How to Set and Achieve your Personal Financial Goals. Cathyann Frank VP of Operations

Transcription

1 How to Set and Achieve your Personal Financial Goals Cathyann Frank VP of Operations

2 Few subjects can cause a collective groan like MATH! The first steps of any good budget exercise are simple math calculations Money In and Money Out

3 Lets Start With Your Income Standard Deductions include Federal Tax, State Tax, and Social Security Exemption: The number of people you support with your income (this number can be different than what you claim on your taxes it has a direct impact on your take home pay)

4 Key Points Of a Plan Define your Goals: what do you want to accomplish in 3 months, next year, and in three years? Some numbers to keep in mind: Groceries: 18% Housing: 28-33% Savings: 10-20%

5 Budget Calculator Income use your net income Expenses includes the following: Housing Utilities Groceries Car transportation expenses Savings Child Care Entertainment Clothing Loans

6 TIP If you aren t sure of all your expenses, try keeping a spending journal. For two weeks, write down everything you spend money on. This way you will have a better of idea of where your dollars go.

7 Pay Yourself First Savings is a very important part of protecting yourself and your family s financial well being. Your first goal should be to establish emergency savings fund enough to cover 3-6 months of living expenses

8 Lets Define Your Emergency Fund Better Remember, its not living at current standard, its meant to only cover the essentials If you would be eligible for unemployment, keep in mind the emergency fund would help cover the difference of the lost wages So Relax this goal is not that impossible to reach

9 Mini-Cobra State COBRA expansion programs, known as Mini-Cobra, is available for those employees in firms with fewer than 20 workers who are not covered by the traditional Cobra. Not all states participate. New York and New Jersey are one of those. Learn more at:

10 Now I Have a Fund, Where To Keep It These dollars are not meant to be locked up in a Certificate of Deposit even though the rates can be higher. They should be kept in a liquid account so that you can access them easily, if needed. Think about a Savings, Money Market or High Yield Checking

11 Should I Borrow From My 401k? With credit card rates in the double digits, and climbing, borrowing from your 401k can be tempting. Keep in mind: You are putting your retirement in jeopardy If you leave your employer, and can t pay back the loan, it will be considered a withdrawal. Not only will you have to pay the tax, but if you are under 59 ½ years of age, you will have to pay the penalty!

12 Should I Borrow From My 401K? It does make sense: For short-term disability For large financial hardship, especially for medical bills that exceed 7.5% of your adjusted gross income Example: AGI is $100,000 and unreimbursed medical bills are $10,000. You can withdraw $2,500 penalty-free, but still have to pay the tax on the withdrawal

13 Home Heating Tips If you have a programmable thermostat be sure to dial back the temperature at night while your sleeping During the winter, open your blinds and window covers to let that natural heat in; be sure to close them at night though Lastly, schedule a free home energy audit NJ NJCLEANENERGY.COM NY GETENERGYSMART.ORG

14 Gas Tips Fuel efficiently: Fill the tank full. Don t top off, its bad for the environment and it invariable forces liquid fuel into the evaporative emissions systems. Wait until you are at a quarter of a tank. Remember, hauling a lighter fuel load will improve your car s efficiency! Avoid idling: Remember, your car gets 0 miles to the gallon while starting and idling. The only exception is when you start the car on cold mornings. Your engine needs to warm the oil or it won t do its job! Drive at a consistent speed : Avoid quick acceleration and hard braking. Cruise control can pay big dividends. Often the right lane keeps moving more than left during traffic jams.

15 Gas Tips Top off the air in your tires every few weeks: It is best done when the car has been driven less than a mile. Too much pressure can cause uneven wear on tires. Park in the shade: Remember gas can evaporate out of the tank. Track your fuel usage: It will allow you to quickly identify performance issues.

16 Insurance Tips Multi Car/policy discounts can add up you can save between 10% and 25% by simply having all your insurance policies with one company. Driver Training Discounts aren t just for Teens. Elderly drivers can save up to 15%! In fact, New York offers a $40 discount for simply taking a course every 3 years. Keep in mind, Good Grades matter for more than just helping those college plans. They can save a teen driver up to 20%! Lastly, the kind of car your teen drives does have an impact on their premiums.

