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The True Cost of Delaying Retirement Contributions

When life is busy, it’s easy to promise yourself you’ll “start saving later.” The catch is that retirement accounts don’t just grow with what you put in—they grow with time. And time is the one ingredient you can’t make up. Starting earlier, even with small amounts, can make reaching your goals easier and less expensive in the long run.

Why Waiting Can Be Costly

When you delay saving, you’re not only skipping contributions, you’re also losing time for your money to earn interest (or investment returns) and for that interest to earn even more. This process is known as compound growth, and it’s one of the most powerful forces in long-term savings. Here’s how it works:

  • When you contribute to a retirement account, those dollars can earn interest or returns based on the investments inside the account.
  • The next year (or month, depending on the compounding), you don’t just earn interest on your original contribution—you also earn interest on the interest that was added.
  • Over time, this creates a snowball effect; your savings grow faster because each layer of earnings adds to the base and generates more growth.

When you wait to start saving, you shorten the timespan for your money to compound. Missing even a few early years means multiple layers of that “interest on interest” effect are never realized. To reach the same goal, you’ll likely need to contribute much more each month, because your money has fewer years to do the heavy lifting for you.

That doesn’t mean it’s ever too late to start—it simply means the earlier you begin the more time works in your favor.

How to Start (and Keep Going)

You don’t have to contribute large amounts to make meaningful progress. What matters most is starting and being consistent.

  • If saving feels difficult, start with what fits your current budget and plan to increase it gradually. Many people raise their savings rate by 1% each year or after a raise, so the change goes almost unnoticed.
  • If your employer offers a retirement plan, try to contribute enough to receive the full employer match. That’s considered ‘free money’ added to your savings.
  • If you’re self-employed or working in the gig economy, there are retirement accounts designed just for you. These plans let you save for retirement with some tax advantages—similar to a 401(k) at a traditional job. Two worth checking out are the Solo 401(k) and the SEP IRA (Simplified Employee Pension IRA). A financial advisor or tax professional can help you decide which fits your situation best.

The main point is simple: getting started matters more than getting it perfect. Every dollar saved today has more time to grow.

Why Time Is the Secret Ingredient

The biggest advantage of starting early isn’t about how much you save, but how long your money can stay invested. The longer your money stays in an account that earns a return, the more opportunities it has to grow.

Markets naturally move up and down, so growth won’t be the same every year. But history shows that, over decades, staying invested through the ups and downs tends to reward patience. Even moderate, steady growth can make a significant difference when you give it enough time.

Adapting to Your Stage of Life

Saving looks different at each stage of life—and that’s normal.

  • In your 20s and 30s: Focus on creating a habit. Automate contributions so you don’t have to think about them.
  • In your 40s and 50s: Review your savings rate and goals. If your income has grown, increasing your contribution can help you take advantage of your higher earning years.
  • In your 50s and 60s: Many retirement plans allow extra “catch-up” contributions once you turn 50. This can help boost your balance before retirement.

Your financial advisor can help you balance your current needs and long-term goals, but no matter your age, the goal is consistency. Small, steady actions—kept up over time—make a larger difference than sporadic bursts of effort.

Delaying retirement contributions may feel harmless, but it can quietly reduce your financial flexibility later. The sooner you begin—even with small amounts—the more time your money has to grow. You don’t need to be perfect. You just need to begin.

© 2025 Commonwealth Financial Network®

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How to Choose Between Buying and Leasing a Car

For anyone in the market for a vehicle, one of the most important financial decisions to make is whether to lease or buy. It’s not just about preference; it’s about cost, flexibility, and how a vehicle fits into your broader financial goals. With current car prices still elevated, interest rates higher than usual, and many people driving less due to remote or hybrid work, this decision carries even more weight than it did a few years ago.

Both leasing and buying offer legitimate advantages, and neither is inherently “better” across the board. The key is understanding how each works, what they cost over time, and which option best fits your driving habits and financial situation.

Buying a Car

When someone buys a vehicle—either outright or through financing—they are paying to eventually own the car completely. Once the loan is paid off, there are no more monthly payments, and the vehicle can be kept, sold, or traded in as desired. For drivers who plan to keep a vehicle for many years, this can result in significant long-term savings.

Ownership offers flexibility. Drivers are free to put as many miles on the vehicle as they want, make modifications, and manage wear and tear without worrying about contract terms. However, new vehicles lose value quickly, by 20 percent to 30 percent in the first year, and once a warranty expires, repair costs typically rise. For those concerned about depreciation or maintenance, buying a certified pre-owned car, a used vehicle that has passed a thorough inspection and comes with an extended warranty, can be a smart middle ground.

Leasing a Car

Leasing is essentially a long-term rental. The driver pays for the use of the car over a set period (usually two to four years) and returns it at the end of the lease. Monthly payments are typically lower than those for a loan on the same car, and upfront costs, like a down payment and sales tax, are often reduced.

Leasing may also appeal to those who want to drive newer vehicles with the latest technology and safety features without worrying about long-term reliability. Most leases also include warranty coverage for the full term, which lowers repair expenses. But there are limits: leases often cap annual mileage at 10,000 to 15,000 miles, and going over can result in costly penalties. Lessees must also return the vehicle in good condition or risk end-of-lease fees.

Because a leased car is never owned, there’s no resale value at the end—and no chance to recover any of the money paid. It’s important to consider that the lower monthly payments come with trade-offs in flexibility and long-term value.

