what decisions we should make with our money,” said Natalie. “We realized we were struggling because we didn’t have in-depth conversations about our philosophies with money and how we were raised with it.” Once they began talking about what they value and their experiences with money, they said they started to find common ground. “Dan and I both share a strong value in our health,” said Natalie. “So spending money on gym memberships, hiking shoes, and even running race registrations requires no convincing because it aligns with a value we hold. But if I were to randomly go out and spend $100 on a new dress, Dan would question that.” These conversations have made their relationship stronger, they said.

Face the fear

For many couples, avoiding money talks comes down to fear, said Ryan Sterling, a financial adviser and wealth coach at Future You Wealth in New York City.”Each spouse is operating in their own money silo,” he said. “They have fear of losing autonomy, losing control, or detaching from consumption and the status or pleasure that comes with that.”In order for couples to feel more secure talking about money, Sterling says they first need to get on the same team.To do that, he recommends couples start by writing their individual wish lists of what they hope to achieve with their money — like take care of family, eliminate debt or reach financial independence. Then, they should compare both lists and see which items match up and which ones don’t. “This process is for all couples — those that have a positive net worth and those with major credit card debt,” said Sterling. “We put it all out there and we work toward a set of agreed upon goals that align with true wants and values.”Money decisions after that are less about being good or bad, right or wrong, he said, and more about, “does this purchase get us closer to our goals or further away?”Talking about money with your spouse is rarely as bad as people think it will be, said Colin Moynahan, a certified financial planner with 2050 Capital Financial Advisors in Charleston, South Carolina.Yes, there are situations where one person is hiding some serious financial issues from the other — but better to know now. “Most people have built up issues in their own head that are not as bad as they think,” he said. “Once they have an open discussion and put a plan in place, they feel much better about the future.”And maybe even each other.

Sadie Goodwin July 30, 2017 No Comments

Racing Ahead

Racing Ahead

Whether it’s cycling or building her practice, Tara Unverzagt pushes her limits.

Charles Keenan

This article originally appeared in Morningstar.


Financial planner Tara Unverzagt knows something about grit. Around 15 years ago, she was looking into enrolling her son for training at the local velodrome, a track for bicycle racers. She found her own riding club offered training sessions for adults, and she soon was hooked. She trained on Friday nights at the velodrome and piled on training miles on the roads around Southern California, and then started to race.

All the riding led Unverzagt to the 2013 UCI Masters Track World championships in England, where she won four gold medals and a silver in her age class of 50–54. Winning wasn’t just about training, though, but being able to go inside what cyclists call the “pain cave.”

“If you want to be good at track racing, you are going to be diving into the pain cave, and staying there,” Unverzagt says. “You get to a place where your body just sort of shuts off, and you don’t feel the pain anymore, and you can just go for a while.”

Good Financial Habits

Unverzagt has also pushed herself to build her practice, South Bay Financial Partners, based in Torrance, Calif. In 2017 she onboarded 65 clients as part of a succession plan with her mother, also a financial planner. Her book of business now totals about $150 million of assets under management, but she still sees work to be done. For one, she believes many people haven’t developed the skills necessary to build wealth. “My generation and below have been brainwashed into thinking credit cards and debt are great,” she says. “Financial literacy has gone completely away.”

To combat the issue—and recruit future wealth clients—Unverzagt has introduced three levels of coaching in her practice, geared toward people aged 20 to 35. “I’m interested in giving them a good foundation,” she says. “These are probably people who have little to no net worth.”

She teaches habits that will help accumulate wealth, such as budgeting, saving, and creating an emergency fund. She has started working with the children and grandchildren of her clients, charging a flat fee of $125 to $200 a month, depending on the level of service, and will open up the service to others in early 2019 if space is available. “The goal is to get them from the financial coaching and into the financial planning side, where you actually have assets,” she says.

For that side of the business, where clients have as much as $10 million in assets, Unverzagt also sets herself apart by charging flat fees, rather than the industry standard of 1% of assets. Annual fees range from $4,000 to $16,000 per year, depending on the complexity of the service. “It just doesn’t equate to me that I would charge you more for doing the same job just because you have more money,” she says.

Healthy Money Discussions

Unverzagt, 55, learned those strong values about money at an early age. She grew up in a house where money was talked about. “It was transparent,” she says. “We had a very healthy money conversation in our family.”

