As we embark on a new year, there's no better time to take control of your financial future by thoroughly reviewing your cash flow. If having a vision and establishing goals is the touchstone for a financial plan, this essential financial practice sets the foundation for achieving your goals and ensuring long-term financial stability.
Anyone who has gone through a divorce knows how emotionally challenging and financially complex it can be. While attorneys handle the legal aspects, a Certified Divorce Financial Analyst® focuses specifically on the financial implications of divorce. This specialized designation equips professionals with the expertise to guide clients through the intricate financial aspects of divorce proceedings, ensuring better outcomes for their financial future.
Anna Marie Mock, a fee-only certified financial planner at Highland Financial Advisors, discusses the dynamic interplay between art and science in financial planning. Drawing inspiration from Leonardo da Vinci's philosophy that "everything connects to everything else," she emphasizes that financial planning is an art involving subjective goal-setting and a science-driven by objective analysis tools. In this video, Anna explains how the scientific method can be applied to financial planning, using equity compensation as a concrete example.
What are your thoughts, feelings, and beliefs about money? What about your partner, and do they differ from your own? Sometimes, the conflict we experience around money in our personal lives can be attributed to incongruent money scripts with those with whom we share finances. Let’s dive into the term money script and how understanding it can help us achieve our financial goals.
Where is the wisdom we have lost in knowledge?
Where is the knowledge we have lost in information?
T.S. Eliot, The Rock, 1932
What does Eliot’s critique of modernity, which holds that we are losing something valuable in our lives as we pursue technical progress, have anything to do with investing and personal financial planning?
Most recessions are the result of fiscal tightening following periods of high growth and inflation, with the Federal Reserve raising overnight rates to put the brakes on the economy.
A second common cause of a recession is the collapse of a group of businesses or assets due to lousy management resulting in a financial contagion. The Savings and Loan Crisis and the real estate bubble and sub-prime mortgage of the Great Recession are examples.
The third type of recession is an event-driven collapse of investor and consumer confidence leading to massive selling of stocks, reduction in spending, and eventually a business slowdown and employee layoffs.
When it comes to event-driven market selloffs and recessions, it is essential to understand that, historically, when the event is waning, the markets have already begun to rebound.
Here is a look back on Recessions since WWII, and S&P 500 performance during those recessions, showing not all recessions are created equal.
The REAL ID Act was passed by Congress in 2005 to set a standard for identification cards. As of December 2013, the Department of Homeland Security implemented an enforcement plan schedule that was modified in 2018 by President Trump. The Act sets a minimum-security standard for licenses and prohibits Federal agencies from accepting identification cards that do not meet the criteria.
Whether or not you have an interest in sports, you have likely heard about the helicopter crash involving Kobe Bryant, his 13-year-old daughter Gianna, and the seven other people on board who lost their lives. As reported, eight seconds after losing communication with the helicopter, it plummeted at a rate of descent increasing to over 4,000 feet per minute, traveling about 185 mph on impact. The families on the aircraft were all on their way to a children's travel basketball game.
The President signed The Setting Every Community Up for Retirement Act (SECURE Act) into law on December 20, 2019, and many of the changes became effective on January 1, 2020. In an earlier article, “SECURE Act”, we discussed the basics of what the SECURE Act intended to accomplish.
In 2006, the Pension Protection Act (PPA) was passed which introduced tax incentives for companies to adopt automatic enrollment and deferral increases. Since 2006, many plan sponsors have implemented automatic enrollment which was designed to positively influence employees’ behavior to improve their retirement savings.
According to Northwestern Mutual’s 2019 Planning & Progress Study, 17% of baby boomers have less than $5,000 saved for retirement and 20% have less in personal savings. With an increase in longevity and decreased purchasing power, more individuals have to supplement Social Security income with personal savings during retirement. According to the US Bureau of Labor Statistics, only 55% of the adult population participated in an employer retirement plan in 2018, and Vanguard reported that the median 401(k) balances for individuals age 65 or older are $58,000.
