How Much Money Can I Gift Without Owing Taxes?

How Much Money Can I Gift Without Owing Taxes?

Liz Smith   Mon, March 27, 2023

For 2023, the annual gift tax exemption is $17,000, up from $16,000 in 2022. This means you can give up to $17,000 to as many people as you want in 2023 without any of it being subject to the federal gift tax. The gift tax is imposed by the IRS if you transfer money or property – worth more than an exempted amount – to another person without receiving at least equal value in return. This could apply to parents giving money to their children, the gifting of property such as a house or a car, or any other transfer. There is also a lifetime exclusion of $12.92 million in 2023. For help with the gift tax or any other personal finance issues you may have, consider working with a financial advisor.

Annual Gift Tax Limits

The annual gift tax exclusion of $17,000 for 2023 is the amount of money that you can give as a gift to one person, in any given year, without having to pay any gift tax. You never have to pay taxes on gifts that are equal to or less than the annual exclusion limit. So you don't need to worry about paying the gift tax on, say, a sweater you bought your nephew for Christmas.

The annual gift exclusion limit applies on a per-recipient basis. This gift tax limit isn't a cap on the total sum of all your gifts for the year. You can make individual $17,000 gifts to as many people as you want.

You just cannot gift any one recipient more than $17,000 within one year without deducting from your lifetime exemption. If you're married, you and your spouse can each gift up to $167,000 to any one recipient.

If you gift more than the exclusion to a recipient, you will need to file tax forms to disclose those gifts to the IRS. You may also have to pay taxes on it. If that's the case, the tax rates range from 18% up to 40%. However, you won't have to pay any taxes as long as you haven't hit the lifetime gift tax exemption.

Lifetime Gift Tax Limits

Most taxpayers won't ever pay gift tax because the IRS allows you to gift up to $12.92 million (as of 2023) over your lifetime without having to pay gift tax. This is the lifetime gift tax exemption, and it's up from $12.06 million in 2021.

So let's say that in 2023 you gift $217,000 to a family member. This gift is $200,000 over the annual gift exclusion, meaning you'll need to report it to the IRS. However, you won't immediately have to pay tax on that gift. Instead, the IRS deducts that $200,000 from your lifetime gift tax exemption.

So assuming you never made any other gifts over the annual exemption, your remaining lifetime exemption is now $12.72 million ($12.92 million minus $200,000). The table below breaks down this example:

Example of Lifetime Exemption Limits Gift Value $217,000 2022 Gift Tax Exemption Limit $17,000 Taxable Amount $200,000 Lifetime Gift Tax Exemption Limit $12,920,000 Remaining Lifetime Exemption Limit $12,720,000

Most taxpayers will not reach the gift tax limit of $12.92 million over their lifetimes. However, the lifetime gift tax exemption becomes important again when you die and pass on an estate.

How the Gift Tax Works

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

https://finance.yahoo.com/news/much-money-gift-without-owing-130026955.html

I Won the Lottery! How Hefty Are Taxes on My Winnings Going to Be?

I Won the Lottery! How Hefty Are Taxes on My Winnings Going to Be?

Javier Simon, CEPF®   Sun, March 26, 2023

Before you see a dollar of lottery winnings, the IRS will take 25%. Up to an additional 13% could be withheld in state and local taxes, depending on where you live. Still, you'll probably owe more when taxes are due, since the top federal tax rate is 37%. So a good first step a lottery winner could take is to hire a financial advisor who can help with tax and investment strategies. Read on for more about how taxes on lottery winnings work and what the smart money would do.

How Are Lottery Winnings Taxed?

The IRS considers net lottery winnings ordinary taxable income. So after subtracting the cost of your ticket, you will owe federal income taxes on what remains. How much exactly depends on your tax bracket, which is based on your winnings and other sources of income, so the IRS withholds only 25%. You'll owe the rest when you file your taxes in April.

