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Financial Tip of the Month

July: Financial Independence is the Goal!

July: Financial Independence is the Goal!

We are officially midway through the year! This is a great time to pause and review your financial state.

We are in very challenging times with the Covid19 crisis.  With the increasing prevalence of scams and fraud, it’s more important than ever for people to be vigilant with their finances. Here are some tips from the AADMM Money Matters blog to help you keep your money safe. https://secure.aadmm.com/2020/05/28/be-aware-of-scams/

Federal tax filing deadline

The 2019 federal tax filing deadline is extended until July 15 (from April 15). Be sure your federal taxes are filed on-time. Some states have also extended the filing deadline. If you need to file state taxes, be sure to check with your own state to verify the deadline.

Do your financial goals make you happy?

Think about what makes you happy: Is it the family vacation? The idea of owning your dream home? Retiring early?

If you aren’t actively planning for any of these things, why not? Maybe it’s time to re-prioritize your goals. The KonMari method stresses focusing your energy on the things that will serve the person you are now and who you hope to become. When applied to your financial goals, you could think of it as finding a balance between spending on what serves you today, but also saving and planning for bigger things in the future. Thanks to Northwestern Mutual for this great tip. 

Should you consolidate your debt?

If you have lots of debt, consider consolidation. When you consolidate you combine multiple loans into a single debt with one monthly payment. As a result, you may take high-interest debt, like credit cards or student loans, and bundle them into a loan that typically carries a lower interest rate. So, not only does debt consolidation simplify your monthly budget it could save you thousands of dollars in interest charges. Do you need assistance with this? Find a daily money manager near you to help.

 

June: Taxes, Graduations, and Summer Expenses… Oh my!

June: Taxes, Graduations, and Summer Expenses… Oh my!

What a tumultuous world we’re living in. So much is happening and the Covid19 pandemic continues without a real end in sight. But one thing we can count on is taxes. 

June 15th is usually the deadline to pay 2nd quarter estimated taxes. However, this year the IRS deadline has been extended to July 15th.  Be sure to submit your federal estimates via mail or online no later than July 15th. Some states have not extended their deadline for the 2nd quarterly estimated taxes so check with your state for that information.

School’s out…..now what?

Summer vacations can call for additional expenditures for summer camp, day care, summer school, family travel, etc. Have you added these costs into your spending plans for the next few months?

June 30th is the midpoint for 2020.  

This time is a great opportunity to review your yearly spending plan and make adjustments as needed. This will ensure that you have the necessary funds for vacations and other summertime activities.

May: It’s Almost Mid-Year. Let’s Regroup and Focus on Some Details!

May is a great time to think about updating important information. Have you recently reviewed who you have designated as a beneficiary on your life insurance policies and retirement accounts? Not having the person or persons designated whom you currently wish to benefit can prove to be an unfortunate mistake. See the CNBC Investor’s Toolkit on the importance of updating beneficiaries. 

Other information to update in your personal records (for yourself to have handy and your loved ones) is your insurance information. Buy a new car, add drivers in the family, move homes, get a new Medicare card, sell valuables listed on a personal articles policy? These are all changes that require updating your insurance information. 

April: It’s Tax Time!

April is traditionally tax time. But, due to COVID-19, tax filing deadlines have been extended or many. 

The government is offering temporary relief.

  • Federal taxes are not due until July 15. The Treasury Department and Internal Revenue Service announced today that the federal income tax filing due date is automatically extended from April 15, 2020, to July 15, 2020. Taxpayers can also defer federal income tax payments due on April 15, 2020, to July 15, 2020, without penalties and interest, regardless of the amount owed. IRS.gov website
  • Many states have also extended their tax filing deadlines, as reported by USA Today.

 

March: Down to the Wire for Taxes and Looking Forward

We’ve talked about organizing for the April 15 tax filing deadline throughout the series; March is “crunch time”. Missing information must be tracked down and everything should be furnished to your tax preparer as soon as possible.

Many Health Care Flexible Spending Accounts have a March deadline for filing claims from 2018. Recheck your records and contact your FSA administrator if you have questions.

March may also be an ideal time to start making credit card payments more often than just once a month. This practice can even out cash flow, improve your credit score by lowering your credit utilization, and you may even save money on interest depending on how the card issuer calculates finance charges.

Finally, visit Money Smart Week website to learn more about Smart Money Week®, a financial literacy campaign which runs from March 30 to April 6, 2019.

February: Focusing on Taxes

You have probably started getting 1099’s of various types for investments, school tuition, contract work or other such income sources as well as W-2s for those who have an employer. Make sure you look these over and review for any potential discrepancies. If they all look good, put them in that folder or envelope you made last month labeled “For TAXES” along with any tax related statements you have received. If something looks odd or incorrect, now is the time to make contact with that institution to get any corrections made. This will be an ongoing process for the next few weeks, so be diligent with your organization.

First Week of February – If you haven’t already, make contact with your CPA/Tax Preparer. Many will have checklists or at minimum, will want to schedule a time to review what they need. They may also have a first come, first serve list, so now is a good time to reach out. If you prepare your own taxes, this is still the best time to get things organized.

Second Week of February – If you use a bookkeeping software, run any reports and review for accuracy. If you don’t use a software, pull out those statements and other tax related documents and follow up on anything unusual or for anything missing.

End of February – Start thinking about your summer plans. Do you need to put together a budget or make reservations? Start shopping for transportation and accommodations early to get best prices and ensure you aren’t missing out on a deal.

January: Off to a Great Start

Let’s start the year organized!

