Why Money Is Hard
.Why Money Is Hard
March 4, 2021 Financial Independence
.Struggling with money? Join the club.
As a personal finance blogger with nearly two years of writing and almost two decades of investing experience under my belt, I would expect to have it all figured out by now. The reality is, I am just scratching the surface – and so is the vast majority of us. Here are some of my musings on the reasons that make money so ** hard.
Why Money Is Hard
March 4, 2021 Financial Independence
Struggling with money? Join the club.
As a personal finance blogger with nearly two years of writing and almost two decades of investing experience under my belt, I would expect to have it all figured out by now. The reality is, I am just scratching the surface – and so is the vast majority of us. Here are some of my musings on the reasons that make money so ** hard.
Because no one talks about it
These days, people will spill the beans on almost any subject, no matter how personal it is. With the notable exception of how much money they make. Now, that’s not necessarily a bad thing. Early on my career as an investment banker, I quickly learned that sharing bonus numbers is not a good idea. The person who makes less is bound to be disappointed. The person who makes more can also walk away upset for having disappointed the other person.
There’s simply no upside. This lack of communication, however, gives rise to a different problem: lack of context. Securing a $50k salary can feel like winning a lottery to someone who is just starting out or wrapping up their career. Not so much for the person in their “sandwich” years, with the dual task of supporting young kids and aging parents.
Equally, a $200k salary will mean different things to someone with no debt versus a physician who has hundreds of thousands in student loans and is finally starting to earn proper money in their late 30s.
And that’s before you take into account cost of living, marital status, and a multitude of other factors that impact our purchasing decisions.
When we do talk about money, we focus on the wrong things
That is, we focus on spending, not saving.
To continue reading, please go to the original article here:
You Shouldn’t Feel Bad About Spending Money — Here’s How To Avoid the Guilt
.You Shouldn’t Feel Bad About Spending Money — Here’s How To Avoid the Guilt
Last updated: Oct. 19, 2021 By Gabrielle Olya
You’ve worked hard for your money — so you should enjoy it. In today’s “Financially Savvy Female” column, we’re chatting with Dani Pascarella, CFP, co-founder of the financial wellness platform OneEleven, about how you can avoid feeling guilty when spending money.
Do a Spending Evaluation
“Start by understanding how previous purchases make you feel and why,” Pascarella said. “This is key to building your financial foundation.”
You Shouldn’t Feel Bad About Spending Money — Here’s How To Avoid the Guilt
Last updated: Oct. 19, 2021 By Gabrielle Olya
You’ve worked hard for your money — so you should enjoy it. In today’s “Financially Savvy Female” column, we’re chatting with Dani Pascarella, CFP, co-founder of the financial wellness platform OneEleven, about how you can avoid feeling guilty when spending money.
Do a Spending Evaluation
“Start by understanding how previous purchases make you feel and why,” Pascarella said. “This is key to building your financial foundation.”
For her clients who struggle with budgeting, Pascarella recommends that they review everything they spend money on over the course of a week and rate how happy each purchase makes them.
“The goal here is to identify the types of purchases that cause guilt, unhappiness or any other negative feelings, and then understand why,” she said. “Once you have this knowledge, it’s much easier to eliminate these types of purchases and focus on spending your dollars in an intentional way that makes you happy.”
Plan Future Purchases and Avoid Random Spending
“When you plan to buy something and then do, it feels different than when you make an impulse purchase,” Pascarella said.
Impulse purchases often cause guilt because you may be buying something that doesn’t align with your values.
“The reason why impulse spending is so dangerous is that we buy before we ask ourselves, ‘How does this relate to the person I want to be?'” Pascarella said. “So what should you do? Know your triggers. People tend to impulse spend in certain situations and on certain things. When we take a deep dive into a client’s impulse spending, we typically notice strong behavioral patterns (example — a stressful day at work [leads to] online shopping).”
Pascarella recommends replacing your responses to known triggers with healthier habits that are better for you long term.