You can find your bracket on the table below:

Federal Income Tax Bracket for 2022 Single Married Filing Jointly Married Filing Separately Head of Household 10% $0 – $10,275 $0 – $20,550 $0 – $10,275 $0 – $14,650

12% $10,276 – $41,775 $20,551 – $83,550 $10,276 – $41,775 $14,651 – $55,900

22% $41,776 – $89,075 $83,551 – $178,150 $41,776 – $89,075 $55,901 – $89,050

24% $89,076 – $170,050 $178,151 – $340,100 $89,076 – $170,050 $89,051 – $170,050

32% $170,051 – $215,950 $340,101 – $431,900 $170,051 – $215,950 $170,051 – $215,950

35% $215,951 – $539,900 $431,901 – $647,850 $215,951 – $539,900 $215,951 – $539,900

37% $539,901+ $647,851+ $539,901+ $539,901+

Here are the tax brackets for tax year 2023 (filed in April 2024)

Federal Income Tax Brackets for 2023  Rate Single Married Filing Jointly Married Filing Separately Head of Household 10% $0 – $11,000 $0 – $22,000 $0 – $11,000 $0 – $15,700

12% $11,001 – $44,725 $22,001 – $89,450 $11,001 – $44,725 $15,701 – $59,850

22% $44,726 – $95,375 $89,451 – $190,750 $44,726 – $95,375 $59,851 – $95,350

24% $95,376- $182,100 $190,751 – $364,200 $95,376- $182,100 $95,351 – $182,100

32% $182,101 – $231,250 $364,201 – $462,500 $182,101 – $231,250 $182,101 – $231,250

35% $231,251 – $578,125 $462,501 – $693,750 $231,251 – $346,875 $231,251 – $578,100

37% $578,126+ $693,751+ $346,876+ $578,101+

On the bright side, if you're in the top bracket, you don't actually pay 37% on all your income. Federal income tax is progressive. As a single filer in 2022, and after deductions, you pay:

10% on the first $10,275 you earn

12% on the next $31,500

22% on the next $47,300

24% on the next $80,975

32% on the next $45,900

35% on the next $323,950

37% on any amount more than $539,900

An Example

Say you're a single filer making $45,000 a year and in 2022 you won $100,000 in the lottery. That raises your total ordinary taxable income to $145,000, with $25,000 withheld from your winnings for federal taxes. As you can see from the table above, your winning lottery ticket bumped you up from the 22% marginal tax rate to the 24% rate (assuming you are a single filer and, for simplicity's sake here, had no deductions).

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

https://finance.yahoo.com/news/won-lottery-hefty-taxes-winnings-130031558.html

7 Boring Habits That Can Make You Wealthy

7 Boring Habits That Can Make You Wealthy

Jenny Rose Spaudo  Thu, March 23, 2023

Despite what social media or TV shows may depict, building wealth typically happens slowly as you stick to smart money habits month in and month out. GOBankingRates interviewed several financial experts to uncover the boring habits that can make you wealthy.

Set a Budget and Stick To It

Whether you use a budget app on your smartphone or the old-fashioned envelope method, make sure to plan how you’ll spend your monthly income.

“Set aside a set amount at the beginning of the month and live within that budget,” said Jay Zigmont, CFP and founder of Childfree Wealth. “Envelopes of cash may have been replaced by prepaid debit cards, but the basics are the same and still work.”

How much should you set aside for each line item? That depends on your specific living expenses. Just make sure to leave room for paying off debts and saving if possible.

Pay Off Your Debts One by One

Whittling down your debts can help free up extra cash to go toward saving. Zigmont recommends starting with the loans with the highest interest rates, which usually include consumer debt like credit cards.

“Paying off your debt gives you a tax-free, risk-free return of the interest,” he said. “With credit card interest rates over 20% in many cases, paying off a credit card provides a return that will exceed most investments.”

Put Money in a High-Yield Savings Account

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

https://www.yahoo.com/finance/news/7-boring-habits-wealthy-110027649.html

What’s in It for Me? The Secure Act

What’s in It for Me? The Secure Act

Adam M. Grossman  |  Feb 12, 2023  HumbleDollar

IN THE WANING DAYS of 2019, Congress passed the SECURE Act, a law that delivered a mixed bag of changes for retirement savers. Well, Congress has been busy again. At the tail end of 2022, a follow-up law—known as SECURE 2.0—was signed into law.

The good news: There’s a whole lot included in this new law. The bad news? There’s a whole lot included in this new law. SECURE 2.0 presents a number of new planning opportunities but, with hundreds of provisions, it’s also a lot to digest. Below are the provisions that, in my view, provide the most meaningful planning opportunities for folks at various ages and stages:

For younger workers. Young people, in many cases, are forced to contend with the twin challenges of relatively low salaries and relatively high student loan burdens. SECURE 2.0 provides some relief.

