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.

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.

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.

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.

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

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.

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:

https://finance.yahoo.com/news/executor-161419524.html

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.

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:

https://article.smartasset.com/financial-advisor-mistakes-18/?utm_source=smartasset&utm_campaign=sma__falc_relatedposts_financial-advisor&utm_content=famistakes_rita

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.

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.

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

Treasury Bills vs. Bonds: What’s the Difference?

Treasury Bills vs. Bonds: What’s the Difference?

Patrick Villanova   Fri, October 29, 2021,

Fixed-income securities play an important role within individual investment portfolios and the economy at large. But like other securities, fixed-income instruments come in a myriad of variations, from short-term Treasury bills that only pay interest when the bill matures, to long-term Treasury bonds, whose investors receive interest twice yearly. Below, we’ll specifically examine the similarities and differences between Treasury bills, Treasury bonds and other types of bonds. If you’re interested in investing in fixed-income securities, a financial advisor can help you build a balanced portfolio.

Treasury Bills vs. Treasury Bonds

Like their name suggests, Treasury bills and Treasury bonds are debt instruments issued by the U.S. Department of the Treasury to help fund the operations of the federal government. 

Since they are backed by the “full faith and credit” of the government, both are extremely low-risk investments known for their relative safety. However, that security comes at a cost for investors. The returns offered by “T-bills” and “T-bonds” often fall well short of the returns of stocks and mutual funds.

The key difference between the two is the amount of time it takes for each to mature. While Treasury bonds are considered long-term debt securities, maturing 30 years after they are sold, Treasury bills are short-term securities that mature within a year and pay less interest than T-bonds. In fact, the maturity period of T-bills can be as short as four weeks.

The other primary difference between T-bills and T-bonds is how interest is paid. A T-bill pays out interest only when it matures. When an investor purchases a T-bill, they’ll pay a discounted rate and later collect the full face value of the bill when it reaches maturity. Treasury bonds work differently, paying out interest to investors twice a year until reaching maturity.

But T-bills and T-bonds share a plethora of similarities. Both are initially purchased at auction, either on the TreasuryDirect platform or through a bank or broker. Both can also be bought and sold on secondary markets. The minimum purchase of either kind of security is $100 and both are sold in increments of $100.

Treasury Bills vs. Savings Bonds

Another common type of bond is the U.S. savings bond. Like T-bills and T-bonds, savings bonds are issued by the Treasury Department to help fund government operations, making them reliable but not lucrative investments. However, unlike T-bills and T-bonds, savings bonds cannot be bought and sold on secondary markets. A savings bond can also be purchased with as little as $25.

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/treasury-bills-vs-bonds-difference-192958846.html

Cramer: ‘Stop Freaking Out’ About Inflation”

Cramer: ‘Stop Freaking Out’ About Inflation” — here's how to profit from soaring costs

Jing Pan   Mon, October 25, 2021   MoneyWise

The threat of runaway inflation has many investors running scared — but for once, Jim Cramer isn’t getting too heated.  The Mad Money host says there are still plenty of attractive places to put your money, pointing to four sectors in particular that could profit from rising prices.

Cramer: ‘Stop freaking out’ about inflation — here's how to profit from soaring costs

“We’ve got lots of companies that benefit — and many that benefit, you might say, spectacularly — and others that are basically immune,” Cramer said last week on his show. “Plenty of winners out there if you just stop freaking out and start looking at the opportunities.”

Here are the four safe havens Cramer recommends and why you might want to funnel some cash that way, even if it’s just your spare pennies.

Energy

Inflation and commodity booms often go hand in hand, with energy typically leading the charge.

In fact, the price of crude oil has already gone up over 70% year to date, while natural gas prices have more than doubled.

Of the big multinational energy producers, “I like Chevron the most,” Cramer says.

“[The company] yields nearly 5% [and is] committed to spending $10 billion in new technologies that are less energy-intensive.”

Cramer also likes domestic producers that seem to be returning more and more capital to shareholders in the form of dividends — naming Devon Energy and Pioneer Natural Resources as just a couple.

Financials

Banks tend to do well under rising interest rates. And facing growing inflation, the Fed is expected to raise rates as soon as next year.

Cramer points out how well Bank of America, Goldman Sachs and Morgan Stanley have been doing, but he also likes Wells Fargo for being a “wildcard turnaround of this entire stock market.”

After a 70% rally year-to-date, Wells Fargo shares now trade at about the same level as they did in January 2020. The other three stocks, however, are trading well above their pre-pandemic levels.

“Wells Fargo can have a ton of upside if it finally gets its house in order,” Cramer says. “And I’m telling you, it is getting its house in order.”

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/cramer-stop-freaking-inflation-heres-221000510.html