  • January 1– First day to fund traditional IRAs, Roth IRAs and SEP IRAs (for self-employed and small business owners) for the current year
  • January 15 – 4th quarter estimated taxes are due!

Revisit your budget (spending plan) or create a new one. January is a great month to assess spending and determine if an adjustment will help you meet your financial goals.

November: Giving Thanks

This month in our AADMM series is going to focus on client appreciation. Read on to understand how this sometimes overlooked area of business impacts your client satisfaction.

In this season of thanks, a traditional thank you note to your clients shows your appreciation. Click here for some tips to personalize those notes.

In addition to a well written thank you note, click here for some other ways to show appreciation to your clients. https://smallbiztrends.com/2016/11/ways-to-thank-customers.html

Why limit your thanks to this season? Read more about the benefits of showing gratitude to your clients all year.

 

 

October: School, Health Care, and Thinking Ahead

If you have family member who will be in college for the 2020-21 school year, October 1 st is the start date for submitting the Free Application for Federal Student Aid, or FAFSA. The FAFSA is the key to getting financial aid; every student should file because not all financial aid is based on need.

October is a good time to check and, if needed, adjust your 2019 tax withholding. If you’re not withholding enough, you could face an unexpected tax bill or even an underpayment penalty when you file your return. If you’re withholding too much tax, you may be able to take home a larger paycheck instead of waiting for a refund next year. The IRS has an online Tax Withholding Estimator calculator available on the IRS website.

People enrolled in a Medicare Prescription Drug Plan can benefit from comparing plans during open enrollment which begins October 15 thand runs through December 7 th. Plans often change premiums, formularies, drug costs, deductibles, and other plan features annually. The plan that was most cost effective for an enrollee in 2019 may not be the best plan for them for 2020.

Those employed by a company that provides benefits often receive reminders in the fall about open season. Open season is an annual period when employees are allowed to make changes to their various benefit plans; it is a good time to look at 2020 costs and think about the health, dental, vision, or other coverage you and your family will need in the coming year.

October is the perfect time to create a budget for Christmas shopping. Planning now can reduce stress during the height of the shopping season. Experts suggest writing down how much you’ll spend on each person and keeping track so you can tweak your plan BEFORE you break the bank!

 

 

 

September: School is Back, and so are Taxes and Health Benefits!

September is estimated tax time again! If you receive income where there is no withholding (eg. Investment earnings, home business) then you are probably familiar with estimated tax payments. The third payment for tax year 2019 is September 16th (the usual 15th due date falls on a weekend. If you plan using the postal service, it is considered on time if it is postmarked on or before the due date. So, checkbook out or, you can pay online for faster processing.

Have questions? Here’s the scoop, straight from Uncle Sam on filing estimated taxes.

Open enrollment for health benefits is approaching so now is a great time to review your current plan, spending, and see if you have a plan that best meets your needs! A #dailymoneymanager can help you look at your budget and big picture spending.

 

 

August: Living in the Moment and Looking Ahead

We are officially midway through the year! This is a great time to pause and review your financial state.

As some jurisdictions celebrate the start of a new fiscal year (July 1-June 30), for their annual budgets, let’s start the new year by reminding everyone that spending less than we make is the primary personal finance goal. Having the ability to do this is the best way to achieve financial freedom.

SPARK JOY WITH YOUR FINANCIAL GOALS Think about what makes you happy: Is it the family summer vacation? The idea of owning your dream home? Retiring early? If you aren’t actively planning for any of these things, why not? Maybe it’s time to re-prioritize your goals. The KonMari method stresses focusing your energy on the things that will serve the person you are now and who you hope to become. When applied to your financial goals, you could think of it as finding a balance between spending on what serves you today, but also saving and planning for bigger things in the future. Thanks to Northwestern Mutual for this great tip

If you have lots of debt, consider consolidation. When you consolidate you combine multiple loans into a single debt with one monthly payment. As a result, you take high-interest debt, like credit cards or student loans, and bundle them into a loan that typically carries a lower interest rate. So, not only does debt consolidation simplify your monthly budget it could save you thousands of dollars in interest charges. Need assistance with this? Click here to find a daily money manager near you.

 

 

Annual Financial Calendar
Daily money managers are adept at keeping track of clients’ financial obligations using a variety of methods. One such method frequently used to stay organized and make payments on time is a financial calendar. A financial calendar is a simple system for keeping track of financial obligations throughout the year or for a chosen period of time, in much the same way as people remember birthdays, anniversaries, and appointments.

For those who utilize technology, here are some options available:

  • Reminders automatically generated using financial software like Quicken or Microsoft Money.
  • Spreadsheets that can be sorted by payee, payment due date, or other criteria.
  • Reminders created using apps for electronic devices.
  • Reminders established with payees. For example, some insurance companies will send emails to policyholders a few weeks before premiums are due.

A Financial calendar does not have to be high-tech to be effective. It can be as simple as a ‘list’ of financial obligations that you review regularly, or a paper calendar with payments due and funds to be received recorded in different ink colors to make them easier to spot.

Financial calendars are also useful for documenting other financial information such as IRA required minimum distribution (RMD) deadline dates. For those living on a fixed income, tracking receipt of dividends and other distributions is useful for creating accurate cash flow projections.

It is important that the system you use is one that you can maintain.

You can create a perfect financial calendar, but you will only be successful if you use it. For those who struggle with keeping track of bills, or lack the time to handle personal financial affairs, you may want to consider hiring a daily money manager to manage your financial calendar. This will ensure that all of your bills are paid on time every month.

AADMM’s Public Awareness Committee has created a Financial Calendar Series. Each month, financial events and reminders will be added. Watch for updates on AADMM’s Facebook page.