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Have you ever fluctuated between knowing you need to save…and wanting to live life to the fullest?

I would think that many of us have argued with ourselves about that at least a few times over the course of our lives. And I’m about to offer a solution to that.

A budget.

Wait! Don’t close this blog just yet! Hear me out.

No one – and I mean NO ONE – wants to sit down and create a budget. I’m picturing some couple in the 80s sitting at their kitchen table with one of those big clunky calculators fighting over how many times they went to Burger King the month before.

The NEW way to budget is to create a spending plan. See? That sounds better already. When you create a spending plan, you’re giving yourself permission to spend in certain areas, so you don’t have to have that moment of guilt before you hit “purchase” – you know it’s okay.

The thing about creating a spending plan is that we all think about money differently depending on our personality type and our life experiences. In my eBook, Stop Financial Freakout, I talk about four different money mindsets.

Let’s take a look at how each one would handle putting together a spending plan:

Giver

A giver would put off crafting a spending plan because they are too busy with all of their commitments to other people. They would definitely have a “charity” line item as well as a “gifts” category.  

Keeper

A keeper crushes budgeting. They pay themselves first, and have allocations for emergency savings, travel fund, replacement car account, retirement, and a line item to save for their parent’s retirement because they will probably need help and they want to be ready.

Merry-Maker

What’s a budget? They just look at their checking account balance and that’s how much money they have left until payday.

Perfectionist

A perfectionist has already downloaded budgeting software, and meticulously tracks every penny they spend, but doesn’t allocate any money for fun because what if they don’t have enough savings? As soon as they hit “X” goal then they will spend some money on themselves. And then the goalpost keeps moving because one can never be sure they have enough money saved, can they?

Which one are you?

Do you see yourself in any of these scenarios? In the next blog we’ll talk about how each money personality can effectively put together their own spending plan, so they hopefully won’t have to decide between saving and FOMO!

With all the turmoil we’ve experienced during the last few years, it’s important to concentrate on the positive side.

According to CNBC.com, “Over the past couple of years, the effects of Covid-19, social activism and economic uncertainty have profoundly impacted women’s attitudes about their finances, according to a UBS survey.

Nearly 9 in 10 women believe money is a tool to achieve their personal “purpose,” the report uncovered, polling 1,400 women investors in January and February 2022.

“Many women have a deeper commitment than ever before to leading more purposeful, intentional lives and making a positive difference in the world,” said Carey Shuffman, head of the women’s segment for UBS.”

3 Ways to Give Back Effectively

While we’re always tempted to send money where it’s needed, it’s also important to make sure your money is being used wisely – both by the charity and in your financial plan. Here are three steps to help ensure your money is going where it should.

Find the right non-profit

Research organizations that align with your values. Do you want to help a smaller organization? Global or local initiatives? Here are a few questions from Fidelity Charitable to ask non-profits before you commit your funds:

Talk to your advisor

When I work with a client, it is helpful for me to understand their values when crafting their financial plan.

For example, is it more important for you to retire early and spend time with your family or to have more money to spend in retirement? Or, if not being a burden to your children is important, we may allocate more money to long term care insurance.

We can use the conversational tools I use to determine values to help select charities.

Another important aspect of charitable giving is understanding how it affects your taxes.

I also like to show my clients ways to “help” without giving money. There are myriad investments that are focused on doing good, such as individual companies and mutual funds that are focused on helping women, or clean energy. It can be hard to sort through them all and make sure that they really are investing in line with their mission statement – I have tools to use and experience to help select these investments.

Think about long-term goals

I can also help you figure out how much you have to give, and where that will come from. You can also see how it will affect your overall plan; for example, if you donate 5% of your income to charity each year, you may only have to work 1-2 years longer to reach your same goals in retirement and that may absolutely be worth it for someone charitably minded.

We’ll also discuss your estate plan and how charitable giving might play a part. You may not have cash flow to give right now, or money to invest, but leaving money to charity as part of an estate plan can be very beneficial to those charities. Beneficiaries get the full value of your assets without taxes on gains (“a step-up in basis”).

