Tips

There’s not a single person who doesn’t appreciate receiving a large sum of money, whether it is a bonus from work or a refund of taxes that have been over-paid throughout the year. However, it’s easy to have spent this large sum of money before it’s in your pocket. Most of us have felt the disappointment of not receiving expected funds. In the event you haven’t already spent the money, what do you do with it once it does actually hit your bank account?

We suggest giving yourself permission to spend a small amount, possibly 10%, on something fun or frivolous. Maybe that’s a ski pass, a vacation, new technology, or a wardrobe boost. We suggest putting the rest toward a goal that will help advance your financial picture. The first priority is likely paying down credit card debt. After this is paid off, then consider paying down a car loan, student loan, home equity line of credit, or mortgage.

Another consideration is boosting savings. Once you have 3-6 months of emergency savings in the bank, you could fund retirement with a Roth IRA contribution. If you are on track for your retirement goals, you could fund a brokerage account for mid-term goals such as buying a house or vacation home, or an HSA for future health care expenses. If you are receiving a bonus, check with your HR team to see if you can invest the funds in your company 401(k) plan to defer the taxes.

A couple secondary options to consider include:

• Funding an account for health insurance premiums if you are planning to retire before Medicare age 65.
• Investing in a home renovation to boost the value of your home for a future home resale.
• You could also consider investing in residential or commercial rental real estate.
• Pursue further education or a designation that will help you advance your career.
• Your favorite charity or non-profit would be more than happy to receive a donation.
• Consider an impact investing opportunity.

Most people understand the concept of insurance. People pay a premium to an insurance company for the protection against a potentially catastrophic financial loss. Insurance companies are able to make money by pooling policyholders’ risks and charging a premium based on actuarial estimates.

The most common types of insurance policies are life insurance, disability insurance, and homeowners and auto insurance. But what happens when you want to insure something outside of the norm, say a personal item such as a laptop or expensive piece of jewelry? More and more, technology is starting to act as a disruptive force in the insurance industry that makes obtaining custom insurance more efficient for consumers.

There is a host of startup insurance firms that now allow you to quickly and easily insure single items, for varying periods of time. According to KPMG, this budding industry, nicknamed “Insurtech”, gathered over $1.7 billion from Venture Capital firms in 2016. One of the most popular companies, called Trov, is entirely app based. It got its start in Australia and the U.K., and recently made its way to the States. It can be very convenient if you want to insure an item for a specific period of time. For example, if you are going on a cross-country road trip with the family and you were worried about losing or damaging an expensive camera, all you’d have to do is send a picture of the camera to the app, tell them how long you want it insured, and you will receive a quote instantly.

Another on-demand insurance company is called Sure. It’s very similar to Trov, but you can also purchase baggage protection when traveling, rental car insurance, and insurance on your pet. As these on-demand and custom insurance companies start to mature, it will be interesting to see what other technological advancements will develop that will aim to make our lives easier as consumers.

This year, Federal open enrollment runs from Monday, November 12, 2018 – Monday, December 10, 2018 and it may be a good time for individuals and families to review and make changes to their health insurance coverage. Even if you have been covered under an employer-sponsored plan for many years and are not planning to make any changes, this year it might be time to consider opening a health savings account, also known as an HSA. To be eligible for an HSA you cannot be enrolled in Medicare and must have a high deductible health plan. For 2018 that means you have a deductible of at least $1,350 for individuals and $2,700 for families where the maximum out of pocket cannot exceed $6,650 for single coverage and $13,300 for family coverage.

HSAs are triple tax advantaged accounts offered through employers and some banks and financial institutions as a way for individuals and families to save for health care expenses as they would save for their retirement. Contributions made to the account are tax deductible regardless of income level. If you invest the funds, any growth is tax deferred and distributions are tax-free when withdrawn for qualified health expenses. Unlike a Flexible Spending Account, you do not have to use the funds you contribute by the end of each year. The balance rolls over year by year and if you are able to cover your current medical expenses through cash flow, the funds can be maintained in the account for future needs.

