Your Parent's Money Mindset Series Recap | Series 3.8 - Enjoy More 30s: Family Finance

Episode 8

Your Parent's Money Mindset Series Recap | Series 3.8

Published on: 5th July, 2021

A recap of all 7 episodes from this Your Parent's Money Mindset series to help you take positive action

Securities offered through TFS Securities, Inc., Advisory Services through TFS Advisory Services, a SEC Registered Investment Advisor Member FINRA / SIPC. TFS Securities, Inc. located at 437 Newman Springs Road, Lincroft, NJ 07738 (732) 758-9300.

Transcript
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Welcome to the EnjoyMore30s Family Finance

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podcast. The only podcast dedicated to making life more

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enjoyable for young families by hitting on the financial topics

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that tend to weigh on us stress us out and distract our focus

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from simply enjoying life.

Joseph Okaly:

Hello, and welcome to the series three, Your

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Parent's Money Mindset series recap. We really covered a lot

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so far this season. We talked about bridging that initial

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financial conversation gap, better understanding your

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parent's existing mindset, how titling and account types will

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affect what you receive, to really the major medical

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expenses and exposures. That's a lot. It's valuable, actionable

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information but as I always say, at the same time, we don't want

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to be overwhelmed by it, right? If we take positive action on

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one of these seven relevant episode topics, you and your

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parents this time around, are better than you were before. And

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you should really be proud of that. You're improving not only

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your life, but your parent's life too. The people that have

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really looked out for you since you were born. We also want to

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make sure we're remembering the goal, remove anxiety and

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financial worries so we can focus our energy on what matters

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most, enjoying more living with family and our friends of

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course. Whether it's our own financial anxiety or that

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anxiety derived from our parents well being the same end result

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is reached. So the kind of worry that goes away when you know

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your parents aren't going to run out of money. Knowing your

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parents are covered medically and not going to come live with

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you kind of worries you might have. Know where you're going to

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have to go to or talk to when your parents pass away kind of

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worry. Know how to handle some of what you may receive when it

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happens, worry. So be proud of all these steps as you take

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them. You're making life more enjoyable than for you and as

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that natural consequence based on this series, for your loved

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ones as well. Lastly, stay tuned to the end as we're going to be

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announcing our focus for the next series to come, which is

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always very exciting.

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So without further ado, get together with your spouse and

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let's review. Number one, how to talk with parents about money.

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So the main point from this initial episode here is to

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acknowledge that money is hard to talk about. But there are

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very significant reasons why you should think about having those

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conversations with parents. The first is to head off any bad

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track earlier than later. No surprise they have to come live

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with you. And secondly is the reverse of that, where if

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they're in a good position to get them thinking about making

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the most out of their money that they've worked so hard to earn

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over their lifetimes. Either way, know that they are almost

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certainly coming from a very different money mindset. So

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remember, very likely no public Venmo purchases with emojis.

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Lastly, start bridging that gap by asking very basic financial

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preference questions. So how many banks do you use? Do you

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like credit cards or cash? When did you start talk, talking to

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somebody about investments, things like that. So those that

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are kind of expressing maybe concern without being invasive?

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Again, the goal is to start a conversation, not tell them why

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they're wrong.

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Number two, your parents trust their advisor. The main point

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here from this episode is if you were able to form that

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conversation around money with parents, don't underestimate the

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trust they likely have in whoever they're already working

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with. Your parents are older, they've likely been working with

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them for a very long time. Secondly, while you may be used

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to asking why-based questions, your parents may not be. They

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didn't grow up with the internet to fact check or self research

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everything. If the professional said it was this way, then many

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times you just kind of went with it. You didn't have any other

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options, you can go research it on your own very easily. Lastly,

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if you are able to ask some more thought provoking questions. So

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for example, what life expectancy assumption did your

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advisor make? How does your annuity actually work? And who

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does it go to if something were to happen to you? What assets

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transferred directly as opposed through the will and again, this

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is the one that most people just always kind of assume it's all

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going to pass through the will, but a lot of assets especially

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annuity retirement assets, do not. Be respectful again. The

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goal is to have them think and evaluate and ask your opinion as

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needed. The quickest way to get shut out is to preach to them.

