Have Young Kids? Why You Should Set Up A 529 Plan

Are you a parent of young children? If so, you may not be thinking about planning for college when you might be dealing with diapers, baseball practice and packing school lunches each day. But, it’s important not to wait too long before putting money aside for your child’s future education. With the cost of college rising each year, it’s hard to imagine what the tuition sticker price will be when your young children are finally old enough for college. So, now is the time to start looking into the option of a 529 savings plan. 

529 plans are a type of investment plan which offer incentives to encourage parents to set aside money by offering tax benefits, such as tax-free earnings and withdrawals for qualified educational expenses. 

Depending on where you live, choosing your state’s 529 plan may offer additional tax benefits, but you can also expand your search to look at other state’s offerings. You should shop around for a plan offering the best investment options and lowest fees so you can maximize your money. 

You can think of a 529 account like a Roth IRA account, but a 529 is for education purposes instead of retirement. You can save money by not paying taxes on your earnings and when you withdraw it for qualified education expenses like tuition and textbooks.

In addition, parents and guardians have the potential of earning more compared to sticking their money in a savings account. While growth isn’t guaranteed, many 529 plans typically have a higher than average rate of return than what you’d find with deposit accounts. 

Another type of 529 plan is the prepaid tuition plan. The difference between this and the 529 college savings plan is that it allows account holders to purchase credits or “units” at participating educational institutions that can be applied in the future toward tuition and fees for their child. While you can prepay for tuition, these plans don’t typically cover future room-and-board costs, which is an expense covered by a 529 plan. 

The main benefit of a prepaid tuition plan is that you have the potential to save on tuition, since you’re paying today’s price for future tuition. However, if your child doesn’t attend a specific school (typically public and in-state participating colleges), you may lose part or all of your money. Even if you’re able to transfer some or all of your funds to another participating institution, the value may go down. 

When it comes to selecting a 529 plan, you should look into whether your state offers any tax advantages. Before opting for your state plan, check to see if there’s any special tax incentives and whether the advantages outweigh any drawbacks, like high fees or poor fund performance.

If your child doesn’t end up going to college or you don’t end up needing all your 529 savings to cover their education expenses, you have a few options. First, you can transfer whatever is left in the 529 plan to another child, eligible dependent or use it yourself for qualified educational needs. To do so, simply change the beneficiary on the account — your 529 plan provider will have instructions on how to. Otherwise, you can withdraw the cash, though you’ll pay a 10% penalty, plus any income taxes you may incur. You can also roll it over to a family member’s ABLE account without incurring any penalties. These tax-advantaged accounts are for people who were disabled and received Social Security insurance benefits before turning 26.

A 529 plan is a great idea for parents who place importance on a college education and want to save money when making financial contributions. The benefits seem like a no brainer! So, even if you think your children are many years away from college, it’s never too late to start thinking about how you are going to pay for it. If you have any questions about setting up a 529 plan, please reach out to us at info@shermanwealth.com or schedule a 30-minute complimentary intro-call here -we are here to help!

 

Fall College Action Plan

Is your child a senior in high school this year? If so, you are likely in the throes of the college planning process. While this process is usually quite overwhelming, it doesn’t have to be too stressful if you plan accordingly. Here are some helpful tips to help you understand what you and your child should be doing this fall to be prepared for the college application process.

Encourage your child to meet with their school counselor. The counselor will help your child work on and submit their applications and make sure they are hitting the most important points they need to. Most high schools will have colleges visiting each week over the next few months so make your child takes advantage of these opportunities. Next, create a college calendar. This calendar should include application deadlines and other crucial dates.  

If your child hasn’t already taken their college admission test(s), make sure they are signed up to take them in the fall.  Many seniors also retake college admission tests at this time to improve on a previous score. In addition, make sure to check out whether the colleges your child may be interested in are “test optional” since many colleges no longer require tests for admission.

If your child is applying to and thinking about scholarship opportunities, they should reach out to the school counselor. Typically these can be found online, but the school counselor should have the most in depth information and can help the students submit these applications. In addition to school scholarships, if your child is applying for financial aid, remember to fill out the FAFSA beginning October 1. If applicable, also make sure your child completes the CSS/Financial Aid Profile, if required. 

