financial planning

Get to Know the Rich Relationship Between Your Financial and Social Life

When you think of your financial wellness, you are likely not considering how it may affect your social life or vice versa. While many factors may influence your financial situation, social influence is the component that is given the least attention. Both those who struggle with their finances and those with a more comfortable financial standing may experience changes to their financial wellness based on their social life, so it is crucial to understand the correlation. Loneliness May Affect Your Financial Health Along With Your Physical Health The American Psychological Association has made correlations between loneliness and increased levels of inflammation in the body and stress hormones. This may lead to adverse effects, such as an increased risk of cardiac disease and arthritis. Poor health may lead to more costly medical expenses and more time off of work. This expense increase and a loss of work time may eventually lead to problems with your finances.1 Your Social Circle May Lead to Increased Spending Sometimes an active social life may lead to increased spending, sometimes even more than you can comfortably afford. If your social circle is comprised of friends that constantly spend outside of their means, you may find yourself mimicking their behavior. This may include making large purchases on impulse that may affect your future financial goals.2 Social Pressure May Lead to Poor Financial Decisions No matter your social circle, fitting in may seem like the most important thing. Unfortunately, trying to impress friends by spending more than you have or making an investment you know may not be ideal may lead to poor financial choices and consequences. Instead of putting yourself under financial strain to fit in with

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financial freedom

Finances and Fireworks: 5 Strategies to Help Preserve and Celebrate Your Financial Freedom

Your finances are probably one of the last places you want to experience fireworks—unless they are celebratory. With new year’s resolutions firmly in the rearview mirror, the summer months allow you to revisit your financial goals and evaluate your progress. This Independence Day may be a good time to take stock of your path toward financial independence with the help of these five tips. Set Goals If you do not already have a plan for where you would like to be in five years or more, now is the time to create one. If you are renting, do you want to own a home? Are you hoping to advance in your career or have more children? Having broad goals may give you something to work toward—and working backward from these goals may give you options for the direction you prefer. Pay Off “Bad” Debt Not all debt is created equal—and abiding by a strict debt-free lifestyle could leave you unable to purchase a home, go to college, or make other major expenses. However, some debt—including most credit card debt and paycheck advance loans—comes with high-interest rates and strict repayment terms. The more you waste on interest, the less you have to pay the principal. Decreasing your interest payments may help you get ahead of this “bad” debt for good. For example, you may accelerate the payoff or transfer a balance from a high-interest card to a lower-interest card. Automate Your Savings One of the most solid pieces of financial advice is to “pay yourself first.” By having 401(k) or Health Savings Account funds automatically withdrawn from your paycheck before it even hits your bank account—or setting up an auto-transfer from

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estate planning

4 Sandwich Generation Survival Tips

Members of the “sandwich generation”—those taking on the care of their aging parents while also raising children or financially supporting adult children—may feel stressed and overextended. Most current sandwich generation members are Gen X or millennials. Some are still dealing with their student loan debt as they try to help their children navigate college selection and research assisted-living facilities for their parents. Fortunately, there are steps you may take to mitigate these stresses and develop a strong action plan. Here are four tips to help sandwich generation members survive and thrive during this season of life. Prioritize No one handles it all alone. One way to manage stress involves focusing on the most important tasks and letting others slide. For example, if you are deciding whether to spend the next two hours mopping your kitchen floor or working on a time-sensitive task for your job, the highest priority is likely to be your job. Other decisions might be more complex. Having a broad idea of what value to place on various categories such as work, marriage, parenting, social obligations, volunteering, and household tasks may help you make prioritized choices. Delegate and Put Others to Work As more tasks demand attention, some may need to be dropped, and others delegated. This situation is where prioritization comes in. Being in the sandwich generation means having others—including those you care for—available to help. You may want to delegate certain household chores to your teenagers, ask your spouse to take on responsibilities you have previously handled, or lean on siblings to help with your parents. Consider an In-Law Suite Not every adult child wants to share a home with their parents, even in a

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Small Business Owners: Life, Liberty, and the Pursuit of Financial Independence