As of January 2019, the Transportation Security Administration (TSA) reported that 99.9% of passengers wait less than 30 minutes for security checks at airports. This doesn’t seem factual when you are waiting in the security line with no end in sight. During my very warm welcome back into the states in the customs line, I was curious as to what traveler program provides the highest value for the lowest cost. There are many programs that are offered through the government and private companies, but the two most popular programs are the TSA PreCheck and Global Entry.
Benjamin Franklin wisely observed that “nothing can be said to be certain, except for death and taxes”. Centuries later, this still rings true. Most earned income will be subject to taxes and tax withholding as determined by Form W-4, Employee's Withholding Allowance Certificate. Form W-4 is an IRS form you, as an employee, complete directing your employer on the amount of pay to withhold from every paycheck for federal taxes. Accurately completing your W-4 is beneficial to you because it can prevent overpayment of your taxes, putting more money in your pocket. It can, also, avoid underpayment of your taxes, which ensures that there will be no unexpected tax bill or penalty due.
Imagine you are in an accident or have a medical emergency. That can certainly be a scary situation. But what if you could not speak or were unconscious? How would the first responders or medical professionals know whether you have any ongoing medical conditions, food or drug allergies, what medications you are currently taking, or what blood type you are?
There are myriad ways to save for higher education expenses and choosing the best college savings account depends on your personal needs and preferences. Ever since Congress passed the Small Business Job Protection Act in 1996, which established 529 college savings plans as a tax-advantaged investment vehicle, 529 plans have become the most popular college savings account for Americans. 529 plans have gained favor because some states offer tax deductibility for contributions, earnings grow state and federally tax-deferred, and withdrawals are tax-free as long as the money is used to pay for qualified education expenses.
In a previous article titled “The Estate Planning Essentials”, I identified the documents needed for a comprehensive estate plan. Although this can be a morbid topic most want to avoid thinking about, reviewing the documents not only ensures your financial legacy is passed in accordance with your wishes as smoothly as possible but guides your agent to ensure your medical and financial wishes are addressed. So, how often should you review your estate planning documents?
There are many self-proclaimed financial experts who like to stand up on their soap boxes and disparage ordinary people for how they spend their hard-earned money. The most commonly referred to “waste of money” is your morning coffee. There is even a website that will calculate how much you would accumulate if you didn’t buy your morning coffee and instead invested it. Suze Orman and Kevin O’Leary are two financial experts who refuse to pay for a cup of coffee because they think it’s like throwing money away.
Open enrollment is a short period of time, usually occurring once per year, when you can add or drop your health insurance, or make changes to other coverages. Open enrollment ranges from a couple weeks to a couple months prior to year-end usually in November to December. This allows employers to provide a comprehensive overview of benefits offered, which allows you to make well informed changes to your benefit elections. Benefits may vary from very limited to comprehensive lists that range from medical insurance, life insurance, and other ancillary benefits like legal services and pet insurance.
As a financial planner, I like to be as prepared as possible for the unknowns in life. This allows me to have peace-of-mind knowing that major issues have already been addressed. As life evolves, no one can be certain about the future, but one aspect you can control is your legacy through a comprehensive estate plan. A comprehensive estate plan can be comprised of a variety of documents, but the base estate plan should include a last will and testament, durable power of attorney, and medical power of attorney and directive. These documents guide your appointed agent(s) to ensure your medical and financial wishes are taken care of and your financial legacy passes in accordance with the guidelines laid out as smoothly as possible. Having an estate plan in place prior to a life changing event, cognitive issues, or death can help ensure that the decisions made by the individual are honored.
Inflation has been a popular topic of late.
In his press conference to announce the Fed’s decision to cut interest rates following its July meeting, Fed Chair Powell cited “muted inflation pressures” as justification for action.
However, retaliatory tariffs between the U.S. and China have raised concerns this could spark inflationary pressures as consumers are forced to pay higher prices.