To continue reading, please go to the original article here:
4 Steps To Improve Your Financial Wellness
.The Other Form of Self-Care: 4 Steps To Improve Your Financial Wellness
Gabrielle Olya Wed, November 3, 2021,
A recent Ellevest study found that financial stress is actually making women sick. Nearly half of women (49%) say that money stress has affected their mental and emotional health, and nearly 40% have become physically ill due to money stress. That’s why it’s so important to practice financial self-care. To find out how to actually do this, we spoke with Kerry Keihn, financial advisor and director of operations of Earth Equity Advisors. Here’s what she recommends for improving your financial wellness.
The most important thing to know is that you are not alone in your struggle to understand your finances. It has nothing to do with your intelligence — the financial industry has basically crafted its own language to make things more difficult to understand.
The Other Form of Self-Care: 4 Steps To Improve Your Financial Wellness
Gabrielle Olya Wed, November 3, 2021,
A recent Ellevest study found that financial stress is actually making women sick. Nearly half of women (49%) say that money stress has affected their mental and emotional health, and nearly 40% have become physically ill due to money stress. That’s why it’s so important to practice financial self-care. To find out how to actually do this, we spoke with Kerry Keihn, financial advisor and director of operations of Earth Equity Advisors. Here’s what she recommends for improving your financial wellness.
The most important thing to know is that you are not alone in your struggle to understand your finances. It has nothing to do with your intelligence — the financial industry has basically crafted its own language to make things more difficult to understand.
If you like to handle your finances yourself, there are a growing number of resources that help make it easier. Don’t burn yourself out trying to decipher financial jargon when you can go to sources like Investopedia or GOBankingRates. These resources have different articles and calculators to help guide you through anything from what is the best credit card for your needs to whether or not it makes sense to refinance (and what refinancing means). Your local cooperative extension office may also offer free or low-cost financial education courses, which can be very helpful.
If you are working with a financial professional and they are not making things clearer for you, it’s probably time to find a new advisor. Look for someone whose values align with yours and who speaks clearly and transparently, so you don’t leave your conversations with them feeling more confused than when you started.
Another important step is setting yourself up for financial success. This can greatly help alleviate worries. What are some ways to do this?
When it comes to setting yourself up for success, one of the most helpful things is to know what you’re spending versus what you’re earning. While you can make your own budget in a spreadsheet or on a piece of paper, there are a lot of free budgeting tools available, like Mint, which can automatically categorize your spending and draft a budget for you to adjust. For most of us, there are so many expenses, it can be incredibly difficult to mentally track all of them, which can lead to feelings of anxiety and stress.
To continue reading, please go to the original article here:
https://news.yahoo.com/other-form-self-care-4-120054409.html
IRS Sends 430,000 Refunds for Unemployment Tax Compensation
.IRS Sends 430,000 Refunds for Unemployment Tax Compensation
Georgina Tzanetos Tue, November 2, 2021
Who Will Receive Roughly $1,189?
In its most recent press release, the Internal Revenue Service announced it sent approximately 430,000 refunds to those who paid taxes on unemployment compensation that is now excluded for the income tax year 2020 under the stimulus relief bill. The new provision, which falls under the American Rescue Plan of 2021, was signed into law in March and excludes the first $10,200 in unemployment compensation per taxpayer in 2020.
This amount is excluded when calculating one’s adjusted gross income — it is not the amount of the refund, the IRS stressed. The exclusion is available to individuals and married couples whose modified adjusted gross income is less than $150,000.
IRS Sends 430,000 Refunds for Unemployment Tax Compensation
Georgina Tzanetos Tue, November 2, 2021
Who Will Receive Roughly $1,189?
In its most recent press release, the Internal Revenue Service announced it sent approximately 430,000 refunds to those who paid taxes on unemployment compensation that is now excluded for the income tax year 2020 under the stimulus relief bill. The new provision, which falls under the American Rescue Plan of 2021, was signed into law in March and excludes the first $10,200 in unemployment compensation per taxpayer in 2020.
This amount is excluded when calculating one’s adjusted gross income — it is not the amount of the refund, the IRS stressed. The exclusion is available to individuals and married couples whose modified adjusted gross income is less than $150,000.
The IRS estimates that the amount of the refunds sent out totals $510 million to taxpayers. The agency states that the effort to correct unemployment compensation overpayments will help most of the affected taxpayers to avoid filing an amended tax return.
The IRS has identified over 16 million people who may be eligible for the adjustment. If you are eligible, you will either receive a refund, or have the overpayment applied to taxes due or other debts to the government.