Being a small business owner can be rewarding but also may bring a lot of stress. You may be experiencing the pressures of trying to grow your company while providing a solid future for your employees. On top of all that, you will also need to focus on building financial independence for yourself and for your business. There are many paths to financial independence; below are a few directions to get you started. Optimize Your Current Assets One of the first steps toward financial independence is optimizing your current assets. This could take the form of increasing the profitability of your business by increasing your marketing, reducing your current costs and expenses, finding ways to reduce your tax burden, or continuing your education. You will need to take an inventory of your current assets and expenses and develop a strategic plan to optimize these factors and help your company reach its potential.1 Pay Down Debt There are two primary types of debt: productive and reductive. Productive debt is debt that helps nurture your financial growth and puts you on the path toward financial freedom. Reductive debt, on the other hand, is debt spent on items that will depreciate in value and not provide boosts to revenue or income. It is similar to credit card debt, and eliminating or at least reducing it can put you and your business on a path toward overall independence. Assess all of your debt and develop a plan to pay it down aggressively until it is eliminated.1   Beef Up Your Savings Savings are vital for yourself and your business since they will help you build wealth and financially prepare you for unexpected expenses. One

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Retirement Annuities Explained: What They Are and How They Work

Having enough retirement income is a top concern for many Americans nearing or in retirement. Even though they may have saved consistently throughout the working years, they may be concerned that their retirement plans will succeed. A successful retirement plan provides the ability to maintain your lifestyle for the duration of your life. Having enough retirement income for what you need and want is essential and must be planned for, even in the best economic conditions. A way to provide income safety is by using annuities as an asset class in your retirement portfolio. Annuities Provide Safety and Income – Annuities help retirees address a specific retirement planning risk- Longevity Risk. Longevity Risk is the risk that a retiree outlives their financial assets. Here are other things to know about annuities: Annuities provide income for life. Due to their safety and growth potential, many portfolios use annuities in the financial services industry as an asset class. Annuities are contractual agreements with an insurance company that provide an investor with a guaranteed income stream during retirement in exchange for a premium. Insurance companies provide products such annuities to help individuals manage their long lives. Annuities offer tax-deferred growth of earnings, protection of principal, and a guaranteed lifetime income. The three types of annuities widely used in financial planning are fixed annuities, fixed-indexed annuities, and variable annuities. Like any financial product, there are pros and cons to each type, and due diligence in investigating any annuity should take precedence before purchasing one for your retirement portfolio. Variable Annuities – Tax-deferred growth opportunities, but with the risk of principal loss. Potentially Greater Growth. Provides a guaranteed income for life. No Principal Protection. Market-type

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5 Homeowner Estate Planning Tips to Consider

Estate planning helps disperse your assets according to your wishes. The effort may seem daunting at first, but estate planning does not have to be overly complicated. With the proper planning, you may find yourself resting a little easier knowing you have an estate plan in place. While an estate plan is personalized to the wants and needs of each person, here are a few tips to help anyone get started. 1. Create an Inventory of Physical Assets One of the first steps in creating an estate plan is knowing what you have, so you may list the items to include in the estate. For many people, working from the inside of the home is easiest. Start by assessing the items in your home that are valuable. These valuable items may include collectibles, jewelry, artwork, antiques, electronics, and power tools. This list may take some time to build, so creating it at a comfortable pace over multiple sessions might be appropriate.1 2. Take Stock of Your Non-Physical Assets You may also need to inventory your non-physical assets. These non-physical assets might include life insurance, long-term care, and health insurance policies. They also may include money sources, such as 401(k)s, IRAs, investments, and bank accounts. You want to include in your inventory the account numbers and documentation for these accounts.1 3. Document Your Obligations Your debts, such as loans and credit cards, should be itemized with account numbers, contact information, and where you keep your documentation on these debts. This strategy helps ensure that the estate pays off any required debt obligations, which the estate must pay from estate funds.1 4. Consider Transfer-on-Death Assignments With some assets, it is possible to

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Why Save for Higher Education?

In 2021, 44.7 million Americans are facing the burden of student loan debt. They owe more than $1.53 trillion in student loans. These alarming statistics prove the importance of saving for higher education. In the past, many parents prioritized saving for their child’s college or trade school. However, today students are taking steps to cover the cost of their own higher education and keep their student loan debt to a minimum.   Benefits of Saving for College or Trade School When students make an effort to save for their education after high school, they get a head start on life with minimal debt. Instead of spending years trying to pay off their student loans, they can focus on other financial goals such as buying a house or saving for retirement. Saving for college or trade school may also motivate students to choose a major that provides job opportunities and encourages them to complete their degree.   How Students Can Save for Higher Education There are a number high school or college-aged students can save for higher education: Apply for Scholarships: Scholarships provide money for college that students don’t have to repay. If they’ve excelled in academics, athletics, or extracurricular activities, it may be in their best interest to apply for scholarships. Even small scholarships can help save hundreds or thousands of dollars on the overall cost of secondary education. Enroll in AP Classes: A high school student can earn college credits by taking Advanced Placement or AP classes in high school. The fewer credits they need to complete their degree while in college, the more money they’ll save. Work: While balancing classes, homework, and studying while working can be difficult,

