2021 At Sherman Wealth

As we look back on the last twelve months, we can certainly say 2021 was quite a year. We continued to battle COVID-19 and re-assimilate into pre-pandemic life, we saw lots of market volatility and corrections, and helped many of our clients achieve major financial milestones. 

As we wrap up the year, we want to take a moment to discuss how grateful we are at Sherman Wealth to be able to do the work we do and love and help our clients reach and exceed their financial goals. So what are these financial milestones we are referring to? Let’s check out some of the amazing financial milestones some of our clients hit: 

  • With historically low interest rates this year, we assisted over 25 clients with their refinancing! And 5 went house shopping and ended up with a new home! 
  • Eleven families had children this year! And for those who already have children, 45 of them contributed to their children’s 529 plans to save for their college tuition. 
  • Charitable giving is always top of mind. At Sherman Wealth, we always are looking for ways to get involved in local givebacks and serve the local community. In fact, Brad Sherman was named Board Member of the Year 2021 at So What Else, which was extremely exciting for the Sherman Wealth team. Others were spreading the love too, with 11 clients contributing to their donor advised funds or donating stock!
  • While COVID-19 taught us the importance of having a solid financial foundation in place, it also proved that life insurance, wills, medical derivatives, and powers of attorneys are crucial in such unfortunate times. Many took this up, with 28 clients planning or updating their estate.
  • We always say retirement planning is key, so shout out to almost all our clients who maxed out their retirement contributions for 2021 (And if you’re reading this before the end of the year, you still have time!) 
  • 75 clients got a raise! 
  • 13 clients put their entrepreneurial skills to work this year and started their own company! 

Look at all these amazing accomplishments your peers, family members, and friends achieved this year! While these are just a few of the financial milestones we saw this year, we want to stress the importance of financial independence and that you are only a few steps away from financial freedom. While these goals won’t be accomplished overnight, setting up a financial plan to achieve them is a great place to begin. It’s never too late to start on your path to achieving your future financial goals.

For those of you who are close to hitting your end-of-year 2021 goals, there are still a few weeks left before the end of the year to fund those HSA’s, 401k’s, and 529 plans. If you have any questions about your financial situation or setting up a plan to hit your financial goals, email us at info@shermanwealth.com or schedule a complimentary 30-minute meeting here. 

 

Mortgage Strategies for Self-Employed Home Buyers

Morgages for self-employed applicants

Being your own boss is a great feeling with many benefits, but those benefits do not include a fast track to a great mortgage. Gone are the days of the easy mortgages, the no-income-verification loans, and The Big Short. In fact, qualifying for a mortgage may rank as one of the biggest challenges you face as someone who is self-employed.

However, given that the 30-year rates have plunged below 3%, marking the lowest they’ve been in over a month, you should move quickly because now is a great time for refinancing and home buying to lock in those historically low rates. According to data company Black Knight, “In the U.S., homeowners withdrew $63 billion in equity from their properties through more than 1.1 million cash-out refinances in the second quarter of the year — the largest quarterly volume since mid-2007”. As you can see from the data, with these all-time lows, now is the time to act.

As a self-employed business owner who just bought a new home for our growing family, I can testify that the mortgage process is not for the faint-hearted. Every time I completed a lender’s checklist they come back to me for more information. This was not my first mortgage but the time and energy it took this time around was beyond what I expected – and I’m a credit-worthy borrower and financial pro with a background in the mortgage world.

So what’s the best way to prepare? To understand the issues, think like a bank. In deciding to lend you hundreds of thousands of dollars, the bank wants to know, first and foremost, that you will be able to pay them back – steadily, regularly, over time.

Here are 3 of the biggest hurdles you may have to overcome:

SHOW YOU MEET THE INCOME REQUIREMENTS

The first thing a potential lender asks to see is your W-2 form, the document that shows salaried workers’ annual wages and withheld taxes. Business owners and independent contractors are unlikely to have W2s, and instead need to present their full tax returns, including profit & loss and deductions & depreciation, as well as their own income.