In the past, when an employer matched an employee’s 401(k) or 403(b) contribution, that match could be made only with pretax dollars. That was the case even when the employee’s own contributions were to the Roth side of the plan. SECURE 2.0 lifts that restriction. 

Now, an employee can opt to receive his or her employer’s match in Roth form. The match will be reported as income, but that’s okay. Folks earlier in their careers tend to be in lower tax brackets, making it advantageous to opt for Roth contributions.

The second provision for young people recognizes that they often face a tradeoff between saving for retirement and making student loan payments. SECURE 2.0 provides a clever solution. Now, an employer can make a 401(k) matching contribution, but the match will apply to student loan payments made by the employee. 

Research has shown that the unreasonable price of private college burdens young people in ways that go beyond the financial cost. This provision offers a bit of an offset.

For the self-employed. If you’re self-employed and want to save for retirement, there have typically been three choices, each of which was imperfect:

Standard IRA contributions are easy but carry relatively low contribution limits ($6,500 this year, or $7,500 for those 50 or older).

SEP IRAs offer higher contribution limits, but Roth contributions weren’t permitted.

Solo 401(k)s do permit Roth contributions, but they’re more complex to set up and carry a tricky reporting requirement for larger accounts.

SECURE 2.0 addresses this by allowing for Roth contributions to SEP IRAs. It won’t be appropriate for all self-employed workers. But for those in particular tax situations, it may be the perfect antidote to an imperfect set of options.

For folks in their early 60s. SECURE 2.0 is unusual in that it contains a variety of provisions targeted at narrow subsegments of the population. Case in point are the new rules on retirement “catch-up” contributions, which are the additional amounts workers age 50 and older can contribute to their company plan each year. 

This year, the catch-up is $7,500. Starting in 2025, this will be increased to at least $10,000, but only for those ages 60, 61, 62 and 63. This provision won’t help everyone, but it’ll be a useful addition to the playbook for those in their peak earning years.

For those in retirement. The original SECURE Act bumped up the age at which retirees must begin required minimum distributions (RMDs) from tax-deferred retirement accounts—from the endlessly confusing age of 70½ to age 72. Now, Congress has extended that timeline further. Beginning this year, RMDs don’t need to start until age 73. So, if you’re currently younger than 72 or turn 72 this year, you can wait one more year.

The new rule has a twist, though. Beginning in 2033, the starting age will rise again, from 73 to 75. This is a little confusing, so a simple way to think about it is as follows: For those born between 1951 and 1959, the starting age will be 73. For anyone born after 1959, it will be 75.

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

https://humbledollar.com/2023/02/whats-in-it-for-me/

Learning from Failure

Learning from Failure

Adam M. Grossman  |  Mar 19, 2023  HumbleDollar

IN THE WEEK SINCE Silicon Valley Bank (SVB) failed, a debate has raged: Did the government do the right thing when it decided to guarantee all of SVB’s depositors, including those that exceeded FDIC limits?

On one side of this debate are those who view the government’s action as an inappropriate and undeserved bailout. In an article titled “You Should Be Outraged About Silicon Valley Bank,” The Atlantic argued that the bank’s failure was the predictable result of incompetent risk management. Critics further cite a reality of human nature: If bank executives are confident the government will step in to pick up the pieces every time something goes wrong, they won’t be as careful in managing risk. Economists call this “moral hazard.”

On the other side are those who think the government did the right thing. They point to the fact that the crisis was quickly contained, and at a cost that will likely be insignificant. Not surprisingly, the loudest voices in this camp came from Silicon Valley. Before the government stepped in, one venture capitalist warned of a “startup extinction event” if SVB were to fail. He urged the Federal Reserve to, as he put it, “bearhug the situation,” but also argued that this should not be characterized as a bailout and would not create moral hazard.

For better or worse, the crisis was contained, and everyone is now breathing a little easier. But it’s worth asking what we can learn from this incident. I see five lessons:

Rule No. 1 of investing. In a letter to my clients last weekend, I commented that, when it comes to our finances, there’s always something to worry about. Beyond the stock market, which everyone understands to be volatile, investors have lost sleep over investments which are usually perceived to be far safer.

For instance, three years ago, at the start of the pandemic, there was widespread worry about municipal bonds. Earlier this year, with another government shutdown on the radar, investors began discussing the unlikely possibility of a default on Treasury bonds. And despite their infrequency, the failure of SVB, along with that of Signature Bank, serves as a reminder that even the safest instrument available—a bank account—can carry risk.