The $10,200 exclusion applies only to federal taxes. Most states do not apply their own tax on unemployment benefits, but each state has their own provisions, so it’s crucial to make sure whether or not your state taxes them separately. The exclusion means that the first $10,200 is not subject to federal income tax this year — anything above that amount, however, can still be qualified as taxable income.
The IRS said that the latest batch of corrections resulted in refunds averaging about $1,189.
To continue reading, please go to the original article here:
https://finance.yahoo.com/news/irs-sends-430-000-refunds-205815644.html
Got a Fat Inheritance? Here’s What to Do With It.
.Got a Fat Inheritance? Here’s What to Do With It.
Patrick Villanova OCT 30, 2021
Receiving an inheritance from a family member can create a large windfall of cash, and with it, new financial opportunities. What you do with the money will depend on the size of the inheritance, your financial situation and level of experience managing investments. But having a defined plan for the inheritance is vital.
A frequently cited study conducted by The Williams Group of San Clemente, California, found that 70% of wealthy families lose their fortune by the second generation and 90% squander it by the third generation. A financial advisor can help you make the most of your inheritance by taking stock of your financial circumstances and creating a plan for the future.
Got a Fat Inheritance? Here’s What to Do With It.
Patrick Villanova OCT 30, 2021
Receiving an inheritance from a family member can create a large windfall of cash, and with it, new financial opportunities. What you do with the money will depend on the size of the inheritance, your financial situation and level of experience managing investments. But having a defined plan for the inheritance is vital.
A frequently cited study conducted by The Williams Group of San Clemente, California, found that 70% of wealthy families lose their fortune by the second generation and 90% squander it by the third generation. A financial advisor can help you make the most of your inheritance by taking stock of your financial circumstances and creating a plan for the future.
Are You Ready to Invest?
The first question to ask yourself upon receiving an inheritance is whether or not you’re truly ready to invest. If you have debt, especially high-interest loans or credit card bills, you probably aren’t in position to begin investing.
While it may not be as exciting as picking mutual funds, exchange-traded funds or individual stocks, paying off debt is a logical and responsible way to use the money. Think of it as an investment in your future. By wiping out your student loan or credit card debt, you’ll free up hundreds, if not thousands, of dollars each month to use in some other way.
If you’re already debt-free or have money left over after paying off your debt, it’s time to examine your savings. Experts recommend having three to six months’ worth of expenses saved in an emergency fund. Not only is it a prudent financial move, but building an emergency fund can give you the sense of security and confidence you need to start investing. You’ll know that no matter what happens to the money you invest in the future, you have a security blanket in the form of your emergency fund.
Save It for Retirement
Like paying off debt or building an emergency fund, putting your inheritance toward retirement may not get your juices flowing, but it’s a sound investment. A recent Schwab Retirement Plan Services survey found that 401(k) plan participants across the country now believe they must save $1.9 million for retirement. Yet, one in four Americans have nothing at all saved for retirement, according to a PwC report.
If you choose to save the money for retirement, you can do so in several ways.
To continue reading, please go to the original article here:
https://smartasset.com/financial-advisor/what-to-do-with-inheritance
Gift Tax, Explained: 2021 Exemption and Rates
.Gift Tax, Explained: 2021 Exemption and Rates
Patrick Villanova Fri, October 29, 2021
The gift tax is a federal tax on the transfer of money or property to another person when equal value is not received in return.
The gift tax is a federal levy on the transfer of money or property to another person when equal value is not received in return. While it may sound cumbersome, most Americans will never pay a cent in gift taxes to Uncle Sam due to several key Internal Revenue Service rules. However, a financial advisor or tax professional can help you determine what your tax liability may be if you plan to give money or property to another person.
Gift Tax, Explained: 2021 Exemption and Rates
Patrick Villanova Fri, October 29, 2021
The gift tax is a federal tax on the transfer of money or property to another person when equal value is not received in return.
The gift tax is a federal levy on the transfer of money or property to another person when equal value is not received in return. While it may sound cumbersome, most Americans will never pay a cent in gift taxes to Uncle Sam due to several key Internal Revenue Service rules. However, a financial advisor or tax professional can help you determine what your tax liability may be if you plan to give money or property to another person.
