Are You Having Trouble Saving Money In This Environment?

As the economy continues to adjust to this higher interest rate environment with future uncertainty on what the Federal Reserve will continue to do with hiking interest rates to combat high inflation, many individuals are too feeling an adjustment. We have been finding that many clients and prospects are needing to adjust and revisit their budgets in this environment, and pay closer attention to the amount of cash they have on hand. Do you feel this way too? Are you keeping a closer eye on your spending?  Have your spending habits changed or are you feeling the impact of higher prices? Let’s take a look at how Americans are feeling about their costs and spending. 

According to a survey from the Certified Financial Planner Board of Standards, “63 percent of Americans are concerned with purchasing necessities such as food, their job security (56 percent), paying their rent or mortgage (55 percent), saving money (82 percent), and the national economy (82 percent).” It’s clear that this higher cost of living is having an impact on the consumer. In fact, credit card balances are at an all time high while American’s emergency savings accounts are dwindling. According to a survey by MagnifyMoney, “Nearly 1 in 5 Americans admit they saved no money at all in 2021. While these stats are not meant to cause anxiety or stress, noting where the economy is a great reason to discuss intentional spending. 

Intentional spending and frequent check-ins on your financial plan and budget is crucial, especially in this environment. Whether you had a financial plan created for you years ago or just a few months ago, it’s extremely important to check in with your plan and budget often to ensure it still works for you. 

When you are intentional about your spending, you separate your wants versus your needs as well as your short and long term goals, creating buckets to achieve your different wishes. We find that many individuals don’t sit down to create a realistic budget and end up spending more than they bring in, resulting in negative cash flows and added financial stress. Along with intentional spending, finding an amount that you are comfortable with to sock away each month is a great way to stay responsible and build up your emergency fund. We just wrote a blog about the importance of a mid-year financial check-in which is a great opportunity to re-visit your spending, budget, cash flows, and savings strategy. 

The survey also found that “younger Americans were also more likely to make decisions that could impact them negatively long term, as investors under 45 were more likely to delay credit card payments (29 percent versus 17 percent) and delay loan payments (25 percent versus 16 percent).” We know that financial planning might not always be top of mind for you, especially if you are a young professional just starting out, but setting up a financial plan from a young age and making these financial tasks a priority can be extremely beneficial to your financial future. Delaying loan and credit card payments can be a very slippery slope and get far away from you quickly if not handled appropriately, so make sure you create a plan and budget that works for you to avoid getting yourself into a sticky situation. 

We know that financial planning can seem scary or overwhelming which is why here at Sherman Wealth make financial planning simplified. We take overwhelming topics and make them easily understandable for our clients to ensure we educate and help them every step of the way on their financial journey. If you have any questions and want to revisit your financial plan or spending habits, email us at info@shermanwealth.com or schedule a complimentary 30-minute call here. 

How To Prepare For The Student Loan Re-Payment in October

After a long three-year pause, student loan payments are officially back. That’s right, interest has resumed on your student loans as of September 1st, and they are set to resume payment in October. The US Department Of Education’s recent announcement on its website indicates that individuals with student loans will need to start making payments once again starting in October. Since borrowers have become so comfortable with the omitted payment for the last three years, it’s crucial for individuals with student loans to prepare themselves for the transition. So, let’s discuss some practical tips to help borrowers prepare for the resumption of payments and ways to fit the payment back in the budget.

So, you might be thinking to yourself, “How Do I Prepare for the Loan Payment to Resume?” Well, especially now that interest has begun accruing on your loans, a great starting point is to review and familiarize yourself with your loan terms and conditions. Maybe you have received an email or statement in the mail recently, or take a look at your old payment sheet to understand the interest rates, repayment plans, and any changes that may have occurred during the payment pause. Take note of the exact amount you owe and any upcoming changes that might impact your monthly payments so you can ensure that your existing repayment plan still fits within your financial capabilities.

Next you want to revisit your budget and re-assess your current financial situation. Take a close look at your current financial circumstances. Evaluate your income, expenses, and other financial obligations. Assessing your budget will help you determine how much additional savings you have each month that you can allocate towards your student loan payments without compromising your overall financial stability. If you find that currently there is no room in the budget for your student loan payment, then it’s time to make some adjustments where you can.

We know it’s hard to make theses adjustments on your own, which is why we work with individuals to tweak and set a realistic budget. With the upcoming student loan payments, it’s essential to create or update your budget to accommodate this new expense. Analyze your income and expenses, identifying areas where you can cut back or make adjustments to accommodate the loan payments. Write down your wants versus your needs to determine discretionary expenses that can be reduced temporarily.

While you’re trying prepping to begin re-payment, think about your emergency fund as well. In addition to your student loan payment bucket, try setting aside an extra portion of your income this month to build up your emergency bucket should the budget be tight once your payment resumes.

