Sharp FinancialJennifer M. Sharp, CFP®3974 County Road 139Ovid, NY 14521(607)532-9969 office(607)279-8613 celljsharp@fscadvisor.com

March 2018 - Print EditionWeathering the Storm: Are You Prepared?

Demographic Dilemma: Is America's AgingPopulation Slowing Down the Economy?

How can I lower my auto insurancepremiums?

Cartoon: It's Tax Time Again!

Sharp Financial QuarterlyPlan. Build. Protect.What's Your Money Script?

See disclaimer on final page

Money is power. Afool and his moneyare soon parted. Apenny saved is apenny earned.Money is the root ofall evil.

Do any of theseexpressions ringtrue for you?

As it turns out, the money beliefs our familiesespoused while we were growing up may havea profound effect on how we behave financiallytoday — and may even influence our financialsuccess.

Beliefs drive behaviorsIn 2011, The Journal of Financial Therapypublished a study by financial psychologistBrad Klontz et al., that gauged the reactions of422 individuals to 72 money-relatedstatements.1 Examples of such statementsinclude:

• There is virtue in living with less money• Things will get better if I have more money• Poor people are lazy• It is not polite to talk about money

Based on the findings, Klontz was able toidentify four "money belief patterns," alsoknown as "money scripts," that influence howpeople view money. Klontz has described thesescripts as "typically unconscious,trans-generational beliefs about money" thatare "developed in childhood and drive adultfinancial behaviors."2 The four categories are:

1. Money avoidance: People who fall into thiscategory believe that money is bad and is oftena source of anxiety or disgust. This may resultin a hostile attitude toward the wealthy.Paradoxically, these people might also feel thatall their problems would be solved if they onlyhad more money. For this reason, they mayunconsciously sabotage their own financialefforts while working extra hours just to makeends meet.

2. Money worship: Money worshippers believethat money is the route to true happiness, andone can never have enough. They feel that theywill never be able to afford everything theywant. These people may shop compulsively,hoard their belongings, and put work ahead ofrelationships in the ongoing quest for wealth.

3. Money status: Similar to moneyworshippers, these people equate net worthwith self-worth, believing that money is the keyto both happiness and power. They may livelavishly in an attempt to keep up with or evenbeat the Joneses, incurring heavy debt in theprocess. They are also more likely than those inother categories to be compulsive gamblers orto lie to their spouses about money.

4. Money vigilance: Money vigilants arecautious and sometimes overly anxious aboutmoney, but they also live within their means,pay off their credit cards every month, and savefor the future. However, they risk carrying alevel of anxiety so high that they cannot enjoythe fruits of their labor or ever feel a sense offinancial security.

Awareness is the first stepAccording to Klontz's research, the first threemoney scripts typically lead to destructivefinancial behaviors, while the fourth is the oneto which most people would want to aspire. Ifyou believe you may fit in one of theself-limiting money script categories, considerhow experiences in your childhood or thebeliefs of your parents or grandparents mayhave influenced this thinking. Then do somereality-checking about the positive ways to buildand manage wealth. As in other areas ofbehavioral finance and psychology in general,awareness is often the first step towardaddressing the problem.1 "Money Beliefs and Financial Behaviors," TheJournal of Financial Therapy, Volume 2, Issue 1

2 Financial Planning Association, accessed October24, 2017

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Weathering the Storm: Are You Prepared?Severe weather can test even the mostseasoned homeowners. And while stormhazards such as power outages, downed trees,and flooding can result in costly damage to yourhome, they can also put your family's safety atrisk. The key to making it through a stormsafely is to be prepared.

Protect your homeBefore a storm arrives, you'll want to takeproactive steps to prevent damage to yourhome, such as:

• Cleaning your gutters and downspouts sothat water can flow freely away from yourhome

• Inspecting and repairing roof shingles andflashing to prevent water damage

• Trimming overhanging tree limbs• Securing loose objects (e.g., grills and patio

furniture)• Parking your car and storing any heavy

equipment (e.g., lawnmower) inside a garage• Investing in storm windows, doors, and

shutters

Have an emergency plan/stock up onsuppliesA severe storm can cause power outages thatlast for days. It can also result in downed powerlines, fallen trees, and flooding that make roadsimpassable. You'll want to have an emergencyplan that identifies a place nearby where youcan safely stay if you lose power for anextended period of time.

In addition, you should gather the necessarysupplies you'll need to stay safe both duringand after a storm. The following are some itemsto put together in an emergency supply kit.