Her mother was a financial planner in the 1970s, when the field was nascent. She would tell Unverzagt and her siblings each night how much dinner cost per person. They were taught responsibility with money, and were given $10,000 by their parents to attend college. The amount was enough in the early 1980s to fully pay for Unverzagt’s tuition at Purdue University in her home state of Indiana. Yet Unverzagt never spent the $10,000. She studied computer science and worked in the summers to pay off the next year’s tuition as a Kelly Girl temp, a computer consultant, and a programmer. She saved by eating Subway sandwiches and low-priced meals at happy hours.

After graduating, she worked at Xerox and Locus Computing, rising to the level of group director at the latter and getting an MBA at Pepperdine University. She left Locus in the early 1990s to become a financial planner, giving her more flexibility to raise a family. She worked as a consultant for her mom while studying for the exam to become a Certified Financial Planner. Her husband brought their 3-month-old son down to breastfeed during breaks of the exam in 1994. “I wanted to be home with my kids like my mom was, while being able to continue working,” she says.

Taking Over

Unverzagt assumed the majority of her mother’s clients in 2017, and now her mom works for her, helping review financial plans. Those plans, of course, include equity exposure, which Unverzagt prefers investing in individual stocks, with about 75 to 100 core holdings. She believes mutual funds lack transparency and exchange-traded funds come with disadvantages such as requiring investors to own laggards. She also worries that ETFs’ losses in a crash could exceed those of the underlying stocks. “It’s an unknown, and I don’t want to buy into that unknown,” she says.

At heart, she’s a value investor with a focus on income. These days, she likes sectors such as utilities, consumer cyclicals, and consumer durables. She’s selective with technology, a sector that’s hot but warrants caution. “Tech is the future, so you have to be there, but you need to be careful and strategic about what you invest in,” she says.

For fixed income, Unverzagt uses bond ladders going out 10 years. She likes five-year Treasury bonds, given the flatness of the yield curve recently. “It’s a sweet spot: You get almost as much yield with a five-year bond as with a 30-year bond, and you don’t have the long-term risk,” she says.

Unverzagt subscribes to Morningstar Office to stay up to date with client accounts. She uses Morningstar’s Back Office Services to download client data from Charles Schwab and TD Ameritrade, the two platforms she uses for trading. She also taps Morningstar ByAllAccounts to download data from held-away accounts. Morningstar Office allows her to do a complete analysis of client portfolios, including running reports on asset allocation, industry diversification, and bond ladders.

“I can slice and dice people’s portfolios any way I want with a click of a button,” she says.

Unverzagt doesn’t have time to train for another world championship with all her new clients, but she still manages to race on her bike now and then. It’s fitting that “Unverzagt,” her married name, means “undaunted” in German.

“Life-enhancing experiences always happen when I’m outside my comfort zone,” she says. “I try to do things that are not in my wheelhouse. It pushes me ahead of everyone that is trying to find their comfort zone.”

Charles Keenan is a freelance financial journalist.

Sadie Goodwin July 30, 2017 No Comments

XYPN Ep #210: Taking Over the Family Business – The Career of Tara Unverzagt

Ep #210: Taking Over the Family Business – The Career of Tara Unverzagt

This episode originally aired on XYPN.

Today we have XYPN Member and South Bay Financial Partners founder Tara Unverzagt on the show! Inspired by her mother—who was one of financial planning’s early pioneers—Tara knew from an early age that she wanted to be a financial planner. She joins us in this episode to share her experience growing up in the field, the valuable lessons she learned from having an advisor as a parent, and how she put her own twist on financial planning to do things differently.

You can find show notes and more information by clicking here.

Sadie Goodwin July 30, 2017 No Comments

CNN – Why wealthy parents who bankroll their adult children are hurting them

Why wealthy parents who bankroll their adult children are hurting them

By Anna Bahney
Updated 11:32 AM ET, Tue July 23, 2019

This article originally appeared in CNN


For some wealthy parents, the pressure to extend their social and financial status to their adult children can be overwhelming.

