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Spending and Saving Strategies for 2023

(NewsUSA) - The past few years have upended many perceptions of financial stability. A layoff or career change, inflation never before seen by younger generations and the lingering uncertainty of the pandemic might have thrown off your financial planning.

The new year is a great time to review your strategies for smart spending and saving so you can weather whatever the future has in store.

Financial planning professionals suggest that you start by creating a budget. Online trackers such as Mint.com can help you understand your spending. Also, reviewing your expenses with a CERTIFIED FINANCIAL PLANNER™ professional is a great way to get a handle on spending smart today while saving for tomorrow.

Try these tips for saving and spending in 2023:

Use credit responsibly: Pay off credit cards each month, if possible, to avoid accumulating debt and build good credit.

Set up automatic savings: You can do this through your bank and via your employer’s payroll. Use the new year to take a fresh look at the savings options through your employer, including Health Savings Accounts (HSAs), which can be carried over from one year to the next.

Invest windfalls: Invest any unexpected cash, such as bonuses or tax refunds, and make your money work harder for you. If you find yourself with significant new assets, such as an inheritance, a CFP® professional can help you make the most of your good fortune.

Review your retirement plans: The new year may bring changes such as buying a home, updating a will or navigating a higher tax bracket. A CFP® professional can provide a new year review to keep your retirement plans on track no matter where you are in your working life.

Plan your tax payments: Consider paying estimated taxes throughout the year to avoid a large tax bill in April. Estimated tax payments can be especially helpful for contract workers or freelancers who don’t have taxes taken out of their pay automatically.

Shop smarter: Combat inflation by switching to store brands for some items. Check whether generic medications will work for you and compare prices for different pharmacies.

Visit LetsMakeAPlan.org for more information about financial planning and how to find a CERTIFIED FINANCIAL PLANNER™ professional near you.

Planning for Winter Expenses Pays Off

(NewsUSA) - Winter is coming. And so are winter expenses. Planning ahead for inevitable winter expenses, from holiday shopping to home winterization, can save you time and stress as well as money. And it can leave you with a robust nest egg when spring arrives.

Unlike holiday decorations, it’s never too early, or too late, to budget for winter expenses, says Rod Meloni, a CERTIFIED FINANCIAL PLANNERTM professional.

Setting aside funds for winter expenses can help you avoid overspending and make sure that you are covered in case of an emergency, says Meloni. For example, setting aside money in advance for contractors to inspect a furnace or clean gutters means you won’t feel pinched when the cold weather kicks in.

Taking smart steps to winterize your home now can save you money later. Some strategies are simple and free; some are more costly and complicated, but a CERTIFIED FINANCIAL PLANNERTM professional can offer help to develop a budget or fit these expenses into your budget.

Consider inside and outside factors for winterizing your home.

Outside, be sure to turn off external spigots to avoid bursting pipes, and put away hoses and sprinklers. Swap screens for storm doors and windows that allow your home to heat more efficiently. Don’t forget to clean the gutters — a buildup of leaves can keep water from draining and allow ice to accumulate and potentially leak into your home.

Inside, schedule an annual inspection for your furnace, and check for insulation of water pipes. Check areas around the attic, windowsills, and electrical outlets for air leaks, and fill them with insulation as needed.

Avoid the heating bill blues by incorporating some money-saving ideas into your winter plans. Installing a programmable thermostat lets you set temperatures lower at times of day when you aren’t home, or when you are on vacation. If your budget permits, check out investing in alternative heating systems such as pellet stoves or solar heat, which can pay off in savings if you plan to stay in your current home long-term.

Make sure your insurance is ready for winter, too. A CFP® professional can help you review homeowners insurance and determine whether you need to increase your coverage.

Also, be aware that winter can bring a catch-all of potentially unexpected expenses, from the need for snow tires or shovels to backup child care in case of a snow day or winter illness. Setting aside an emergency fund for winter expenses gives you a sense of security, and if you don’t need the funds this year, roll them over to next winter.

Every season involves expenses that should be incorporated into your financial plans. A CFP® professional can help you think through these considerations and build a comprehensive plan that keeps you on track to achieve your goals, no matter the season.

3 Great Resources to Kick-Start Your Financial Planning Career

(NewsUSA) - Finding a rewarding career that offers growth potential, work-life balance and the satisfaction of helping others is a key priority for many job seekers. With those goals in mind, a career in financial planning should be a top contender, whether you are just starting out or looking to make a career change.     But once you have decided that financial planning is the field for you, how do you get started? Here are three resources that can help you launch a successful financial planning career.     