Food/supplies. Stock up on enoughnonperishable food to sustain you and yourfamily for several days. You'll also want to storeother items that are specific to your family'sneeds, such as infant formula, diapers, petfood, clothing, and blankets.

First aid/medicine. Be prepared for anypossible medical needs by having a first aid kit.Also talk to your doctor about obtaining an extraprescription for important medications you takesuch as heart and blood pressure medications,insulin, and asthma inhalers.

Communication/safety items. Make sure yourcell phones and other methods of electroniccommunication are fully charged before thestorm arrives. Also gather additional safetyitems, such as matches, flashlights, batteries,and an AM/FM radio.

Important documents/valuables. Placeimportant documents, such as personal records(e.g., birth and marriage certificates), propertyrecords (e.g., insurance policies), medicalrecords, financial information (e.g., bank orcredit card information), and any valuables in asecure location that is easily accessible in caseof an emergency.

Review your insurance coverageReview all of your insurance policies (e.g.,homeowners, renters, and auto) to make surethat you have appropriate coverage for yourproperty and belongings. Your home and itscontents should be insured to their fullreplacement cost, including any new additions,remodels, and furniture. To assist withpost-storm insurance claims, be sure to takepictures/videos and make an inventory of yourhome and valuables in case they are damagedor destroyed.

Keep in mind that certain types of stormdamage (e.g., flood and hurricane) may not becovered by a standard policy or may requireyou to pay a separate deductible. If you live in ahigh-risk storm area, you may need to purchaseinsurance specifically designed for floods andhurricanes. Contact your insurance agent todetermine if you need to purchase additionalinsurance above and beyond traditionalcoverage.

After the stormIf your home suffers severe storm damage froma natural disaster, you may be eligible forimmediate disaster relief funds and specialprograms through the Federal EmergencyManagement Agency (FEMA) and variousstate/local government agencies.

You'll also need to file a claim for stormdamage with your insurance company. Tomake the claims process easier, take picturesto document the damage — both inside andoutside of your home — as soon as possible.While your claim is being processed, take stepsto prevent further damage (e.g., putting a tarpon a damaged roof), since the insurancecompany may not cover any additional damagethat occurs after the storm passes.

Keep in mind that the process for filing aninsurance claim can take time, especially if yourhome is in an area that has been impacted by alarge-scale storm. As a result, you shouldcontact your insurer with any questions youmay have regarding the claims process.

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Demographic Dilemma: Is America's Aging Population SlowingDown the Economy?It's no secret that the demographic profile of theUnited States is growing older at a rapid pace.While the U.S. population is projected to growjust 8% between 2015 and 2025, the number ofolder Americans ages 70 to 84 will skyrocket50%.1

With roughly 75 million members, babyboomers (born between 1946 and 1964) makeup the largest generation in U.S. history. As agroup, boomers have longer life expectanciesand had fewer children than previousgenerations.2

Now, after dominating the workforce for nearly40 years, boomers are retiring at a rate ofaround 1.2 million a year, about three timesmore than a decade ago.3

Though the economy has continued to improvesince the Great Recession, gross domesticproduct (GDP) growth has been weakcompared with past recoveries. A number ofeconomists believe that demographic changesmay be the primary reason.4

Spending shiftsThe lower birth rates in recent decadesgenerally mean that fewer young people arejoining the workforce, so the consumerspending that fuels economic expansion andjob creation could take a hit. When youngpeople earn enough money to strike out ontheir own, marry, and start families, it typicallyspurs additional spending — on places to live,furniture and appliances, vehicles, and otherproducts and services that are needed to set upa new household.

On the other hand, when people retire, theytypically reduce their spending and focus moreon preserving their savings. Moreover, retirees'spending habits are often different from whenthey were working. As a group, retirees tend toavoid taking on debt, have more equity built upin their homes, and may be able to downsize ormove to places with lower living costs. Morespending is devoted to covering health-carecosts as people age.

If a larger, older population is spending lessand the younger population is too small to driveup consumer spending, weaker overall demandfor products and services could restrain GDPgrowth and inflation over the long term. Lessborrowing by consumers and businesses couldalso put downward pressure on interest rates.

A new normal?The onslaught of retiring baby boomers haslong been expected to threaten the viability ofSocial Security and Medicare, mainly becauseboth are funded by payroll taxes on current

workers. But this may not be the onlychallenge.