Not only are lenders not likely to be expert at understanding your business and your cash flow, but the salary you show on paper may be deceptively low. That’s because most business owners invest a sizable chunk “back into the business” when they’re getting started as well as taking deductions for travel, leased vehicles, and purchases of computers, office supplies, and even their phone.

Getting ready: If you’re thinking about buying a house, consult a financial planner, your accountant, or a trusted mortgage professional (we’ve suggested a few below) about how much to accurately deduct – or not – this year to show sufficient income and an acceptable debt-to-income ratio.

HAVE ALL THE PAPERWORK

Having paperwork that tells the full story can make all the difference, so now is the perfect time to prepare a file with the documents you’ve already collected for the IRS. Remember, though, that this year’s tax returns and records may not be enough to show your business has been steadily growing. Be prepared with records from previous years, and bonus points for data about how your sector has been doing as well.

Getting ready: Keeping good records is key so if you haven’t already started, get started now, and see what you can put together for previous years.

MAKE SENSE OF COMPLEXITY

Every company and every consultant is unique and it may be hard to reconcile your business’ specific challenges and trajectory with the solid predictability a mortgage lender is looking for. You may want to bring a trusted accountant or financial or business advisor to the meeting with the lender – someone who knows your business well and can explain its structure, operations, and cash flow in context. If your advisor can’t be there, ask them to write a brief document explaining your data. Consider also requesting profit-and-loss statements prepared without personal expenses to show the difference between reported income and actual income.

Getting ready: be prepared to explain what your numbers mean in context and turn to a trusted advisor, if possible, who can translate your numbers for the lender and help them understand you’re a good candidate.

AVOID CREDIT SCORE SURPRISES

You wouldn’t be the first, or last, person to find discrepancies in your credit score. Correct any discrepancies and make sure it’s correctly updated before applying for a mortgage. And – obviously – pay off any outstanding debt.

Getting ready: get credit reports from the major agencies and make sure that they are accurate.

If you’re in the market for a new home, let us help you and guide you through the process. With interest rates at all-time lows, whether applying for a mortgage or refinancing, we are happy to schedule a call with you for a free analysis of how that may affect your purchasing power.

We are well versed in the latest options from different lenders that may be most appropriate for your situation and have online tools to help you look at your overall financial situation to determine how much of a mortgage it makes sense for you to take on. We also have resources and experts we can refer you to, or, if you already have a mortgage professional, we will work with them to determine how much your can afford.

And we have experience: I’m pleased to report that, after what seemed like a never ending process, I succeeded in getting a mortgage with very favorable terms and – most importantly – we love our new home.

Don’t be daunted by the challenges involved with getting a mortgage when you’re working for yourself. With the right preparation and the right help, you too can make your dream home a reality!

Here are three resources trusted referral partners in the Washington area:

(As a fee-only financial planner, we have no financial vested interest in referrals. We just want to make sure you have the best advice possible!)

Jody H. Eichenblatt, Senior Mortgage Consultant at Prosperity Home Mortgage

Josh Friedson, Senior Vice President of Mortgage Lending at Guaranteed Rate

James Schneider, Loan Officer at Eagle Creek Mortgage

***

The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions.  They are for information purposes only. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.

Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.

If you have any questions regarding this Blog Post, please Contact Us.

Maximizing Your Benefits During Open Enrollment Season

We recently posted a video, blog and financial tips regarding the importance of creating and implementing an end of year financial checklist. As part of your annual checklist, a main focus during the month of November should be your employer’s open enrollment period.