If you find yourself overwhelmed or unsure about how to proceed, seek guidance from a financial advisor or student loan counselor. We are working with borrowers to analyze their situation and provide personalized advice based on their specific circumstances. As the resumption of student loan payments approaches, it’s crucial for borrowers to proactively prepare. By reviewing loan terms, assessing your overall finances, and creating a realistic budget, you can effectively prepare and manage the transition. Remember, a financial plan and preparation are key to ensuring a smooth adjustment to the student loan repayment phase and maintaining overall financial well-being. If you have any questions, email us at info@shermanwealth.com or schedule a complimentary intro call here.

The Importance of Financial Planning and Goal Setting As A Young Professional

As individuals enter their golden years, it becomes crucial to have a financial plan already set in place and planned out. Prioritizing financial planning and goal setting from an early age will ensure a secure and fulfilling future. Older adults often face unique financial challenges, including rising costs, potential long-term care needs, and economic insecurity. This blog post emphasizes the significance of creating a solid financial plan while you’re building your family and career, setting clear goals, and highlights the role of financial planning in securing a stable financial future for aging Americans.

So, lets discuss the power of financial planning. Financial planning serves as a roadmap to navigate the complexities of life and provides a sense of control over one’s financial well-being. It involves evaluating current financial circumstances, creating a plan to achieve both your short-and long-term goals, estimating future expenses, and developing strategies to maximize savings and investments. By engaging in financial planning and creating a holistic plan as you kickstart your life path, older adults can proactively address their financial needs and aspirations, and ensure the ability to weather unexpected financial shocks.

According to the NCOA survey, a staggering “80% of households with adults over 60, equivalent to 47 million households, are at risk of falling into economic insecurity due to high inflation and rising costs”. This poses a significant challenge for older individuals, with 45% of them having household incomes below the threshold required to afford basic living needs. In fact, many of these individuals feel unprepared to whether a financial shock that may come their way. This shows the importance of having a plan in place and setting up a strategy to achieve both your short and long term goals.

Goal setting is an integral part of effective financial planning. It involves identifying specific objectives that align with your personal values and dreams. Whether it is retiring comfortably, purchasing a vacation home, covering long-term care healthcare expenses, or leaving a legacy for loved ones, goals are specific to you and your family. Setting achievable and measurable goals helps individuals stay motivated and track their progress towards financial security.

Financial planning and goal setting will play a vital role in preparing for your future and any unexpected financial shocks that come your way.  By creating a robust financial plan, individuals can navigate economic uncertainties, rising costs, and life goals effectively. If you have any questions about creating a financial plan and preparing for the future, email us at info@shermanwealth.com.

Your Financial Checklist for September

September is here, which means it’s time to start thinking about your financial goals and ensuring your money matters are in order. As the summer months wind down, it’s the perfect opportunity to revisit your financial plan, set new goals, and make sure you’re on track to achieve them. Here’s a financial checklist to help you navigate the financial waters this September:

1. Check Your Student Loan Portal: If you have student loans, you may have enjoyed a few years of reprieve thanks to the pandemic-related pause. However, as of this month, interest has resumed on federal student loans. It’s crucial to check your student loan portal to confirm and understand your liability beginning next month. This change could impact your monthly payments and the overall cost of your loans.

2. Benchmark Your 2023 Goals: At the beginning of the year, you likely set financial goals for yourself. Now is the time to revisit those goals and assess your progress. Take a moment to reflect on what you wanted to achieve in 2023, whether it was saving for a major purchase, paying down debt, or investing for the future. Evaluate where you stand in relation to those objectives and make any necessary adjustments. If you’ve met some of your goals, celebrate your accomplishments, and if you’re falling short, identify the steps needed to get back on track.

3. Review Your Retirement Contributions: Your retirement savings are a critical part of your financial future. September is an excellent time to review your retirement accounts and contributions. Are you on track to max out your contributions for the year? If not, consider increasing your contributions to take full advantage of tax-advantaged retirement account. Did you increase your contribution from last year to account for the increase in contribution limit, which is $22,500 and $30,000 for those 50 and older. Ensure your investment allocations align with your long-term goals, and if necessary, consult with a financial advisor to fine-tune your retirement strategy.

4. Revisit Your Cash Flows and Budget: As we transition from summer to fall, your expenses and financial priorities may change. Take a closer look at your cash flows and budget to ensure they reflect your current situation. Are there any upcoming expenses you need to plan for, such as back-to-school costs, holiday expenses, or home maintenance? Adjust your budget accordingly to accommodate these changes. Reevaluating your budget can help you stay in control of your finances and avoid any unexpected financial stress.

Bonus Tip: Consider Tax Planning Though tax season is still a few months away, proactive tax planning can save you money in the long run. Review your tax situation and look for opportunities to optimize your tax strategy. This might include taking advantage of tax deductions, tax credits, or making smart investment decisions with tax implications in mind. Consult with a tax professional or financial advisor to explore potential tax-saving strategies.

In conclusion, September is a prime time to get your finances back on track after the summer months. By following this financial checklist, you’ll be better prepared to tackle the rest of the year with confidence and ensure that you’re making the most of your financial resources. Remember that financial planning is an ongoing process, and regular check-ins like this one can help you achieve your short-term and long-term financial goals. If you have any questions or are seeking financial advice in your fall financial check-up, email us at info@shermanwealth.com or schedule a complimentary intro call here.

