Ep. 152 Launch Financial-Markets Price In Future Interest Rate Hikes

Overview: Tune into this week’s episode of Launch Financial as we discuss the markets as they continue to digest inflation data and Fed outlook on whether they will be another interest rate hike this fall. As consumer sentiment numbers finalize, how are you feeling about your spending? Gas prices are spiking up to highs for the year, are you feeling the impact? Let us know! 

Show Notes:

Check out this episode!

The Importance of an Emergency Fund

How are you feeling now that summer is winding down, and fall is right around the corner? Are back to school activities starting back up for the kids? Has your spending picked up as well? There is certainly a lot to reflect on about the last year and a half. One thing that we are hearing a lot about from clients, families, and friends is that they wish they had a greater emergency fund. Do you wish you had a greater emergency fund? Does having an emergency fund make you feel more secure as you make your way thru life? 

If the uncertainty of the last few years showed us anything, it is the great impact that such an unprecedented event can have on our world, its economy, and health. As we head into the fall, think about your expenses, your cash flow, and your priorities moving forwards. For those whose spending has picked up since the pandemic, now is a great time to revisit your budget and set up an automated cadence to allocate additional savings each month to replenish your emergency fund. Given that back to school is approaching and your schedules might be picking up, now is a great time to not only revisit your cash flows and bank account balances, but your overall financial plan. With student loan payments resuming next month and inflation staying course, you may want to map out your spending for the rest of the year and implement a savings goal as well. Take the next few weeks to think about your wants versus your needs and how to allocate your budget across all your costs. 

If you dipped into your emergency fund since the pandemic, this is also a good time to start thinking about your strategy to replenish those accounts back to where they were prior to the pandemic. It is also important to think about how much money makes you and your family feel comfortable in case of emergencies that arise or come up. We’ve been getting lots of questions about how much one should have in their emergency fund. This answer is specific to every individual which is why we recommend re-visiting your financial situation with a financial professional.  On the contrary, it is important that your portfolio is diversified and you are not sitting on too much cash that is not earning any interest. With inflation constantly rising, it’s important that as you grow older, your money is growing with you.  The earlier you start, the better. 

As we have discussed on our podcast Launch Financial with David Pearl, communicating with your partner is extremely important when it comes to your finances. Take this opportunity to think about your financial priorities, what amount of emergency savings makes sense for you as a family, and make a proactive strategy that is best for you and your family.

At Sherman Wealth, we help individuals simplify their financial life and build comprehensive financial plans that are customized to each individual. If you have any questions about how to approach your financial priorities, set up an emergency fund, and how to set goals for you and your family, reach out to us at info@shermanwealth.com or schedule a 30-minute consultation here

Get Ready For Some Fall Tax Planning

As summer winds down and we gear up for the fall season, there’s one important task that should be on your radar: tax planning. While thoughts of fall pumpkin spice lattes and sweaters are tempting, it’s also a prime time to start getting your tax matters in order. In this blog, we’ll discuss some practical steps to make your tax planning process this fall efficient and effective. Connect with your financial advisor and tax professional to plan your fall tax planning meeting now!

Assessing Your Situation: Before delving into any specific strategies, it’s important to assess your current financial situation. Have there been any significant changes in your life this year, such as marriage, a new job, or the birth of a child? These changes can impact your tax status and determine which deductions or credits you may be eligible for. By understanding your unique circumstances, you can tailor your tax planning approach accordingly.

Organize Your Financial Documents: While this step always applies to taxes, get your financial documents organized. Collect your income statements, receipts for deductible expenses, investment reports, and any other pertinent records. This preparation will save you headaches when tax time rolls around.

Review Your Financial Goals: Take a moment to consider your financial goals. Are you looking to reduce your tax burden, maximize deductions, or make strategic investments? Your goals will shape your approach to tax planning.

Maximizing Retirement Contributions: One effective way to reduce your taxable income is by maximizing contributions to your retirement accounts. Whether it’s a 401(k), IRA, or another retirement plan, contributing the maximum allowed can help lower your tax liability while also building a secure financial future. The end of the year is a prime time to make any additional contributions, so take advantage of this opportunity.

Estimate Your Tax Liability: Whether you work with a CPA or advisor, or do it yourself, estimate your tax liability for the year to come. Use online tax calculators or seek advice from a tax professional to estimate your potential tax liability for the year. This estimate will guide your decisions as you explore tax-saving strategies.