1. Guide to Careers in Financial Planning. Based on interviews with leading financial services firms, this guide introduces you to the wide range of career opportunities in the financial planning profession. It identifies typical entry points and career tracks, explores the types of companies that hire financial planners and provides information on how to find financial planning career opportunities. It also includes resources such as a list of recommended questions to ask in a job interview.     

2. Scholarship Programs. Dozens of scholarship programs are available to support you on your professional journey. Some are offered directly through colleges and universities that have financial planning degree and certificate programs. Others are available through nonprofits and organizations like the CFP Board Center for Financial Planning, which administers 16 scholarship programs that help pay for the education and exam requirements to become a CERTIFIED FINANCIAL PLANNERTM professional. Financial services firms may offer scholarships or tuition reimbursements to employees to cover the costs of obtaining professional designations and credentials such as CFP® certification --  some of which may be required to advance within the company.     

3. Career Fairs. In-person and virtual career fairs provide valuable opportunities to connect with prospective employers. CFP Board’s spring and fall career fairs are some of the most popular hiring events in the profession, with dozens of firms participating in these online exhibitions. Job seekers can visit employers’ virtual exhibit booths and view open jobs and internships, apply for open positions and interact with employers through one-on-one video meetings and messaging. You can also visit the CFP Board Career Center to browse current job and internship opportunities in financial planning, as well as a collection of articles providing career guidance.     

Other top resources include career offices at your college or university, financial services companies’ career websites and professional organizations that may have a local chapter near you.     

Making the most of these resources will not only help you find a financial planning job, but also support your growth and development as a future financial planning professional. To learn more about CFP® certification, visit the CFP Board website.

4 Tax-Smart Strategies for Your Charitable Giving

(NewsUSA) - Are you one of the 68 percent?  Or maybe even the 17 percent?

The former are those Americans who, despite the current economic uncertainty, intend to donate a similar amount of money to charity this year as they did in 2021, according to a new survey conducted by financial services firm Edward Jones with Morning Consult.  While the latter – kudos to you – are planning to dig even deeper into their pockets.  

Here's how to do it in a way that might be more advantageous when you file your taxes:

Take advantage of the upside of higher gas prices.

1. Take advantage of the upside of higher gas prices.  

So you, being a caring person, have decided to volunteer at a charity whose work you admire.  The IRS lets you deduct unreimbursed out-of-pocket expenses like the cost of gas for driving back and forth.

And with prices at the pump being what they are these days, the deduction might be worth more than any “gently used” clothes you donate to your local resale shop.

Act like your own charitable foundation.

2. Act like your own charitable foundation.

Three words:  Donor-advised funds (DAF).  If you haven’t heard of them, you should.  According to a report by the Philanthropy Roundtable and American Enterprise Institute, they're the fastest growing option in charitable giving – no doubt because, as the report concluded, they “help to democratize philanthropy” by essentially acting as “small, personal foundations” for people who don’t have treasury secretaries on their speed dial.

Basically, with DAFs, you make an irrevocable contribution to the fund – whether cash, stock or other marketable securities, and you get to recommend grants/distributions to one or more of your favorite IRS-qualified public charities to support.  Maybe it’s your local homeless shelter. Or maybe it’s a religious institution.  

Whatever you decide, it’s a win-win situation:  You get an income tax deduction in the year of the contribution, the money you donated to the fund has the potential to grow over time and any investment growth is tax-free, expanding your charitable impact.

“DAFs can be a powerful tool for helping people make a positive impact in the world, which is something our survey found Millennials and GenZers are especially interested in,” says Zach Gildehaus, a senior analyst at Edward Jones, whose local financial advisors can help you figure out how best to incorporate charitable giving into your overall financial strategy through vehicles like a donor-advised fund.

Consider the RMD trap.

3. Consider the RMD trap.

The IRS generally requires that traditional IRA holders take annual income withdrawals, known as required minimum distributions (RMDs), starting at age 72 even if they don’t want or need the money.  But that cash, which is subject to ordinary income tax, could put you into a higher tax bracket and adversely affect your Social Security payments and Medicare benefits.

And not taking your RMD can have serious consequences.  

“The IRS penalty for not withdrawing it is 50 percent of the amount not taken on time,” says Gildehaus.

One Strategy?  Folks age 70½ and older can make what’s known as a QCD (qualified charitable distribution).  That allows you to meet your RMD by instructing your IRA administrator to send as much as $100,000 a year from your account to an IRS-qualified charity, and – wait for it – not only would you then not have to pay taxes on the money since it’s going to a charity, but your RMD may be reduced in future years.