Fall Into Financial Health: Why It’s Crucial for the Season Ahead

As the leaves begin to change color and the temperature starts to drop, we often find ourselves embracing the cozy comforts of fall. It’s a season of pumpkin spice lattes, warm sweaters, and scenic walks through nature’s vibrant transformation. However, amidst all the autumnal pleasures, it’s essential not to overlook a different kind of health and fitness – your financial health.

Fall serves as an excellent reminder of the importance of financial health, especially as we approach the end of the year. Post summer travel and the last few months of the year mark a fitting time to assess your financial situation, prune unnecessary expenses, and ensure your financial foundation is strong.

Here are some compelling reasons why financial health and fitness are crucial as we head into fall:

  1. Budgeting for the Holidays: Fall marks the beginning of the holiday season, which often comes with increased spending on gifts, travel, and festivities. To avoid financial stress and overspending, it’s essential to have a budget in place. Review your finances now and allocate funds for the upcoming celebrations.
  2. Emergency Preparedness: It’s essential to have financial reserves in place for unexpected expenses that life can throw at us. Just as leaves fall from the trees, unforeseen medical bills, car repairs, or other emergencies can quickly impact your finances. Having an emergency fund serves as your financial safety net during such times of need. Ensure you have enough savings to cover these unexpected expenses, offering you peace of mind in an ever-changing world.
  3. Year-End Financial Goals: As the year draws to a close, it’s an ideal time to assess your progress toward your financial goals. Whether it’s saving for retirement, paying off debt, or building an investment portfolio, fall is an excellent time to make adjustments and finish the year strong.
  4. Tax Planning: Fall is the perfect time to start thinking about your tax situation for the year. By reviewing your income, deductions, and potential tax credits now, you can make strategic financial decisions to optimize your tax liability before the end of the year.
  5. Healthcare Open Enrollment: Many employers offer open enrollment for health insurance and other benefits in the fall. Take the opportunity to review your coverage options and make any necessary changes to ensure you have adequate protection for you and your family.
  6. Year-End Financial Checkup: Just as you visit your doctor for a health checkup, consider scheduling a year-end financial checkup. Review your credit report, assess your investments, and ensure your financial accounts are in good order.
  7. Setting Financial Resolutions: Fall is a time of change and renewal, making it an excellent moment to set financial resolutions for the coming year. Whether it’s saving more, investing wisely, or paying down debt, having clear financial objectives will keep you on track.

In conclusion, just as we prepare our homes and wardrobes for fall, it’s equally important to prepare our finances. The changing season reminds us to reevaluate our financial health and make any necessary adjustments to ensure a secure and prosperous future. By taking proactive steps now, you can enjoy the beauty of autumn with peace of mind, knowing that your financial foundation is strong and ready for whatever challenges and opportunities lie ahead. If you have any questions or are seeking financial accountability and help this fall, email us at info@shermanwealth.com or schedule a complimentary intro call here.

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!

 

How To Improve Employee Education As a Small Business Owner

Being a business owner ourselves, we feel that financial education and empowerment of everyone, including your staff, is extremely important. As a small business owner, do you ever feel that there’s more you can be doing to better and further the financial education of your employees? Creating a work environment where your employees are given the proper resources to understand the full scope of their benefits and become financially literate is key to creating a team that can make sensible and educated decisions regarding their financial futures.

It’s easy to let your finances get away from you, especially when you are busy with day-to-day life and feel that you have the basics taken care of. However, as a business owner, we encourage you to help your staff see beyond that financial comfortability and challenge them to set themselves up for financial success by contributing to their 401(k) for retirement, seeking financial advice, and asking questions about all the benefits you may offer. We know that you are most likely too busy and pre-occupied to answer financial wellness and financial benefit questions from your staff, which is why we created a service to alleviate this weight from your shoulders. 

We’ve found that companies who offer financial wellness programs have less anxiety-ridden and financially stressed employees. According to a nationwide survey from Bank of America, “91% of employers see higher employee satisfaction when they offer resources to manage overall wellbeing.” This finding reinforces the need for stronger financial education, especially when it comes to retirement and setting financial goals in our country as well as within our firms. Reducing the financial anxiety of your employees should not only increase their workplace satisfaction but efficiency and work product.

As a business owner and entrepreneur, it is easy to get sidetracked with miscellaneous tasks and other aspects of keeping your company running, but it’s important to not only make sure your employees are happy, but are on the road to financial success. If you find yourself too overwhelmed or don’t feel you have the necessary expertise to educate your employees regarding their finances, consider hiring a financial planner or 401(K) consultant as a guide. At Sherman Wealth, we specialize in 401(k) education and can also serve as a financial fitness coach for your company. If you feel that your staff needs more financial empowerment, coaching and guidance, contact us at info@shermanwealth.com or schedule a complimentary 30-minute consultation to discuss your company’s financial needs here.