Fortunately, there is a solution, and it’s an easy one: diversification. It’s not only the simplest tool in an investor’s toolbox, but I believe it’s also the most effective. Back in 2018, I suggested several ways to diversify so as to protect against so-called unknown unknowns. As an example, I cited the 2003 blackout that hit New York City. Among the effects, ATM and credit card networks went offline.

For those without cash to purchase groceries, it was a difficult situation. While it was temporary, these are the sorts of black swan events that can occur. That’s why I recommend diversifying along as many dimensions as possible to guard against whatever the next financial curveball turns out to be.

Rule No. 2 of investing. When it comes to managing our finances, many things are outside our control. That’s why it’s even more important to control what we can. SVB customers whose balances exceeded FDIC limits are lucky the government came to their rescue, but they wouldn’t have needed that support if they’d taken even the simplest of steps.

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

https://humbledollar.com/2023/03/learning-from-failure/

Don’t Regret It

Don’t Regret It

Adam M. Grossman  |  Mar 26, 2023  Humble Dollar

I SPOKE RECENTLY with a fellow who had climbed Mount Everest. The first question I asked: What was it like at the top?

What I expected him to say was that the view was dramatic. Instead, he said, his time at the summit turned out to be less than he’d expected. For starters, it was 4:45 a.m., so there wasn’t a lot of visibility. In addition, it was minus 45 degrees. Because of that, he didn’t want to stay too long. Reaching the summit, it turned out, wasn’t the most memorable or the most enjoyable part of the trip.

This got me thinking about the topic of regret. When it comes to personal finance, there’s the standard type of regret that’s well understood: not saving enough, or spending too much, or taking an unnecessary risk. With mistakes like these, it’s natural to feel regret—because they’re mostly within our control and the results are predictable. In such cases, we might genuinely wish we’d done something differently.

But this fellow’s Everest experience fits into a different category. Though it didn’t turn out as he’d expected, he certainly doesn’t regret it. In fact, he’d gladly do it again. This highlights a reality about decision making: Sometimes, things don’t turn out as expected—but through no fault of our own. In other words, even with the benefit of hindsight, we don’t regret decisions of this sort because, despite the disappointing results, they were still reasonable choices and could easily have turned out differently.

What sorts of financial decisions fit in this category? Many have started new jobs, or even new careers, that turned out to be disappointments. In other cases, maybe a move to a new home or a new city fell short. In all of these cases, it wasn’t because we failed to do our homework. Things just didn’t work out as expected for reasons beyond our control.

The world of personal finance is full of unknowns, which means that many—if not most—decisions are susceptible to this phenomenon. But that doesn’t mean things are completely out of our control. Even without the benefit of a crystal ball, certain decision-making strategies can help tip the results in our favor. Here are five I recommend:

Tet the waters. When I was in school, I had a professor who grew up in New Zealand. Near his home, he said, there was a river that was a popular spot for swimming. The problem, though, was that sometimes a nasty type of biting fish might be in the area. Some of the more reckless kids would still just jump in, hoping for the best. Sometimes, they got lucky—but sometimes not. The smarter approach was to take a half-step into the water to assess.

In his field, marketing, this approach made a lot of sense. But for a long time, I wasn’t sure whether this philosophy would apply to personal finance, where many decisions tend to be irrevocable. Recently, though, I caught up with an old friend who told me this story: After his youngest child started college, he and his wife sold their house. They no longer needed such a large home. They then gave themselves two years to decide where to move.

One idea was Florida, but they weren’t sure, so they took six weeks over the winter to do some research. They started in Miami, then moved up the coast, town by town, spending a few days in each community. By the end of the trip, they’d collected a good amount of data and had largely made up their minds. The lesson: Even when it doesn’t seem like it might be possible, look for ways to test the waters on financial decisions. It might carry a cost, but it could be well worth it.

Split the difference.

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

https://humbledollar.com/2023/03/dont-regret-it/

Why Digital Asset Protection is Crucial for Your Business and How to Do It Right

Why Digital Asset Protection is Crucial for Your Business and How to Do It Right

March 20, 2023  Financial Pilgrimage

Whether you are in the business of technology or not, protecting your company’s digital assets, data, and information is pivotal. When you have a business that utilizes the internet, vital information about your business could be at risk. You must protect yourself and your company in whatever business you’re involved in.  Luckily, there are plenty of ways to keep data private and utilize all the tools of information technology (IT). Below are a few ways to protect your company, its digital assets, and yourself from malevolent actors.

