I remember when my first son was three years old, and in the “why” stage of development, we had a lengthy conversation about ATMs.

“Why do we need to go to the bank?”
“Why do you put money in the bank?”
“Why do you need to save?”

Why, why, why, and before I knew it I was trying to explain to this tot the concept of interest, paying for a mortgage, budgeting – and yes, asking myself the whole time why I was trying to answer these questions with any depth when he was only 3.

Since then we’ve had a lot of follow-up conversations as his little mind tried to grasp through repetition these financial concepts, and I tried to impart financial lessons to keep in check the also-growing consumerism that seems to accelerate when kids enter kindergarten.

But what I’ve come to realize is that having simple conversations about even complex ideas on money has built a foundation for us talking about these issues that I hope will carry into his adult years. Because in addition to wanting to raise a responsible adult, I recognize that the time will come when I will need him, and his siblings, to understand my finances and estate, and execute them on my behalf. I want them to know my values and feelings about these matters, and to be able to take care of them for me if I need assistance.

Charles Schwab & Co. financial consultant Kimberly Segal says she recommends her clients save enough to meet 80 percent of their current expenditures when planning for retirement. But a recent survey by her firm finds that Bostonians with means aren’t necessarily hearing the message. Most are expecting to only need about half the income they earn now when they retire, even amidst concerns about healthcare and other rising costs.

It’s not as if Segal’s clientele can’t afford to save. The demographic polled by Charles Schwab are technically well off, with at least $250,000 in “investable assets and retirement funds.” On average they earn $113,000 a year, yet in retirement they expect to only need $63,000.

The disconnect is particularly striking given that the majority of survey respondents plan to continue living in the Boston area in their golden years. Only one in four said they will move to a new area, seeking a better quality of life and lower living costs when they stop working.

“We’re urging people at a younger age to look at retirement planning, prioritize current and future expenses, and take action on the plan to make them financially secure for retirement,” Segal said. “Doing it early on can alleviate concerns, especially unforeseen expenses in medical and healthcare costs.”

Several analysts have reported that car sales are expected to rise this year, in part because there’s a sizeable group of people who need to replace their older vehicles. But how much is the “right” amount to spend?

If you’re looking to finance, you might consider the 20-4-10 rule: 20 percent down; financing that lasts no longer than four years; and principal, interest and insurance that doesn’t exceed 10 percent of your gross household income.

It’s a formula that can help change the way we think about how we define the affordability of a car, and potentially start to free up some extra cash for other, more important financial needs such as retirement or even the more basic emergency savings fund.

“How that change in thinking lowers your stress level is just amazing,” says Mike Sante, a managing editor at Interest.com, which recently completed a study that looked at car affordability. “It can make a tremendous change in your quality of life. This is where the money is for your savings.”

Americans are largely spending too much on cars, an asset that is often our second-largest household expense after rent or a mortgage and offers no potential for increasing net worth. For example, taking into account car insurance costs and the Boston area’s median income of almost $70,000 a year, Interest.com calculated that a typical Boston household can afford to spend up to $26,025 on a car. It would take a pretty good amount of self-control to avoid spending more than that, since the average new car with bells and whistles costs $30,550.

The rally in the markets this week probably has a lot of people checking their 401(k) balances to see what kind of bump they may have gotten in their portfolios. Mary Mullin, a financial advisor with Merrill Lynch Wealth Management here in Boston, says that there are some pretty solid reasons to be optimistic about a rebound in growth, not just in the U.S., but worldwide this year.

“The macroeconomic challenges still exist, but we’re talking to individuals about re-evaluating their portfolios because there are a lot of good companies out there doing good things,” Mullin said in an interview.

Mullin said research published by her firm examines the “great rotation,” referring to a move in the markets from cash and bonds into areas of potential growth, including housing, and back into equities.

If you look at individual companies, you’ll find several with strong balance sheets and profitability, she said. “A lot of companies have cash on their balance sheets and are paying strong dividends or are increasing their dividends,” Mullin said. “We’re also seeing signs of life in the housing market, which brings consumption that goes around that.”

So what are some investment themes that Mullin is looking at as she advises her clients?

2013 is going to be another good year for borrowers, and a lousy year for savers, as interest rates remain low amidst a slow-growth economy, Bankrate Senior Financial Analyst Greg McBride said in an interview.

McBride forecasts that the U.S. economy will expand by about 2 percent this year, tempered by an unemployment rate that will decline very slowly and gains in wages that will be “nothing to write home about.”

Those consumers looking to purchase or improve their homes or upgrade the cars will have a window of opportunity as borrowing costs remain low. Auto loans, for one, are at record lows and are still falling, making 2013 a favorable year from a financial standpoint for anyone looking to buy either a new or used car, McBride said

A few years before my mom passed away, she had knee replacement surgery and needed some help in the weeks immediately following her operation. It was always tricky figuring out the best arrangement at times like these – she lived across the country, which meant we had to put together a patchwork of support for her care during those times when immediate family weren’t in town.

She was fortunate to have a strong network in her hometown, and the kindness of her friends at these times of need was heartwarming. But in one unfortunate incident my mom learned the troubling lesson of how even those who have the best of intentions can sometimes succumb to their own life stresses and take advantage of someone who is disabled.

