Why Choose A Financial Advisor With A Big Tech Stack

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In the times of the coronavirus pandemic and with working-from-home becoming our new norm, we are all learning how to conduct our daily lives from the confines of our laptops and smartphones. Furthermore, while adjusting to this new way of life, it is crucial that the platforms and technology we use to connect with other professionals is as high-tech as possible. This is why having a financial advisor with the most current and state-of-the-art technology is crucial. 

In an article written by the Financial Advisor Magazine, they said that advisors with inadequate technology  weren’t able to conduct all aspects of their business during the pandemic. The article further states that more than three quarters of U.S. and Canadian advisors in a recent survey reported losing business due to inadequate technology as the coronavirus pandemic took hold. 

As mentioned previously, the ability to meet with your clients virtually and interact with them as if you were face to face is the only way to make these unprecedented times feel somewhat normal and keep your clients happy. According to the survey, eighty-nine percent of the respondents said their desktop software and firm-provided technology had become more essential during stay-at-home mandates; and 74% wished their firm had access to better technology tools.

Sherman Wealth has always utilized the most high-tech and innovative technology to serve our clients with. From staying in touch virtually via zoom meetings, texting, digital forms, screen sharing, or conference calls, to allowing our clients to constantly check their portfolio with the simple click of a button that takes them to our client app, this technology keeps our clients on top of their portfolio at all times. It also allows them to add in held away accounts that are not managed here or any bank accounts and debts to get a full financial picture. Our online scheduler allows our clients to book appointments at the tip of their fingers in order to stay connected at their leisure. Furthermore, our firm offers a risk tolerance questionnaire, where our clients can check their risk number at any time, to see how much risk you are actually taking within your portfolio. When choosing your financial advisor, make sure to think about choosing a firm that can reach you and give you the best service, especially during times like these when face-to-face communication is not possible. If you would like to inquire more about any of the technological services we offer to our clients, please reach out and we would be happy to share more information with you.

Financial Literacy More Important to Americans Than Health and Wellness

financial literacy blog

As we’ve mentioned previously, financial literacy is a skill that is lacking in our education system and amongst individuals across the country. A recent survey by Charles Schwab discusses the importance of financial literacy to Americans and how it should take precedence over health and wellness. 

According to the survey, the COVID-19 pandemic has underscored the need for basic personal finance and money management skills. Nearly 63% of U.S. adults said financial education was the most important supplementary graduation requirement to Math, English, and Science. That’s comparable with 43% of individuals who said health and wellness was more important. 

History shows that everytime our country faces a detrimental crisis, “the need for greater financial literacy becomes more apparent,” said Carrie Schwab-Pomerantz, president of Charles Schwab Foundation.

The following data was collected to support the need for financial education within our schooling system and within our country. 

Nearly nine in 10 Americans (89%) said a lack of financial education contributes to some of the country’s social issues, including poverty (58%), lack of job opportunities (53%), unemployment (53%) and wealth inequality (52%).

They survey found half of respondents would be hard-pressed to cover a $1,000 or less emergency expense in the next month if they had to. Financial education stresses the importance of saving and building up an emergency fund. 

Many respondents indicated that they wished they had been taught financial skills when they were younger, including the value of saving money (59%), basic money management (52%) and how to set financial goals and work toward them (51%). Due to this lack of financial education, so many individuals are lost when it comes to how much they should be saving, where they should save, where they should invest and more. 

Sherman Wealth has long been a strong advocate of increasing financial literacy in our country and encouraging our youth to educate themselves early on in their lives. A thorough financial education is now more important than ever. Learning the proper way to manage money and set yourself up for financial success will ensure you are prepared at all times, even during an economic crisis, such as a pandemic. 

Many schools across the country are realizing the importance of beginning a financial education at an early age. Studies show that having state-required classes can have a significant impact on students’ money moves in the future. Forty-five states now include personal finance education in their curriculum standards for kindergarten through 12 grades. In addition to programs in schools, Wall Street Bound is an organization that provides urban youth with financial, educational, and technical resources to get them closer to Wall Street. If you are passionate about spreading awareness about financial literacy, you can support Wall Street Bound with a donation.  As always, Sherman Wealth is here to answer any questions you may have and most importantly, happy to help educate you and those around you on what money means and how you should make financial literacy a priority.

Millennials Slammed by Second Financial Crisis Fall Even Further Behind

millennials

If one economic recession wasn’t enough for millennials to grapple with, why not throw another their way? 

