Last week’s column on “boomerang kids” described some of the concerns to address before allowing adult kids to move back home because they are in financial trouble. This week let’s take a look at that same topic from a different perspective.

It’s interesting that in today’s world, we tend to assume that if adult children move in with parents, it’s the children who need help and support. In earlier times, combining households was more often a way for children to help their parents.

There’s no reason a multi-generational household can’t become a positive arrangement for everyone. The key is to manage it carefully and consciously. Here are a few potential benefits:

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“Boomerang kids.” It sounds like a TV reality show: kids grow up, kids move out, kids get into financial trouble, kids move back in with Mom and Dad.

In real life, there’s nothing particularly entertaining about adult children moving in with their parents. The situation is often a response to a financial or life crisis, and it can result in family tension and conflict that is anything but funny. For anyone considering this option, here are some important points to think about and discuss ahead of time.

1. Have a clear end in sight.
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This week I was honored to speak to the Financial Behavior in Retirement Summit in Chicago on Monday.  Pamela Black, of Financial Planning News, was there and covered my remarks.  She quotes me as saying, “We need more skills than what we learned in CFP courses. We are number crunchers, not  therapists. So we lack information about how humans change.”

I went on to tell the attendees that financial planners and advisors need to proceed with caution as they work with clients. For example, instead of reacting when a client resists change, planners might want to back up and explore the resistance rather than shaming or insisting on something.

Of course, the solution I use is to partner with a counselor.  After all, money is associated with psychological and emotional issues, but planners are not trained to manage those issues.   To read her entire article on my remarks, click here.

Would you be comfortable taking weight-loss advice from a dietician or a fitness trainer who was overweight? Would you trust a surgeon who was unwilling to be a patient in the hospital to which he sent his patients?

Probably not. Yet clients don’t hesitate to trust financial planners who don’t have financial planners of their own. To my knowledge, planners who do have their own planners are only a tiny minority of those in the profession.

Apparently, most planners don’t see this as a problem. Maybe that’s the reason why a recent webinar on financial planners having planners, sponsored by the National Association of Personal Financial Planners (NAPFA), was cancelled after not even one planner signed up.

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This week I spoke with Lyneka Little of ABC News about the pitfalls of turning family relationships into business ones.  It’s something I know more than a little bit about.

As the result of the Great Recession, more and more parents are asking their children to co-sign loans for them. Being a co-signer on any note comes with pitfalls.  A co-signer becomes liable for the full loan if the other party fails to pay their note as agreed. One of the problems of co-signing is you usually don’t know there’s a problem until the loan is in default.  If a payment is missed, you’re one of the last to find out. Continue Reading »

Michael Kitces, Nerd’s Eye View blog,  has a pertinent posting on his blog today regarding a topic I am passionate about, the need of financial planners to have their own financial planner.  His post was inspired by a webinar I was to do for national orgainization of financial planners on the topic.  The webinar was cancelled because not one financial planner signed up! 

You can read my original research or a recent post I wrote on the topic.  To read Michael’s entire post, click here.

Intra-family loans are certainly a popular topic with my clients.  Just last week I had three separate conversations with clients regarding loans to children. 

Apparently, intra-family loans are popular topic with the financial press, too. Last week I spoke with New York Times reporter Jennifer Saranow Schultz about the pros and cons of parents lending money to adult children.  You can read the entire article here.

If you want a reason to lie awake nights and worry about money, just choose a career where your earnings come in unpredictable boom-and-bust cycles. Having spent years selling real estate, I’m familiar with the financial roller coaster that can go along with selling big-ticket items.

There are plenty of other careers, as well, that don’t necessarily provide a reliable month-to-month income: farming and ranching, music, writing, tourism, construction, and consulting. And, as one of my staff members with a bronc-riding husband would remind me, professional rodeo. Plus in today’s economy, increasing numbers of people are relying on temporary contracts and projects.

Another form of unpredictable income is a field such as professional athletics. There’s a chance to earn big money, but the career typically won’t last long and could be abruptly cut short by an injury.

Here are some suggestions for managing an irregular income:

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Rick recently spoke with Linda Stern, a writer with Money Magazine, about whether a parent should cosign for a child.  to read the entire article.  She gives three excellent points a parent needs to consider: Pretend you are a lender, understand the risks, limit your exposure.

The article appears in the November issue on page 36. To read the whole article click here.

Kahler Financial Group is proud to be a sponsor of Black Hills Community Theater’s presentation of “A Christmas Carol,” that opens this Thursday, November 4th.

As a sponsor, we have a limited number of tickets to the preview performance on Thursday, tonight, that we would like to make available to our mailing list and blog readers.

If you  would like to attend the play, please call or email us and we will reserve a ticket for you.   The theater is located in the Rushmore Mall.  You can find out more information about the play or location by calling 394-1786.  There is a limit of 2 tickets per client and they are on a first come, first served basis.  Call 343-1400 or email Darla at darla@kahlerfinancial.com.  Enjoy the show!!