What Is the Gift Tax?
When a person gives money or property to someone other than their spouse or dependent, they may be required to pay gift tax. This federal excise starts at 18% and can reach up to 40% on certain gift amounts. The responsibility for paying the tax typically lies with the donor, not the individual receiving the gift. While recipients don’t face any immediate tax consequences, they may have to pay capital gains tax if they sell gifted property in the future.
Not all gifts are subject to this tax, though. Certain gifts are entirely free of tax, including:
School tuition and education payments
Charitable donations
Medical expenses
Political contributions
Gifts to spouses and dependents
The gift tax does not play a significant role in the finances of most Americans because of two key IRS provisions: the annual gift tax exclusion and lifetime exemption.
Annual Gift Tax Exclusion
The gift tax is a federal tax on the transfer of money or property to another person when equal value is not received in return.
The gift tax is a federal tax on the transfer of money or property to another person when equal value is not received in return.
The IRS allows individuals to give away a specific amount of assets or property each year tax-free. In 2021, the annual gift tax exemption is $15,000, meaning a person can give up $15,000 to as many people as they want without having to pay any taxes on the gifts. For example, a man could give $15,000 to each of his 10 grandchildren this year with no gift tax implications.
To continue reading, please go to the original article here:
https://finance.yahoo.com/news/gift-tax-explained-2021-exemption-172716212.html
Capital Gains on Inherited Property
.Capital Gains on Inherited Property
Eric Reed Tue, October 26, 2021
Inheritance can make your taxes tricky. If you inherit property or assets, as opposed to cash, you generally don’t owe taxes until you sell those assets. These capital gains taxes are then calculated using what’s known as a stepped-up cost basis. This means that you pay taxes only on appreciation that occurs after you inherit the property. A financial advisor could help ensure that you are filing your returns correctly. Let’s break down how capital gains are taxed on inherited property.
If You Inherit Property You Don’t Pay Taxes Automatically
Capital Gains on Inherited Property
Eric Reed Tue, October 26, 2021
Inheritance can make your taxes tricky. If you inherit property or assets, as opposed to cash, you generally don’t owe taxes until you sell those assets. These capital gains taxes are then calculated using what’s known as a stepped-up cost basis. This means that you pay taxes only on appreciation that occurs after you inherit the property. A financial advisor could help ensure that you are filing your returns correctly. Let’s break down how capital gains are taxed on inherited property.
If You Inherit Property You Don’t Pay Taxes Automatically
There are three main types of taxes that cover inheritances:
Inheritance taxes – These are taxes that an heir pays on the value of an estate that they inherit. There are no federal inheritance taxes and only six states levy any form of inheritance tax. Given the state-specific nature of inheritance taxes, this subject is beyond the scope of this article.
Estate taxes – These are taxes paid out of the estate itself before anyone inherits from it. The estate tax has a minimum threshold. In 2021 that threshold was $11.7 million. As with all other tax brackets the government only taxes the amount which exceeds this minimum threshold, meaning that if your estate is worth $11,700,001, the government will levy taxes on $1. The remainder passes tax free.
Capital gains taxes – These are taxes paid on the appreciation of any assets that an heir inherits through an estate. They are only levied when you sell the assets for gain, not when you inherit.
Cash that you inherit is taxed through either inheritance taxes (when applicable) or through estate taxes. In the case of inheritance taxes, it is your responsibility to file and pay this tax. In the case of an estate tax, the IRS taxes the estate directly. As a result it is uncommon for an heir to owe any taxes, including income tax, on inherited cash.
The IRS does not automatically tax any other forms of property that you might inherit. This means that if you inherit property, stocks or any other form of asset, you generally will not owe taxes when you inherit. For example if you inherit your grandparents’ house, the IRS will not tax you on the value of the property when you receive it. (There are exceptions to this rule in certain specific circumstances. Most often these exceptions apply to assets that generate revenue, such as income investments, retirement accounts or ongoing businesses.)
You will, however, owe capital gains taxes if you choose to sell this property.
