Financial Planning

8 Life Events that Require Financial Guidance

Almost everyone stresses over the daily obligations of financial planning, but many also neglect the significant life stages that require special attention and strategies. Here are 8 key life events that could benefit from professional financial guidance.

1. Graduating from College

College graduation marks the first major transition into adulthood. The progression from school to career is a significant milestone and the perfect time to get financial advice. Whether you or a loved one has graduated, this is also a great time to assess needs such as college debt repayment, savings strategies, or insurance.

Luckily, most recent graduates have time on their side. With the decades ahead and the power of compound interest, it’s the perfect time to have a discussion about the benefits of saving right now. The financial foundation built now will have a major impact on the rest of your financial life.

2. Marriage or Divorce

Professional finance advice is extremely beneficial at the time of marriage. Goals such as combining finances, handling credit issues or debt problems, and building a successful financial life with your spouse will be hard to establish without objective financial advice. Click here to download our helpful checklist for newlyweds.

On the other end of the spectrum, divorcees should ensure that they protect their finances. If you’re entering divorce proceedings, important tasks like updating your will, changing your insurance policies, and protecting your investment accounts need to be handled with care and are best managed by a professional.

3. Adding a Member to Your Household

The birth of a child is a miraculous event, but that new addition will bring huge financial and lifestyle changes. College funds will need to be created, wills and insurance policies need to be updated, and a whole host of new expenses will need to be managed. Make sure that your new bundle of joy is off to the best start possible by bringing in a professional.

4. Job and Income Changes

Whether you are starting a new job, changing careers, or accepting a well-deserved promotion, there are important financial considerations to address. During a job change, you’re better off with a financial planning professional who can help you minimize taxes by rolling over retirement accounts and making the most of your stock options. A professional can also help you adjust your financial plan so you start putting more money aside and preparing for a future of continued financial growth.

5. Buying and Selling Property

If you’re buying a home, a professional can help you review your situation in an effort to maximize your tax benefits, deal with capital gains exclusions and taxes, and find write-offs and deductions you might otherwise have missed. Buying and selling property is complicated, and it’s not worth tackling on your own.

6. Illness or Hospitalization

An unexpected illness or hospitalization can strike at any time, and when it does, your finances are soon to be impacted. If you find yourself hospitalized or stricken by a sudden illness, reaching out to a professional could minimize the financial impact and help you recover more quickly. A financial advisor will also help with long-term care options and disability insurance, estate planning, life insurance, and a host of other planning topics that will have an impact on your overall portfolio.

7. Inheriting Property

Dealing with an inheritance can also be complicated, hence why it made our list. If your inheritance comes in the form of a lump sum, it is important that you minimize the tax bite and address outstanding debts. If you are inheriting a retirement account like a 401(k) or IRA, you’ll definitely benefit from assistance with rollover options and investment advice.

8. Retirement

Retirement may be the most important transition in your life. From maximizing and managing benefits to developing a distribution strategy, the right professional can be an invaluable resource.

Everyone wants to feel comfortable by establishing long-term financial security, so it’s worth taking an honest look at your current financial situation and goals. Every day we take the complexity out of financial planning for our clients. We can make it simple for you too, so don't hesitate to contact us directly if you need someone to look over things with you.

A New Year - A New Financial You

January means a New Year is upon us, bringing a fresh opportunity to consider your goals. For 2018, I am taking a different approach to resolutions. Instead of giving you a laundry list of tasks to accomplish, I want to encourage you to make this the year you really own your financial life. 

Imagine fast forwarding your life to December 31, 2018, and looking back on the year. What do you think you will have accomplished? How did your financial life change? What roadblocks did you remove? Answering these questions can help you identify your true goals for 2018.

If your vision for next year differs from where you are today, then you need a clear strategy for making changes—and a plan to follow along the way. It all begins with knowing how to define and reach your goals.