For many employers, open enrollment runs through early December. This year, as a result of the pandemic, there are some new offerings aimed at mental, physical and financial health. Here are some things to revisit during your open enrollment period this month:

  1. Health Insurance

When reviewing your health insurance options during your open enrollment period, you should consider what your health coverage costs you now that premiums and deductibles are changing. Annual family premiums for employer-sponsored health insurance will likely be about 3% lower in 2022, after factoring in subsidies enacted under the American Rescue Plan Act. However, more workers have a deductible — the amount you pay before insurance kicks in — and that deductible is rising. In 2020, the average single deductible was $1,945, roughly twice what it was a decade ago. If you are shopping for a plan, make sure to not only focus on the premium, but also the total out of pocket

  1. Health Savings Accounts

As discussed in a prior blog, using tax-advantaged accounts for medical expenses, specifically, health savings accounts or flexible spending accounts, is one way to help with health care costs.

To be able to use an HSA, you need to be enrolled in what’s called a high-deductible health plan, or HDHP. Contributions grow on a tax-free basis, and any unused money can be rolled over year to year. For 2022, employees and employers can contribute a total of up to $3,650 for individual coverage and up to $7,300 for family coverage.

Health Flexible Savings Accounts (FSAs) have lower contribution limits ($2,750 for 2021) and you don’t need to have a high-deductible plan in order to be eligible. You don’t need health coverage at all to sign up for an FSA. There are also dependent care FSAs, which allow employees to pay for eligible childcare expenses using funds on a pre-tax basis.

Generally, you must use the FSA money by year-end or you lose it. However, recent legislation could also allow you to roll over any unused funds from 2021 to 2022 for use at any time next year if your company has opted in.

  1. Life Insurance

According to a recent survey, nearly 45% of U.S. workers don’t have or don’t know if they have life insurance. Due to the pandemic, people are now interested in life insurance policies more than ever. Since most employer-issued life insurance policies typically amount to a year’s worth of salary or less, it’s important to consider what’s the right amount for you and your family. You can then decide if you want to buy additional coverage, or supplemental insurance, through your workplace group plan or shop for your own individual term life insurance policy, which many advisors recommend.

  1. Disability Insurance

Disability insurance is often the most overlooked employee benefit. These plans can help replace a portion of your paycheck if you get sick or injured and are unable to work. Short-term disability generally replaces 60% to 70% of your base salary and premiums are often paid by your employer. Long-term disability, which ordinarily kicks in after three months to six months, typically replaces 40% to 60% of your income. If your employer offers some kind of disability insurance, you should consider enrolling. 

  1. Wellness Initiatives

The pandemic has many Americans turning to their companies for help dealing with work-life stressors and personal issues. Due to increased demand, many companies are now offering a variety of financial wellness benefits. Some of the wellness resources available this year include financial coaching, stress management classes, web-based resources for healthy living and even discounts on gym equipment. There could also be tuition assistance, student loan repayment programs, backup child care, tutoring services for older children and stipends for enrichment programs and camps. Companies that understand the importance of their employees’ well being often have a more productive and successful workforce.

If you have any questions about your company’s open enrollment options, you should contact your human resources department. If you are interested in having us help you create your end of year financial checklist, please contact us for a free 30 minute consultation.

End Of The Year Financial Checklist

It’s hard to believe, but the final quarter of the year is now upon us. As 2021 comes to a close, here are some key money moves you can make to finish the year off strong and set yourself up for success in 2021.

GATHER AND ANALYZE YOUR DATA

As we head into the final months of the year, it may be a good time to gather your important financial documents, preferably into once place such as an automated financial planning software. Once your financial data is organized, analyze it, take a look at your spending, budgets, and cash flow, to make sure you are on track to reach your financial goals for the year. Then, implement any necessary changes. Additionally within this process, take some time to set new financial goals for you and your family for the upcoming year.

REBALANCE YOUR PORTFOLIO

Even if you’ve found the perfect asset allocation for your investment portfolios, its important to revisit your allocations periodically and do a portfolio review. Overtime, your investments may perform differently than you expected, which will change your intended allocation. So in this instance, make sure to go back and double check you are happy with your current asset allocation and that you have no intended alterations.