Encourage your child to set up college interviews. These interviews will help your child get prepared and learn more about their desired schools. Each school has its own interview process, so have your child check out the individual school information on their websites.

Senior year is a big year for your child as they balance schoolwork, extracurricular activities and the college application process. The guidance listed above will give you and your child the necessary preparation to start applying to colleges over the next few months. If you need any additional help or information about the college financial aid process, be sure to reach out to us at info@shermanwealth.com and we can point you in the right direction. 

If you have younger children and aren’t quite in the college planning process just yet, you can at least make sure you’ll be financially prepared for when they do head off to college by starting a 529 plan. We’ll talk more about this in our next blog. 

Financial Planning Checklist For College Graduates

Just graduated college and not sure what to do next? Want to set yourself up for financial success, but not quite sure how to get started? Well, you’ve come to the right place! We recently published a Financial Checklist for Recent College Grads that will walk you through important and easy financial steps to take as you embark on the next chapter of your life. You can download the checklist here. 

  1. GET ORGANIZED & DEVELOP A BUDGET 

Using wants vs. needs along with the bucket strategy, you can build out your priorities and create a budget that works for you. The bucket strategy is when you create different buckets based on priority, importance, time needed to save, and money needed to save and distribute your money to each bucket in order to reach your goals. 

  1. BUILD AN EMERGENCY FUND WITHIN A HIGH-YIELDS SAVINGS ACCT 

You’ve had a few summer jobs & have a few dollars saved up. Open a high-yields savings account with the highest interest rates that will earn you the most money on your dollars and continue to save! Click here for CNBC Select’s top HYS accounts. Starting early and saving the most you can while you are young is extremely important and will help you the most in the long-run. 

  1. OPEN A LINE OF CREDIT & BUILD YOUR CREDIT SCORE 

Once you graduate college, you should take on a source of debt by getting your own credit card and building your credit. But, make sure you pay your bills in full & on time! PS: Don’t forget about those college Verizon cable bills! Check out our podcast with KC Cole to get some tips on how to better and build up your credit score. 

  1. CONTRIBUTE TO RETIREMENT ACCT 

Contribute to a Roth IRA & opt-in to your company 401(k) if offered as it’s a great way to save for retirement with tax benefits. Always take advantage of the company employer match! If you take a look at the JPMorgan chart below, you can see the benefits of saving earlier rather than later. 

  1. AUTOMATE YOUR FINANCES 

You are the kings of social media! Take your finances online too. Reach out to us to get access to our financial client portal/app that allows you to track all your data in one place, and on your i-phone! Email us at info@shermanwealth.com if you would like a complimentary trial. 

  1. ASK ABOUT YOUR WORKPLACE BENEFITS & PERKS 

When starting a new job, it’s always important to take advantage of all that your company offers, in regards to retirement accounts, health benefits, and more. Talk to HR to make sure you understand the full scope of your company benefits. 

  1. INVEST IN YOUR FUTURE! 

Whether it’s learning about and investing in the stock market or saving for graduate/medical school, invest in yourself & be smart about achieving your goals. 

While these are only a few of the financial moves you should make when graduating from college and prepping for the next few years of your career, there are many more things to consider and ways to make yourself financially fit. If you would like to learn other easy ways to set yourself up for financial success, reach out to us at info@shermanwealth.com or sign up for a complimentary college grad prep session here. 

Tax Break Adds Perk To 529 College Plans

529 plans are not only a great estate-planning tool way to save for your children or grandchildren’s’  college tuition, but they have another added bonus too. Under this new tax law, individuals can make a lump-sum 2021 gift of up to $75,000 to fund a 529 college savings account for a child or grandchild and claim a federal gift tax exclusion for the full amount. 

“This accounts for five years’ worth of the standard $15,000 annual exclusion that normally applies to 2021 gifts,” according to the IRS. We have found that many people are not aware of this tax break and how they can benefit from this, which is why it’s important to share the knowledge. 

Another interesting point to note is that the Tax Cuts and Jobs Act of 2017 now applies to tuition for grade K-12, which is useful for those who decide to send their children to private school. 