Data Protection

One of the most important things for your business is to protect data. Data is a precious resource necessary to keep hackers and malware secure. Data security and protection enable you to keep peace of mind because your company’s data will be safe. Whether you acquired the information from either operations or purchase,

Cloud storage on-site can allow a professional company to monitor your data with limited access to your information. It will be the best of both worlds. Not only will you reap the benefits of professional data protection, but you will also have the option to continue storing your vital information with on-site servers or remove the inconvenience by allowing the company to store data on the cloud remotely.

Encryption

Another extremely vital method to protect your company, digital footprint, and data is to use encryption. Encryption is when the IP address and information about where you are, what computer you’re on, and who you are talking to are all hidden. They are filtered through a protected server in a different location, providing the ability to protect what you are doing and what information is available on your devices.

Encryption is one of the most critical aspects of our modern world and all the technology involved. Not only will you have the peace of mind that your interactions, information, and essential data are protected, you won’t have to deal with malicious actors on the internet. Whatever business you’re in, you should use encryption to protect your business.

Analysis

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

https://financialpilgrimage.com/protect-your-companys-digital-assets/

Charley Ellis: Six Nuggets Of Investment Wisdom

Charley Ellis: Six Nuggets Of Investment Wisdom

Posted by TEBI on March 24, 2023

Charley Ellis has been a voice of common sense in the world of investing for more than 50 years. His book, Winning the Loser’s Game, which explains why low-cost, buy-and-hold indexing is the rational choice for all investors, has become a classic. He’s now aged 85 but still working. Charley recently spoke to Cameron Passmore and Benjamin Felix at the Rational Reminder podcast, and we’d strongly urge you to listen to the whole episode.

The interview contains a wealth of wisdom about investing, but here are six lessons that caught our attention.

1. Success is all about minimising mistakes

“A loser’s game is any competitive activity, where the outcome is not controlled by the winner, but it’s actually controlled by the loser. Golf is a good example. People that are really good at golf will shoot less than par, by two or three strokes on a regular basis. A lot of other people are proud to be able to shoot 90. There are some people who’ve never broken a 100. Well, the difference between the two groups is the mistakes of the people who’ve never broken a 100 and make all the time.

 “Another loser’s game is tennis. If you look at your game, or at least my game, how many times do you win a stroke, instead of hitting it at the net, hitting it out of bounds, laying it up so easily for the other person hit it back, that you’ve essentially forced yourself into a loss? If you could cut back on the number of mistakes and let the other guy increased the number of mistakes he made, you’ll come out the winner of a loser’s game.

“That’s what investing is all about. Most of the activity that most of us spend our time engaged in, in investing actually doesn’t help. It actually does harm. Our long-term results are impoverished by the mistakes that we’ve made along the way.

“In investment management, if you could just reduce the number of mistakes you’ve made, you would come out as a winner. The easy summary of all that is, if you index, you won’t be making any mistakes. You have to choose the right index, that’s fair. If you index, you won’t be timing the market, you won’t be trading too much, you will get excited about something you just heard from a friend of yours who heard from a friend of his that looks like it might be a really great idea.”

2. Active managers do more harm than good

“It’s gotten harder and harder and harder to be an active manager, and successful at the same time. More and more people have accepted indexing is a perfectly rational way of taking advantage of the realities of the market, then not getting suckered into doing things that actually do you harm. It does take a sense of humour, and it does take an appreciation for history to realise. I know you’re wonderful. I know you’re terrifically talented. I know you work very, very hard. But you’re actually not helping yourself, or your clients.

“The perception is, you’ve got brilliantly talented people working hard for you all the time, that’s true. That perception is that they’re going to be able to make a real difference to your economic situation. That’s very unlikely to be true. What’s very, very likely to be true is you’re going to make a wonderful difference to their economic situation.”

3. Outperformance gets harder as aggregate skill increases

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

https://www.evidenceinvestor.com/charley-ellis-six-nuggets-of-investment-wisdom/

Experts: 4 Safest Places To Keep Your Savings

Experts: 4 Safest Places To Keep Your Savings

Brought To You By BASK Bank  - GoBankingRates

If you have reached a certain point in your career, you may have a little bit of extra money set aside. While you know that storing your savings in the freezer is not the best idea, you may not be too sure where you should keep it to get the biggest bang for your buck.