MAX OUT YOUR 401(k)

If you’re planning to max out your 401(k) for 2021, mark your calendar for Dec. 31, as this is the last chance to do so. If you receive an end-of-the-year bonus, you may want to consider putting as much of it toward your 401(k) plan as you are able to. Additionally, if your company offers a match that you haven’t maxed out, now is the time to do so.

CONTRIBUTE TO YOUR 529 PLAN

If you have young children, hopefully you are already contributing to a 529 plan to help pay for college when the time arrives. If not, now is the time to set one up. If you already have an account set up, make sure you remember to make your annual contribution. 529 plans have varying deadlines set by the state, but many have a December 31 cut-off. If you miss the end-of-year deposit deadline for your plan, you could be missing out on significant state tax savings. These tax deductions reduce your taxable income, giving you a percentage reduction in taxes owed reflective of your tax bracket. Lots of states offer a state income tax deduction or tax credit so make sure to do some research to see if you qualify for one! 

MAKE ANY CHANGES TO YOUR HSA

If you have an HSA, now is the time to make appropriate changes or contributions to your plan. Every year , the IRS creates a contribution limits for health savings accounts and this year the limits have increased by $50 dollars for individuals and $100 for families. Check this out for other HSA contribution limits. 

CONVERT TO A ROTH IRA IF ELIGIBLE

A Roth IRA conversion involves transferring retirement funds from a traditional IRA or 401(k) into a Roth account. Since the former is tax-deferred while a Roth is tax-exempt, the deferred income taxes due must be paid on the converted funds at that time. There is no early withdrawal penalty. Inquire about whether a Roth conversion is right for you. 

CONTRIBUTE TO A DONOR ADVISED FUND OR OTHER CHARITABLE ORGANIZATION

Donor-advised funds are tax-deductible financial accounts provided by 501c3 nonprofits who are approved, donor-advised fund sponsors. The funds are opened in the donor’s name, and they enable a donor to donate funds and get a tax-deduction immediately while deciding later which organization those funds will support.

After you set up a DAF, you can add money or appreciated assets into one of these funds and get the full tax deduction for the money or assets on the day you put them in the fund. And then, any time in the future — whether one day or ten years later — you can give the money out to any charity of your choosing. 

If a DAF isn’t for you, many people look for ways to combine their desire to help the causes they believe in—including COVID-19 pandemic relief efforts—with their desire to save on taxes. Generally, if you itemize your deductions, making charitable contributions can decrease your tax bill, and since high‐income earners generally pay tax at higher rates, they may enjoy a particularly large tax benefit from charitable contributions. Check out our podcast with Elizabeth Goldstein regarding Donor Advised Funds and how to get involved.

CHECK ON YOUR ANNUAL SUBSCRIPTIONS

Now is a good time to make sure you are actually using all of those annual subscriptions you are paying for. Do you really need Netflix, Hulu, Apple TV and other streaming services at the same time? You might be able to cut down on some of your monthly expenses by taking a good look at what you are actually using vs. what you are paying for. You’d be surprised at how these services add up so it’s a good time to assess what you might be able to save money on in the upcoming year.

Finally, now is a great time to schedule a meeting with your financial advisor to review your year-end financial planning. It’s important to have that meeting before year-end to set the stage for a financially successful year in 2022. Besides the list mentioned above, there are tons of other tasks you may need to check off your list before the end of the year so let us know if you need any help!  If you don’t currently have a financial advisor and would like some help with your year-end planning, please contact us for a free 30-minute consultation today! 

What Happens If You Try To Spend More Than Your Credit Limit?

credit cards

When you sign up for a credit card, you are often assigned a credit limit when that account is opened.  These limits typically start at $200 and go up to tens of thousands of dollars.  With so many people out of jobs and finding it hard to make ends meet these days, credit cards have become a necessary resource to pay for things that we might not have the money for right now. However, the more you charge on your cards, the closer you may come to hitting that max limit.  If you do hit that amount, you are likely to get hit with over-the-limit fees. Before you decide to use your credit card to pay for necessities, there are alternatives to going over your max before risking having your credit limit cut or incurring unnecessary fees.  