It’s important to note that grandparents can really benefit from contributing to a 529 plan, as it removes assets from taxable estates in large sums and the money is invested to grow and earn income tax-free. If you are currently contributing to a 529 plan or are considering opening one, we are happy to discuss your situation and more of the benefits involved. If you have any questions or would like to discuss these plans, please feel free to contact us at info@shermanwealth.com or schedule a 30-minute complimentary meeting here

Financial Advice For Parents

kids-earning-money-with-chore-chart-e1581111178885

Raising a child in today’s world can cost hundreds of thousands of dollars. As a parent of four children ranging from ages 5 to 16, I can attest to just how expensive kids can be. Besides just the essentials like food and clothes, there are club teams, tutors, dance lessons and so much more. With each additional family member comes new financial considerations and expenses. The importance of planning for these costs before they arise is a key reason why many financial advisors are targeting young families and helping them successfully navigate how to cover their children’s expenses without compromising their own financial security. Here are a few top takeaways from some of these advisors:

SAVING FOR COLLEGE

With a high school junior in our house, it won’t be long before we are paying that dreaded college tuition bill. And, due to the ballooning costs of higher education, this bill is not likely to be a small one! If possible, new parents should try to start saving as soon as they can for their child’s college tuition.The earlier you start saving, the better prepared you’ll be. If you save $500 a month at birth, you should have around $190,000 saved by the time that child reaches 18 (assuming an annual return of 6%). However, if you don’t start until your son or daughter is 10, you’ll only have around $60,000 by the time they graduate high school. Setting up a state-sponsored 529 college savings plan, allows parents to invest money and then withdraw it tax-free, so long as the funds are used for certain education expenses. However, as you prepare for your children’s future, make sure that you remain focused on your retirement saving as well. There are lots of ways to pay for college, but you can only use the resources you’ve accumulated for your own retirement.   

CHILDCARE AND HEALTH CARE

When our first child was born, my husband and I were both working, and trying to find affordable childcare was not easy. Childcare is one of the biggest expenses new parents will face, especially if both parents work. In some cases, one parent will decide to leave their job and take care of the child themselves, especially if the cost of childcare is more than one parent is making. This is exactly what happened when our second child was born, since it was no longer cost effective to pay for childcare for two children with my salary.   

Meanwhile, childbirth and adoption count as qualifying events that allow parents to make changes to their employee benefits outside of the open enrollment period at work. For example, new parents can expect to see their medical expenses rise and those who have access to a flexible savings account and health savings account at work should use them since the money put into an FSA or HSA avoids federal taxation. In some cases, employers offer a Dependent Care FSA, which can be used for costs picked up from a nanny, babysitter or childcare center.

When it comes to health insurance, if both parents work, you should examine which plan will cost less to add the child to. Most doctor visits in the first couple of years are considered wellness visits, which are typically free or very low-cost in most health-care plans today. But, you should look into which plan is most cost-effective in the event of a trip to the emergency room or having to see a specialist – even with good insurance, the price tag of a broken bone is a lot more than you might think!

LIFE INSURANCE

Even though it’s not something most people like to think about, preparing for death is of utmost importance when becoming a parent. Your financial advisor should be able to run various calculations to figure out the amount of protection you would need. Many families make the mistake of only getting life insurance for the main earner, experts say, but both parents should be covered. Many people think that since stay-at-home parent isn’t actually earning anything, they don’t need insurance. However, when it comes to life insurance, you need to evaluate what it would cost to have someone else take care of your children if something were to happen to that parent.  

It is also extremely important to put together estate planning documents, including a will and health-care directives, as well as discussing appointing a guardian in the event of an unexpected life event. When we found out we were expecting our first child, it forced us to have some difficult conversations about who we would want to take of our child and how our assets would be distributed if something happened to us. It’s also important to revisit those questions each time you add another child to your family or if there is another major change to your assets. The guardians you might have written in your will when you were 25 might not be the same guardians you would choose when you are 45. None of these decisions are easy ones, but they are vital to preparing for your life as a parent.

EMERGENCY SAVINGS

With all the additional expenses new parents can face, from diapers to a larger home and mortgage, it’s more important than ever to have a safety net for those unexpected costs. Having children is a good reason to have a bigger emergency fund, simply because there are now more people who are dependent on you financially. Aside from the random home and car repairs that always seem to pop up when you least expect them, now add braces, sports equipment and teenage social lives to the mix. Having some money from each paycheck deposited directly into an account that you don’t touch is an easy way to make sure you are creating an ample emergency fund should you need it.  