What to Consider in Today’s Climate

Several current market conditions are affecting how buyers and lessees should approach this decision:

  • High car prices remain a reality, especially for new vehicles. While prices have eased slightly compared to pandemic peaks, many models are still significantly more expensive than they were five years ago.
  • Interest rates for car loans now average between 6 percent and 8 percent for borrowers with good credit, increasing the total cost of financing. Leasing rates—calculated using a factor called the “money factor,” which functions like an interest rate—are also elevated, though they can be slightly lower than loan rates.
  • Remote and hybrid work continue to reduce the time and miles many people drive. This makes leasing more practical for some drivers who now put fewer miles on their car and can stay well within the lease’s mileage limits.
  • Electric vehicle (EV) incentives may favor leasing. Certain federal tax credits are currently easier to access through a lease than a purchase, as dealers can apply the credit to reduce lease costs directly.

Look at the Bigger Financial Picture

There’s no single right answer when it comes to leasing versus buying—it depends on the driver’s needs, habits, and financial priorities. Someone who commutes long distances, plans to keep a vehicle for many years, or wants to avoid recurring payments may find that buying offers better value over time. On the other hand, someone who drives less, prefers newer cars with updated features, or wants predictable costs and minimal maintenance might benefit from leasing.

The smartest choice is the one that aligns with a household’s broader financial goals. That includes not just the monthly payment, but the total cost over five to seven years: insurance, maintenance, fuel or charging, taxes, and potential resale value. A decision based only on what feels affordable month-to-month may miss hidden long-term costs.

When possible, it’s wise to run a full cost comparison before deciding—and to treat the car not just as a vehicle but as part of a larger financial plan.

© 2025 Commonwealth Financial Network®

 

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Building Your Financial Dream Team

Managing money can sometimes feel overwhelming. There are so many moving parts: saving for retirement, paying taxes, planning for your family’s future, and making thoughtful investment decisions. The good news is you don’t have to figure it all out alone. Your financial advisor can help guide and support you as you build toward your goals. And a wider team of trusted professionals—who coordinate and bring different skills to the table—can add even more structure to your financial life.

The Financial Advisor: Guiding the Big Picture

Your financial advisor often serves as the central point for your financial team. They take time to understand your priorities, whether that’s buying a home, saving for education, preparing for retirement, or feeling more confident about day-to-day finances.

Advisors can help design a plan tailored to your situation and adjust it as life changes. They may guide investment choices, suggest approaches to managing risk, and coordinate with your Certified Public Accountant (CPA) or attorney. Many clients find it helpful to work with an advisor when they’re starting out, navigating major life transitions (such as marriage or parenthood), approaching retirement, or experiencing significant financial changes.

The Certified Public Accountant: Managing the Numbers

Taxes affect nearly every aspect of your plan. A CPA can help prepare and file your returns, offer year-round guidance on ways to manage taxes, and bring clarity when life events get more complicated—like when starting a business, selling property, receiving an inheritance, owning rental real estate, managing multiple income sources, or handling stock compensation.

CPAs can also represent you before the IRS if issues arise, and they frequently collaborate with your advisor to keep cash flow and investment decisions aligned with your tax picture.

 The Estate Planning Attorney: Preparing for the Future

Estate planning helps you communicate your wishes and consider your loved ones. An estate planning attorney helps put legacy documents in place (such as wills, trusts, powers of attorney, and health care directives) and can explain state-specific rules. They may offer strategies to help reduce taxes where applicable and guide executors or trustees through probate or trust administration. It’s wise to revisit your plan with your attorney after major life events such as marriage, divorce, the birth of a child, or significant changes to your assets.

 The Insurance Professional: Protecting What Matters

Insurance is a key piece of financial security. An insurance professional can help you evaluate needs for life insurance, disability coverage, long-term care, and liability protection. They can explain policy options, help you review coverage as circumstances change, and coordinate insurance strategies with your overall plan. Major milestones, such as buying a home, starting a family, changing careers, or nearing retirement, are good times for a check-in.

Other Professionals Who May Play a Role

Depending on your circumstances, you might also work with other specialists. A real estate agent or broker can help with buying, selling, or investing in property. If you own a business, you may engage consultants for strategy, systems, succession planning, or financial optimization. Other specialists could include appraisers, trustees, philanthropic advisors, or property managers.

How They Work Together

Each professional brings a different perspective, but collaboration adds real value. A financial advisor and a CPA may coordinate to ensure investments and cash flow reflect tax considerations. An estate planning attorney and advisor can help align retirement and legacy plans with your documents. An insurance professional can work with a financial advisor to integrate protection strategies. In some situations, the whole team coordinates on wealth transfers across generations.

Putting Your Team in Place

Think about which professionals could support you now and which you might add over time. Everyone’s team looks a bit different based on goals, family, and stage of life. If you’re seeking help for a specific area, your advisory firm can often suggest professionals they know, trust, and collaborate with. By surrounding yourself with professionals who bring complementary expertise, you’ll gain access to guidance that can help you move forward with clarity and confidence.

© 2025 Commonwealth Financial Network®

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How Much Should You Spend on Aging in Place?

Aging in place—the idea of staying in your own home as you grow older—offers both independence and comfort. But while the idea sounds appealing, the financial reality of making it happen can be more complicated than many anticipate. From home modifications to in-home care, there are a variety of costs to consider and plan carefully. Let’s break down the key costs associated with aging in place, and how you can manage them to stay on track with your financial goals.

Home Modifications: Preparing Your Home for the Long Term

As you get older, your home needs to be safe and easy to navigate. If you’re noticing that everyday tasks, such as walking up stairs or stepping into the bathtub, are becoming more difficult, now is the time to think about home modifications.

Key Modifications to Consider:

  • Stairs and entryways: If you have trouble with stairs or walking, adding ramps or installing a stairlift can improve safety and mobility.
  • Bathroom updates: Consider a walk-in shower, grab bars, or a raised toilet seat to reduce risks.
  • Wider doorways: If you use a walker or wheelchair, widening doorways can make it easier to move around.

