Ask The Financial Expert

Paying for braces, saving for college, and putting money away for retirement are all important financial issues that many families face. We’ve talked to local financial experts to get the most up to date advice for local parents.

Mark Munzenberger

Financial Education Specialist

University of Michigan Credit Union (UMCU)
Branches throughout Ann Arbor, Ypsilanti, and Metro Detroit
734-662-8200 |

Mark Munzenberger

Mark Munzenberger serves as the Financial Education Specialist for both the University of Michigan and Eastern Michigan University Credit Unions. Munzenberger facilitates a variety of financial wellness workshops for people of all ages, and specializes in credit education, first-time homebuyership, and identity theft prevention.

When is a good age to start teaching my children about money? Do you have any suggestions for creative ways to help them learn?

Elementary-age is an ideal time since children are learning addition, subtraction, and other math areas. Parents can introduce concepts such as saving and understanding needs vs. wants. As children become teens, they begin to make their own decisions about money, and will experience “opportunity cost”. For example, if I buy this video game today, what am I giving up tomorrow? The chance to go to a concert with friends? Money to fill up my gas tank? Money is limited, and spending decisions should be made with thought and care.

Some tips:

Take your child shopping

The grocery store is a great place to teach kids how to comparison shop. Clearly explain what your budget is for that trip and ask them to help you make wise spending decisions. Clip coupons, compare products, and let your child help you find items on sale. Consider using cash, and have your child transfer money from one envelope (budgeted) to another (spent).

Provide an allowance, but only for completed tasks and accomplishments

Money enables people to purchase goods and services, but it must be earned. Allowances are a great way to introduce this concept. Ideas for a weekly allowance: completing certain household tasks, receiving good grades and/or perfect attendance at school, and providing assistance to neighbors (pet walking, yardwork, etc.).

Financial wellness starts with savings

For younger children, consider providing three different containers at home to store their money: one for saving (50%), one for spending (25%), and one for donating to a charity (25%). Encourage your child to reach certain savings goals by rewarding him/her. For older children, open a savings account where they will earn interest on their deposits.

Offer to make a loan!

Seventy percent of all college students borrow money for tuition – it’s often the first loan they take out. Introduce the concept of lending and paying interest by offering to provide a $50 loan to your teen today for something on their wish list. The only catch – the loan will need to be repaid within 60 days and cost an additional $5 in “interest charges.” Another option is an advance on allowance – take $25 today or wait until the end of the month for the full $30.

Deb Purcell

Financial Advisor

A New Path Financial
3003 Washtenaw Ave., Suite 4
734-330-2266 |

Deb Purcell

Deb Purcell, Financial Advisor with A New Path Financial, takes a holistic approach to financial planning and strives to provide clarity during times of financial uncertainty, especially during life transitions. She holds an MBA from the University of Michigan, and has passed the CERTIFIED FINANCIAL PLANNER™ exam. Purcell and her husband are longtime Ann Arbor residents, where they raised two sons.

How much money should I put away each month to fund college education?

The first challenge we work through with clients is to make sure both parents are on the same page when it comes to their vision for paying for college. One parent may feel obligated to pick up the whole tab for an expensive school and the other believes the child should have “skin in the game.” It is also important to see how paying for college impacts other life goals. For instance, you can take a loan out for college, but you can’t take a loan out for retirement. And many parents today are still burdened with their own student loan debt.

What amount of money should we have set aside for an emergency fund?

Many young couples do not realize that the risk of a disability is much higher than the risk of dying. It is important to understand the potential lost income that the family would face in case of an injury or illness. Does each parent have a short-term disability policy through work that would cover a few months of regular expenses? If not, your emergency fund should be enough to cover the period without income until either recovery or a long-term disability policy kicks in. Money doesn’t need to be sitting in the bank collecting minimal interest, but it needs to be easily accessible.

If you had to choose just one, would you put money in a 401k or a savings account first?

Today’s low interest rates can make it a challenge to make your money work for you, and there are few options that return as much as an employer match on a 401k contribution. But there is more nuance to the question. What is the need and purpose for the funds? If you need an emergency fund, a 401k wouldn’t be the answer. A 401k is a retirement fund, and while loans may be possible, there are significant restrictions and potential penalties. Even if the goal is retirement, there may be advantages to limiting your 401k contributions and contributing to a Roth IRA, especially if you are early in your earning years. It is important to match the investment to the anticipated time frame of the need, and choose the best savings vehicle for that purpose. For example, you may want to build a CD ladder to potentially improve the return on cash that you need within a couple years, or if your goal is college savings, you could consider funding a Section 529 plan.

My child will need thousands of dollars in orthodontic care and insurance only covers a small part, are there alternative ways to finance braces?

Regardless of whether you are looking at a medical expense, like braces or glasses, child care costs or paying tuition, it’s important to understand your employer’s benefit plan. Many companies offer flexible spending accounts that let you set aside pre-tax funds for specific purposes, which is kind of like getting a discount on those purchases equal to your marginal tax rate. Or if you have a high-deductible health insurance plan, you may contribute to an HSA (health savings plan) that lets you invest and grow your funds that can be used tax-free for future qualifying healthcare expenses. Knowing how your employer can help you is key to making the right decision.

Related Articles