It’s Time to Re-Visit Your Life Insurance Options

As the new year is quickly approaching, end of the year planning is ramping up. While many are getting their finances in order for 2021, I want to bring light to a topic that you may have given little attention to: life insurance.  If you haven’t already, now is the time to reach out to a trusted professional to find out what your options are when it comes to life insurance. 

Each year, you should get an annual health checkup with your doctor to make sure you’re in good shape. The same thinking applies to your life insurance policies. Generally it’s a good habit to review your policy every 12 months.  This can help you identify where you are today versus what you may need in the future. You can also ensure nothing has changed in the market to affect your coverage. You may find you have adequate coverage and don’t need to change any details, or that you need to make more adjustments than you initially anticipated. Your financial advisor or insurance provider can help you decide what type of strategy you should pursue when it comes to your life insurance policy. 

I recently revisited my life insurance policy and realized some things had changed since I had purchased it. Life insurance rates had gone down, there were better options, and my health had remained the same, if not better. By revisiting my policy, I was able to save money, as well as add on more life insurance. 

Keep in mind the importance of life insurance and remember to check in with your agent or other trusted professional at least once a year to see if you can benefit from a reassessment. In some instances, you may be able to pay less for a similar policy or obtain a policy with a higher value for the same cost or less based on the current rates. If you have any questions, please reach out to us at info@shermanwealth.com or sign up for a complimentary 30-minute consultation here.

Do You Know How Much Tax is Withheld from Your Pay?

Whether workers get a windfall from Uncle Sam or wind up owing taxes mostly comes down to filling out one form correctly – and few people are doing it. In fact, 45% of the people polled by the American Institute of CPAs said they don’t know when they last reviewed the amount of tax withheld from their paychecks.

It turns out that many people are unfamiliar with W-4 forms that allow them to determine whether they’re owing or getting a tax refund. While taxes and filing a tax return may seem daunting, it’s important to remain on top of the situation to know how it will impact your finances. 

While many people assume they just owe taxes, it’s important to note that it is not always the case. Indeed, the IRS issued 125.3 million refunds for the 2019 year, with recipients getting back an average of $2,535, according to agency data as of Nov. 20.

With 2021 just around the corner, now is the perfect time to reassess your withholdings so that you can start the new year on the right foot. People who become more familiar with their W-4 seem to be able to get their withholdings to be more realistic. Any changes to your exemptions would take effect at the start of the year if you do it now.

It’s also important to be aware of the “feel-good effect.” While it feels good to get a hefty check from the IRS in the spring, it really means that you voluntarily overpaid Uncle Sam in the prior year. In other words, your withholding was too high and you took home less cash.

Meanwhile, if you wound up owing the taxman, you may have pocketed more money – but you also paid too little in tax over the year.

Employers use this document alongside the tax withholding tables to figure out how much income tax gets pulled from your paycheck. The W-4 considers the number of dependents in your home, your filing status – single, married and filing jointly, or head of household – the income you bring in and whether you take the standard deduction or itemize deductions on your tax return. Key life events also warrant updating tax withholding, including getting married or divorced or having a child.

The form is also worth another look if you’re working 9-to-5 while generating side income from other work; it’s easy for new entrepreneurs to fall short of paying quarterly estimated taxes.

While tax season can be confusing and stressful, it’s crucial to understand your situation. Consider seeking help from a financial advisor or accountant when it comes to your taxes to help you better understand your withholdings. If you have any questions, please reach out to us at info@shermanwealth.com or schedule a complimentary 30-minute consultation.

Do you Need Financial Therapy to Deal with Money Stress and Budget Fights with a Spouse?

Do you fight about money with your spouse or significant other? Do you have trouble following a budget – assuming you even have one? If so, you might want to consider seeking financial therapy, coaching, or a financial advisor.  

What is financial therapy?

Think of it like psychotherapy. But instead of improving your state of mind it seeks to improve the state of your money. In essence, it’s supposed to help you behave differently, and for the better, when it comes to how you handle your money.

Do you need coaching, not therapy?

Given the year we’ve had with the coronavirus pandemic, which has led to massive layoffs and economic turmoil, it’s not a surprise that money issues may have caused fights between you and your significant other. In some of these scenarios, financial coaching is the way to go. In times that are economically tough, it’s important to tighten up your budget and learn ways to strategically stabilize your financial life. 