These updates could cost anywhere from a few hundred to a few thousand dollars, but they’re far less expensive than medical bills from accidents caused by unsafe living conditions. Fortunately, there are financing options such as home improvement loans and grants specifically for seniors, and some modifications may even be tax deductible.

Financial Tip: Look into financing options early to avoid unexpected financial strain. Research grants, loans, and tax benefits to help cover the cost.

Home Maintenance: Planning for Ongoing Costs

As you age, maintaining a home becomes more difficult. If you’ve lived in a large house for years, you might find that tasks such as mowing the lawn, cleaning gutters, or even managing repairs are becoming overwhelming. At some point, you’ll likely need help with these tasks.

Maintenance Tasks to Plan For:

  • Lawn and yard care: Lawn mowing, snow shoveling, and landscaping
  • Routine repairs: Plumbing issues, fixing appliances, roof repairs
  • Cleaning services: Regular cleaning to keep the home tidy and safe

For many older homeowners, these costs add up quickly. The expense of hiring help for even basic upkeep can reach thousands of dollars annually, depending on your location and the services you need. Planning for these ongoing expenses now can help prevent surprises down the line.

Financial Tip: Set up a dedicated maintenance fund specifically for these types of expenses. This allows you to manage regular costs without tapping into your retirement savings.

In-Home Care Costs: How to Prepare for Assistance

As time passes, most people will need some help with daily activities, whether it’s preparing meals, managing medications, or getting dressed. These costs can add up quickly, so it’s important to plan for them in advance.

Types of Care to Consider:

  • Personal care aides: These professionals assist with daily tasks such as bathing, dressing, and meal preparation. They usually charge an hourly rate.
  • Skilled nursing care: If you need more specialized medical help, such as physical therapy or medication management, a nurse may be required. This is generally more expensive than personal care aides.

The cost of hiring an aide for even a few hours a day can run into thousands of dollars per month, depending on your location and the level of care needed. If you don’t already have long-term care insurance, now is the time to consider it to offset these future expenses.

Financial Tip: Check whether your health insurance covers any part of in-home care, or if Medicaid is an option in your state. And if you don’t already have long-term care insurance, look into options that might suit your needs.

Financial Sustainability: Making Sure You Can Cover the Costs

Aging in place requires long-term financial planning to ensure that you can cover all these costs without depleting your savings. You may need to explore different strategies for funding your home modifications, maintenance, and care needs.

Options to Consider:

  • Downsizing: If your current home is large or costly to maintain, selling it and moving to a smaller, more affordable property can free up cash.
  • Long-term care insurance: This can help cover the cost of in-home care, helping protect your savings when your care needs increase.

Financial Tip: Downsizing is a significant financial decision. Speak with a financial advisor to fully understand its long-term implications before moving forward.

When Aging in Place Becomes Too Costly

At some point, you may find that the costs of aging in place—or the physical demands of maintaining your home—become too great. If your care needs increase or home maintenance becomes too difficult, it’s time to reassess whether staying in your home is still the best choice.

For example, you might start with part-time in-home care, but as your needs grow, you may find that full-time care is necessary. The costs of full-time care and maintaining your home could exceed your budget, making other options, such as assisted living, more appealing.

Financial Tip: Regularly reassess your needs and expenses. If aging in place becomes unmanageable, consider speaking with a financial advisor to explore other options, such as transitioning to assisted living, before you reach a crisis point.

Plan for the Long Term

Aging in place is a great goal for many, but it requires thoughtful financial planning. From home modifications to in-home care and regular maintenance, understanding the full scope of the costs involved will help you set realistic expectations. By budgeting carefully, exploring financial options, and reassessing your needs periodically, you can ensure that aging in place remains a viable option that allows you to live comfortably in your own home for as long as possible.

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What You Should Know Before Naming a Minor as a Beneficiary

If you have young children, grandchildren, or other little ones in your life who are dear to you, you might consider including them in your estate plan. One component of that estate plan may include naming them as a beneficiary on your financial accounts, insurance policies, or other assets via a will. While leaving assets to minors may seem like a simple solution, it can lead to unintended complications. In this article, we’ll explore the challenges minors face when inheriting assets and provide practical strategies to help ensure that your wishes are carried out smoothly.

What Challenges Do Minors Face as Direct Beneficiaries?

Minors legally cannot own or manage significant funds or property without a custodian. Here are the potential challenges when leaving assets directly to a minor:

  • Custodianship: When a minor inherits assets outside of a trust, they will usually need a custodial account to manage the funds until they reach the age of majority. This account requires a designated custodian, who may be a parent, legal guardian, or another trusted person. If no custodian is named, then most often a natural parent or legal guardian will typically take on this role. Speak to your financial advisor or attorney for more information about how to elect a custodian.
  • Lack of control: In almost all circumstances, control of custodial accounts must be transferred directly to the minor once they reach the age of majority as defined by state law (often either 18 or 21). This may not align with your original intention if the child isn’t ready to handle the inheritance responsibility.
  • Probate: When leaving assets to a minor via a will, they could go through probate, a costly and time-consuming process that validates your will and distributes the assets. To avoid delays and complications, it’s important that all accounts have named beneficiaries, and you consider using a trust to bypass probate.

 How Can You Establish a Trust to Protect a Minor’s Inheritance?

A trust is often the most flexible and effective way to ensure that your child’s inheritance is distributed according to your wishes. However, it is also often the most expensive. Here are some of the features of a trust:

  • Control over distribution: You can set specific terms, such as distributing funds at milestones like graduating from college or reaching a certain age, ensuring that your child is prepared to manage their inheritance.
  • Protection from mismanagement: A trustee (either an individual or institution) will manage the funds responsibly, ensuring that they are used appropriately, such as for education or housing, until the child is mature enough to take control.
  • Extended control beyond age of majority: If you don’t want your child to have full control at 18 or 21, a trust allows you to distribute assets over time (e.g., 25% at age 25, 25% at 30, and the remainder at 35). This approach helps ensure your child’s financial maturity before receiving large sums.