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Episode Three, What About Mom? Surviving Spouse = CFO. This

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deals with the fact that one of your parents is going to outlive

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the other one. And the one that is going to be the longest

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living may not be the one who currently handles the finances.

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If that is the case, you are going to have to provide

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significant assistance. Having both parents fluent to some

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degree in what is going on financially ahead of time really

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is the smartest approach. I shared how with my own

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grandparents, my grandfather passed first, but because his

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illnesses kind of stacked up a little bit, as time went on, he

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had the opportunity to teach my grandma enough about the

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finances so that now today she's able to manage. If you find

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yourself needing to assist, start with organizing with what

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they have. Generally the best place and starting is with the

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bank accounts. Lastly, help in adding extra awareness in

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certain areas for that surviving spouse, such as you know, Social

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Security, where they're only going to maintain the higher of

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the two. Life insurance where maybe, you know, they don't know

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where the documents are, they already paid it off. So you

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don't want to miss that obviously. Annuities which have

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so many moving parts, many times. IRAs, which is an all

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likelihood not be immediately liquidated to help ensure no

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unfixable mistakes are made when it comes to taxation. And then

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the last part of that, which we also mentioned, was talking

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about making sure to have that appropriate power of attorney

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(POA) in order. Because now with one spouse, if something were to

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happen to them, you need somebody that can speak on their

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behalf if you need to you your sibling, somebody.

Episode number four:

Inheriting Assets, Opportunities and

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Headaches. Here we touched on how there can be a lot of

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headaches that come up, whether through incorrect beneficiaries

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being listed, incompetent executors, or just scattered and

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disorganized paperwork. These can significantly delay the

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settling of the estate cause issues in taxation, or really

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worst of all, it could mean that money goes to people they didn't

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want it to go to. The best course of action by far is to be

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proactively asking some questions again, to your parents

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ahead of time. These are not you know, how much do you have mom

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and dad? How much you guys worth kind of questions, just

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questions to make sure that they have their ducks in a row. Does

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everything go through your Will you have retirement accounts?

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They probably don't go through your will. Are you sure who the

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beneficiaries are? Do you know where any important information

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is? Should I know where any important information is now, or

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at least who to go to in order to find it if I need it? So

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questions kind of like that.

Next episode:

Step Up! The Gain Is Gone. Here we covered the

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current rules again, as of the spring of 2021. Were

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non-retirement account gains are essentially wiped away from the

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individual inheriting again, the non-retirement assets. The

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second thing to make your parents aware of though, is some

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of those general questions we touched on. Because quite

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frankly, we find very few people have these things kind of

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explained to them. So again, the broad workings of this step up

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rule, you have a stock, I bought it, it's worth $50 a share, it

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goes up to $120 a share, I pass away. The person that is

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inheriting that account, all that gain is wiped away here.

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Inherited IRAs, More Limited Options. So while the

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last episode Step Up! The Gain Is Gone, could possibly be

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changing with the current administration over here,

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inherited IRAs already were changed back in 2019, with the

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Secure Act. So this episode, we focused on how these inherited

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IRAs now have new unique rules, where instead of being able to

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have a lifetime distribution window, it's been shrunk all the

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way down to 10 years. All the money in an inherited IRA has to

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be distributed within 10 years. However, your parents do still

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have some powerful options at least, in potentially minimizing

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that tax and they can do that through what's called a Roth

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conversion. So ask your parents, did you hear about how they

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significantly changed the rules for people inheriting IRAs? Do

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you know if your plan is set up to properly try and help

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minimize or reduce these total taxes paid long term so that

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Roth conversion can be powerful because you can take those

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assets, and you can move them into a place that could be

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growing tax free, instead of leaving them currently where

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they may be in a place that they're going to continue to

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accumulate tax deferred, meaning that it's going to be a large

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growing tax burden that you may likely have to be, you know,

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paying at the top of your working career.

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And finally, number seven, Retiree Healthcare for Parents,

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A Lot Isn't Covered. This was a really, really important one.