A 2016 working paper by Federal Reserveeconomists concluded that declining fertility andlabor force participation rates, along withincreases in life expectancies, accounted for a1.25 percentage point decline in the natural rateof real interest and real GDP growth since1980. Furthermore, the same demographictrends are expected to remain a structuralimpediment to economic growth for years tocome.5

Put simply, a nation's potential GDP is aproduct of the number of workers times theproductivity (output) per worker, and the U.S.workforce is shrinking in relation to the totalpopulation.

The labor force participation rate — thepercentage of the civilian labor force age 16and older who are working or actively lookingfor work — peaked at 67.3% in early 2000, notcoincidentally the last time GDP grew by morethan 4%. The participation rate has droppedsteadily since then; in August 2017, it was62.9%. This reflects lower birth rates, increasedcollege enrollment, some men in their primeworking years dropping out of the labor force,and large numbers of retiring baby boomers.6

Many economists acknowledge that U.S.population trends are a force to be reckonedwith, but the potential impact is still up fordebate. Some argue that labor shortages coulddrive up wages and spending relatively soon,followed by higher growth, inflation, and interestrates — until automated technologies startreplacing larger numbers of costly humanworkers.7

Even if demographic forces continue to restraingrowth, it might not spell doom for workforceproductivity and the economy. Another babyboom would likely be a catalyst for consumerspending. Family-friendly policies such as paidmaternity leave and day-care assistance couldprovide incentives for women with children toremain in the workforce. It's also possible that alarger percentage of healthy older workers maydelay retirement — a trend that is alreadydeveloping — and continue to add theirexperience and expertise to the economy.8

1, 3) The Conference Board, February 24, 2017

2) The Wall Street Journal, January 16, 2017

4-5) Federal Reserve, 2016

6, 8) The Financial Times, October 25, 2016

7) U.S. Bureau of Labor Statistics, 2016-2017,Bureau of Economic Analysis 2017

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Sharp FinancialJennifer M. Sharp, CFP®3974 County Road 139Ovid, NY 14521(607)532-9969 office(607)279-8613 celljsharp@fscadvisor.com

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2018

Securities and Advisory servicesoffered through FSC SecuritiesCorporation, Member FINRA/SIPC.Sharp Financial is a marketingdesignation.

Broadridge Investor CommunicationSolutions, Inc. does not provideinvestment, tax, or legal advice. Theinformation presented here is notspecific to any individual's personalcircumstances.

To the extent that this materialconcerns tax matters, it is not intendedor written to be used, and cannot beused, by a taxpayer for the purpose ofavoiding penalties that may be imposedby law. Each taxpayer should seekindependent advice from a taxprofessional based on his or herindividual circumstances.

These materials are provided forgeneral information and educationalpurposes based upon publicly availableinformation from sources believed to bereliable—we cannot assure the accuracyor completeness of these materials.The information in these materials maychange at any time and without notice.

How can I lower my auto insurance premiums?More and more, it's harder tokeep up with the rising cost ofauto insurance. According toone estimate, the average costof auto insurance in 2017 for

lower-risk drivers with good driving records was$1,178.1

Although the criteria vary from state to state,insurance companies may base auto insurancerates on a variety of factors, such as: yourdriving record, credit history, age, and gender;type of vehicle; number of miles driven; whereyou live/park your car; and number of claimsfiled. While the types and level of autoinsurance coverage that you have (over andabove your state's required minimum liabilityamounts) will primarily influence your premiumcosts, auto insurance premiums can varywidely. That's because premiums arecustomized for each policyholder usingmathematical formulas that reflect theperceived level of risk.

Fortunately, there are things you can do if youthink that your auto insurance costs are higherthan normal. The following are some ways tohelp lower your premiums.

Raise your deductible. For the most part, thehigher your deductible, the lower yourpremiums. Before you raise your deductible,though, you'll want to be sure you can cover theout-of-pocket expense should an accidentoccur.

Forgo any unnecessary coverage. If youhave an older car with limited value, it maymake sense to drop your collision andcomprehensive coverage, because a claim paidby your insurance company may be minimaland might not exceed what you'd pay inpremiums and deductibles. But keep in mindthat this coverage may be required by a lenderif you took out a loan to purchase the vehicle.

Take advantage of discounts. Depending onyour circumstances, you may be eligible for oneor more auto insurance discounts. For example,your insurer might provide discounts to thosewith a safe driving record or who insure morethan one car with the company.

Shop around. Auto insurance rates vary fromcompany to company, sometimes significantly.Compare the various rates offered by differentinsurers.1 AAA, Your Driving Costs, 2017

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