According to a study on the science of achieving goals, 3 key steps make you more likely to achieve what you set out to accomplish:

  • Written goals
  • Accountability
  • Commitment

Using these findings, I have created 3 steps to help you set—and keep—your financial resolutions for 2018.

 

1. Written Goals: Define and record what you want.

Financial worries keep 65% of Americans up at night. From paying for health care to saving for retirement, people’s concerns span an array of life events. Fortunately, writing down goals can improve your chance of reaching them and moving past these stressors.

When defining your financial resolutions, ask yourself which priorities matter most to you and would help create the greatest comfort in your life. Your financial needs are unique to you, and they should guide the goals you set for the coming year.

2. Commitment: Outline specific action items for each day.

Once you have defined your goals for 2018, you can outline the actions you will take to help make your dreams a reality. Create and maintain your commitment to the goal by building a clear strategy for bringing it life. For example, rather than saying, “I want to pay down debt,” define the exact amount of money you will pay toward your liabilities each month. Determine which steps you need to take to achieve your goal, and then build a schedule for accomplishing the necessary tasks each day.

3. Accountability: Share your goals and progress with someone else.

When studying goal-setting, individuals who shared their objectives and actions with another person had better results than those who did not. To help increase your chances of achieving your 2018 financial resolutions, share your plan with someone else, such as a spouse, family member, or friend. Make sure you give them a detailed account of exactly what you want to achieve—and the steps you will take to do so.

Once you’ve selected someone to share your goals with, keep them in the loop on your progress. In fact, sending weekly updates to your chosen accountability partner can make you significantly more likely to achieve your goals.

 

As you look to 2018 and what you hope to accomplish, I encourage you to follow these steps to start out on the right path. I am always here to guide your financial goals and help you create the future you desire.

Here’s to a happy, healthy, and fulfilling New Year!

Protect Yourself from Identity Theft

You, like most people, probably believe that identity theft is something that could never happen to you. Then, one day, you’re reviewing your monthly bank statement, and see a list of charges made to your account from a country you’ve never dreamed of visiting.  Just like that - you’ve become one of the millions of identity theft victims that occur in the U.S. every year.

I’m sure by now you’ve heard, hackers recently accessed the personal information of over 143 million people within Equifax’s database. Unfortunately, these hackers were able to access financial information putting many of us and the people we care about at risk.

Fortunately, there are many ways that you can protect yourself from potential identity theft and fraud. Most of these actions are common sense, but they’re often overlooked. Here are 7 tips you can follow to help protect yourself:

 
  1. Be wary of emails or social media messages asking you to log into a financial account. Your bank, mortgage company, investment account, or the IRS will never request personal information by email. Never click on links embedded in those emails; instead, always log into your accounts by manually typing the web address into your browser.

  2. Never give out personal information in response to a phone call from someone claiming to represent the IRS or a financial institution. If you get a suspicious phone call, hang up and call the organization directly for more information.

  3. Protect your sensitive information by collecting mail promptly and shredding documents containing account numbers, credit card numbers, or your Social Security number.

  4. Never use the same PIN or password for multiple accounts or websites. Doing so increases the risk that a single attack could compromise your identity or result in fraud.

  5. Monitor your financial and credit card statements carefully to identify suspicious activity. If you find fraudulent transactions, report them to the relevant institution immediately to reduce your financial liability.

  6. Check your credit report often. You can check your report for free at creditkarma.com. If you find fraudulent accounts or activity that you don’t recognize, immediately file a report with all three agencies.

  7. If you don’t anticipate purchasing a home, new car or opening a new line of credit, you may want to consider placing a security freeze with the three different credit bureaus. You can learn more about this by clicking here.

 

No one wants to be the victim of identity theft, and it’s up to you to control whether or not you are adequately protecting your personal accounts and information. By following these tips, you will be on the path to stronger security. If you would like to discuss ways to deepen your protection from identity theft, we are more than happy to help.