If you’ve been watching the news and are finding it endlessly depressing, giving back could be a wonderful way to feel a little more in control. If this is something you’re considering, I would be happy to discuss your options with you and help ensure your money is helping both the cause and your financial plan.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

If you click on this article - 8 Reasons Gen X is Especially Good With Money – you might wonder why I, a financial planner, am talking about it. After all, in the opening paragraphs it says this:

Born between 1965 and 1980, they're used to doing things for themselves, so they don't ‌need to waste money paying someone to manage their money or tell them how to manage financial stress. They'll handle it all themselves, thank you.

So, while it might seem counterintuitive to point out that Gen Xers don’t want to pay for financial services, there are some qualities about this generation that make them perfect for professional financial planning.

A productive financial planning partnership between a client and an advisor embraces all of those qualities. Yes, we’re there to create a plan, but it’s also up to the client to implement some of the pieces.

Every advisor has had a client who has come back to them disappointed in an outcome they were hoping for, and every advisor has asked the question, “Did you do [this part of the plan that we talked about before]?”

The answer is almost always no.

The fact that Gen Xers are more open to new ideas when it comes to their financial plan AND are more likely to follow through with them, makes this a win-win for both the client and the advisor.

Independence:

“Gen X'ers are more likely to have a 401(K) and believe that the ability to save for retirement is mainly their responsibility.”

Perfect. Let’s come up with a plan to get you where you want to go because I know you’re going to implement it. You like to do things for yourself and I’m going to give you the tools to do it.

Work-Life Balance:

“…they are more likely to manage their time and make sure they have enough time for both work and play. And this extends to their choices for how to make money.”

YES. Let’s create a plan that not only prepares for the future but allows you to enjoy life now. You understand the need for a diversified portfolio. I understand that everyone’s goals are different. Together we’ll do something amazing.

Adaptability:

“Gen X'ers are more likely to start their own businesses, have online brokerage accounts, and invest in a broader range of assets than other generations.”

I love that you want to start your own business and that you also understand that we don’t save for the future like our parents did. You know that it’s up to you to create the future you want; pensions are pretty much a thing of the past and you’ve adapted to that change. You also understand that a plan needs to be fluid and you’re willing to communicate these changes with your advisor. There’s no shame there; it’s just life!

As with most things – yes – you can go it alone. You can fix your own car. You can do your own taxes. You can replumb your entire house. I know you have it in you do it all.

But do you WANT to?

Let’s take the amazing qualities you already have and make them work for you and your money. CLICK HERE to contact me.

It’s certainly no secret that healthcare costs have escalated in recent years, and there’s no reason to believe that the end is in sight.  But whether you have a comprehensive health insurance policy or have purchased a catastrophic policy, there are ways to save on healthcare costs.

Here are just a few:

1. Stop going to the emergency room for minor illnesses. There are many reasons why going to the emergency room is a good idea. A cold or the flu is not one of them. Urgent care centers are designed to handle non-emergency medical situations from coughs, colds, the flu, to minor cuts, scrapes, and bruises. If you have a comprehensive insurance plan, your co-payment for urgent care will likely be half of what the emergency room co-payment would be. And if you’re paying out of pocket, an urgent care bill will likely amount to about one-tenth of what an emergency room bill would be. Save the emergency room for emergencies, and go to the urgent care route instead.

2. Take advantage of a Health Reimbursement Account (HRA). Traditionally offered by larger employers, more small business owners are starting to offer HRAs to their employees. When signing up, you’ll choose the amount that you expect to pay in out of pocket healthcare related expenses in the upcoming year. When you have a reimbursable expense, you can file a claim with the plan administrator to be reimbursed up to the yearly amount requested, meaning the co-pays and other expenses that you have to pay out of pocket will be paid with tax-free funds. Many HRA plans now issue a card that can be used like a credit/debit card, so you can pay for medical expenses as they occur; eliminating the need to file a claim.