The recent college admission scandal revealed shocking things parents were willing to do to secure spots at top schools. But those same motivations drive some parents to bankroll their kids’ lives into early adulthood, often to the detriment of the family.
“How many times have we seen in wealthy families where the breadwinner is so inundated with making a living and providing for a family, that love, intimacy and closeness are shown through financial means,” says Dr. Alex Melkumian, a psychologist and financial therapist.
Support that keeps a young person living above their means can undermine their independence and create deep insecurities.
Dr. Bradley Klontz, a psychologist and certified financial planner who researches money disorders, calls this “financial enabling.” Often arising between parents and their adult children, financial enabling involves extended financial support that not only affects the enabler’s finances, but can also cause lasting damage to the young adult.
“The delay of financial independence is associated with a lack of purpose, creativity, drive — it can be extremely crippling,” says Klontz. And that’s to say nothing of the damage caused to the family relationships. “People then have a tendency to resent the source of their money, even while they rely on it.”

Parenting without enabling

When children grow up with the expectation of a wealthy lifestyle, it becomes harder for them to maintain that lifestyle once they are on their own. And the parents feel pressure to step in and help.
“It has to do with growing up with one identity and becoming an adult and expecting to continue on that identity,” says Tara Unverzagt, a certified financial planner in Los Angeles. “You don’t have the job to support it. Your parents have the income.”
Unverzagt works with families struggling to find the line between supporting their children and offering too much help. All of it starts by talking about money, and making sure kids have realistic expectations.
Make sure you are setting your kids up for a lifestyle they can sustain. “Because if they can’t, you’ll sustain it, and it will bleed you dry and impact your own retirement.”
She says that many ultra-wealthy parents can afford carrying a child’s expenses into adulthood but others end up hurting their own finances by supporting their kids. “They feel they should be able to do these things for their kids endlessly and afford them,” she says. “But if you continue to do it, the money can run out really quickly if you’re not paying attention.”
And that’s to say nothing of the message sent to the adult child.
“You’re telling that child, she can’t do it on her own,” says Unverzagt. “Some moms and dads want her to feel that way, that she can’t live financially without that parent. You should be striving to have an independent adult.”
Unverzagt started talking about budgets with her own three children, now all recent college graduates, when they were two years old.
“I feel it is your job as a parent,” she says. “A 4-year-old’s money mistake is nothing. Have them make a bubble gum mistake instead of buying a house at 25 they can’t afford. Are you going to enable those bad financial decisions at 24 and 30?”

Breaking the enabling cycle

Having unlimited options can be paralyzing to some young people.
“Having too many options can be overwhelming,” says Meghaan Lurtz, president of the Financial Therapy Association, who has a PhD in personal financial planning. “It happens to wealthy children a lot: I could have 1,000 careers, I could have any car I want. I can’t pick one. They appear to be the laziest bums on earth because they have so many options in front of them, it is paralyzing.”
She says that a strategy to aid in moving forward is to put boundaries on endless opportunities.
She advises parents to be clear about their expectations of adult children. “Tell them, you need to have a job, even if you’re a teacher and making $30,000 a year. You need to do something, and have purpose.”
Working with a financial therapist, a counselor who can help people think and feel differently about money, can be helpful to people in that paralyzed state, she says.
It’s okay to want your children to have the best, she says, and many people have the resources to do it. But the key is to give kids the tools to achieve it on their own.
“It is an important step to talk about what it is like to have money and the responsibility that comes with it,” Lurtz adds.
Sadie Goodwin July 30, 2017 No Comments

CBS NEWS – Americans still think they can make money flipping houses

Americans still think they can make money flipping houses

By Irina Ivanova
July 19, 2019 / 7:51 AM / MONEYWATCH

This article originally appeared in CBS NEWS.


While fewer Americans are buying homes these days, more of us than ever believe we should be. The portion of people who say real estate is the ultimate investment — better than stocks, bonds or gold — has hit a new high.

Nearly one-third of Americans believe real estate is a better way to invest money for the long term, according to a survey released this week. Younger people are more likely to say so, with 37% of 23-to-28-year-olds ranking real estate above stocks, bonds, gold and savings accounts as an investment. This is the strongest sentiment for real estate in the seven years Bankrate has run the survey, said Greg McBride, the website’s chief financial analyst.

Sadly, real estate is no better an investment today than it was in the previous century—and that’s to say, mediocre at best. For people with a bit of money to put away, the stock market will almost always give the best return.