The economic hit of the coronavirus pandemic is looking pretty bad to millennials. We’ve been reading many articles discussing how unemployment seems to be looking the worst for their generation in contract to others. 

The 12.5% unemployment rate among millennials is higher than that of Generation X (born between 1965 and 1980), and baby boomers (1946 to 1964), according to May figures from the Pew Research Center

Millennials have found it fundamentally more difficult to start a career  and find jobs in comparison to other generations who are now married and have children. Research shows that even the most educated millennials are employed at lower rates than older college graduates and millennials’ tendency to work at lower-paying firms has caused them to lag behind in earnings.

As a result, the millennial generation has less wealth than their predecessors had at the same age, and about one-quarter of millennial households have more debt than assets, according to the St. Louis Fed. 

Between February and May, millennials got hit the hardest in terms of unemployment, according to the chart below by St. Louis Fed. Millennials are now at risk of falling further behind because they entered the pandemic in a weaker position than older Americans. 

For millennials who have been impacted by this second economic recession, it is important to take a step back and start re-evaluating their careers and financial lives. It is also crucial to start early, set up a plan, and stick to it to see it through in the long run. Building up your wealth is crucial, especially while you are stuck at home during the pandemic and economic recession. Putting aside even just a little bit of money each week or month will grow over time due to compound interest.  Think about investing some of the money you might have spent on going to the movies or out to eat or having some of your paycheck put directly into a different account that is solely for saving.  However, make sure you still treat yourself to a morning latte or favorite takeout from time to time – you CAN save for your future without sacrificing all the little extra things that make you happy.  

 Now is the time for millennials to consider seeking financial help and guidance to navigate these bumpy waters and prepare a plan to help them succeed financially in the long term. If you have any questions or concerns, please reach out and we would be happy to help create a financial plan to suit your individual needs. 

How Much Does it Take to Be Wealthy?

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The coronavirus pandemic has certainly shaken almost every aspect of the lives of Americans.  The stay at home orders, high unemployment rate and volatile market have many people thinking differently about the value of their money than they did before COVID-19 erupted in the country.

A survey conducted by Charles Schwab in January of 2020 regarding financial stability asked participants what it took to be financially comfortable, and survey participants cited an average of $934,000 in net worth. This number shifted down by 30% in June, to $655,000.

What is considered to be wealthy changed exponentially as well.  Respondents stated that $2 million in net worth today is considered wealthy, down by 23% from $2.6 million in January. In 2019, respondents said it took $2.3 million to be wealthy, down slightly from $2.4 million in the two prior years.

Americans’ attitudes about money play a role in their overall happiness, but when asked about the most important factor to their overall happiness today, survey respondents regarded those drivers in the same order as before the coronavirus outbreak:

  • Relationships – 39%
  • Health – 27%
  • Money – 17%
  • Lifestyle – 14%
  • Career – 3%

After months of stay-at-home orders and a change of lifestyle, the coronavirus pandemic has vastly impacted the way we think about the value of money. 57% percent of respondents said the coronavirus has financially affected them or a close family member.

At the same time, many respondents mentioned that they are more likely to start saving in general than they did before the pandemics onset. The need for an emergency fund is now more important to many than ever before.  Others said they are much more likely to consider hiring a financial advisor to set up a strong financial plan. 

If the coronavirus pandemic has impacted your finances or you are uncertain about your financial plan, please reach out and we would be happy to help you find a plan that works for you. If you have any questions, contact us at info@shermanwealth.com and we will answer any questions you might have. 

Here’s How to Prepare your Finances

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With the additional $600 per week unemployment benefits coming to an end this week, it is important to think about the ways in which you can prepare your finances for the months ahead. Many Americans are currently jobless and have been relying on these additional COVID-19 related unemployment benefits. There is much uncertainty as we navigate through the pandemic the best we can, but there is great value in coming up with a plan to start saving and getting your finances in order as your benefits may decrease in the coming months. 

Here are some key ways to be prepared for your future and what you should expect as any additional unemployment relief comes to an end. 

Adjust your Budget 

A great place to start in uncertain times is with your budget. Sit down and attempt to cut out all unnecessary expenses along with looking into other options that may be cheaper. It’s important to think of all your essential monthly costs and see where you can save a buck or two. For example, take a look at your housing, food, utilities, and car payments to see if there are places you can cut down. Also make sure to take a look at bank and credit card statements to cut out those annoying hidden fees or unnecessary charges such as ATM fees. Also, think about selling items you may not use anymore for some extra cash. 