Three ways to Protect a Minor's Inheritance - graphic

When Might Custodial Accounts Be Appropriate?

If you’re looking for a simpler option, custodial accounts under the Uniform Transfers to Minors Act (UTMA) or the Uniform Gifts to Minors Act (UGMA) might be a good choice. These accounts allow you to transfer assets to a minor while appointing an adult custodian to manage them until the child reaches the age of majority (usually 18 or 21, depending on the state) via a beneficiary designation.

Key features of custodial accounts:

  • Simple and cost-effective: Easy to set up with no complex administration. There are typically no ongoing fees or tax filings.
  • No probate: Funds in a custodial account avoid probate via a beneficiary designation, ensuring a quicker transfer.
  • Automatic control at age of majority: Once the child reaches the age of majority as defined by the state, they gain full control over the account, which may not be ideal if they aren’t ready to manage it. For this reason, custodial accounts may be best suited for smaller amounts or simpler needs.

Why Is Choosing the Right Trustee or Custodian Critical?

Whether you choose a trust or a custodial account, selecting the right person to manage the funds is essential. This person will be in charge of handling the money and making decisions, so they must be financially responsible, trustworthy, and likely to outlive you. It’s also a good idea to name a backup trustee or custodian in case your primary choice is unable or unwilling to take on the responsibility.

For larger sums or more complex situations, you might want to consider naming a professional trustee, such as a financial institution or estate planning expert, to ensure that the trust is managed according to your wishes. Speak with your financial advisor to determine if a professional trustee is the best option for you.

What Circumstantial and Tax Implications Should You Consider?

Leaving money or property to a minor can have tax implications that should be considered. One important factor is the kiddie tax, which applies to any unearned income (such as investment earnings) a child receives. If the amount exceeds a certain threshold, it will be taxed at the parent’s rate instead of the child’s, which could lead to a higher tax burden. Also, trusts are often taxed at higher rates than individuals, so if you set one up, it may quickly reach the highest tax bracket, even if the income is relatively low.

Additionally, retirement assets left to minors could affect their eligibility for student aid, and naming special needs beneficiaries could affect their government benefits. Always consult with your financial advisor and a tax professional to structure the inheritance in a way that minimizes tax consequences and aligns with your overall financial goals.

Have You Considered 529 Plans for Education-Specific Inheritance?

For those who want to leave funds specifically for a child’s education, a 529 college savings plan can be an excellent option. These state-sponsored accounts provide tax advantages when funds are used for qualified education expenses. The benefits include:

  • Tax advantages: Contributions grow tax free, and withdrawals for education expenses are not taxed.
  • Control: The account owner maintains control of the funds, even after the child reaches adulthood.
  • Flexibility: If the child doesn’t need the funds, you can change the beneficiary to another family member. Additionally, starting in 2024, you can transfer a certain amount of funds into a Roth IRA for the beneficiary, offering additional flexibility for long-term savings.

Some estate planners recommend using a 529 plan alongside other inheritance tools, such as trusts, to create a comprehensive financial plan.

While naming a minor as a beneficiary is a thoughtful gesture, it requires careful planning to ensure that your assets are used responsibly and in the best interests of your child or grandchild. Consulting with an estate planning attorney, tax professional, and your financial advisor is key to creating a plan that aligns with your goals, minimizes tax implications, and helps avoid unnecessary complications in the future. By taking proactive steps today, you can ensure that your loved ones are supported when they need it most.

The fees, expenses, and features of 529 plans can vary from state to state. 529 plans involve investment risk, including the possible loss of funds. There is no guarantee that an education-funding goal will be met. In order to be federally tax free, earnings must be used to pay for qualified education expenses. The earnings portion of a nonqualified withdrawal will be subject to ordinary income tax at the recipient’s marginal rate and subject to a 10 percent penalty. By investing in a plan outside your state of residence, you may lose any state tax benefits. 529 plans are subject to enrollment, maintenance, and administration/management fees and expenses.

This material has been provided for general informational purposes only and does not constitute tax, legal, or investment advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a qualified professional regarding your situation. Commonwealth Financial Network does not provide tax or legal advice.

© 2025 Commonwealth Financial Network®

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Why Artificial Intelligence Can’t Replace Your Financial Advisor

In today’s digital age, artificial intelligence (AI) has transformed how we shop, communicate, and manage our finances. From budgeting apps to automated bill payment systems that track spending patterns, AI tools provide convenient ways to monitor and organize your financial life. They’re available 24/7, typically cost less than human services, and can process vast amounts of data in seconds.

With all these benefits, you might wonder: Do I still need a financial advisor? The answer is a resounding yes. While AI brings impressive capabilities to financial services and can certainly supplement your financial strategy, it falls significantly short of replacing the comprehensive value a human advisor provides. Here’s why the human touch remains essential in financial planning.

Human Understanding and Emotional Insight

AI excels at analyzing numbers and identifying patterns, but financial decisions aren’t just about the math—they’re deeply personal, tied to your life goals and values.

An AI-enhanced tool may calculate the maximum amount to contribute to a retirement plan or education funding, basing the figure purely on numbers. Still, it won’t understand the deeper emotional significance—the pride in helping family, the desire to leave a meaningful legacy, or how their own experiences with financial hardship affect what they consider “enough” for retirement security. These emotional dimensions require the human understanding a financial advisor provides.