She had hired a friend who had recently lost their job to be her nurse for a week. Longstanding confidence, built on years of friendship, led my mom to trust this individual with her debit card to make some grocery purchases. Unfortunately, the friend did more with the card than just buy groceries. A couple of weeks later, my mom happened to check her bank statement and discovered several other amounts that she had not authorized.

The friend, who was feeling the pinch from her own financial strain, had used my mom’s bank account to take her children on some excursions. My mom speculated that the friend had thought she would get away with it because my mom was distracted from most paperwork and the chances were slim that she would check her account closely.

Expecting an inheritance? Apparently so, if you’re a member of Gen Z. And that youthful optimism may deter these individuals from taking retirement savings seriously – with potentially damaging consequences.

That result was surprising, said Carrie Braxdale, managing director, investor services, TD Ameritrade, Inc., because this group of young people was generally pretty savvy about articulating the current challenges in the economy and job market. And with the majority of them already actively using some kind of investment or savings account, they also clearly had been taught about the importance of saving and thinking about a financial plan.

Still, they are focusing mainly on “savings needs that are more near-term,” Braxdale said. “Many explicitly said they are saving for college or current expenses.”

Whenever I write anything about affluent Americans, inevitably I hear from some readers about how journalists are “out of touch” and not understanding the issues. I find these emails striking because they reflect a lot of the uncertainty and frustration most people are feeling in today’s job market and economy. And while I am often just reporting the results of someone else’s study, I understand that even doing that simple act can rub people who are struggling the wrong way.

So when I was told about a recent “Affluent Insights Survey” that Merrill Lynch conducted, I found myself wondering how we might think about its results so that it can be useful information for a variety of individuals, of varying incomes, and not just for those who happen to have $250,000 or more of investable assets. To me, these surveys are helpful if we can find even just one or two nuggets of new information that might serve as potentially interesting solutions when applied to our own lives.

Let’s start by laying out some of the context for the results uncovered by the survey. Among the 1,000+ individuals that Merrill Lynch interviewed, close to half view today’s economic uncertainty as a “new normal,” with rising healthcare costs, the care of aging parents, and the extended financial support being given to adult-age children weighing on their minds. Four out of five, or about 80 percent, of those surveyed worry that they won’t be able to achieve their financial goals before they retire.

Some of these “affluent” individuals are drawing a harder line on funding college. About 48 percent told Merrill Lynch that they were willing to support adult-age children for as long as they need. But some are trying to use the expense as a way to teach a financial lesson. About 38 percent of parents today paid for, or plan to pay for, the full cost of their children’s college education, down from 48 percent a year ago, the survey said. And when asked about their ability to fund higher learning, 19 percent said they chose not to pay for the full amount so that their kids would appreciate their education more.

Increasingly, “families are getting together, with their college-age kids, to talk about how they will pay for college, even in this group where the cost was traditionally paid for by parents,” said Merril Pyes, a managing director in Boston with Merrill Lynch. “Parents are talking with their kids about how to pay for it, what they’ll get out of college, and what their kids will do when they get out.”

Communicate.

Having more conversations as a family about finances seems to be one of the bigger lessons we can learn from this survey, which provided other examples of how people are trying to communicate, and work together, more to solve concerns and challenges.

Individuals who participate in company stock plans are increasingly earmarking the assets for investment or retirement instead of paying off debt – a shift that offers some hope that segments of the population are starting to be able to refocus on saving rather than just paying off bills, Fidelity Investments said today.

The Boston-based investment company found that more than half (57 percent) of company stock plan assets are being allocated for eventual investment or retirement savings after participants sell them. Just 13 percent are targeted for paying bills or debt in the future. In past years, about a third of assets were allocated for bill payment, and only a quarter targeted for savings and investment, Fidelity said.

If you participate in your employer’s 401(k) plan, you may have already noticed a change in the format of the statements that are provided to you, detailing your investments. If you haven’t, keep an eye out – by Aug. 30th, the information provided on there will be changing.

The U.S. Department of Labor is requiring that plan sponsors (your employer) provide more detailed information on fees and expenses related to 401(k) plans. It’s important to note that the fees listed are not new. They’ve always been there. It’s just that now the DOL is trying to make it easier for participants to see the administrative expenses charged for running a program, as well as the individual expenses – or those fees that may have been deducted from a participant’s account based on actions they may have taken, such as redemption or loan fees.

Plan sponsors must also notify participants about the existence of any revenue-sharing arrangements. This is a practice that involves using a portion of the investment-related fees paid by participants to help cover a plan’s administrative costs. It is this type of so-called “soft dollar” arrangement that has been the subject of some debate, and helped prompt the new fee disclosures. (To get a sense of the historical context around the fee debate, read this 2006 column by Bloomberg columnist John F. Wasik, “401(k) Fees Are Still Exorbitant, Buried Secrets.”)

Previously there was concern about administrators passing along fees to participants in the form of individual fund expense ratios, which is an annual percentage deducted from plan assets. The lack of transparent disclosure raised criticism that some plans may have been paying excessive administrative fees, and investors were buying into them without considering other, lower-cost options such as index funds. Other concerns included the potential for conflicts of interest: Plan sponsors and administrators may have an incentive to pick funds that pay more in revenue sharing, instead of evaluating funds for being the best investment. (SmartMoney highlighted this ongoing concern in a May 2012 article, “Will 401(k)s Abandon Revenue Sharing?”)