To continue reading, please go to the original article here:
https://finance.yahoo.com/news/capital-gains-inherited-property-164546562.html
What to Do When You’re the Executor
.What to Do When You’re the Executor
Sandra Block, Senior Editor Fri, October 29, 2021,
At some point in your life, there’s a good chance you’ll be tasked with acting as the executor of an estate. The designation is both an honor and an obligation. Depending on the size of the estate and your relationship to the deceased, performing the duties of an executor can feel like a second job, says Patrick O’Brien, cofounder of Executor.org, an online tool designed to help executors manage an estate.
O’Brien launched the tool after he served as executor of his father’s estate. Even though the estate was fairly modest, “I was shocked at how difficult and complicated it was,” he says.
What to Do When You’re the Executor
Sandra Block, Senior Editor Fri, October 29, 2021,
At some point in your life, there’s a good chance you’ll be tasked with acting as the executor of an estate. The designation is both an honor and an obligation. Depending on the size of the estate and your relationship to the deceased, performing the duties of an executor can feel like a second job, says Patrick O’Brien, cofounder of Executor.org, an online tool designed to help executors manage an estate.
O’Brien launched the tool after he served as executor of his father’s estate. Even though the estate was fairly modest, “I was shocked at how difficult and complicated it was,” he says.
The task is particularly challenging for adult children who are responsible for executing the estate of the last surviving parent. Those executors are often required to distribute assets among several beneficiaries, sell the family home, and comb through decades of family belongings, some of which may be valuable.
If the family is fractious, the estate is large or the parents’ estate planning was haphazard (or nonexistent), the task becomes even more time-consuming. While every situation is different, here are some basic steps most executors should follow:
Obtain copies of the death certificate and file the will. One of the first duties you must perform as executor is to obtain copies of the death certificate, usually available from the funeral home, and file the will and death certificate with the county probate court. The deadline for filing the will varies by state, but it can range from 10 to 90 days after the date of death.
If probate is required, you’ll need to obtain a letter from the court, known as a letter of testamentary, that gives you legal authority over the estate. You need this letter because “the executor doesn’t have authority until they get something from the court that says they have that authority,” says Rich Yam, an estate planning adviser with Wealthspire Advisors, in Madison, Wis.
Assemble a team. In most cases, you’re going to need professional help, including an attorney with estate-planning experience (who can help you navigate the probate court) and, depending on the size and complexity of the estate, a tax professional and certified financial planner. The attorney who helped the deceased draw up his or her will is a good option, because he or she is probably familiar with the estate.
To continue reading, please go to the original article here:
7 Mistakes People Make When Choosing a Financial Advisor
.7 Mistakes People Make When Choosing a Financial Advisor
Smart Asset October 31, 2021
Choosing a financial advisor is a major life decision that can determine your financial trajectory for years to come. A 2020 Northwestern Mutual study found that 71% of U.S. adults admit their financial planning needs improvement. However, only 29% of Americans work with a financial advisor.
The value of working with a financial advisor varies by person and advisors are legally prohibited from promising returns, but research suggests people who work with a financial advisor feel more at ease about their finances and could end up with about 15% more money to spend in retirement.
7 Mistakes People Make When Choosing a Financial Advisor
Smart Asset October 31, 2021
Choosing a financial advisor is a major life decision that can determine your financial trajectory for years to come. A 2020 Northwestern Mutual study found that 71% of U.S. adults admit their financial planning needs improvement. However, only 29% of Americans work with a financial advisor.
The value of working with a financial advisor varies by person and advisors are legally prohibited from promising returns, but research suggests people who work with a financial advisor feel more at ease about their finances and could end up with about 15% more money to spend in retirement.
A recent Vanguard study found that, on average, a $500K investment would grow to over $3.4 million under the care of an advisor over 25 years, whereas the expected value from self-management would be $1.69 million, or 50% less. In other words, an advisor-managed portfolio would average 8% annualized growth over a 25-year period, compared to 5% from a self-managed portfolio.
1. Hiring an Advisor Who Is Not a Fiduciary
By definition, a fiduciary is an individual who is ethically bound to act in another person’s best interest. This obligation eliminates conflict of interest concerns and makes an advisor’s advice more trustworthy.
All of the financial advisors on SmartAsset’s matching platform are registered fiduciaries. If your advisor is not a fiduciary and constantly pushes investment products on you, use this no-cost tool to find an advisor who has your best interest in mind.