Can You Go Over Your Credit Limit?

Yes, you can go over your credit limit, but there’s no surefire way to know how much you can spend in excess of your limit. Card issuers may consider a variety of factors, such as your past payment history, when deciding the risk of approving an over-the-limit transaction. Any approved transactions above your credit limit are subject to over-the-limit (or over-limit) fees. This credit card fee is typically up to $35, but it can’t be greater than the amount you spend over your limit. So if you spend $20 over your limit, the fee can’t exceed $20.

Due to the CARD Act of 2009, over-limit fees can’t be charged without your consent. As a result of these regulations, most card issuers have done away with over-limit fees and the default for any transactions over your credit limit may be that the transaction is simply denied.

If you do consent to a one-time over-limit fee, you can change your mind and opt-out at any time. However, in doing so, your card issuer will likely decline any purchases you attempt to make over your limit. Even if you opt-in to over-limit fees, transactions exceeding your credit limit may still be denied.

Should You Go Over Your Credit Limit?

While spending over your credit limit might relieve some short-term problems, it can also cause long-term financial issues, including fees, debt and damage to your credit score. The best practice is to try to maintain a low credit utilization rate – avoid maxing out your card and spending anywhere near your credit limit.  If you do go over your limit, you should sit down and consider why it happened in the first place and review your budget. You should figure out what purchases caused you to spend more and whether you can make any changes to your spending habits.

Alternatives If Your Credit Limit Is Low

For those that may have a low credit limit or if your credit limit recently got cut, there are some options to ensure you don’t max out your spending. If you’ve had a low credit limit for a while and currently have a stable job, you may want to request a credit limit increase. This can be a good idea if you have good credit (scores 670 to 739) or excellent credit (scores 740 and greater) or if you haven’t updated your income in a while and make more money than what’s listed. Your card issuer may pull your credit report for this request, which may cause a small, temporary ding to your credit score.

However, if your credit limit was reduced, you may want to consider other options. Cardholders with good payment history and a stable job should call their card issuer and ask for reconsideration.  You should ask why your credit limit was cut, explain that your account is in good standing and that you have a stable source of income to pay off your bill. This may shed light on why your limit was lowered and potentially result in your credit limit increasing — though there is no guarantee. Rather than asking for a credit limit increase on the card that had a reduction, you may want to consider any other cards you have instead. If you have three credit cards and one got the limit cut, see if you can get an increase on one or both of the other two,

If you have a history of missed payments or maxing out your cards, you are likely not a good candidate for reconsideration and don’t want to draw attention to yourself. Therefore, if you fall into one of these categories, it’s best to not try to request a higher limit.

When To Apply For A New Credit Card

Cardholders with only one credit card and a low credit limit may want to consider opening a new credit card, but should be aware of any potential risks. For starters, if you were recently laid off or faced a reduction in income, you may not be in the best position to be approved for a new card, and there’s no sense in adding a new credit inquiry to your credit report if your chances are low. Also, if you have a history of maxing out your card, you should be aware that more credit can lead to more debt. An additional credit limit can be helpful for affording your expenses, but it can also be harmful if you overspend.

Before opening a new card, give yourself clear guidelines on how you’ll use the card and stick to keeping a low credit utilization rate. When it comes time to pay your bill, make on-time payments of at least the minimum every month for all of your cards.  If you are able to do so, pay in full so that your credit score will  improve and your debt will be minimized. When applying for a new card, check your credit score first to narrow down your options. Then consider cards based on your credit score. 

In these tough times, we need to be responsible when it comes to spending and not see going over your credit limit as a choice. If you do need to use your credit cards to pay for utilities, groceries and other necessities right now, make sure you are aware of your max and other options you might be able to work out with the credit card companies before going over your limit. When you do receive those credit card statements, make sure to pay at least the minimum amount each month to maintain a positive credit score. And, make sure you are paying the bills on time to ensure you won’t incur any late fees either.  If you have any questions about credit, credit cards or other issues concerning your finances, please contact us.  We are all in this together and we’re here to help! 