There are so many wonderful aspects of being a parent, but it is definitely a costly undertaking. Seeking some financial guidance before you become a parent is always a good idea, but it’s never too late to start planning for your future with a family. If you have any questions about saving for college, choosing the right health plan, putting together your estate documents or anything else related to your financial goals or plans, please contact us.  We offer a free 30-minute introductory consultation and would love to hear from you!  Check out our other blogs for more financial advice and tips.

 

National 529 College Savings Plan Day

529 day 2

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!

Ways To Build Wealth And Boost Your Savings While You’re Stuck At Home

finances during quarantine

We’re all spending more time at home these days and it’s likely that money and finances are a stress for many during this pandemic. As the markets continue to be extra volatile,  many people are feeling a lack of control when it comes to their money.  Even though there isn’t much we can do about the state of the overall economy, there are some small-scale things you can do right now, from the comfort of your own home, to help you feel more in control of your finances. If it is all you can do right now to keep up with your bills, that should continue to be your main priority.  However, if you’re in the fortunate position of having an income or some extra cash, the following tasks take 30 minutes or less and might just have you feeling a little better about the state of your finances.

REVIEW YOUR BUDGET

 

 

Every solid financial plan starts with a good budget, and now is a great time to go over yours. You should review your spending habits and try to determine which areas of your spending are relatively fixed — such as monthly rent and insurance coverage — and those that are discretionary, like your lattes, subscriptions and eating out. 

Since you’ll likely be spending a lot of time at home this month, most of your convenience purchases will probably trail off. Comparing last month’s expenditures to this month, you will see where you are spending your money and you will be better positioned to make changes to your spending habits in order to prioritize saving money and spending on what you deem essential for your household.

GET SPECIFIC ABOUT YOUR FUTURE

 

 

Write down all the things that you want to do in your future – you can do this by yourself or with a significant other. Break it down into five-year segments. What do you want to do, where do you want to go, and what do you want to accomplish during each five-year segment? If you have career goals that include starting a business, making more money, or changing your job, you might need to learn some new skills to start down that path. 

Being confined to our home offices gives us a great opportunity to focus on learning something new and developing plans for the next steps in life, whether it is signing up for an online class or doing some research on what it might take to take your career in another direction.

SET UP A 529 COLLEGE-SAVINGS PLAN FOR YOUR KID(S)

 

 

If you’ve been considering a college savings plan for your child, setting one up online is quick and easy. You should start by reviewing the 529 plan options where you live, since they often provide tax benefits while you save for your child’s college education. Just remember to keep your own future financial goals in mind, as well. Saving for your children’s education is very important, but should come second to saving for your own retirement.

REVIEW YOUR BENEFICIARY INFORMTION

 

 

You should make a list of your financial accounts that include beneficiary designations —  like your IRA, 401(k), or life insurance — and make any necessary beneficiary information adjustments. Since these designations determine who will receive your account upon your passing, if they are left blank or not updated, your wishes could be ignored and assets could go to an ex-spouse, or state law could become applicable and decide how to split your accounts.

 

SET UP A NEW SAVINGS ACCOUNT

 

Now is the perfect time to set up a separate online high-yield savings account for your specific goals, whether it be for a vacation, saving for the holidays or possibly a new car. To make things even easier, you can also set up a direct deposit so that you put a little bit away from each paycheck towards that objective. However, remember that these “extras” should take a backseat to your emergency fund.  Having three to six months of expenses set aside in a money market or high-yield savings account can provide peace of mind and can be a lifesaver in times of temporary job loss or medical costs.

DO SOME BOOKKEEPING

 

 

Now might be a good time to do some overall bookkeeping.  This can include reviewing your insurance policies to see if you still have sufficient coverage for your needs, or working on your estate plan (are your medical directives all updated?).  If your kids are old enough, this could even be a good opportunity to teach them how to balance a checkbook by showing them how you do yours.

 

EVALUATE YOUR INVESTMENT PORTFOLIOS

If you have money in the market that’s earmarked for retirement, you might be a little worried about how current events will impact your goals. Now is a good time to have a call with your financial planner to determine if your portfolio is still meeting your long-term goals, or if it needs to be adjusted based on current events. 