Human advisors bring emotional intelligence to the table. They can help you process the complex emotions that often come with money decisions—whether it’s the anxiety of market volatility or the excitement of buying a home. Unlike AI, a human advisor can recognize when the “rational” financial choice isn’t the right one for you emotionally and help you balance both.

Regulatory Knowledge and Technical Expertise

Financial advisors stay current on the ever-changing landscape of tax laws, retirement rules, and financial regulations—areas where AI might lag unless specifically updated.

When tax laws change (as they often do), your advisor will understand how these changes affect your specific situation and can adjust your strategy accordingly. They can tell you when it makes sense to harvest tax losses, which retirement accounts to draw from first, or how new regulations might affect your estate plan.

This specialized knowledge becomes particularly valuable during major life transitions. When you’re navigating a career change, inheritance, or retirement, your advisor can bring technical knowledge and contextual understanding that automated systems simply can’t match.

Infographic

Complex Family Dynamics

Financial planning often extends beyond individual goals—it could involve navigating complex family relationships and financial legacies.

Issues like inheritance planning, supporting aging parents, or managing family business assets require sensitive conversations and thoughtful solutions. Dividing an estate fairly among siblings or deciding how to support a child with different financial needs involves more than just math—it requires emotional insight and negotiation skills that AI lacks.

An advisor who knows your family history and financial dynamics can offer tailored advice that AI can’t replicate. They can help prevent family conflicts over money and create plans that honor both financial efficiency and family harmony.

Behavioral Coaching and Accountability

Money decisions aren’t just logical—they’re psychological. Fear, greed, and overconfidence can cloud judgment, even when the data points one way.

A good financial advisor acts as a coach, helping you manage emotional reactions and stay focused on long-term goals. AI might send automated “stay-the-course” messages, but it can’t replicate the impact of a trusted advisor reminding you of your objective-driven strategy and reassuring you during uncertain times. Your advisor knows your financial history and can remind you of how you’ve weathered previous market downturns when panic starts to set in.

Data Privacy and Security

AI tools that handle sensitive financial information are potential targets for hacking and data breaches. While human advisors are also vulnerable to cyberthreats, they provide added layers of protection, such as secure communication channels and strict confidentiality protocols.

Additionally, when you work with a human advisor, you know exactly who has access to your financial information. With AI platforms, especially free ones, your data might be shared with third parties or used for purposes beyond your immediate financial needs.

Real-Time Adaptation and Strategic Insight

AI relies on historical data to make decisions, but it can’t fully anticipate unprecedented events or shifting market conditions.

During a market crash, AI might recommend selling assets to minimize short-term losses because that’s what the algorithm suggests. A human advisor, however, can step in, remind you of your long-term goals, and help you stay the course—potentially avoiding costly decisions driven by panic.

Beyond market fluctuations, life itself is unpredictable. Divorce, an unexpected illness, or a sudden career opportunity can change your financial picture. An advisor who knows you and your goals can adjust your plan thoughtfully, considering both financial and personal factors. AI can’t replicate that kind of nuanced, real-time guidance.

The Value of Human Advice

Perhaps the most compelling reason human advisors remain essential is their ability to serve as true thinking partners. They bring perspective gained from working with hundreds of clients through different life stages and market cycles. They understand not just how markets work—but how people work with money.

Human financial advisors are legally required to act in your best interest. AI tools, on the other hand, are not held to the same ethical standards. In some cases, algorithms may be designed to prioritize the platform’s profitability over your financial well-being. Having a human advisor helps ensure that your interests remain the priority.

AI will continue to evolve and enhance financial services, but the human connection, contextual understanding, and strategic guidance that advisors provide are irreplaceable. The future of financial advice isn’t about choosing between human and artificial intelligence—it’s about combining the strengths of both to create better financial outcomes for you and your family.

© 2025 Commonwealth Financial Network®

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The Importance of Financial Literacy for Kids

Picture this scenario: Your 10-year-old receives $20 for their birthday and asks, “Can we go to the store so I can buy a new toy?” As you think about how to answer, you realize this is a perfect chance to teach an important life lesson. The impulse to get something new as soon as possible is undoubtedly a strong one—in both kids and adults—but this could be an opportunity to explain the merits of saving for a larger purchase. Helping kids understand how to manage money can create habits that stick with them and help them make smart choices in the future.

Teaching children about money isn’t just practical—it’s about giving them the tools to handle life’s challenges. Early lessons about saving, spending, and planning can set them up for success.

Why Start Early?

Kids pick up habits and lessons starting at young ages, and money skills are no different. Studies show that attitudes about money are generally formed by age seven. Teaching kids while they’re young helps them build a healthy relationship with money and equips them with skills to manage it—to save, spend, and budget responsibly. These lessons can give them the tools they’ll need to avoid financial mistakes later on. In addition to helping your child make better decisions about saving, borrowing, and investing, early money lessons will help them learn to distinguish between needs and wants, a key skill for managing money wisely.

Allowance and Budgeting

An allowance is often a child’s first encounter with money, making it a great tool for teaching the basics of finance. While you may want to designate some chores as an expectation for contributing to the household (therefore, not allowance-worthy), try giving your child a weekly allowance tied to age-appropriate tasks that go beyond their expected contribution. For example, a seven-year-old might be expected to make his bed every day, but he can earn cash for changing the sheets or putting the dirty ones in the laundry.

Here’s one way to use an allowance to teach budgeting:

  • The three jars method: Give your child three jars labeled “Save,” “Spend,” and “Give.” Encourage them to divide their allowance among these jars. A common split is 50% for spending, 40% for saving, and 10% for giving, but you can adjust this based on your family’s priorities.
  • Discuss spending choices: Let them decide how to use their “Spend” money. If they want a toy, talk about whether they’ll still enjoy it a week later—in other words, is it worth the spend?
  • Track their money: Use a simple notebook or a basic app to keep track of allowance, savings, and spending. This helps kids see where their money is going and gain practice keeping a record of their finances.