The Financial Services Industry Is Evolving

As our world is evolving and industries are becoming more complex, we have found that consumers too are heightening their expectations in terms of products and services received. A recent survey by Spectrem Group found that there is quite a gap between what consumers expect and what they receive in actuality, especially in regards to the financial services industry. 

As you can see from the chart below, financial planning and wealth management were two areas in which consumers found that services expected and services received had the least discrepancy. As a financial advisor, we recognize that the financial services industry is evolving, relationships continue to grow and adapt, and advisors must strive to deliver a holistic service to their clients. 

The chart above shows the client demand for an all-encompassing approach to the financial services industry and the importance of finding an advisor who truly understands the value of a financial plan. At Sherman Wealth, our focus is on helping the whole client, whether it involves setting up a 529 for those with young children, making sure retirement goals can be attained, knowing how to best maximize your 401(k) or creating a monthly budget and thorough financial plan for those just starting out. We are constantly adapting our technology solutions to keep up with the ever changing advancements as well as refining our relationships with clients. If your needs align with our values, please reach out to us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here.

10 Important Things To Discuss Before Marriage

7thingsbeforemarriage

10 Things to Discuss Before the Big Day

You are excited, in love, and planning the wedding of your dreams. Probably the only money questions on your mind are the down payments for the caterers and the florists!

Yet – whether your wedding reflects a minimalist sensibility or is a no-holds-barred extravaganza – it’s better to have a good understanding of each other’s finances before the “I Do’s”. This is a time when procrastination could cost you a bundle, even if neither one of you currently have a lot of assets.

Getting married is more than just substituting the word “ours” for “yours” and “mine”.  It’s combining your finances, histories, dreams, aspirations, possessions – even your music – and making all of that “ours too. Since a significant part of those dreams and aspirations involve money, having multiple financial conversations before marriage (or right after, if you’re newlyweds!) can help you start married life on a firmer footing, with regard to financial goals.

Here are a few conversations that will get your marriage off to a smoother financial start:

1) Views on money. How we feel about money is often very emotional and very personal. Our family’s views on money can have a big impact on the way we see finances. In some families money may not be talked about. In others, one partner may hide money or spending from the other. While we might not consciously have these same behaviors, our upbringing will have an impact on how we feel about money and how we save, spend, and budget.

The best way to address unconscious – and sometimes conflicting – money behaviors is to start by recognizing how you each feel about money. Then you can take a practical approach and implement the best strategies from the past and incorporate them into your new relationship. This will also give you a chance to address any not-so-beneficial attitudes and behaviors and work to consciously change them.

2) Spending/Saving Habits. Chances are the two of you don’t spend and save money the same way. The interesting thing about spending and saving habits is that they give insight into priorities, both financial and otherwise because we tend to spend money on things we feel are most important and scoff at spending on things we see as unimportant.  Some people value saving more than anything and could be considered “tightwads”. Other people have a “live for today” attitude and spend whatever they have available, saving nothing or little for later. Most of us find ourselves somewhere in the middle.

Not agreeing on spending priorities can lead to serious conflicts down the line. While there is no right and wrong answer regarding priorities and habits, it’s valuable to know and understand each other’s habits earlier rather than later.

3) Divvying Up the Bills. This is an important conversation about how you will manage your money together. Will you have separate or joint accounts? Who will be responsible for paying the bills and investing for long term goals? A realistic understanding both of your current incomes and current debts is important so you can create a realistic budget based on your combined income and expenses.