17 Five Purchases You Should Always Charge On Your Credit Card Big Ticket Items: Some cards offer extended warranties and price protection Service Provider Purchases: Burden of proof is on the merchant to show the work was done to your satisfaction. PayPal purchases: Governmental protections are greater on credit card transactions than linking your PayPal purchase to your bank account Automatically recurring purchases: Some companies don t have the best customer service, so using your card allows for greater ease in placing a stop payment Travel expenses: A lot of credit cards provide extra perks such as rental insurance, travel accident insurance, and lost luggage insurance

18 Speaking of Credit Cards, Show Me My Rewards First pick a program that aligns with your spending habits. It should reward you for your everyday purchases. Concentrate to accumulate: Don t limit your potential by spreading the spending across multiple cards. Focus on one or two to maximize your rewards. Use points to pay for the best value. Small purchases often reduce the value versus large purchases.

19 Grocery Tips Focus on the stores you do your weekly shopping. Check their websites, sign up for alerts, etc. It never hurts to ask if they accept other stores coupons. Many stores are using Social Networking. For example, Walmart uses Facebook to post coupons, as well as specials closest to your zip code. Whole Foods uses Facebook and Twitter. Don t forget about that mobile app s. A few good ones are couponmom.com and smartsource.com

20 September is National Preparedness Month Items to keep handy in the event of a disaster: Social security card Identification (drivers license/passport) Disposable camera Bank account and routing numbers Credit cards/emergency cash Cell phone and charger FEMA phone number or load mobile app

21 Its Time to Start Investing: Picking the Right Financial Advisor There are three ways a Financial Advisor is compensated: Fee only Commission Fee-Based (a combination of fee and commission) Don t forget to check your Broker out on Broker Check

22 US Savings Bonds As of January 1, 2012, paper savings bonds will no longer be sold at financial institutions. Some interesting facts: Paper bonds sold for half the face amount Electronic bonds are sold in increments of a penny, starting at $25 Electronic bonds can be redeemed at any time, 24/7 Penalty: Loss of 3 months interest if bond is redeemed during the first 5 years

23 US Savings Bonds Exempt from state and local tax Education Tax Benefits include tuition and fees Does not include room/board or books. Income limitations do apply for this program. Keep in mind the impact of cashing in bonds when applying for financial aid

24 Stafford Student Loans After you stop attending school (at least part time), your 6 month grace period begins. There is one grace period per loan. Minimum payment is $50.00 Repayment period is 10 years Consolidating loans have a fixed-rate for the life of the loan. The rate is calculated by the weighted average of all the rates, plus 1/8 of one percent (not to exceed 8.25%). Those serving in the Military in hostile areas should contact their lender as their loans do not accrue interest during this service

25 Managing Money After a Divorce List your expenses: You want to see if they are less than your income. If not, time to see areas that you can cut back. If you need to negotiate with your creditors, remember to not make promises you can t keep. Be realistic. Establish your own Financial Team: Accountant, attorney, financial advisor, insurance agent Married couples usually take out joint credit: It s a good idea to establish credit in your own name. Don t forget to update all your documents: Beneficiaries on 401k, Insurance, Wills, etc. Think about a Power of Attorney: If you have minor children, you will want to make sure your assets are passed on to them. Consider naming a guardian since they won t be able to assume legal control of them.

26 Retain Documents You should retain the following documents for 7 Years: Bank statements Broker confirmations Receipts for tax deductions Tax returns Receipts for home improvements (at least 6 years after home is sold; that is not a rollover transaction) Contracts: 7 years after expiration

27 Miscellaneous Files Mortgage Records: 3 years after paid-off Insurance Papers: 4 years after expiration Warranties/extended service agreements: Until they expired

28 IIndefinite Birth certificates Adoption papers Custody agreements Death certificates Deeds to property Divorce papers/marriage certificates Photographic or video record of house/contents

29 Energy Savings Credits: Tax Planning Heating/Air Conditioning : $50-$300 Insulation: 10% of cost; up to $500 Roofing: 10% of cost; up to $500 Water Heaters: $300 Windows/Doors/Skylights: 10% of cost; up to $500 (windows capped at $200)

30 Tax Planning Reduce Taxable Income by increasing your 401k contribution; make sure you are at least matching your employer benefit Consider donating your clutter. The tax deduction might have greater impact than a garage sale Summer Camp (day program only): If you sent your child while you were working, it may be worth a 35% tax credit (for children under 13)

31 Education Credits American Opportunity Credit: Allows you to receive 100% of first $2,000 and 25% of next $2,000 (income limitations) Lifetime Learning Credit: Worth up to $2,000 (income limitations) Remember you can claim one or the other!

32 Questions?