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3 Ways Planning For Retirement is Like Planning For Summer Break

For kids, teens, and college students, summer break often represents freedom from schedules, responsibilities, and all those other drains on your time. Retirement actually can provide a similar level of freedom, but only if you’ve adequately prepared, planned, and saved. Below, we discuss three ways that planning ahead for your retirement can be like scheduling your summer. Deciding What to Do After spending decades at a 9-to-5, you may struggle to find ways to fill your time after retirement. Just like summer break, a couple of weeks of well-deserved decompression may turn into boredom. It’s important to have a plan to transition into retirement. Whether this means having a list of vacation destinations, a hobby to turn to, or an organization to volunteer with, giving yourself some options can help you remain active and engaged instead of simply vegetating. Deciding Where to Go Many new retirees spend a lot of time traveling now that they no longer need to worry about coming back to a pile of work or rationing a limited number of vacation days. As you spend time traveling during your working years, take note of the destinations you’d like to return to. Planning for retirement in general can look a lot like planning a vacation: you’ll need a budget, a destination, a timeline, and a Plan B. More than just longer vacations, retirement may also mean traveling to a new home – whether downsizing, moving closer to family, or even heading to a senior living community. When considering next steps, especially if debating an interstate move, take into account factors like: The way your state treats and taxes retirement income Whether the setup of your home allows

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Strategies Using Life Insurance

What is it? Life insurance is not only about protecting your survivors in the event of your death. Depending upon the type of policy you purchase, it can also enable you to meet specific life goals: retiring comfortably, paying for your child’s education, accumulating wealth, and paying for estate costs. If you own a business, life insurance can even fund the purchase of your business interest when you die or decide to sell your business. In addition, life insurance can provide you with certain tax benefits. The following life insurance-related strategies may help you to achieve your various investment objectives. Buy term and invest the difference Individuals who buy cash value life insurance typically do so because it offers them a chance to accrue savings and protect loved ones simultaneously. On the downside, however, cash value life insurance involves higher premiums than term life insurance and may afford you little (or no) opportunity to manage and control your investment. Depending upon your financial situation and goals, it may be best to buy term life insurance and invest the difference between the term insurance premium and the cash value premium in an investment of your own choosing. Although a certain amount of risk will be involved, it may be possible for you to obtain higher returns on your own, as insurance companies tend to invest quite conservatively. In terms of risk, be aware that many investors who intend to invest the difference end up spending the difference. Also, term insurance does not last indefinitely. When your term is up, your premium to renew may skyrocket, or perhaps you may not even qualify to renew or replace the policy. Use cash value

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Small Business Owners: Are You Retirement Ready (or Not)?

Whether you are an employee in corporate America or a small business owner, retirement is a part of life. For many, the thought of retiring and whether or not you are ready to take those first steps might be overwhelming or intimidating. Ancient philosopher Lao Tzu once said, “The journey of a thousand miles begins with one step.” [i] Here is a 6 question checklist for small business owners to ask themselves to determine if they are ready for retirement.   ☐  Have I decided on a retirement timeline? Most people don’t wake up one day and decide that they will retire tomorrow. It is a decision that requires years of preparation. Knowing when you want to retire is the first step toward pursuing this goal.   ☐  Do I have enough money set aside to maintain my quality of life after retirement? This might seem like a no-brainer when it comes to retirement, but many small business owners wonder if they will have enough to comfortably retire. Experts suggest that upon retirement, you want to have at least 10 times your annual salary in savings. Here are a few more questions to consider in preparation for retirement: [ii] Are your debts paid off? Will you be able to pay your retirement expenses (both entertainment and bills) long-term without having to eventually depend on social security? Will the 4 percent rule be an approach that is feasible for you? (The 4 percent rule refers to being able to live off of 4 percent of your invested money in the first year of retirement, then increase or decrease the amount to account for inflation in subsequent years). [iii]   ☐  Is

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