The IRS adjusts contribution limits to an HSA each year and for 2018 they are set to $3,450 for individuals and $6,900 for families, with a $1,000 catch up contribution if you are 55 or older during the year. While you cannot use HSA funds to pay your health insurance premiums, you can use the funds to pay Medicare premiums once enrolled. If funds are withdrawn for non-medical expenses, there is a 20% penalty until age 65. After age 65, funds can be used for any expense but are subject to taxes if not medically related.

When a loved one passes away, there are so many things to do in the midst of grief. The last thing on a grieving mind is the risk of identity theft of the person who has recently passed away. Sadly, hackers have reached a new low by taking advantage of such a sorrowful time.

Identity theft hackers have been using information from hospitals and obituaries to steal a deceased person’s identity and file a fraudulent tax return. According to an AARP article, “With a name, address and birth date in hand, they can illicitly purchase the person’s Social Security number on the Internet for as little as $10.”

The term for this ugly practice is commonly referred to as “ghosting” because it can take six months for financial institutions, credit-reporting bureaus, and the Social Security Administration to register death records. This gives the “ghosting” hackers plenty of time to cause a lot of damage. Thankfully, the surviving family members are not necessarily responsible for the financial destruction.

To make it even worse, an article from ABC News warns of a “disturbing pattern of identity theft of financial information belonging to people who were dying. It’s easy to see how that could happen, since people who are gravely ill can easily lose track of the details of their finances.” Therefore, it is always important to help protect the identity of a loved one, especially one who is ill as well as the recently deceased.

For many people, their 40s and 50s are still a period of financial transition. Some people are opening their own businesses while others are considering retirement. No matter where you are at this point in your life, it is likely that you still have some financial goals to work toward. These tips may help you work towards a brighter and more financially secure future.

Pay into Retirement

If you have an employer sponsored 401(k) plan, we suggest creating a goal to contribute the maximum amount allowed based on the IRS limits ($18,500 in 2018). Alternatively, if you own a business and don’t have a 401(k) through an employer, you can may be able to set up your own retirement plan to contribute with tax-deferred funds.

While you are adding money to your savings regularly, also make sure to project your savings, ensuring you are on the right track. If you feel like you’re off track and you’re over the age of 50, you can contribute an additional $1,000 to your IRA and $6,000 to your 401(k) to help catch up.

Monitor Stocks and Bonds

It is important to keep your stock/bond allocation near it target design and may require periodic rebalancing of the account. This is something you should discuss with your Financial Advisor.

Becoming financially savvy can take decades. Each stage of life poses different challenges, some of which can make smart financial choices seemingly impossible. While it’s inevitable that there will be financial slip-ups throughout your life, following these tips in your 20s and 30s can help build a solid foundation for healthy finances.

Create a Monthly Budget

It is very difficult to save responsibly if you don’t first learn how to spend responsibly. Establish a budget, even a simple one, so you can track where your money is going. Remember: no budget is set in stone. You can always revisit your budget in a few weeks, months, or years to reassess your income and needs.

One popular and simple technique for budgeting is the 50/30/20 method. First, use 50 percent of your after-tax income on necessities like rent, groceries, insurances, and auto payments. Next, 30 percent of your income goes to your wants like shopping, travel, and entertainment. The remaining 20 percent of income goes right into savings.

Avoid Credit Card Debt

Credit cards can be a powerful tool, but to avoid losing money on interest payments, you need to pay off your balance in full each month. Spending only as much as you can pay off by the end of the month limits your credit card spending and can prevent you from falling into a pit of debt.

If you are already in debt, set up a repayment plan now and no matter what, avoid paying your credit card bills late. Playing catch-up puts a heavy strain your budget.

Filial Laws impose responsibility on a third party to cover support for poverty-stricken parents and relatives. The concept is derived from a term called filial piety, which is a key virtue in Chinese culture. This virtue essentially stands for respecting and taking care of elders. In more modern context, these laws allow the states to go after the assets of adult children if their parents were on government assistance. This issue often comes up if there has not been proper planning for long-term care needs.