2. Hiring the First Advisor You Meet
While it’s tempting to hire the advisor closest to home or the first advisor in the yellow pages, this decision requires more time. Take the time to interview at least a few advisors before picking the best match for you.
3. Choosing an Advisor with the Wrong Specialty
Some financial advisors specialize in retirement planning, while others are best for business owners or those with a high net worth. Some might be best for young professionals starting a family. Be sure to understand an advisor’s strengths and weaknesses - before signing the dotted line.
To continue reading, please go to the original article here:
7 Situations When You Need a Financial Advisor Most
.7 Situations When You Need a Financial Advisor Most
Matt Wiley MAR 28, 2019
Do you know enough about financial management to take care of all of your investing on your own? Or do you need help from a seasoned expert?
That question comes up for millions of Americans each year.
7 Situations When You Need a Financial Advisor Most
Matt Wiley MAR 28, 2019
Do you know enough about financial management to take care of all of your investing on your own? Or do you need help from a seasoned expert?
That question comes up for millions of Americans each year.
If any of these describe you, you could benefit from professional financial advice:
1. You’re retiring soon – Maximizing retirement income requires smart decisions around complex topics such as Social Security, 401(k) and IRA withdrawals.
2. You manage your own investments – Individual investors should check their strategies with unbiased third parties. You may be overlooking opportunities in your portfolio.
3. You have children – Whether you’re saving for college or planning their inheritance, there are several ways to ensure your children are taken care of.
To continue reading, please go to the original article here:
https://smartasset.com/financial-advisor/7-situations-when-you-need-a-financial-advisor-most
15 Things To Help Kids Be Good With Money
.15 Things A Personal Finance Expert Suggests Parents Do To Help Their Kids Be Good With Money
Thu, October 28, 2021,
I like to imagine I was raised to be financially intelligent (thanks ma and pa) but now that I have a kid of my own, I was curious what an expert had to say about raising kids to be good with money.
I write about personal finance and money, so you'd hope I have it together — and for the most part, I think I do. I owe my love of saving money and my abhorrence of debt to my parents who set me up with a bank account at birth, had me get a job as soon as it was legal, and made me save up for the dumb plastic toys I thought I just had to have.
15 Things A Personal Finance Expert Suggests Parents Do To Help Their Kids Be Good With Money
Thu, October 28, 2021,
I like to imagine I was raised to be financially intelligent (thanks ma and pa) but now that I have a kid of my own, I was curious what an expert had to say about raising kids to be good with money.
I write about personal finance and money, so you'd hope I have it together — and for the most part, I think I do. I owe my love of saving money and my abhorrence of debt to my parents who set me up with a bank account at birth, had me get a job as soon as it was legal, and made me save up for the dumb plastic toys I thought I just had to have.
So I chatted with Beth Kobliner, the New York Times bestselling author of Make Your Kid a Money Genius (Even If You're Not). Sometimes you've gotta pull out the big guns.
Here are her tips:
1. Start talking about money early on.
There's a lot of shame, stress, and worry surrounding money, so it makes sense that many parents shy away from the topic. But Kobliner says that to raise financially intelligent kids, you'll want to start talking about money early on.
"And not only should it be early, but financial education also needs to be ongoing. Here’s why: A study out of the University of Wisconsin showed that by age 3, children can grasp basic economic concepts such as value and exchange. And a University of Cambridge survey found that by age 7, many of the habits that help kids manage their money are already set."
There's a lot of shame, stress, and worry surrounding money, so it makes sense that many parents shy away from the topic. But Kobliner says that to raise financially intelligent kids, you'll want to start talking about money early on.
"And not only should it be early, but financial education also needs to be ongoing. Here’s why: A study out of the University of Wisconsin showed that by age 3, children can grasp basic economic concepts such as value and exchange. And a University of Cambridge survey found that by age 7, many of the habits that help kids manage their money are already set."
2. Show them how money works and teach them the difference between wants and needs.
The act of trading money for goods and services will be completely foreign to them. They may literally think money, and the things it buys, grows on trees.
To continue reading, please go to the original article here:
https://www.yahoo.com/lifestyle/15-ways-parents-help-kids-194602014.html