Cartoon drawing of a family

Birth Order Matters

Evidence, though scant, suggests that financial shortcomings may be related to birth order.

But there’s plenty of non-financial research indicating that the stereotypes linked to first-borns and “later-borns” are often on target. First children who are best-positioned to relate to their parents often become high achievers (Abraham Lincoln or Warren G. Harding), while their attention-seeking youngest siblings tend to be more creative, social, or funny (Jay Leno or Stephen Colbert, who is the youngest of 11 children).

To get at financial behaviors linked specifically to each ranking in the birth order, a 2011 study found that later-borns tend to be the big risk takers. And a February Bankrate.com article featured psychologists and financial advisers who said that they have observed clients’ money problems that they believe are linked to birth order. Below are excerpts from the Bankrate.com article:

Responsible first born: “More often than not, being a perfectionist leads to burnout and giving up or setting unrealistic financial goals,” says Derrick Kinney, an Ameriprise financial adviser at Derrick Kinney & Associates in Arlington, Texas. “That may sabotage your finances.” …Learn More

Impulse Saving May Be ‘New’ New Thing

You’ve heard of impulse purchases. But how about impulse saving?

It’s purely an idea at this stage, and it may not work. But a New York City check-cashing firm plans to start a program that will allow customers to throw $20, $10, even $1 into savings – on impulse – when they’re cashing a check or flush with cash.

“I know my customers,” said Joseph Coleman, president of RiteCheck Cashing Inc., which has 12 stores open 24/7 in Harlem and the Bronx. “If they could put $5 away or $20 away for a television they wanted, to buy a car, or for Christmas, they would do it.”

Key to making the program work is simplicity, operating on the theory that barriers and red tape thwart savings deposit; if a customer wants to open a savings account, RiteCheck will print an application that’s already filled out and needs only a signature. RiteCheck teamed up with long-time business partner Bethex Federal Credit Union to open and manage the accounts.

“People have intensions to save” but “get derailed by the lack of a clear, easy path to start saving,” said Innovations for Poverty Action’s (IPA) Jonathan Zinman, a Dartmouth College economist who worked with Coleman to create the product. The non-profit IPA granted $15,000 this month to set up RiteCheck’s program…Learn More

Street signs at the intersection of Broad and Wall Street.

Questioning Wall Street Convention

Walk into your financial adviser’s or broker’s office, and the conversation inevitably leads to your portfolio’s “asset allocation” and “total return.”

Financial planners, the media, investors – we’ve been under Wall Street’s spell for three decades. But a small chorus of skeptics, bucking the orthodoxy, argues that brokers and planners don’t always match investments with an individual’s goals and needs. The human gets lost – in more ways than one.

“People are being guided by the asset management industry,” said Boston University finance professor Zvi Bodie, co-author, with consultant Rachelle Taqqu, of “Risk Less and Prosper: Your Guide to Safer Investing.”

The industry’s premise is that “you can’t afford not to take risk,” he said, referring to the tenet that more risk means a larger potential return. But what happens if you roll the dice and lose? “They never say that,” he said.

Keen to this critique, Barclays in London and a few other large investment houses have started pitching wealthy clients by focusing on their “unique” circumstances.Learn More

A group of women in business attire holding signs with question marks on them in front of their faces.

Women Crave More Information

It’s common knowledge that women save less in their retirement plans than men do. This is a major problem, because they live longer, are more likely to require nursing home care, and need more money.

To learn why women save less, Karen Holden and Sara Kock at the University of Wisconsin, Madison, recently conducted focus groups with state employees and analyzed data for the Wisconsin Deferred Compensation Program. Similar to a 401k, the program for Wisconsin government workers also allows tax-deductible, voluntary contributions, though there is no employer match. Squared Away interviewed Holden about their findings.

Q: Do women save less, because they earn less?

Holden: Average lower earnings are a factor but more surprising is that, at any specific salary level, women contribute a lower percentage of their earnings than do men. Women on average contribute 6.28 percent of gross pay, compared with 7.03 percent for men. While lower pay and age differences accounted for some of that, being a woman led to lower contribution rates. …Learn More

Pieces and the board of The Game of Life, a popular boardgame.

Money Games Are Great Gifts for Kids

The Boston Globe is providing a cool list of holiday toys for your children, to help them learn early and often about handling money – while it can still make a difference. In July, Squared Away wrote about another idea that would make a fine gift – call it “not your average piggy bank.” A May blog post was about a great book to teach children about what bank accounts are all about.Learn More

A stork carrying a baby flies in front of a pink background.

Parents: College Saving Not Optional

New parents: you have been warned. Mainstream media have rolled out one horror story after another about college graduates and their parents burdened with $40,000, $50,000, even $100,000 in student loans.

Not everyone plans to pay for their children’s education. But those who do need to think early about saving, because college has become extremely expensive – tuition costs are rising much faster than inflation.

The good news is that figuring how much to save for college is not nearly as complex as planning for retirement. While retirement strategies fill hundreds of books and fuel vigorous academic debates, new parents can be reasonably certain about one major factor in calculating how much they’ll need: when the child will attend – age 18.

“There are a lot fewer moving parts” to calculating college costs, said New Orleans financial planner H. Jude Boudreaux, who has been thinking about this issue more since his daughter, Lucy, was born about 15 months ago. …Learn More

A number of presents wrapped in dollar bill style paper.

Calculate Holiday Budget: If You Dare

Take a hard look at your holiday spending. A credit counseling agency in Virginia says it shouldn’t exceed 1.5 percent of your annual income.

How’s your budget doing? Click here to use the holiday planning calculator, courtesy of Clearpoint Credit Counseling Solutions, a non-profit agency in Richmond, Virginia.

The budget tells you how much you can spend and then divvies it up among gifts, parties, travel, food, and donations. There sure is a lot to spend your money on!

Clearpoint Holiday PlannerLearn More

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