Contact your Creditors 

If you have not already called your creditors, you should consider reaching out to them and discussing your options moving forward. If you are only able to pay the minimum payment on your credit card bill, make sure to let your creditors know so they can figure out a plan and help you out. Many creditors may be able to offer you “financial hardship assistance” so that you can keep your credit in good standing even if you can’t pay more than a certain amount each month.

Build an Emergency Fund Even if You Don’t Think You Can 

We all know it’s important to have a cash cushion, especially in times of economic crisis. However, it can be difficult to think about how to build one when you are already strapped on cash. But, it’s never too late to start saving. The first step is to start reducing any debt. You should also try to put yourself into a “saving mindset” by incrementally setting aside a small stash of cash every month. You can contact your bank to set up auto payments to your savings account each month, which will help you get consistent with your saving habits. 

Expect a Drop in Your Credit Score 

While it’s important to maintain a strong credit score, in times of financial crisis it is okay to expect a drop in your score. As mentioned above, make sure to give your creditors a call to keep them in the loop about your situation. Also, if you are unable to pay your credit card balance in full, at least pay the minimum amount to keep your credit stable. 

Understand Your Costs

When you are strapped for cash, it is important to know which bills you should be prioritizing, for example, housing payments. While the additional unemployment relief is ending, so are the eviction moratoriums. Make sure to do some research and have a conversation with your creditors, landlords, and banks to fully understand the regulations and rules associated with your payments. 

Get Creative and Seek out Resources

Our current environment is a new adjustment for everyone, so don’t be afraid to seek out help even if you never have before. Your local city and state government offer information and resources ready to help you. When the additional coronavirus unemployment relief runs out, you may be able to qualify for government programs such as SNAP, Medicaid, and HEAP, according to CNBC. There are also many charities and organizations that are doing their best to help out those in need. 

Ask your friends and family for advice and we encourage you to seek out a financial advisor for guidance and clarify on your financial situation. If you have any questions or are uncertain about the future of your financial life, we are happy to help you in any way and help you figure out your financial future. Please contact us to schedule a free 30 minute consultation.

 

Recently Graduated? How to Establish A Good Credit Score

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Are you a recent college graduate? Are you starting your first job? 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. 

As your first paycheck starts rolling in, make sure you are opening multiple lines of credit, including opening credit cards, putting your name on your school apartment lease, and signing your name on the comcast bill. However, when you open these lines of credit and sign your name, make sure you are paying your bills in full each month. If your roommate hasn’t paid your cable bill, make sure to stay on top of them so it doesn’t impact you down the road. However, if you have been impacted by the coronavirus pandemic and can’t pay the full bill, make sure you understand to pay the minimum and reach to your creditor to figure out a reasonable solution or game plan. 

Here are five important credit concepts that you should be aware of:

  1. Low credit scores can cost  you thousands 
  2. Your credit score actually measures your risk of not paying
  3. Credit repair companies charge for services that maybe you can do yourself 
  4. Your age has nothing to do with your credit score, except for how long you’ve been borrowing credit
  5. All types of companies can check your credit score

Unless you have a perfect credit score, there is always room for improvement. The bottom line is that when you are just starting out, it’s easy to overlook the small steps needed in establishing a good score. However, having a good credit score is something that should be maintained and will impact many financial decisions you are able to make in your lifetime. If you have any questions about your credit score, how to obtain credit or how to fix a bad credit score, please contact us for a free 30 minute consultation.

 

5 Ways to Manage Your Finances Under COVID-19

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Managing your finances isn’t simple. Throw a global pandemic into the mix and you might be finding yourself overwhelmed and unprepared for the future. Now is the time to self-educate and start finding ways to manage your money for both the short and long-term. 

Here are a few tips on how to manage and improve your financial situation during the coronavirus pandemic. 

 

  • Focusing on building savings

 

While it is always important to invest and allow your money to compound, it is crucial to focus on building up your savings account to ensure you have a cash cushion for a rainy day, or in our case, the coronavirus pandemic. While you may be currently saving around 20-30% of your income, right now focus on investing 10% of your income towards a long-term goal, such as your retirement plan. 