We reached out to financial experts nationwide to find out the safest (and smartest) places to keep your savings. We came up with four tried and true methods for protecting your money and maybe even watching it grow.

Certificate of Deposit (CD)

If you have some extra money that you won’t need in the next few months, a certificate of deposit can be a great option for reliable earnings, especially right now with interest rates soaring.

“A great thing about CD accounts is that your rate is locked in,” said Morgan Gray, SVP, Head of Bask Bank and Consumer Segmentation. “When rates are high, as they are right now, you are guaranteed that interest rate through the length of your CD term. So, no matter what the rate environment looks like over the course of that term – six months, a year, or longer – you’re still going to earn the rate you did when the account was opened.”

Bask Bank’s CDs offer some of the highest rates available, with APYs (annual percentage yields) ranging from 4.00% to 4.85% depending on your preferred term length. You can choose from four different term lengths — from six to 24 months — so you can customize your CD to fit your financial situation. All Bask Bank CDs come with APYs well above the national average. For example, Bask Bank’s six-month CD has a 4.85% APY*, while the national average is 0.65%, according to the FDIC. All Bask Bank CD accounts require a $1,000 minimum to open.

Gray says another added benefit of choosing a CD is that it encourages responsible saving.

“If you don’t want to be tempted to spend your savings, CDs are a great option to ward off impulse spending and reward you with high interest returns at the end of the account term. By choosing to open a CD account that’s FDIC insured, you’re also adding an additional level of security to your savings.”

The annual percentage yield is effective as of Monday, March 20, 2023. APY is fixed and a $1,000 minimum balance is required. Bask Bank will pay this rate and APY through CD maturity date. Early withdrawal penalty and fees may reduce account earnings. Must fund within 10 days of account opening. Bask Bank is a division of Texas Capital Bank, Member FDIC.

High-Yield Savings Account

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

https://www.gobankingrates.com/money/financial-planning/safest-places-to-keep-your-savings/?utm_term=incontent_link_7&utm_campaign=1216166&utm_source=yahoo.com&utm_content=9&utm_medium=rss

7 Reasons Nobody Writes Checks Anymore

7 Reasons Nobody Writes Checks Anymore

Andrew Lisa   Thu, March 23, 2023

A check is written, signed and dated instructions for a bank to transfer funds. To mail one, you have to wrap that piece of paper in a second piece of paper and then stick a third piece of paper on the outside to prove you paid to have it travel to its destination on at least one gas-burning vehicle.  If that sounds like a primitive way to move money, you’re in good company.

According to a GOBankingRates survey of 1,000 American adults, 45% haven’t written a single check in the last year — another 12% wrote fewer than six.

It’s nothing new — the writing was on the wall for checks long before COVID forced a shift from in-person to app-based banking. Like manual transmissions and fax machines, paper checks aren’t quite gone yet, but the museum has a spot all picked out. Here’s why.

The Paper Check Is a Victim of History

In 2012, the Federal Reserve Bank of Philadelphia predicted paper checks would be extinct by 2026 — but according to Business Insider, the clock had been ticking since 9/11.

Until that day, physical checks worth billions of dollars were packed onto trucks, shipped to sorting facilities and then loaded onto airplanes every single day. When the FAA grounded all flights on Sept. 11, 2001, the Check 21 Act allowed banks to verify funds with images of checks instead of physical paper.

There was no turning back.

More than a decade later at the time of the Philadelphia Fed report, nearly all bank-to-bank transactions were settled electronically. According to the Atlanta Fed, the number of consumer checks declined by 63% between 2000 and 2015.

Electronic Transfers Are Cheaper and Easier for Banks and Their Customers

At the time of the Philadelphia Fed report, the shift away from physical checks was already saving the banking industry $1.2 billion annually. Faster processing was saving consumers and businesses $2 billion a year.

That was more than a decade ago and the trend continues today.

The 2022 Payments Cost Benchmarking Survey from the Association of Financial Professionals (AFP) showed that the ongoing shift from checks to ACH transfers saves money, lowers fees, reduces fraud and saves time.