With baby boomers growing older and living longer, almost 70% of people will need some sort of long-term care in their lifetime. Many people do not have the ability to purchase long-term care insurance, so they rely on their own assets to pay for care until they can qualify for Medicaid.

One of the most recent examples of these laws being enforced happened in Pennsylvania in 2012. In the case of Health Care & Retirement Corporation of America v. Pittas, the court ruled that a son was financially responsible for his mother’s nursing home costs during the 6 months that she spent in the facility. The total debt that the defendant had to pay was $93,000.

We all know that inflation raises prices, but how many of us really understand the compounding effect that it has on the cost of everyday items? What other factors influence prices besides official inflation numbers? And how many of us know how we may protect ourselves from inflation and, at the same time, make the most of inflationary pressures as we plan for the future?

Inflation Through the Years

Let’s take a brief look at individual inflation rates from 1990 to 2018, at the cumulative rate, and at some specific numbers over just the past 28 years.

Comparing prior years, inflation stood at 6.1% in 1990, 3.4% in 2000, 1.5% in 2010, and is expected to be around 2% for 2018. On their own, those numbers may not look too daunting, but when you look at the cumulative effect that it has over the years, small increases over time can have a huge impact.

By adding together each year’s inflation rate, we can see how much the cost of an ordinary $20 item increases over the years. Since 2010, the cumulative inflation rate is 15.4%, so the same item that cost $20 just eight years ago would now cost $23.08. Going back to 2000, the cumulative rate has been 46.1%, raising the cost to $29.22. Looking back another 10 years, we see a cumulative inflation rate of 92.5%. This means the cost to buy that $20 item from 1990 would today cost $38.50.

With the cost of college tuition rising, more students are looking to scholarships to help take pressure off the cost. However, when it comes to athletic scholarships, the odds of a male high school athlete playing basketball at a NCAA Division I school are 107:1, and 88:1 for a female high school athlete. If your student was fortunate enough to receive an athletic scholarship, for the 2014-2015 school year, males received athletic scholarships of $14,270 and females received $15,162 on average at a Division I school. This likely still would not cover the full cost of tuition. So where else should students look for scholarships? According to a report completed by Sallie Mae, many families don’t apply for scholarships because they think they won’t qualify due to grades, finances, or simply because they don’t know what may be available.

Scholarships can come from each school independently, private or community organizations, or state and local governments. With close to $49 billion in grants and scholarships available it is likely that there is a scholarship out there for every student, the tricky part is finding it. Below is a list of websites put together by The Scholarship System to help students get started.

1. Big Future (College Board)
2. Broke Scholar
3. CareerOneStop
4. Chegg
5. JLV College Counseling
6. Student Scholarships
7. Tuition Funding Sources
8. Unigo

As a new or expecting parent, there are a number of expenses you need to prepare for. Raising a child isn’t cheap, and it only becomes more expensive as time goes on. If you want to be sure that you’re prepared for many of the major financial obligations associated with raising a child, this financial checklist will help confirm that you have everything in order.

Step One: Plan for Hospital and Delivery Costs

The average cost of birth in the United States is more than $30,000, without even factoring in the costs of prenatal care and checkups in the months leading up to it. Much of this amount will be alleviated by insurance, but you’ll need to consult with your provider to fully understand the amount you’ll owe following delivery. You will also want to make sure your doctor, hospital, and anesthesiologist are all in network with your insurance, prior to your delivery. By planning for these expenses, you can stay one-step ahead and take at least one worry off your plate when your child arrives.

Step Two: Build Up Your Emergency Fund

You may already have an emergency fund set up, but the amount you save up will change when you have a child. Ideally, you want to have 3-6 months of required expenses including rent or mortgage payments, car and insurance payments, groceries, and more in your emergency savings fund. The goal is that in the event of a job loss, you will have enough to be able to take care of your family while you search for a new job. Your emergency fund will also help cover things like emergency child care, hospitalization for illness or injury, or unexpected home repairs.