4) Credit History. No one likes to talk about credit ratings because they highlight past mistakes and spending habits. Yet it’s essential to know and discuss your credit histories. This can help you talk about past money mistakes, current debt loads, and how to address any issues that are lurking. Having this conversation now will also help if you’re planning to borrow money for a large purchase, such as a home or car; credit history will effect how much you’ll pay in interest for loans, as well as how much it will cost for things like insurance. Many companies even pull credit for potential job applicants. When it comes to credit, it’s best not to have surprises down the road, so have the conversation now.

5) Risk Tolerance and Financial Goals. Couples often have very strong – and differing – feelings about risk and money that are deeply rooted in past experiences.  Your family may have gone through periods of unemployment, for instance, or  you may have grown up taking financial security for granted. One of your parents may have owned a business and you saw it go bankrupt,  so you might be very conservative with your money and not want to take unnecessary chances. Or perhaps they invested in a business that was a huge success.

Everyone brings a different level of comfort when it comes to risk tolerance and it’s important to understand your partner’s because it has an impact on spending and savings habits – everything from where you invest to how much money you want to set aside. Money provides a level of security that can be very powerful and risk tolerance is directly linked to that feeling of security.

6) Ongoing Financial Obligations. If this is a second marriage, are there child support or alimony payments that need to be considered in the budget process? If so, how much and how long will the obligations need to be fulfilled. Caring for elderly parents might also be a long term expense you will be facing as a couple.

7) Net Worth. When it’s a first marriage, often neither partner has much in the way of assets, but if one partner has more than the other, are you going to want a pre-nuptial agreement? When discussing net worth it is valuable to discuss not only current net worth, but also aspiring net worth. What household income level are you both hoping to achieve. Will reaching those aspirations include additional education? Will it mean switching jobs several times early in your career? Will it mean working 80 hours a week for decades? As a couple, understanding financial expectations and future net worth aspirations will help you plan a life together that will meet both of your needs, financially and emotionally.

8) Family Plans. The family size you hope to have will also have a big impact on your financial needs. Children, as wonderful as they are, are very expensive to raise. Do you both want to have children and, if so, one child or several children? Discussions about how the children will be raised and educated are also valuable from a financial perspective. Will one of you stay home to raise the children? Will you pay for day care? How far apart should the children be? Each of these answers will have a significant financial impact to the family budget.

9) Combining Physical and Financial Assets. Particularly with couples getting married later, both partners will have accumulated possessions that now need to be combined. This can be as simple as which sofa and bedroom set to keep, or more complicated when multiple homes, retirement accounts, and other investments are brought into the mix. Discussing whether property, accounts, and debt should be left in individual names or held jointly is also an important conversation to have.

10) Wills, Trusts, and Life Insurance. When you’re getting married, you don’t really want to think about death. Yet wills, trusts, and life insurance need to be updated soon after you say, “I Do.” This is true especially if you have assets or children. The process of obtaining a will or trust is fairly straightforward; it’s the discussions that lead up to it that provide the most value. Both of you should have a good understanding of what you have and what you want to happen, should the unthinkable occur.

Financial advisors can be a real asset, when it comes to pre-marital financial discussions. They can help you determine when it is best to hold assets jointly or separately. Assistance with budgeting and planning for long term goals will help you create a strong financial plan. Advisors can also guide you in building a strategy for reaching financial milestones.

So, if you’re getting married (or just got married), congratulations! And while these discussions may not be the most romantic ones you’re having, they do have the ability to bring you closer together. Planning together and sharing your dreams will give you better insight into the mind and heart of the person you’ve fallen in love with and allow you to become stronger partners when it comes to reaching your goals as a couple, emotional as well as financial.

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The views expressed in this blog post are as of the date of the posting, and are subject to change based on market and other conditions. This blog contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Please note that nothing in this blog post should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax or legal advice. If you would like investment, accounting, tax or legal advice, you should consult with your own financial advisors, accountants, or attorneys regarding your individual circumstances and needs. No advice may be rendered by Sherman Wealth unless a client service agreement is in place.
If you have any questions regarding this Blog Post, please Contact Us.