Financial Literacy for Children - illustration - Jar GraphicSetting Saving Goals

Saving teaches kids patience and discipline, which can be tough when they’re naturally drawn to instant rewards. Help them set a goal for something they want, like a game or a bike, and show them how to save for it.

  • Set a goal together: Ask your child what they’d like to save for and figure out how much it costs. Then, break it into smaller, manageable steps. For instance, if the goal is $20 and they save $5 a week, they’ll reach it in four weeks.
  • Make it visual: Create a savings tracker, like a thermometer, sticker chart, or a jar they can color in as they save. This makes the process fun and the progress visible.
  • Celebrate success: When they reach their goal, congratulate them and tell them how impressed you are that they did it. Reinforce how saving leads to worthwhile rewards.

Introducing Investing

Investing might sound too complicated for young minds, but it can be easy for kids to understand with age-appropriate explanations.

  • Use familiar examples: Explain investing by comparing it to planting a seed and watching it grow. Relate it to companies they know, like ones that make their favorite toys or snacks.
  • Open a custodial investment account: Some financial institutions offer accounts where you can manage small investments for your child. Show them how money can grow with time and patience by explaining how the account works.
  • Use simple analogies: Talk about risk versus reward. For example, keeping money in a piggy bank is safe but doesn’t grow, while investing is like planting a garden—it takes time but can yield bigger rewards.

Everyday Teachable Moments

Using ordinary situations to teach money lessons helps make the concepts stick:

  • Grocery store shopping: Involve your child in comparing prices, discussing needs versus wants, and finding the best deals.
  • Family budgeting: Share how you budget for things like vacations or household expenses. Simplify it so they can understand how money is allocated.
  • Holiday or birthday money: If your child receives money as a gift, encourage them to split it among saving, spending, and giving.

Encouraging Generosity

Teaching kids about giving helps them develop empathy and gratitude. Suggest they donate a portion of their money to a cause they care about—like helping animals or supporting a local food bank. Explain how even a small amount can make a big difference.

A Lifelong Skill

By teaching kids about money early, you’re giving them skills they’ll use forever. Financial literacy helps them make smart decisions, avoid debt, and even build wealth. Whether it’s through an allowance, saving for a goal, or exploring investing, these lessons will prepare them for the future. Start small, keep it consistent, and watch them grow into confident, money-savvy adults.

© 2025 Commonwealth Financial Network®

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How to Start a College Fund Early

Every parent wants to give their child the best possible future, and for many families, that includes higher education. But with tuition costs continuing to rise, figuring out how to pay for college can feel overwhelming. The good news? Starting a college fund early gives your savings more time to grow, making it easier to manage those future expenses.

529 Plans: A Popular Tool for College Savings

When it comes to saving for a child’s education, 529 college savings plans are one of the most widely used and versatile options. These state-sponsored accounts are specifically designed to help families save for qualified education expenses, and contributions grow tax free as long as they’re used for qualified expenses. Because of their flexibility and tax advantages, they’re one of the most popular ways to save for college. Begin by evaluating your state’s 529 plan, as that’s often the best place to start for state tax benefits. However, you’re not limited to your own state’s plan—you can choose almost any state’s 529 program that fits your needs.

Here’s how they work:

  • Contributions: Money added to a 529 plan is invested in a selection of funds or portfolios chosen by the account owner.
  • Growth: Earnings grow tax free, meaning you won’t owe federal taxes on the investment gains as long as the money is used for qualified education expenses.
  • Withdrawals: Funds can be used for tuition, fees, room and board, books, and even some K–12 tuition (in certain states) or trade schools.

Let’s say you start contributing $200 monthly when your child is born. By the time they’re 18, assuming a 6 percent annual return, you could have about $75,000 saved—and all the earnings would be tax free when used for education.

Tax Benefits

One of the biggest advantages of a 529 plan is its tax efficiency. Contributions are made with after-tax dollars, but the account’s growth and qualified withdrawals are tax free. Some states even offer tax deductions or credits for contributions, adding another layer of savings.

For example:

  • If you contribute $5,000 to a 529 plan in a state offering a 5% tax credit, you could save $250 on your state taxes that year.

While $250 may not seem like much, over time, these tax savings can make a meaningful difference—reducing your overall education costs just by choosing the right savings plan.

Investment Options, Age by Age

529 plans typically offer a range of investment portfolios, from aggressive growth funds to conservative options. Your child’s age and your comfort with risk will help guide your investment choices.

In the early years (ages 0–10), it often makes sense to invest more aggressively, with a higher allocation to stocks that have the potential for long-term growth. By the time your child reaches middle school (ages 11–15), gradually shifting to a more balanced approach can help manage risk. As college approaches (ages 16+), many families move to more conservative investments, such as bonds or money market funds, to help protect savings from market downturns.

Keep in mind, many plans also offer “age-based” portfolios that automatically adjust the investment mix as your child gets closer to college age.

Starting Early

Time is your greatest ally when it comes to compounding growth, so it’s ideal to start as soon as possible. Setting up automatic monthly transfers often works better than trying to make larger annual contributions. For example, contributing $100 monthly feels more manageable than coming up with $1,200 at year-end. If you start contributing that $100 monthly at your child’s birth, earning an average annual return of 6 percent, you could have nearly $40,000 saved by the time they turn 18. Plus, regular contributions help you take advantage of market ups and downs through dollar-cost averaging.

