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Keystone Global Partners

Keystone Global Partners

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How to Talk to Your Kids About Money

WRITTEN BY: CALVIN LO

Opening up and starting conversations about how to handle money and finances with your kids is often overlooked, but it doesn’t have to be. As a parent, it is your role to serve as a positive influence in their lives to get them on the right financial track and develop a healthy relationship with money. Here are five things to consider as you embark on helping your children understand the importance of being responsible with their finances.

Start Simply, When They Are Young

Start discussing money with even the youngest ones by including by including them in everyday activities, such as grocery shopping or budgeting. This allows money to become a tangible concept and not some abstract thing that they cannot see. You can also ask them questions such as “We have 5 dollars to buy a treat, would you pick ice cream or cookies?”. These types of conversations help children to understand that their are trade-offs to any decision, and that money is not infinite.

Be Truthful

Being honest with your kids is a great first step to opening the door to discussing finances. You can share the family budget for items like groceries or entertainment, and explain remind them of this limit when they ask for items that don’t fit within it.

Additionally, If there are things in your financial past, such as going into debt, that you are not proud of, share that with your kids. Honest moments with your kids are very valuable and will help build trust. Keep in mind that the more open and honest you are with your kids, the more open they will be with you, so being truthful about your own finances is a great place to start.

Talk About Values

Encourage your kids to consider what is important to them for their future. Start by asking questions such as “Do you want to own a house or rent when you grow up? or “What splurges would you like to be able to make when you grow up (travel, cars, etc)?”. Down the line it can be helpful to have children involved in charitable donations, to have them identify what they care about, present a case for the donation and stay connected to other needs in the world.

Helping kids to visualize what they want for the future is a crucial component to talking to kids about money and financial goals. Talking about what they value and hope to have in their future allows them to take a long-term view, which is critical to the concepts of saving, budgeting, and paying down debts.

Establish Family Goals

As a family, talk about your budgeting methods and set some goals together. For instance, perhaps you set a weekly grocery limit of $250. Take your children to the store with you when you shop and have them help look for sales or clip coupons to keep your cart under budget. Another idea is to have kids help plan a vacation staying within a budget. Involving your children however you can with the family finances is a great hands-on way to educate them and give them a chance to see real-life examples of how their financial habits will impact them in the future.

Lead By Example

There may be certain financial topics that you are not as knowledgeable about, and that’s okay! Take the opportunity to learn with your kids. Showing your kids that you are interested in growing your understanding of financial topics will heighten their interest in it as well. At Keystone, we are more than glad to include all members of a family in a financial meeting.

Talking to your kids about money may feel hard to start if you don’t know how to approach it properly. However, broaching the subject sooner rather than later will reap many benefits for you and your kids. Ultimately, you want your kids to have the knowledge and skills they need to handle their own finances responsibly as they grow up. As a parent, it’s your job to instill this knowledge in them and to open the door to an often taboo subject so that you can help them get off on the right foot with their finances and have a healthy relationship with money. Financial habits are formed young, so it’s critical that you start early and start the conversation today. Make your kids feel comfortable to talk about finances with you by using these tips.

Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

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Will you help me solve any and all financial problems I may encounter?

Yes, and it’s likely we’ve helped others solve similar problems as well such as business sales, QSBS, tax minimization, estate, 401(k) plans, IRS audits, family deaths, disability, real estate, debt, social security, Medicare, health insurance, college, gifting, and most other financial issues.

What types of clients do you specialize in?

We work specifically with tech founders.

What services do you provide?

A relationship with Keystone involves comprehensive financial planning around retirement, insurance, estate planning, tax planning, and investment management.

How do you help clients implement their financial plans?

We firmly believe that even the best financial plan is of little value until it’s implemented. To help you achieve your goals without feeling stressed or overwhelmed by the noise along the way, we will work together to make the necessary decisions then we take care of the execution.

Are your recommendations truly in my best interest?

As an SEC Registered Investment Advisory firm, we are held to a fiduciary standard, which legally requires us to do what is in our clients’ best interests. This differs drastically from some of our competitors who are only held to the “suitability standard,” meaning that our competitors can make recommendations that are suitable but may not be in the clients’ best interests. Our commitment to an honest and ethical culture has allowed us to build deep, trusted relationships with our clients.

What are all the different ways you get paid?

We are only paid via one management fee. We believe this allows us to have an unbiased framework to select the best investments for you and to give you advice tailored to your needs, not ours. We believe compensation drives behavior, and the way someone is paid influences the work they do. Many financial firms have complex fee arrangements; we do not.

Why would I choose you as my advisor and not do it myself?

There’s certainly a possibility that if you put enough focus and energy into it, you could do it all yourself. But like everyone else, your time is limited and most people prefer to focus on family or business. We’re here to free up your time while leveraging our wealth of experience in addressing concerns, presenting solutions, and working toward your financial goals.

What are the benefits of working with an independent advisor compared to a bank or large advisory firm?

Our independent and conflict-free approach allows us to find the best solutions for our clients. This gives you the advantage since larger firms might be compelled to make specific recommendations, sell proprietary products, or may be restricted in the advice and services they offer. We offer guidance customized to your needs and goals which is a personalized level of service, care, and attention larger firms just can’t provide.

Do you use proprietary funds?

At Keystone, we do not use proprietary products. We do not receive commissions or backend fees from any third parties. We do not earn compensation for recommending one fund vs. another. We believe this allows us to have the most unbiased framework to select the best investments for you and to provide advice tailored to your needs, not ours.

Where do you keep my money and how can I see it?

For your convenience and safety, we use Charles Schwab as the custodian for the majority of our client assets. Schwab administers more than $7 trillion dollars and we selected them to care for yours as well based on a variety of criteria including safety of assets, financial strength, and ease of use. As custodian, Schwab holds your funds and provides direct reporting to you. Your funds will be held in accounts under your name and can be viewed anytime online at Schwab.

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