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The takeaways here are to realize your parents may not be

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fully aware of what coverage they have medically in

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retirement, and could possibly be assuming they are more fully

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covered than they actually are. So talk to them about what they

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may have. Say that there are certain things that are only

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partially covered by Medicare, and others that are flat out not

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covered at all, like essentially all long term care expenses.

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Remember there is that guaranteed issue or acceptance

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period right after losing existing medical coverage for

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obtaining that Medigap supplement. So again, Medicare

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only covers roughly the first 80%. That extra 20% you do need

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to fill either with a Medigap supplement or with a Medicare

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Advantage plan. And even a rough plan of what would happen in a

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long term care situation is highly, highly recommended. What

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do you guys going to do? Do you need to use your home equity?You

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have an account that you're not touching? Did you just happen

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enough to be lucky to have purchased a long term care

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insurance policy back in the day before the prices went up so

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much? What is our plan if God forbid something happens?

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And so there you go, the first series I have ever heard about

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trying to help you speak with your parents about money is

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complete. So take some time to review these important areas.

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And remember, again, if you can make one positive change just

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one, then you are one step farther along and having life be

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more enjoyable for you and this time your parents as well.

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If you can absorb and implement all of the items that's

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fantastic. That's great. You have an ability to now really

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take big leaps ahead for where most where most people

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unfortunately tend to be. So I'm happy to be able to provide this

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to you. If it is overwhelming, if you have questions, just want

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someone to help you get all this stuff in order so you know

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exactly where you are and what path you're going on, head over

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to our website at www.enjoymorethirties.com.

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That's enjoy more three zero s.com and click Ask Joe to

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connect. I'd always be happy to help.

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Overall as always, thanks for tuning in. If you enjoyed this

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episode, like I always say please make sure to click,

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follow, and review us on Apple podcasts or wherever you listen.

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There are literally millions of young families out there I'm

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trying to reach and help just like you.

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Now to finish off today, I still need to share our next series as

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promised, which is entitled The Main Money Misnomers. Have you

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ever wondered as an advisor, what are the main

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misunderstandings when it comes to money that I get most

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regularly? I'm going to share some of those most prevalent

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misnomers I come across, especially when it comes to

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young families. We are going to cover tax refunds, goal setting,

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crypto, what's actually worse than death, and even Hershey

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bars. So it's a really wonderfully unique, colorful lot

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of topics that you may have thought about before and with a

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little information can likely worry about less than the

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future. As always trying to help in achieving that goal that we

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always have here of making life more enjoyable. So thanks for

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joining me today and I can't wait to connect with you again

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soon in the series to come.

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The conversations on this show are

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Joe's opinions and provided for general information purposes

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only. They do not constitute accounting, legal, tax or othe

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professional advice for you specific situation. You shoul

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always seek appropriate advic from a financial advisor

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accountant, lawyer or othe professional before acting upo

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any content or information foun here first. Joe is affiliate

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with New Horizons Wealt Management LLC, a branch offic

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of TFS Securities, Inc., and TF Advisory Services an SE

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registered investment adviso member FINRA/SIPC

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About the Podcast

Enjoy More 30s: Family Finance
Family Finance for Young Professionals.
Young families receive little to no personal finance help. We all grow up to have jobs and money, yet our education system focuses on Shakespeare and Algebra. Even professional advice can be hard to come by, with the majority of the industry chasing retirees and existing wealth.

Joe Okaly's podcast is aiming to change this, providing personal financial advice geared specifically to professionals with young families. This podcast is dedicated to making life more enjoyable for young families, by hitting on the financial topics that tend to weigh on us, stress us out, and distract our focus from simply enjoying life.

Joseph P Okaly is a CFP Certified Financial Advisor who fits directly in with who this podcast is focused on - a young professional with a family. With over a decade of experience as an advisor, there is passion and knowledge to make a difference.

Securities offered through TFS Securities, Inc., Advisory Services through TFS Advisory Services, a SEC Registered Investment Advisor Member FINRA / SIPC. TFS Securities, Inc. located at 437 Newman Springs Road, Lincroft, NJ 07738 (732) 758-9300.