 

Even though we may not have expected to be spending this much time in our homes over the past few months, it’s important to take advantage of the time while we can.  These unprecedented times have given us the opportunity to slow down and focus on our families, as well as other important aspects of our lives like our finances.  Taking just a half hour each day or week to go over these tasks can help us to feel more in control and less stressed about our money as we deal with the uncertainty of the times.  As always, if you have any questions about any of the suggestions above or any other concerns about your finances, please contact us.  We are here to help and we are all in this together!

Coronavirus and Student Loan Debt: What You Need to Know

student loan debt

By the end of 2019, student loan in America reached $1.48 trillion.  There were approximately 45 million borrowers across the United States.1  The COVID-19 pandemic has created even greater financial instability for many Americans and those that have student loans may have more difficulty paying them than ever before.  

The Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, was recently enacted to provide a wide array of assistance for families and businesses.  The legislation also made some important changes to assist federal student loan borrowers. 

Here are some answers to a few important questions regarding student loan debt during the current pandemic: 

Question #1: Are Interest & Payments Suspended on All Student Loans?

The suspension of payments applies only to student loans that are held by the federal government. However, your FFEL (Federal Family Education Loan) lender or school may suspend interest and payments voluntarily, but they are not required to do so. 

Regarding your federal student loans, all interest and payments are suspended through September 30, 2020.2 

The benefits authorized by the CARES Act do not apply to private student loans that are owned by banks, credit unions, schools or other private entities. If you are trying to suspend payments to these institutions, you will need to contact them directly to find out what your options are. 

Question #2: Should I Apply to Suspend My Payments or Interest?

Until September 30, 2020, there will be no interest accrued or payments due for federal student loans.2 There is no action required on your part as these payments will be stopped automatically.  

Question #3: What Should I Do if I’m Behind on Payments?

On March 25, 2020, the Department of Education announced that it would not be withholding federal tax refunds, Social Security payments or garnishing wages from those who have defaulted on their federal student loan payments.3 In addition, private collection agencies contracted by the government will put a pause on attempting to contact defaulted borrowers. 

No defaulted federal student loan will collect interest until September 30, 2020.3

Many of us are experiencing a certain level of financial stress as we navigate this “new normal” through the COVID-19 pandemic. If you are able to continue to make regular payments to your federal student loans, it is beneficial in the long-run.  However, it is important to know your options have changed. If you have any questions relating to your student loan payments or other financial matters, please contact us.  We are here to help! 

  1. https://www.newyorkfed.org/medialibrary/interactives/householdcredit/data/pdf/hhdc_2019q2.pdf
  2. https://www.congress.gov/bill/116th-congress/house-bill/748
  3. https://studentaid.gov/announcements-events/coronavirus#defaulted-loan-questions

Teaching Children Financial Responsibility: Start Early

close up of family hands with piggy bank

Would it surprise you to know that students graduating from high school enter college with little to no knowledge about their finances, how to budget, or save for their futures? The problem has become so severe that 40% of these students wind up going into debt in order to fund their social lives and 70% of these students wind up damaging their credit ratings shortly after college graduation.

Unfortunately, it seems as though this debt will not be going away anytime soon.  The average student loan debt for the class of 2016 increased by 6% from the previous year and the financial literacy rate in the U.S. has not improved over the past three years. While college enrollment and the number of college graduates has continued to increase, financial literacy lags among these young people at record lows. Where does this disconnect come from?

Few states offer personal finance or economics courses and even fewer states test students on the financial knowledge they have acquired. It therefore comes as no surprise that American students (and we can infer American adults) have one of the lowest levels of financial literacy when compared to other countries.  While the number of student loans has increased,

  • 44% of Americans don’t have enough cash to cover a $400 emergency
  • 43% of student loan borrowers are not making payments
  • 38% of U.S. households have credit card debt
  • 33% of American adults have $0 saved for retirement

Why does it matter? How is it affecting the economy?

Students are graduating with loans they can’t afford to pay back and with minimal financial knowledge in planning for their futures. According to Student Loan Hero, Americans have over $1.48 trillion in student loan debt, which is more than double the total U.S. credit card debt of $620 billion. This debt is becoming a major barrier to home ownership. 43% of student loan borrowers are not making payments and most of these individuals do not have any savings. A lack of sound financial knowledge will affect the economy as these millennials enter the labor force burdened with student loans.