Ramping Up Your Retirement Savings

No matter where you are in your life, saving for retirement is likely one of your most important financial goals. But, even if you have professional guidance and a clear strategy for your desired future, you could still be missing some straightforward ways to maximize your savings.

The reality is: Most people do not save enough money for retirement. In fact, the National Institute on Retirement Security estimates that Americans have at least a $6.8 trillion gap between the amount they have saved and the amount they need.  Alarmingly, they found the gap could be as high as $14 trillion.

While we are always here to help you address major life events and financial changes, we also wanted to share some simple ways to increase your savings now.

 

Reevaluate Small Budget Items

Changing major aspects of your budget — such as your housing or healthcare costs — can significantly impact your savings potential, but may also take time to implement. To start saving more today, look at the little places where you spend money and see where you can trim your expenses. For example, do you eat lunch out every day or buy a specialty coffee most mornings? Do you have entertainment packages you aren’t really using, such as cable TV or online memberships? Saving a few dollars each day can add up to thousands of dollars over a year, which is money you can put toward your retirement.

Remember to Imagine the Retirement You Desire

Effective retirement strategies often focus on building a clear vision of how you would like to spend life after your career. As you go about your daily life and make financial decisions, how often do you reflect on this vision? Rather than only thinking about your retirement goals during financial reviews or major choices, start incorporating this picture into your regular decision-making process. For example, each time you make a purchase, ask yourself if you’d rather have this item or put the money toward the retirement you desire. You may discover that by grounding each purchase in this way, you spend less on items you don’t really care about — and have more money to put toward the retirement you’ve dreamed about. 

Capture Your Employer’s Full 401(k) Match

U.S. employees lose $24 billion a year by not saving enough in their 401(k) to claim their company’s full matching. If your employer matches your retirement contributions, make sure you contribute at least enough to claim what is essentially free money. And if you are age 50 or older, remember that you can contribute an extra $6,000 each year to your 401(k) on top of the $18,000 annual limit.

Invest Additional Funds

When you receive a raise, bonus, tax refund, inheritance, or other financial windfall, spending the funds can be very tempting. Instead, if you choose to invest this money into your retirement, you can boost your savings without affecting your current bottom line. In addition, if you put a bonus into a 401(k) or IRA, you may also enjoy tax benefits and not owe anything until you withdraw the funds.

 

Saving for retirement is a big responsibility, but it does not have to be a burden. With these simple changes — and support from professionals who care about your future — you can focus on creating a lifestyle that matches your dreams. We are here to help you at each step, so please let us know if you have any questions about these tips or the bigger strategies guiding your retirement.

Keeping Up with the "Joneses"

Financial envy is even more of a thing now than it ever was. Today, we not only have television shows displaying lifestyles of the rich and famous, we’re punched with images and status updates in social media, too.

We not only see the “Joneses” on television, but we are likely connected on social media to colleagues and friends who post frequent photos and statuses about their new luxury car, boat, or 3-carat diamond ring. Though we may think the grass is greener at the Joneses, we have no way of knowing whether that snapshot is a true picture of “the good life,” or a depiction of living beyond one’s means.

One 2016 study of household debt in America shows the average household has debt balances totaling almost $17,000, and the average household with any kind of debt, including mortgages, owes nearly $135,000.

If you’ve been struggling to keep up with the Joneses and your financial life reflects that, it may be time to make some changes to improve your quality of life. Here are a few simple ways to start:

  • Stop comparing yourself to others. The truth is you never really know what someone else’s financial picture actually looks like. Don’t view their portrayed success as your failure. It is highly possible that they are living beyond their means.

  • Learn to live within your means. The key is to spend less, despite how much you may be making. You should start by tracking your spending and figuring out where your money is going. You might be surprised at what you find.

  • Stop enabling yourself. Making a significant change to your lifestyle can be difficult. If you find yourself struggling with this be prepared to cut yourself off. Cut up your credit cards or ask someone to do it for you. Change has to start somewhere.