Here are a few tips to get started:

  • Set up automatic contributions: Most 529 plans allow you to schedule recurring deposits, making it easier to stay consistent.
  • Start small: Even $25 a month can grow substantially over 18 years. Note that some plans do implement minimum contribution thresholds, though these are generally very low.
  • Gift contributions: Encourage family members, such as grandparents, to contribute to the 529 plan as part of holiday or birthday gifts. College savings works best as a family effort, with everyone pulling together toward the shared goal of providing educational opportunities for the next generation.

What If Your Child Doesn’t Pursue College?
Worried about what happens if your child doesn’t go to college? 529 plans offer plenty of flexibility:

Change the beneficiary: The account can be transferred to another family member of the beneficiary, such as a sibling, cousin, grandchild, or even yourself.

Use it for other education-related expenses: Use the money for trade schools or vocational training or put it toward K–12 tuition (up to $10,000 annually, but only in certain states).

Withdraw funds: If the funds are withdrawn for nonqualified expenses, the earnings portion will be subject to taxes and a 10 percent penalty, but the principal contributions are not penalized.

Repurpose the funds: Recent changes in legislation allow up to $35,000 of unused 529 funds to be rolled into a Roth IRA for the beneficiary (subject to certain conditions).

This flexibility ensures that your savings don’t go to waste, even if plans change.

Exploring Alternatives
While 529 plans are a popular choice, they’re not the only option. Depending on your family’s circumstances, other accounts might be worth exploring:

Coverdell education savings accounts (ESAs): These accounts offer similar tax advantages to 529 plans but with lower contribution limits ($2,000 annually per child, subject to certain limits) and more flexibility in investment options.

Custodial accounts (UTMA/UGMA): These accounts allow you to save money in a child’s name, which they gain control of upon reaching adulthood. However, earnings are subject to taxes, and the funds can be used for any purpose—not just education.

Each option has unique benefits and trade-offs, so it’s helpful to compare them carefully before making a decision.

Building a Brighter Future
Starting a college fund early may seem like a daunting task but breaking it into manageable steps can help you stay on track. Whether you choose a 529 plan, a Coverdell ESA, or another option, the key is to begin as soon as you can and contribute consistently.

Saving for college doesn’t have to be overwhelming. By starting early, taking advantage of tax-advantaged accounts, and making saving a family effort, you can turn today’s small contributions into tomorrow’s opportunities—helping your child chase their dreams with confidence.

The fees, expenses, and features of 529 plans can vary from state to state. 529 plans involve investment risk, including the possible loss of funds. There is no guarantee that an education-funding goal will be met. In order to be federally tax free, earnings must be used to pay for qualified education expenses. The earnings portion of a nonqualified withdrawal will be subject to ordinary income tax at the recipient’s marginal rate and subject to a 10 percent penalty. By investing in a plan outside your state of residence, you may lose any state tax benefits. 529 plans are subject to enrollment, maintenance, and administration/management fees and expenses.

This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

© 2025 Commonwealth Financial Network®

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Navigating the Financial Side of Divorce

Divorce is one of life’s most challenging transitions – emotionally and financially. After years of building a shared financial life, you’re suddenly faced with untangling everything, from your finances to your future plans. Questions like, “What happens to our house? How will I manage on my own? What’s fair when dividing everything we’ve built?” are essential to address.

The good news? With a clear understanding of your options and proactive planning, you can create a solid foundation for your post-divorce life.

Dividing Assets

One of the most complex aspects of divorce is dividing your assets. It’s not just about who gets what; it’s about ensuring that you have a clear picture of your financial situation and a fair plan for moving forward.

  • List all assets. Start by listing everything you and your spouse own. In most cases, marital property includes assets acquired during the marriage, regardless of whose name is on the title. Certain items – such as gifts, inheritances, or assets protected by a prenuptial or post-nuptial agreement – may not be considered marital property, however. Be thorough and don’t overlook assets such as frequent flyer miles, retirement accounts, or collectibles – they may factor into the financial picture.
  • Understand their value. Knowing what your assets are worth is important. You might need professional help, like appraisers for property or valuations for a business. For bank accounts and investments, statements from financial institutions can provide accurate numbers.
  • Decide how to divide. How assets are divided depends on your state’s laws. Community property states split everything 50/50, whereas equitable distribution states divide assets fairly, though not necessarily equally. A financial advisor and attorney can help you determine what’s realistic based on your situation.

Understanding Support Obligations

Divorce often brings financial obligations such as child support or spousal support (alimony). These need to be factored into your financial plan.

  • Child support. If you’re paying or receiving child support, know that it’s designed to cover essentials such as housing, education, and health care. Look at how this fits into your budget – whether as an expense or income – and plan accordingly.
  • Spousal support (alimony). Alimony helps ensure that one spouse doesn’t face undue financial hardship. This is especially important if one partner took time out of the workforce to support the family. The duration and amount vary depending on your state, so it’s smart to consult legal and financial experts to understand your options.

Legal and Mediation Costs: Plan for the Process

Divorce isn’t just emotionally taxing – it can be expensive. Budgeting for these costs early can help avoid financial surprises.

  • Traditional divorce. If your case is contested, you’ll likely need an attorney. Rates vary, so ask for a clear estimate upfront.
  • Mediation or collaborative divorce. If you and your spouse can work together, alternative methods may save you both money and stress. These approaches are typically less expensive and give you more control over the outcome.

Rebuilding Your Financial Life After Divorce

Once the paperwork is signed, it’s time to focus on your financial future. Taking these steps can help you regain control and confidence.