As parents, we play a vital role in educating our children about the importance of personal finances.  In the Sherman household, we are teaching our children the importance of finances on a daily basis. Our 4 year old son is learning about savings by doing chores in return for an allowance, which he saves in his piggy bank. He is learning to save and spend his money wisely.

Parents can begin educating their children at home in order to increase the financial literacy of their kids. By demonstrating wise financial habits, parents can serve as role models for their kids. Talking in an age appropriate way to your children about the dangers of debt and the importance of saving a portion of any money they earn instills financial values and lessons your child can use throughout life.  You may find that using an allowance is a way that you can teach your kids about saving and spending appropriately. Since it has been shown that kids who manage their own money have been found to demonstrate better financial habits in the future, giving your kids the opportunity to spend and save their own allowance or money earned is a good way to prepare them for later on. Even a simple trip to the store can be used as an opportunity to start the conversation about the danger of credit cards and how they should only be used in an emergency.  Educating your kids at an early age will enable them to better learn and practice sound financial habits while under your watchful eye and cause them to be less likely to make irrational decisions once they are out on their own.

kids managing money

 

This issue is not only affecting students and young adults.  Many professionals with advanced degrees have spent countless hours studying and researching information in their particular field.  Despite all of the hours spent earning their degrees, many of these people have never taken a single course in financial education and are surprisingly not prepared to deal with the important financial decisions affecting their futures.  As a result, many extremely smart and successful people are making critical financial errors which can negatively impact the amount of money they have saved upon retirement.

Beginning in 2011, studies were conducted where participants were shown a computer generated rendering of what they might look like at their age of retirement.  They were then asked to make financial decisions about whether to spend their money today or save that money for the future. In each study, those individuals who were shown pictures of their future selves allocated more than twice as much money towards their retirement accounts than those who did not see the age-progressed images.  Seeing the images gave the participants a connection with their future selves that they did not possess before. As a result, their spending/saving behavior changed dramatically because “saving is like a choice between spending money today or giving it to a stranger years from now.”

The benefits of educating your children about the importance of personal finances are undeniable, and you’ll be able to set them up for a promising future and help them prepare for retirement. Visit us online for more information about how we can help improve your financial life.

Want to Get More “Financially Fit” in 2018? Set Savings Goals Now

Sorting

One of the most important elements of a good financial plan is regular saving. Unfortunately, it is one of the biggest stumbling blocks as well, with 57% of Americans reporting they had less than $1000 in savings in a 2017 survey. To make matters worse, 1 in 3 American has no retirement account, and only 1 in 4 Americans has over $100,000 in their retirement account.

These are concerning figures, particularly now. As interest rates keep rising – short term treasuries at their highest in nine years – and the market continues its climbing streak, you’re missing out if you are not putting savings to work for you.

Why aren’t more people saving when, according to a recent you.gov survey, “saving more money” was the 4th most popular New Year’s resolution for 2018?

One factor our clients have cited that kept them from saving in the past is discouragement due to past failures. The solution is to make sure your goals are SMART goals: goals that are Specific, Measurable, Attainable, Relevant, and linked to a Timetable.

It is important to set Specific and Relevant immediate, short, and long-term savings goals that you can visualize – like a beach vacation, a bigger home, or a child’s graduation ceremony. Tying savings goals to images that align with your life and your values can make them more emotionally compelling and easier to keep in mind.

Equally critical is to make your goals Measurable and set a Timetable: how much you are planning to save each month, or by a certain date. Don’t set figures or dates that are impossible; make sure they are Attainable as well.

Just like physical fitness, financial fitness is best achieved by setting specific, achievable, and measurable goals. A defined goal, whether it’s “save 5% of each paycheck” or “add extra hours to save for a vacation,” gives you a much better shot at success rather than a simple “I should be saving more.”

A huge part of good financial planning is goal setting. A good financial planner can help you calculate the long-term benefits of saving more and on a regular sustainable basis. It’s particularly important that your financial planner is a fee-only Fiduciary: that means there will be no “additional charges” or investment recommendations with commissions for the broker that could throw off your savings calculations.

And if you’d like help defining financial goals and evaluating whether you are saving enough to achieve them, please feel free to contact me for a free introductory call. We are always on call to help you realize your highest financial potential.