Between 2006, the peak of the previous housing bubble, and 2019, average home prices have increased just 13%, according to the S&P/Case-Shiller Home Price Index. In that same time period, the S&P 500 rose 125%. In other words, stocks did 10 times better than real estate.

Despite the stock market’s better returns, “it remains rather unloved,” said Bankrate’s McBride. “We’ve been doing this survey for seven years and we’ve been in a bull market for the entire seven years, but investors haven’t really warmed to it.” Just 1 in 5 think the stock market is the best long-term investment.

Things you can touch

A house is a much more unwieldy investment than a stock portfolio. It costs money to buy and sell and maintain a property, and it can lose value over time, like an iPhone or a car. If housing is an investment, buying a house is akin to purchasing a single share of stock—except instead of paying a quarterly dividend, the investment needs you to put some money into it periodically to keep it in good shape.

Nevertheless, familiarity breeds contentment when it comes to real estate. While less than half of Americans own any stocks, nearly two-thirds own the home they live in. Many if not most Americans are at least aware of homeownership through family, friends or neighbors. And of course a house is a physical asset in a way that financial instruments are not. “You can kick it, touch it, look at it; you know it is there. It provides a sense of comfort that is missing when we hold stocks and bonds,” said Anders Skagerberg, a financial adviser at Skag Financial in Salt Lake City, Utah.

The way most people think about home sales also leaves out many costs, artificially inflating real estate’s perceived rate of return, said Tyler Reeves, founder of Plimsoll Financial Planning in Birmingham, Alabama.

“You find out that this house was bought for $300,000 and sold five years later for $400,000 — wow, that’s a quick $100,000!” he said. “What they don’t see is during that five-year period, they had to get a new HVAC unit, and a hot water heater, and pay a mortgage for five years.”

Repairs and maintenance are an often-overlooked aspects of homeownership, especially for younger homeowners. Upkeep alone—tasks like yard work, carpet cleaning and maintaining the gutters—can run $3,000 a year, according to a recent Zillow study.

Unexpected repairs can cost much, much more. One young Tennessee homeowner spent $21,000 over six months to repair her modest 1950s ranch house, she wrote in Business Insider. While she admitted that “procrastination made some of the problems worse,” many of the repairs were the inevitable result of normal wear-and-tear: replacing the roof, fixing cracked ceilings and upgrading some electrical systems.

Even in a best-case scenario with minimal upkeep, property almost always comes with carrying costs: the mortgage, taxes, homeowners’ insurance, fees for water and services like trash pickup and even a homeowners’ or condo association. Those taxes and fees are why first-time homebuyers are often told to budget 30% on top of their monthly mortgage payment to get the “true” cost of owning their house.

Today, a would-be house flipper could buy the $300,000 house in Reeves’ example for a $70,000 outlay (down payment plus closing costs) and a monthly payment of $1,130, assuming she has excellent credit. After five years, the lucky debtor will have paid $45,000 in interest payments alone, and—under the 30% rule—about $20,000 in taxes and other costs. If she sells the house for $400,000, after accounting for the agents’ fees and the interest, taxes and maintenance she’s paid out along the way, she would have made a profit of $22,000.

In that best-case scenario, the flipper got an impressive 31% return on her initial investment. But if instead she’d­­ put $70,000 into a stock-market index fund five years ago, she would today have $34,000 in profit—and arguably for a lot less work.

“We have many more clients that have broken even or lost money in real estate than have made a killing in it,” Adam Van Wie, a financial planner in Jacksonville, Florida, told CBS MoneyWatch. “We more often than not try to talk them out of it, but many of them never listen.”

Like stock-picking made hard

Still, the ongoing housing crunch makes it unlikely the draw of making a quick profit in housing will ever fade. If anything, financial planners report an increase in the amount of people coming to them with dreams of real estate riches.

“In the last couple years, it’s come up in conversation with almost half of my clients,” said Reeves. “Seven, eight years, ago you wouldn’t have expected it.”

Reeves, like most financial planners, emphasized he wouldn’t discourage real estate investing for the right person. But it’s much more like a job than most people assume, and doing it profitably requires treating it like one.

“I know people who make money buying and selling and renting real estate, just like I make money buying and selling stocks and bonds,” said Tara Unverzagt, founder of South Bay Financial Partners in Torrance, California. “But that’s their life. They spend a lot of time learning the cycle and when to ‘buy low and sell high.’ ”

She added that in real estate, just like in stocks, “the average person tends to buy high and sell low and lose their shirt.”