  • Commit to your own financial well-being. Nobody cares more about your money than you do, which is why it is so important that you take actions towards improving your situation. You need to commit to improving your own financial well-being, because no one is going to do it for you.

  • Find value in yourself and in others. Studies show that buying material things makes us happy, but only briefly. Instead of spending mindlessly, invest your time in your family and relationships. That is where the real value is.

No matter how much money you earn, the “Joneses” will always be there. They will have a bigger house and nicer cars. They will throw better parties and seem happier than most people. Just remember, trying to keep up with them is an impossible task and a waste of your time.

If you have any questions or would like to discuss making changes in your financial life, we are happy to talk. 

National Financial Literacy Month

Did you know that April is National Financial Literacy Month?

What started out as a financial-literacy awareness day more than a decade ago is now a month-long campaign. The program is designed to highlight the importance of financial literacy and teach people of all ages how to manage their money wisely. And, according to recent surveys, Americans have a lot of room to improve in their financial knowledge.

About 40% of those surveyed spend less than they earn. The other 60% are either breaking even or spending more than they earn, which means they are unable to save money steadily.

It’s no surprise then that the study also shows that 50% of Americans don’t have a “rainy day” fund to cover expenses for three months — in case of emergencies such as sickness, job loss or economic downturn. Those without an emergency savings face unexpected financial blows that not only compromise their personal financial stability, but decrease overall economic stability as well.

Let’s look at three tips that could enhance your financial literacy, or that of one of your friends or family members.

Set and Follow a Budget that Works for You

There are norms in budgeting, but those are variable and defined by influences out of your control, including your zip code and tax bracket. Ask yourself what your normal is. An estimation tool you might use is the 50/30/20 rule. That ratio breaks down like this:

  • 50% of net income: Spend about 50% of your take-home pay on “fixed costs” — bills that are about the same amount each month. This might include things such as rent/mortgage, car payments, utilities, cell phone service, and memberships or subscriptions (Netflix, gym, Spotify).
  • 30% of net income: In the 50/30/20 plan, about 30% of your net pay would go toward flexible spending — also commonly called disposable income or lifestyle expenses. These might include costs for hobbies, shopping, and entertainment. We will include gas and groceries in this category because even though they are needs, how you spend your money on these things might vary. One month, you might travel, which means you might spend more that month on gas and food/groceries.

  • 20% of net income: Reserve about 20% of your net income for your financial goals. Three important goals to think about are paying down credit-card debt, saving for retirement, and building that emergency fund.

Manage your habits; change them if needed so they work for you. And remember that financial stability doesn’t necessarily mean mortgages and car payments. Determine your normal.

Start Saving Now

Saving money is easy to put off doing, since the consequences of not steadily saving may not be noticed or felt until later in life when you try to buy a house, send your kids to a top college or retire at a certain age.

So, start now — one of the easiest ways to make regular savings deposits is to pay yourself first from each paycheck. That way, it’s gone before you even notice it’s missing. Though saving for retirement usually is priority, you might also want to make sure you have financial reserves for emergencies.

Set Specific Financial Goals

It's never too soon, or too late to set financial goals.The first steps to setting financials goals include:

  • securing a steady source of income;

  • making sure you have financial reserves;

  • protecting yourself and your family from financial upheavals or disaster by buying the right insurance for life, health, disability income, and possessions.

Getting further ahead each year takes patience and planning. If your reserves stay flat, inflation will diminish its value. Stay alert and ready to go after opportunities to grow your money.

Think about what your personal financial goals are — sorting them by wants or needs might help. Decide which ones are long-term or short-term goals and prioritize them. Choose goals you’re enthusiastic about to help you reach them.

With your 50/30/20 budget, you should be able to distribute your limited resources in ways that make it possible to reach your goals.

We specifically designed Wealth Wise to offer the next generation an opportunity to start now. If you have questions or would like to learn more about certain financial topics, we are happy to talk. If you think you're ready to start planning, check out Wealth Wise Plan.