 

  • Spending money on take-out/delivery, and supporting local businesses

 

As we approach the beginning of July, finally entering country-wide re-opening stages, it is still important to be supporting local businesses who have suffered a beating these last few months. Ordering takeout/delivery is a great way to mix up your daily meals and give your kitchen a break, while also stimulating the economy. 

 

  • Building a larger emergency fund

 

As mentioned earlier, it is crucial to have a cash emergency fund to be able to cover around 6 months of living expenses. No matter your job, we see how great of an impact unprecedented global events can have on our economy, so knowing you have a few dollars in your pocket is a great reassuring measure to take. 

 

  • Buying Comfort

 

As we slowly begin to reacclimate into our daily routine, it is important to put our spending into perspective. While there is nothing wrong with retail therapy, there are ways to make online shopping less expensive. Make sure to use free browser extensions to get cash back on your purchases. Also, if you always pay your full credit card balance monthly, you can use your credit card to accumulate miles and points. Lastly, remember to ask yourself if your purchase is necessary and worth it before submitting your order. 

 

  • Giving more

 

Now more than ever, it is important to give back to the community and help those who are less fortunate. If you are in a stable financial situation, remember to help those around you by directing your extra income towards donating to charities and organizations you strongly believe in. 

 

By re-evaluating your financial situation and altering the ways you use your money, you can set yourself up for long-term financial success. Consider speaking to a financial advisor before making any big changes to your current financial plan. We offer a 30-minute complimentary financial consultation for those who have questions or concerns about their personal situation and how we may be able to assist you. If you have any questions on your current situation, please contact us and we will be happy to help you! 

Bullet Journaling Your Way Toward A Budget

bullet journaling

Many of us have tried to create a budget and stick to it at least once. Some people choose apps on their phone or spreadsheets on the computer to help them complete this task. But, for those who prefer a more creative approach, a better option might be bullet journaling. Bullet journaling is an organized system that helps people kickstart their to-do lists, stay on track with goals and switch up their approach to keeping their personal finances in order.

How Does Bullet Journaling Work?

Bullet journals can look like basic line writing, or you can add color and design elements to make it fun and attractive. Regardless of what you want to create, it’s most important to make your journal exciting enough to stick with. Your bullet journal should be customized to your liking in order to help you meet your goals.

How Can Bullet Journaling Help You Reach Your Goals?

Bullet journals are an all-in-one way to keep track of your expenses and reach your goals. It allows you to keep a record of:

  • Your financial goals
  • Your spending habits
  • Miscellaneous observations you have made about your money habits

Being able to actually see everything in writing and holding yourself accountable makes it much easier to keep track of how much you’re spending, what types of items you’re buying and how other factors (like your mood) could be affecting your money habits. 

How to Use Bullet Journaling For Finances

While bullet journaling can be used for anything from tracking sleep patterns to weight loss, dream journaling or tackling your daily to-do list, there are a few ways you can use a bullet journal to develop a better budget.

Plan for Upcoming Purchases or Trips

If you’ve been wanting to make a big purchase or splurge on an upcoming event, use your journal to keep track of how much you need to save. If you are planning for a vacation, find out the cost of flights, hotels, food, etc. and start putting aside money for that. If you are looking to purchase a new car, you can keep track of what your monthly payments would look like based on what the loan costs might be. Drawing a visual representation of what you’re saving for can help make your goals feel more tangible. As you set money aside, you might want to include something in your journal that you can color to visually show how much you have saved.

Track your Monthly Expenses

According to a recent survey, only 14 percent of respondents used cash to pay for everyday purchases.1 Using credit or debit cards for most of your purchases can add an extra challenge when it comes to budgeting since it is an easy way to lose track of how much is being spent.

If you still prefer to avoid cash for your purchases, use your bullet journal to track your credit/debit expenses at the end of each week or month. You should create a list of how much money was spent and what it was spent on.  You can also get creative and draw graphs symbolizing certain categories (food, gas, eating out, entertainment, etc.). Having a visual tool to compare what you’re spending and what you’re saving can be an eye-opening way to reassess your budget.

Pair it With Your Favorite Financial App

If you’re interested in using a budget tracking app, you can always pair your bullet journal with an app like Mint or YNAB. Apps can be more useful in immediately alerting you to overspending and help you budget in real-time. While journaling is still great for reflecting on your spending, an app can help keep you more accountable upfront.