Sadie Goodwin July 30, 2017 No Comments

CNN – Is $2 million enough to feel wealthy?

Is $2 million enough to feel wealthy?

By Anna Bahney CNN Business
Updated 10:14 AM ET, Fri May 31, 2019

This article originally appeared in CNN.


How much does a person need to feel rich?

A recent survey from Charles Schwab revealed that a net worth of $2.27 million would be enough. But can you really put a number on it?

For many people, being wealthy means being financially independent and not having to work for a living, says Bradley Nelson, of Lyon Park Advisors. He says a family with a net worth of $2.27 million could easily be wealthy.

If that family spent a conservative 3% of their assets each year, they would have $68,100 a year to live on. That’s more than the median household income in the United States of $61,000 — without even having to work.

But that wouldn’t be enough for some people. And for others, wealth isn’t a financial concept at all.
That’s why finding what makes you feel wealthy takes a strategy rather than a single specific number, says Nelson.

“I know people who make $250,000 to $500,000 and feel poor, and other people who make $70,000 and feel rich,” says Tara Unverzagt, a certified financial planner.

She points to research showing an income of about $70,000 is optimal for emotional well-being, and $95,000 is ideal to feel positive about your life, including meeting long-term goals and the inevitable comparisons with everyone you know.

“But for most people, when they get to $2.27 million, if their friends have more, they won’t feel ‘rich,'” she says. “And today with so many billionaires, many feel having mere millions is nothing — and to some degree, that’s true.”

$2.27 million? ‘Not even close’

Matt Doran is a wealth manager in St. Louis with a personal net worth of “more than $5 million, but less than $20 million.” He’s not fixed on a number, though, and has no intentions of slowing down.
He works with clients who are worth more than $2 million and says, “they don’t feel wealthy and neither do I.”

For Doran, the drive to continue earning money and growing his assets builds security for his family and allows him to support the things that give his life meaning — the people, places and causes that he loves.
“And $2.27 million doesn’t get me there,” he says. “Not even close.”

Doran says he and his wife and daughter spend on things typical for families at their income level. For example, they have a lake house in Michigan, with a boat.

“Our spending is really about lifestyle. While not overly extravagant in our opinion, we do drive nice cars, travel frequently and help others regularly,” he says. “We, like many others, find ourselves spending on experiences more than things because they enrich our lives and relationships.”

In his view, the purpose of building wealth is to generate more income. And the more income you make, the more options, flexibility and opportunities you have.

“When someone has financial resources in a substantial amount, they have choices they didn’t have before,” he says. “How to work, when to work, what work to pursue, where to live. How to spend their time.”

The reluctant millionaire

Russ Ford considers himself wealthy, but it has taken him a while to say it without feeling guilty.
Ford was 21 years old when he inherited $2 million from his grandfather.

“I got $1 million free and clear I could pick up and go to Vegas with,” he said. There was another million in trusts. That’s in addition to money likely to come his way through his parents’ estates.

“I do feel wealthy,” he says, “But in today’s society, I’ve felt guilty about it. I’ve worked through it to understand the opportunity to do good with it.”

But for a young person with seven figures, that kind of money can evaporate a lot faster than people think, says Ford. “Feeling wealthy can lead to a lot of temptation. You feel wealthy when you don’t have to think about money. The minute you don’t think about it, you can get into a lot of trouble.”

After college he became a financial planner, got married and had a son. Ford says that at first, his inherited wealth caused a lot of pressure and stress.

“The pressure comes from having the money and feeling like I can’t let my grandpa down and I can’t let my son down,” he says. “I was feeling a lot of pressure from the culture around me to keep up with the Joneses and becoming a father magnified all of that. The money has definitely made me more anxious.”

He’s appreciative of what he has, but he’s not interested in accumulating more money.

“I know that chasing more isn’t going to make me more happy,” he says.

Ultimately, the money that caused his anxiety helped him and his wife out a lot when he experienced loss of income due to his health. It helps his family have more of what they value the most — time together.

“Money certainly gives us more of that,” says Ford. “It gives us security that we’ll have more of that in the future and feeling secure in that makes me feel wealthy.