Consider meeting with a financial advisor. Here at Sherman Wealth, we challenge our clients to think differently about their money and coach them towards positive financial outcomes. We help our clients avoid making decisions persuaded by behavioral and investment biases, such as selling and buying mutual funds and stocks at the wrong times. Financial coaching will help you learn bucket strategies for savings, the importance of budgeting and ways to strategically build your wealth. If your finances are having a negative impact on your health and relationships, it is key to seek help from a professional in the field. Talking with a financial advisor can help you work through some of those miscommunications and misconceptions towards a positive outcome. 

Where to find help

If you believe a financial coach is best for your situation, please reach out to us at info@shermanwealth.com or sign up for a free 30-minute consultation on our site. Our team is happy to help you get your finances on track and get you to a place where you are feeling positive about your financial life. 

The Stock Market Saw a Historic November Rally

November was a big month for the stock market, signaling that Wall Street sees better things ahead for the economy in 2021. Between the coronavirus pandemic, the election, vaccine news, and where we were just nine months ago, it’s hard to believe that our stock market is breaking record highs these days. It will be interesting to see how the November rally holds as we move into December.

 

This month alone, The 30-stock average rose 11.8% in November, its biggest one-month gain since January 1987. Back then, the Dow jumped 13.8%. Just last week the Dow Jones Industrial Average traded and closed above 30,000 for the first time.

 

The Russell 2000 remained up nearly 19% for November, putting the small-cap gauge on track for its biggest monthly gain since its inception more than 40 years ago. It was far outpacing the large-cap benchmark S&P 500, which was up more than 10% and on track for its biggest monthly rise since April, while the tech-heavy Nasdaq Composite was up around 11.3%.

And while December is historically a strong month for equities, analysts state that the strength of those November gains suggests a note of caution would be in order. We will continue to monitor how the market plays out this December, but November’s strong rally proves how important it is to stick with your long-term plan. Here at Sherman Wealth, we always encourage you to drown out the noise and biases within the market and stick with your initial plan for the long-term. If you have any questions about your portfolio, please reach out to us at info@shermanwealth.com or schedule a complimentary 30-minute consultation on our site.

Why the Average 40-Year Old Has a 676 Credit Score

Credit score is an essential part of your financial life, setting you up for success in the long-term. Whether you are a recent college graduate, starting your first job, or in your 40’s and a mid-career professional, credit score remains equally as important. While it’s extremely important to save money when you are first starting out, it’s also quite important to know how to spend money and understand the concepts behind your credit score and establishing good credit.

We read an interesting article that reported New Experian data that found consumers between the ages of 39 to 53 (aka Generation X) have a considerable gap in their credit scores when compared to older generations.

The credit bureau’s 2020 State of Credit report shows that Gen Xers, with an average credit score of 676, are closer to the scores of Gen Y/millennials (658) and Gen Z (654) than they are to Boomers (716) and the Silent Generation (729).

“Credit scores tend to improve as people age,” says Rod Griffin, senior director of public education and advocacy for Experian. But in order for Gen X consumers to reach the higher credit scores we see in older generations, they need to start focusing on two factors: lowering their credit utilization rate and paying their bills on time. Credit utilization can often be a confusing topic for many, but its important to keep in mind that if your utilization is too high, lenders may be worried you are relying on your credit card too much without being able to pay it off. If you need to charge large amounts on your credit card during a period of time, make sure to pay it off as quickly as possible to keep down your credit utilization. 

While Gen X consumers have had fewer missed payments year over year, they still have a higher rate of missed payments than any other generation.

No matter your age, making your bill payments on time is key to maintaining good credit standing and an overall healthy financial future. In fact, payment history is the most important factor that determines your credit score. A solid score gives you access to the best credit cards and better loan terms when you want to take out a mortgage or a car loan.

It’s crucial to make sure you know how to track your debt payments and credit score every month. Consider using credit monitoring apps such as Credit Karma that update you with real time changes or sites such as AnnualCreditReport.com to see where your credit stands and ways to improve it. Your credit report will list the payment history on your current and historical credit accounts from the past seven to 10 years, including revolving (credit cards) and installment accounts (mortgages and loans).

If you have any questions about your credit score of explaining it to your children or grandchildren, we are happy to help. Please reach out to us with any questions at info@shermanwealth.com or book a free 30-minute consultation here