Use caution when donating to political organizations or candidates.

4.  Use caution when donating to political organizations or candidates.

Okay, so this is really more of a caution. Remember that 17 percent who said they intended to donate even more this year?  Well, 39 percent of them cited social/political issues as the catalysts. That, however, doesn’t mean any contribution you make to political organizations or candidates will score you a tax deduction.  They won’t.

*Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation.

How to Find a Financial Planner

(NewsUSA) - Experts agree that financial planning has many benefits. It can help you protect your family, worry less about finances and reach your goals at any stage of life. These benefits can be even greater if you work with a professional financial planner who is trained to show you how to make sound investment choices, save money on taxes and rein in high-interest debt, among other things.     

If you’ve decided that you need a financial plan and would like to work with a financial advisor to create it, you might be wondering where to find an advisor. Asking friends, family or colleagues to recommend an advisor can be a good place to start, especially if they earn a similar income as you and seem to be successfully managing their money. There are also numerous resources available online to help you find a financial advisor.     

One of those tools is LetsMakeaPlan.org, a website maintained by Certified Financial Planner Board of Standards Inc. (CFP Board). The site features a search tool that helps you find a CERTIFIED FINANCIAL PLANNERTM  professional by location and planning services offered. CFP® professionals must complete an extensive, multiyear certification process that ensures they obtain the skills and real-life experience needed to provide comprehensive financial planning. They also make a commitment to putting your interests first.     

When you are hiring a CFP® professional, how you will pay for their services is a key question to ask. Different financial advisors may charge differently, or one financial advisor may offer several different ways that clients can choose to pay. Many financial planners use the assets under management (AUM) model, in which the financial planner gets paid a percentage of the assets they manage for you. Some CFP® professionals may earn a commission on a transaction. Others charge hourly fees, subscription fees or fixed fees for specific services. You should ask a CFP® professional to lay out the details for how they charge at the beginning of your engagement.    

Lower-income families or those facing a financial crisis may find help through the Foundation for Financial Planning. The foundation can help connect you with a CFP® professional who provides financial planning services free of charge. These connections are made through financial capability workshops and webinars offered by nonprofit groups and other foundation grantees, as well as through one-on-one financial planning sessions.     

Once you’ve found a competent, ethical financial planner, you can start the planning process together and begin working toward a more secure tomorrow.

Smart Ways to Invest in Charities You Care About

(NewsUSA) - Giving Tuesday, a day dedicated to giving back, occurs on the Tuesday after Thanksgiving, but charitable giving is a year-round endeavor. With some smart financial planning, you can support the causes that mean the most to you.     

You don’t have to break your budget to make a difference, says Scott Ward, a CERTIFIED FINANCIAL PLANNERTM professional. A recent survey by Lending Tree showed that 56% of Americans gave to a charity of some kind in 2021, and nearly 92% of those who gave to charity included charitable deductions on their tax returns.     

Keep these ideas in mind to help support your favorite causes while staying within your budget.     

• Give time. If you are on a tight budget, volunteer your time to a local charity. “If your volunteer service requires you to drive your own car, keep tabs on your mileage; you may have an opportunity to deduct it on your tax return,” Ward says.     

• Consider securities. Stock shares that have appreciated for more than a year can be donated outright to charity with a variety of benefits. “Both you and the charity may be able to avoid capital-gains taxes because you didn’t sell the shares, and you can deduct the fair market value of the asset on your next tax return,” Ward adds.     

• Donate non-cash items. You can deduct donations of non-cash items, such as clothing and furniture, as long as the items are in good condition. Ask for a receipt to document the donation. The IRS guide, Publication 561, can help you determine the value of your donations.     

• Maximize giving opportunities. Some companies offer matching contributions to charitable organizations. Also, if you are age 72 and older, you must take a required minimum distribution (RMD) from your IRA, even if you are still working. If you were going to make a charitable donation anyway, consider a qualified charitable distribution (QCD). “The QCD option allows you to make a gift directly from your IRA to the eligible charity of up to $100,000 a year,” Ward says. This option allows you to increase your charitable donation, satisfy the RMD and reduce your taxable income, he says.     

• Set a schedule. If you want to take a tax deduction in one year (typically used for gifts in excess of the standard deduction limit) and donate to charity over time, consider a donor-advised fund. You can donate a variety of gifts to a donor-advised fund, including cash donations, investment securities and cryptocurrencies.     

Visit www.LetsMakeAPlan.org for more information about how giving can be part of your budget.