Harvest Tax Losses: Tax loss harvesting involves selling investments with losses to offset capital gains and potentially lower your tax bill. Approach this tactic thoughtfully, and work with your professional financial advisor to help execute capturing these losses.

Charitable Giving: Fall is a great time to engage in charitable activities. Not only can you make a positive charitable impact, but you can also claim tax deductions for your donations. Keep track of your charitable contributions and ensure you have the necessary documentation for deductions.

We know that taxes can be quite overwhelming and while there’s plenty you can handle independently, consulting a tax professional can provide personalized insights based on your financial situation. They can guide you through complex tax regulations, uncover potential opportunities, and ensure your tax planning is on point. Working with both a financial advisor and tax professional collaboratively can help maximize your financial future and success.  So, as fall rolls around, take the opportunity to proactively engage in tax planning. By organizing your financial records, accounting for life changes, and tactically implementing tax-saving strategies, you’ll set the stage for a successful tax season. Remember, a little preparation now can avoid tax headaches months from now. If you have any questions or are interested in utilizing a tax efficient financial strategy, email us at info@shermanwealth.com or schedule a complimentary intro call here.


Avoid These Common Costly Financial Mistakes

We know that it can be difficult or overwhelming to stay on top of your finances. At Sherman Wealth, we focus on helping young professionals and families get their finances on the right track, and curate strategies to help simplify their life as it becomes more complicated. So whether you are working with a financial advisor or not, let’s take a look at some costly financial mistakes we see young professionals and millennials oftentimes make. 

One of the first commonly made mistakes we see with our clients is purchasing the wrong insurance products or not having the proper insurances in place. We see tons of people in their 20’s purchasing whole life and non-level term policies from large insurance companies that are truly not right for them and that they truly do not understand. Oftentimes, it is not until these individuals are starting their families and progressing their careers that they realize they have been losing money with the wrong policy for them. It is very important to discuss with a professional or research what policies are best for you and your family before blindly purchasing the wrong insurance. 

Budgeting and saving is always a priority when it comes to building your financial portfolio and especially starting a family. In previous blogs, we have talked about the importance of starting and saving from an early age and the power that compounding interest and  “time” in the market has on your money. Whether you are starting your first job or graduating college, it is never too early to start saving, even if it’s only a few dollars per month. On the topic of spending, many young professionals inflate their lifestyle way too quickly and are subject to lifestyle creep. Make sure you are aware of your cash inflows and outflows, and are not spending more than you make. Creating a budget and using the “bucket strategy” can allow you to effectively keep track of your spending. 

Another commonly made mistake we see among this demographic is not signing up for your company 401(k) and taking advantage of the match. We have seen tons of cases where individuals are not signing up for their company’s retirement plan and matches until five to ten years later, which is giving away a large chunk of your salary benefits and essentially, “free money”. It is always the right move to sign up for your company 401(k) and contribute the full match if your situation allows you too in order to build a strong retirement account.

Lastly, another mistake we see individuals making is not contributing to their health savings accounts (HSAs). A health savings account (HSA) can help you lower your taxes as they are triple tax free. Our advice is to always take advantage of these types of accounts if you are eligible, that can help you make the most of your current situation and future. 

By avoiding these four commonly made financial mistakes in your early years, you and your family will be in a much better situation as you embark on the next chapter in your life. If you made financial resolutions earlier this year, make sure you are checking them off as you make way through the year and let us know if you need any help. As always, speak with your financial professional to ensure you are making the right decision for your particular situation. If you have any questions, please email us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here

Apply For Biden’s New Affordable Repayment Plan

If you are a student loan borrower, you can now apply for President Biden’s New Affordable Re-Payment Plan. The Education Department this week debuted an updated beta version of its income-driven repayment plan application on the Federal Student Aid (FSA) website that allows student loan borrowers to enroll in the Saving on a Valuable Education, or SAVE, plan.

The Income-Driven Repayment (IDR) plans are set to potentially provide a lower monthly payment based on your income and family size. Check out the link above on the Student Aid website to apply and learn more. If you have any questions about the new Repayment plan or preparing for your student loan repayment this fall, email us at info@shermanwealth.com and we are happy to analyze your situation and help!