End of Summer Reflection & The Importance of an Emergency Fund

How are you feeling now that summer is officially over, your kids are back in the physical classroom, and you may be heading back into the office? 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 entered the pandemic with a greater emergency fund. Do you wish you had a greater emergency fund during the pandemic? Did having an emergency fund make you feel more secure over the course of the last year and a half? 

If the pandemic 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 and life returns to somewhat of a sense of normalcy, we want to discuss how your finances are going to begin to change and how your priorities may shift moving forward. For many of us working from home, there has been a substantial decrease in daily costs such as transportation, child care, extra curricular activities and more. Now that these activities are beginning to resume, are you thinking about how to incorporate those costs back into your daily and monthly budget? 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 during 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. 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, how they may be changing as we head into the fall, 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 fall financial priorities 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

Here’s Why Millennials Need To Get Started Early Financially

Are you young and jump starting your career? Heading up the corporate/financial ladder but still worried you will not reach your financial goals? Don’t fret, many others out there are in the same boat, especially millennials. We have been writing about millennials and their increasing wealth in previous blogs, however, we have yet to touch on how those individuals feel about reaching their financial dreams. 

According to a survey by Broadridge, “of the 39% of millennials not using a financial advisor, the majority (65%) plan to begin using one in the next two years.” They found that “the demographic is more comfortable with investing than the total population, with 65% of millennials using self-directed brokerage accounts, compared with 52% of all investors surveyed.” 

At Sherman Wealth, we work with millennials, regardless of their financial status or assets, and help them reduce their financial stress and meet their financial goals. Our team works diligently to provide our clients with state-of-the-art technology that is well built for tech savvy millennials and helps them view all their finances in one place. With the overflow of social media and conflicting sources in the media, as a young individual, it’s very easy to get swept up in fads and social media trends, resulting in poor financial decisions. Given the data listed earlier, this is a real opportunity for you to let us help you get started at a young age and try to hit those goals you have set for yourself and your future. If you have any questions or are interested in learning how we can help you, reach out to us at info@shermanwealth.com or schedule a 30-minute complimentary consultation here.

What To Think About When Moving Jobs

Changing jobs and not sure if you have everything under control? Switching jobs can be a stressful time and definitely a transition, so it’s important to make sure you are on top of everything you need to know and do. So where do you start? Let’s see. 

Salary Structure

According to an interesting LinkedIn article, most people leave their jobs due to career advancements and salary increases. While this may be the reason you are leaving your job, you should make sure you understand the full scope of your pay situation, in terms of the pay schedule and type 

Workplace Benefits 

The benefits at your new job may be different than the ones at your previous job. You may have had a 401(k) and match at your old company and realize that your new one may not. If that’s the case make sure you are aware and content with the circumstances. If you have an old 401(K) from the company you are leaving, make sure to take it with you and consider a rollover to make the most sense. 

Also, keep investing in or open a Roth IRA while you switch jobs in case you are unable to contribute to your new company 401(k) for a certain amount of time. Check out our previous blog discussing mistakes to avoid when rolling over a 401(k) to an IRA. In addition to your retirement options, make sure you look at what other financial perks your company offers, such as how your health and medical insurance may change, for the better or worse.  

Job Growth 

You’re probably moving jobs because you want to advance in your career. No matter the reason, you should always work somewhere you feel you can achieve personal growth and advancement. 

Company Culture 

Before committing to a new company, do research on the company and make sure you fully understand the culture of that workspace. Company culture is a huge part of being successful at your job, so feeling comfortable with the new team you may be joining is a huge step. Given the unconventional working conventions due to COVID-19, inquire about the future of your company’s work culture, whether that may be returning to in-person or remaining virtual. 

While starting a new job may bring an abundance of emotions, it’s important to think through all of your options and do your research. Consider discussing your switch with a financial professional to understand how to make a smooth transition to the next chapter in your life. If you have any questions for us about your current situation, reach out to us at info@shermanwealth.com or schedule a 30-minute appointment here.