3 Tips for Latino Families Working With a Financial Planner

(NewsUSA) - Every family’s financial situation is unique, with different challenges, opportunities and cultural considerations affecting their decisions about money. For some -- particularly families who have immigrated from Latin America, where financial services are less regulated than in the United States -- a mistrust of financial institutions may also influence decision-making.

According to the Federal Deposit Insurance Corporation (FDIC), Latino households are five times less likely than white ones to have a banking relationship. Other research has found that financial challenges facing the Latino community range from higher debt and lower household wealth to less awareness of, or access to, diverse financial products.

Although this can make planning for your family’s future seem complicated and overwhelming, a CERTIFIED FINANCIAL PLANNERTM professional has the education and experience to help you make sense of your financial options and chart a path to reach your short- and long-term goals. CFP® professionals also make a commitment to the CFP Board to act as a fiduciary when providing financial advice to clients, which means they have agreed to put their clients’ best interests first.

Here are three tips for building trust and making the most of a partnership with a CFP® professional:

1. Look for a CFP® professional with international expertise. If your family members don’t live near you, estate planning can be challenging, so make sure you prioritize that with your planner. Cross-border issues need to be taken into consideration to minimize financial consequences. Make sure you ask your financial planner to give examples of how they’ve dealt with similar client issues in the past.

2. Include your family in the planning process. If your focus is on taking care of your family as a unit -- or you rely on your closest relatives for advice -- it may be smart to involve your partner, parents and children in your financial plan. This enables you to work together as a family to align your financial plan with the family’s well-being. It can also accelerate relationship-building with your financial planner as they learn about your values, culture and unique traditions.

3. Make sure your financial plan covers your needs. Most plans include cash flow planning, retirement, education, taxes and estate planning. Including plans for establishing credit, debt management and asset protection is also important. Don’t be afraid to ask your planner questions about financial structures and products that you’re not familiar with, or have them explain the advantages and disadvantages of different options. You can also ask your planner for illustrations or other graphic representations of your options. Visit LetsMakeAPlan.org to find a CFP® professional in your area and for more tips on making a solid financial plan.

Getting started on a comprehensive financial plan today will prepare you for a more secure tomorrow.

Is A Debt-Free Life Possible?

"To say we were disorganized is putting it mildly."

Like so many Americans, they didn't have a plan for their money.

The problem is often not how much money a family makes, but that they have no idea what they're spending it on. Seventy-eight percent of full-time workers say they live paycheck to paycheck, according to a recent report from CareerBuilder. Worse, most feel it will always be that way. But it doesn't have to be.

Financial experts agree that the best way to break the vicious cycle of scrambling to make ends meet is by having a written budget and sticking to it. Leslie heard about a website, EveryDollar.com and the EveryDollar budgeting app that makes it simple to create a budget, manage money, and track spending. They signed up, set up their budget, and they've stuck to it for years. "We paid off $165,000 in debt since we got started. Now we're in a position to be completely debt-free, including our house and rental property, in the next three years."

The "B" word has gotten a bad rap. Budgeting sounds hard. It sounds restricting. Frankly, it sounds boring. But people who've made budgeting the center of their financial behavior have discovered quite the opposite. The technology behind apps like EveryDollar make budgeting easy. Rather than feeling restricted, they say it feels as if they have permission to spend - just not permission to waste.

Sierra Schmidt was surprised by how much having a budget changed her attitude. She's a single mother in Spokane, Washington, whose bills include daycare, rent, and student loans. "I felt so far behind every month, and things seemed hopeless," she says.

"Now, I keep track of every dollar, and the numbers are right in front of me. I'm getting ahead instead of falling behind. Every month I feel more confident that I can wipe out the debt that's been so stressful."

Sierra and Leslie empowered themselves to take control of their money. You can too. Creating a budget and sticking to it could change your life and help you take control of your money in the new year.

EveryDollar is a free budget app that allows users to create customized monthly budgets, and seamlessly track expenses, income and savings from the convenience of their computer and phone. It's available for both iOS and Android devices. EveryDollar launched in March 2015 and now has more than three million users.

Learn more by visiting www.everydollar.com.

 

America’s Retirement Score Hits All-Time High

That's according to Fidelity Investments' latest biennial Retirement Savings Assessment study, which - while mostly upbeat - also makes clear that all too many of those surveyed remain "at risk" of not being able to fully cover essential expenses in retirement if they don't turn things around.

Specifically, after totaling up the assets of the 25- to 74-year-old respondents earning at least $20,000 annually - and that included current or expected Social Security benefits - Fidelity estimated that the typical saver is on track to have 80 percent of the income he or she will need to cover retirement costs. That's the highest it's been since the study was first conducted in 2005, when the same figure was 62 percent and people were just beginning to know the joys of watching videos of cats performing weird tricks.