When It Comes to Security, Tech Beats Checks

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

https://news.yahoo.com/7-reasons-nobody-writes-checks-220015363.html

Being Poor vs. Feeling Poor

Being Poor vs. Feeling Poor

By Lawrence Yeo

Growing up, I knew our family didn’t have much money. Our apartment was small, my mom prepared food for a tiny catering company, and my dad was abroad trying to get his small business off the ground. By all financial measures, we were poor.

But here’s the thing: I never felt poor.

Part of the reason was that I never got sucked into the comparison game of material wealth. Many of my friends lived in large homes, but to me, that was a source of joy rather than jealousy. I figured that my friends having large houses just meant that we would have a lot of fun hanging out there. And when it was time to go home, it was simply a return to the warm space that I shared with my family.

The other reason was the neighborhood I lived in. Many of my neighbors also worked in the same catering company as my mom, which meant that there was an aura of familiarity that connected us all. My mom’s friends had kids that were roughly around the same age as I was, so we hung out all the time. We went to play basketball at the nearby park, we would watch movies at each other’s places, and would enjoy Korean BBQ dinners together on various nights.

When I think back on this time, I recall it with fondness. Even though we were under financial stress, my parents and my neighborhood never made it feel like we were. I had everything I needed and wanted. I had all the resources I required to do well at school too, so I never felt underprivileged there either.

This highlights the distinction between being poor and feeling poor. One is a factual claim that could be made using a number and its relationship to the poverty line. The other is something that can’t be quantified in any rational way, and is entirely dependent on one’s state of mind and its connection with others.

One interesting phenomenon that’s been occurring in the United States is that poverty has been decreasing while incomes amongst the wealthiest have been increasing. At first glance, this may seem like a win-win. If more people are escaping poverty and the wealthy are earning more, doesn’t that seem like a non-zero-sum game?

Well, the answer is no, and there are two reasons for this.

The first reason is obvious: the gap between the rich and poor has never been higher, so it doesn’t matter if the poorest are earning more. Wealth is rarely defined in absolute terms; it’s always relative. If you make $10 more each day but the person next to you is earning $100 more, then you will feel poor, irrespective of the fact that you’re making more.

The second reason is not-so-obvious, but plays according to the same dynamics as the first one. It turns out that that wealth disparities among the top 5% of richest Americans has never been higher either. In essence, the gap between the merely rich and the filthy rich has widened to an alarming extent. So if you were making $100,000 more each day but the person next to you is earning $1,000,000 more, then you will feel poor, irrespective of the fact that you’re still making a ton of money.

In this situation, it doesn’t matter that you’re not poor in any absolute sense. No one with a sound mind would say that a person making $100,000 a day is poor. But if you’re making that much and doing so next to someone making 10x that amount, then you will feel poor. In other words, the difference between being and feeling is all about environmental context.

The psychologist Nico Frijda made an interesting distinction between emotions and feelings. He said that emotions were the unconscious processing of events, whereas feelings are the conscious interpretation of them. An example of an emotion might be fear, whereas a feeling may be withdrawal.

This maps pretty well onto the being vs. feeling delineation I was making. To be something is to accept the facts of what is, similar to how an emotion is simply the unconscious processing of an event. If you make a million dollars a year, you’re rich. If you lose your eyesight, you’re blind. And so on.

But to feel something is to overlay the facts with your interpretation of them. This is how a millionaire can feel poor instead of rich, and a blind person can feel empowered instead of depressed. The way you feel about something is the result of your conditioning, your values, and perhaps most importantly, your framing of the situation.

Much of what I write about money is informed by this realization. We often view the problems of money through the lens of data and numbers, but the reality is that they’re driven by the narratives we tell ourselves. “Who is making what? How much do I need to attain that goal? What will money accomplish for me in the first place?”

What seems like a “money” question is actually a “story” question. And like any story, there are obstacles to overcome, characters to meet, and realizations to have. It’s the marriage of these three things that form the foundation of your narrative, and the way they interlink will reveal how you’ll feel about money.

In my case, the obstacle in my story was that my family was poor. The characters in my story were my neighbors and friends, all of whom formed a warm community that fulfilled my emotional needs. The realization was that I already had everything I wanted, despite a bank account balance that might suggest otherwise. All this wove together to form the conclusion that there’s a difference between being poor and feeling poor, and it was ultimately up to me to choose the right frame.

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https://moretothat.com/being-poor-vs-feeling-poor/