3. Sign up for a Health Savings Account. If your policy has an annual deductible of $1,300 for single coverage or $2,600 for family coverage, you’re eligible for a Health Savings Account. You can contribute up to $6,750 per year for a family policy, with $1,000 additional if over 55, and the savings can be used in the current or future years, unlike the HRA, which requires you to use the funds in the current year.

4. Pay attention to your medical bills. Hospital bills in particular are error-prone, billing for items and services never received. Before automatically paying any balance due, make sure that you actually owe the bill. But it’s not just hospital bills. Even bills from an office visit or lab may contain errors. Taking a few moments to review bills as they come in can help to ensure that the balance due is accurate.

5. Take the time to compare insurance plan options during open enrollment. Make sure that you compare your options, and don’t automatically sign up for the same plan, or the cheapest plan. In actuality, in many cases the cheapest plan may end up costing you the most if you have surgery, or spend any time in the hospital.

Other options include taking advantage of mail order prescriptions, utilizing health plan benefits such as free gym membership and telehealth options can also help you save. While healthcare may never be truly affordable, these and other options can help to minimize additional expenses.

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2018 Advisor Websites.

For years it was assumed that tax planning was reserved for the wealthy. While wealthy individuals will see the most benefit from tax planning, with big changes looming for the 2018 tax year, even middle-income earners can reap the benefits of tax planning.  

Basic tax planning starts with your AGI or Adjusted Gross Income.  This is your total income after any adjustments or credits have been applied. Reducing your AGI is the number one goal of many tax planners, and the easiest way to do this is to contribute money to a 401(k) or other retirement plan. By the way, 401(k) contribution limits have increased for 2018, with those under 50 able to put away up to $18,500, while those over 50 can contribute up to $24,500. IRA contribution maximums have also increased, with a maximum of $5,500 in 2018, while those over 50 can contribute up to $6,500. Contributing to a qualified retirement plan is the easiest way to positively impact your AGI; reducing your taxable income while also building your nest egg for the future.

Another way to minimize your tax liability is to simply change your withholding exemptions on your W4 certificate. In fact, the IRS is recommending that taxpayers take advantage of the newly updated withholding calculator available on the IRS website to check if too much or too little tax is being withheld from your paycheck.   

Those looking to minimize tax liability in 2018 may also want to consider paying off a home equity loan. While interest was deductible on all home equity loans prior to 2018, under the new tax law, if the loan was used to pay off other expenses, the interest will no longer be deductible. However, if the loan was used for home improvements, it’s likely still deductible, provided it falls under the mortgage principle threshold of $750,000.

Aside from lowering your AGI, another area that tax planning traditionally focused on was increasing itemized deductions. While the opportunity to itemize still exists, keep in mind that deductions for moving expenses, alimony (for divorces after December 31st of 2018), and losses from natural disasters that do not occur in federally designated disaster zones have been eliminated, while deductions for state and local taxes paid have been capped at $10,000.  

However, the new tax law allows taxpayers to deduct medical expenses that exceed 7.5% of AGI, down from 10% in prior years. If you have a high-deductible health insurance plan, or typically incur significant medical expenses each year, now might be the time to consider using the medical expense deduction.  In fact, if you typically have high medical expenses, or a high-deductible health insurance plan, this might be the year to consider opening a Health Savings Account that allows individuals to contribute up to $3,450 annually, while families can contribute up to $6,850.

With all the changes looming for 2018, you may want to contact a finance or tax expert to help guide you through the maze, as well as get you on track for potential tax savings.

Resources

1. https://www.thebalance.com/tax-planning-basics-3193487

2. https://www.putnam.com/literature/pdf/II922.pdf

3. https://www.forbes.com/sites/megangorman/2018/03/12/want-to-fund-your-hs...

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2018 Advisor Websites.

*Some IRA’s have contribution limitations and tax consequences for early withdrawals. For complete details, consult your tax advisor or attorney. -Distributions from traditional IRA’s and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59 ½, may be subject to an additional 10% IRS tax penalty.

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Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through GPS Wealth Strategies Group LLC, a registered investment advisor. GPS Wealth Strategies Group LLC and Aspen Wealth Management are separate entities from LPL Financial.

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