"It's a significant improvement," says Ken Hevert, Fidelity's senior vice president of retirement, who attributed the rise to both a higher median savings rate compared to 2006 (8.8 percent vs. 3.6 percent) and better portfolio asset allocation.

Even more comprehensively, four color-coded categories were used to show where households fell on a retirement preparedness spectrum based on their ability to handle estimated expenses in a down market:

* Dark Green Thirty-two percent were on target to cover more than 95 percent of their freight (up 1 percent from 2016).

* Green. Eighteen percent were looking good as far as essentials go, but not discretionary items like travel and entertainment (down 1 percent from 2016).

* Yellow. Twenty-two percent were off track, with "modest adjustments" likely required to their planned lifestyles (down 1 percent from 2016).

* Red. Twenty-eight percent definitely "need attention," to put it kindly (up 1 percent from 2016).

Perhaps the biggest surprise in the study had to do with Millennials.

For the first time ever, those born between 1981 and 1992 surpassed the older Generation X in Fidelity's unique cross-generations scorecard. The latter are on track to have 78 percent of the retirement income they'll need, while the former lags behind by 1 percent - though that's presumably after many of them dipped into their own savings to pay the college tuitions of their Millennial offspring. "Millennials are clearly putting money aside for retirement and taking more control of their personal situations," says Hevert.

And Baby Boomers? Collectively, they're in the best position of all, especially those Baby Boomers with increasingly rare pensions, and are on course to have set aside 86 percent of the money they'll need.

For those curious where they stand, Fidelity allows anyone to access their retirement score online. And if you really want a cushiony retirement, keep in mind that you could have 108 percent of what you'll need by embracing all three of the following "accelerators": saving at least 15 percent of your income yearly; ensuring an age-appropriate asset mix; and deferring Social Security benefits till at least 66 or 67.

"While these actions taken separately are clearly helpful," says Hevert, "doing all three could help bring you from good to great."

 

Coupling Finances: What All Newlyweds Should Know

It's a catchphrase that's been described as perhaps the first "I do" for newlyweds, and it's especially relevant as we head into wedding season. Because as much as you may think no two people have ever been more in love than you are - hey, look at the size of that engagement ring! - the truth is that it could be less than smooth sailing ahead if you're not on the same page when it comes to financial matters.

"Couples have a very hard time talking about money," Joan Atwood, a Hofstra University professor of marriage and family therapy bemoaned on an NPR "Money Coach" segment on the issue. "I would say it's the last taboo."

Ready to break it? Read on.

* Set common goals. You probably discussed this in a dreamy sort of way while dating. You know, a large house with a swimming pool ... yearly vacations. But turning those reveries into reality requires habitually saving to pay for them and finance your later retirement years - not to mention deciding whether both partners contribute equally or based on salaries.

"The median ages for brides and grooms are 29 and 31, respectively, these days," said Andrew Peterson, a vice president at Fidelity Investments (fidelity.com). "So while people may come into a marriage with their own assets, they need to take some time after the wedding to sit down and start getting organized as a couple."

* Be transparent. There's no law that says you have to put all your cash into a joint savings account - some couples do, some don't - but at the very least you'd be "less than truthful" by not divulging any outstanding debts. And then figuring out, together, how to pay them down.

* Safely store your information. Quick: What's your new spouse's Social Security number? And what other vital information don't you know if a sudden need arises?

Exactly.

To truly mark your financial coupling, you might consider using an online service like FidSafe.com that lets you store, access and share all your new family's important records and documents anywhere via a web browser or iOS app.

Not only is it free and simple to use with handy checklists, but even before it was officially introduced two years ago by Fidelity - Get it? "Fid Safe" - Barron's magazine gave the service five stars for being what it called "the first cloud-based safe deposit box we've seen that's secure enough to organize everything from financial statements, insurance policies, and real estate records to a will, IRA benefits, and even passwords."

"With all the other things on their to-do lists, newlyweds typically don't focus on all the important financial and other documents they need to begin married life on a solid footing," said Peterson. "This makes things easier for them from the start, as well as through the years as they have even more joint documents to retain - including those related to perhaps buying a house and having children."

You get up to 5GB of storage, which leaves plenty of space left over once you download your new marriage license and the receipt for that engagement ring.

* Investigate this option. Do you both get health insurance through your employer? Congrats. You may have just saved yourselves some money if it works out it's less expensive for one of you to be on the other's plan rather than pay for both.

 

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