 

Bullet journaling is a simple way to get your finances in order and it can make staying on track much easier. It provides a way for you to outline what needs to be done in order to accomplish your goals and allows you to constantly remain mindful of your expenses. If you need any assistance in starting your own budget journal or have any questions relating to your future financial goals, please feel free to contact us – we are here to help!

 

4 Financial Red Flags When Dating Someone New

relationship

It might seem strange to talk about finances when you first start dating someone new. People often try to overlook financial issues when embarking on a new relationship as it can be uncomfortable and awkward to discuss. However, if you see a future with that special someone, it’s important to know what kind of financial baggage they might be bringing with them and to be aware of any potential financial red flags.

Red Flag #1: Having Different Approaches to Saving

If your partner is a spender and you are a saver, this could be your first major red flag. It is critical that you both discuss your savings plans and goals in detail. If you share accounts or credit cards, you don’t want one person spending more than their fair share since this would not only negatively affect your savings goals, but it can also create a power struggle over financial control. It’s important to discuss how much money you’re okay spending on certain items and creating a budget that will help you compromise to meet your financial goals. It may be best to keep your finances separate for now, however, if you’re still unable to reach an agreement.

Red Flag #2: Not Discussing Your Credit Scores

Disclosing your credit scores is a must. Depending on what your partner’s credit score is, it could diminish your chances of getting a house together or making any other big purchase in the future.

Red Flag #3: Neglecting To Address Debt 

It is essential that you know what debts your partner may have accumulated and how they plan on handling them. If you’re still getting to know one another, they may not be comfortable divulging the actual amount. You should, however, have a good understanding of whether or not they’re paying it off responsibly and spending wisely. 

Red Flag #4: Not Sharing the Same Financial Goals 

While the relationship is still fairly new, you should outline what your end goals are. It is important to ensure your financial goals are aligned early enough in the relationship to avoid any future disappointment. 

 

The excitement of any new relationship might cause you to overlook some major financial red flags. But when the time is right, it’s important to address these issues (preferably sooner rather than later) – especially if you’re both in it for the long haul.  If you encounter any of these red flags in your relationship and have any questions regarding your finances, please contact us – we are here to help!  

National 529 College Savings Plan Day

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Today is Friday, May 29 which means it’s “529 Day” or “National 529 College Savings Plan Day”. Each year, National 529 College Savings Plan Day draws awareness to the tax-advantaged way of putting money away for education costs. To help ease the burden of student loans, some parents put money aside each year for their children’s education. 529 plans have grown in popularity over the years, however many people still remain unaware that 529 plans are even an option for education savings.

So, what exactly is a 529 plan? 529 plans, also referred to as “qualified tuition plans,” are tax-advantaged savings plans sponsored by states, state agencies or educational institutions. Earnings are federally tax-exempt and most states exempt earnings from state income tax.

There are two types of 529 plans: Prepaid tuition plans and education savings plans. Both can be used as a way to save for a child or beneficiary’s education, but differ in their methods.

Prepaid tuition plans allow people to purchase units or credits at higher education institutions at current prices to be used in the future by the beneficiary. The credits are purchased for participating colleges or universities, which are usually public and in-state. However, it may be able to be used for an equal payment to private or out-of-state institutions.

The second type of plan is an education savings plan. It serves as an investment account that can be used for future qualified higher education expenses. Similar to a Roth401(k) or Roth IRA, plans offer several investment options and funds will rise and fall based on the investment’s performance. Generally, the accumulated funds can be used at any participating college or university, regardless of its location. You can also use up to $10,000 to pay tuition at elementary or secondary schools.

The ways you can spend this saved money differs based on the plan. Prepaid tuition plans can be used for tuition and mandatory fees, but not room and board. Education savings plans, however, can be used for tuition, fees, books, supplies, equipment, computers and sometimes room and board. Technically, a person can use the funds accumulated in an education savings plan for any expense they choose, but if the funds are used for a non-qualified distribution, they are subject to income tax, a 10 percent penalty and any additional state penalties. If a beneficiary doesn’t need the funds, they can be withdrawn with the payment of income tax and penalties, although there are exceptions to the penalty fees.

529 Day is a great time to review your college savings progress and if you haven’t started saving for college yet, it’s not too late!  Some states currently have different contests and incentives to try to boost interest and participation in their 529 savings programs. Click here to see what your state might have to offer.  If you have any questions about 529 plans or would like us to help set up a plan for your beneficiaries, please contact us – we’re here to help!