  • Create a new budget. Your income and expenses will change – new housing costs, insurance premiums, or child-related expenses might now be part of your monthly routine. Tools like budgeting apps or a simple spreadsheet can help you keep track.
  • Reassess your retirement goals. Divorce can affect retirement savings, especially if you’re dividing a 401(k) or IRA. A financial advisor can help you revise your plan to ensure that you’re still on track for the future you want.
  • Build an emergency fund. Life after divorce can be unpredictable. Aim to save at least three to six months of expenses. This cushion can help you handle surprises and start your new chapter with more peace of mind.

Special Considerations for Women

Although divorce affects everyone, women often face unique challenges that require special attention.

  • Earning potential and career goals. If you’ve been out of the workforce or earning less while supporting your family, this is an opportunity to focus on rebuilding your career. Consider whether you’ll need to upskill, reenter the job market, or negotiate spousal support to bridge the gap.
  • Retirement savings. Wage gaps and career breaks mean women often have less saved for retirement. If you’re awarded a portion of your spouse’s retirement accounts, ensure that the funds are transferred correctly, using a qualified domestic relations order (QDRO) to avoid penalties.
  • Health insurance. Explore new options if you were covered under your spouse’s employer-sponsored health plan. COBRA can provide temporary coverage, but marketplace plans or employer-sponsored options may be more affordable long term.
  • Custodial considerations. If you’re the custodial parent, plan for child-related expenses such as day care, extracurricular activities, and school fees. Be sure that these are accounted for in your divorce agreement to prevent future disputes.

Moving Forward

Divorce marks a major life transition – but it’s also an opportunity to start fresh. With the right support and financial planning, you can navigate the challenges, reduce uncertainty, and build a stable, fulfilling future.

Remember: You don’t have to do this alone. We’re here to help you every step of the way. Whether you’re just starting the process or finalizing the details, thoughtful financial planning can help you move forward with confidence.

This material has been provided for general informational purposes only and does not constitute tax, legal, or investment advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a qualified professional regarding your situation. Commonwealth Financial Network does not provide tax or legal advice.

© 2025 Commonwealth Financial Network®

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Understanding and Protecting Your Purchasing Power

Imagine walking into your local grocery store with a $20 bill. Last year, that might have bought you a gallon of milk, a dozen eggs, and a loaf of bread with change to spare. Today, those same items could cost noticeably different amounts and $20 may not cover as much. This everyday experience demonstrates the concept of purchasing power—how much your money can actually buy. Understanding this concept helps you make smarter financial decisions and grow the value of your funds over time. 

What Shapes Your Money’s Value?

Your purchasing power changes as the economy changes, influenced by various economic factors. Inflation and purchasing power are inversely related—when prices rise, the amount of goods and services you can purchase with the same amount of money decreases. And, conversely, when prices decrease, you can buy more.

Think about buying a car. The same $30,000 that bought a well-equipped sedan five years ago might only buy a basic model today. Or consider housing—monthly rent that was $1,500 a few years ago might now be $2,000 for the same apartment.

Understanding purchasing power isn’t just about watching prices go up and down, however. It’s about learning how economic changes affect both your spending and saving strategies. This helps you make smarter decisions to protect your money’s value in the years to come.

Making Your Savings Work for You

One way to counter inflation and preserve purchasing power is through smart savings choices. Traditional savings accounts offer accessibility, but interest rates can vary widely. High-yield savings accounts, for example, often provide significantly better returns than standard accounts, while government securities, such as Treasury bills or savings bonds, offer other secure savings options.

For instance:

  • If you had $10,000 in a regular savings account earning just 0.1% annually, after five years, you’d earn around $50 in interest.
  • By contrast, in a high-yield savings account earning 4% annually, you’d earn about $2,166 in total interest over the same period.

A financial advisor can help you explore savings options that best fit your goals, making it easier to protect your purchasing power over time.

Planning for a Comfortable Retirement

When planning for retirement, understanding purchasing power becomes especially important. A lifestyle that costs $50,000 per year today will likely cost a different amount in the future. Similarly, what you can buy with a $1 million retirement fund today will not equal what you can buy with the same amount 25 years from now.

Your spending patterns in retirement usually shift over time:

  • Early Retirement: Often marked by discretionary spending on travel and hobbies.
  • Mid-Retirement: A time when housing needs may shift, perhaps toward downsizing.
  • Late Retirement: Typically, expenses for health care and support services increase.

Over a retirement that might last decades, changes in purchasing power could mean that what seems like ample savings now might cover far less in the future. A financial advisor can help you create a retirement strategy that aims to keep pace with rising costs, especially for essentials like health care.

Career Development and Income Potential

Career growth is another way to help protect your purchasing power. For instance, if you start with a $50,000 annual salary, adding certifications or new skills could boost that to $75,000 or more—helping your income keep up with rising costs. Continuing education, professional certifications, and skill development allow you to stay competitive and command higher earnings. Side income from consulting or freelance work can also diversify and strengthen your income.

Building Long-Term Financial Security

Protecting your purchasing power isn’t about predicting economic trends; it’s about staying prepared and adaptable. Understanding financial tools and regularly updating your strategy can make a significant difference.

Taking Action

Start with these steps to better manage your purchasing power:

  • Track Key Prices: Choose your top 10 most-purchased items, track their prices for six months, and adjust your budget as needed.
  • Shop Around for Savings: Check savings account interest rates every January to see if higher-yield options could help grow your savings.
  • Invest in Your Skills: Identify certifications or training that could boost your earning power and set a timeline for earning them.
  • Adjust Your Budget Regularly: Review your monthly budget each quarter to reflect changes in prices and spending patterns.
  • Meet with a Financial Advisor: Review your long-term financial strategy on a regular basis to ensure that it keeps pace with changing economic conditions.

Taking small, consistent steps can build up to significant results over time. While you can’t control the economy, you can take control of your financial future by staying informed and proactive.

© 2025 Commonwealth Financial Network®

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