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What does Financial Independence Mean to You?

What do you think of when you hear the phrase financial independence?

Do you think of being able to afford to move out of your parents’ house and pay for your own things? Do you think of living in your dream house, going on great vacations, and doing what you want – when you want. Or, do you think of not working at all, and instead spending your days on the beach sippin’ something sweet? Maybe for you the “independence” part of the phrase just means being able to find a decent home, put acceptable food on the table, have fun with your friends, and live a happy and comfortable life.

The point is that financial independence means different things to different people.


And it may mean different things to the same people at different points in their life. Sarah Newcomb, Director of Behavioral Science at Morningstar, found that people are more likely to have a satisfying life if they choose reasonable role models.

For example, the Kardashians probably are not the best role models to help you feel like you’re living a satisfying life. They have an unusual situation that most people can’t attain. If you choose to spend like the Kardashians and have 0% ability to earn the income they do, you will be miserable.

Warren Buffet on the other hand, is not a bad role model. He has lived in the same modest (depending on your definition of modest) home for decades. He has spent less than he makes and invests a lot for his future. If you follow his lead, you may not live as successful a life as he, but probably just as satisfying.

Even better would be your Aunt Sue who has a good job that pays a middle-class wage. She spends less than she makes and invests the rest for her future. She’s apt to retire at some point with an adequate nest egg to maintain her lifestyle for the rest of her life.

Aunt Sue has an emergency fund to take care of those unexpected issues that come up like someone crashing into her two-year-old car. Yes, she has insurance but they don’t pay for 100% of her replacement car. She has to make up for the difference from her emergency fund.

Her vet bill for her dog never taps her emergency fund because she plans for two emergency visits to the vet a year. Often that line item in her cash flow rolls into her opportunity fund at the end of the year because her dog has been well every year after the first year. (That first year as a puppy used up all of the money allocated for her baby.)

She has an opportunity fund that allowed her to take six months off from work to travel when she turned 30, her dream after graduating college. She came back with a little left in her opportunity fund and her emergency fund full.

Aunt Sue has lived a full life. She’s done what she dreamed of, live in a home that’s very comfortable, and was able to retire from work when she wanted to and maintain her lifestyle. Aunt Sue is a great role model for how to do life successfully and reach financial independence. Nothing fancy, but she found comfort, happiness and had little heartache and disappointments.

Looking into your future, how do you want to live your life? What does success look like? What would disappointment look like? How realistic are you? Who do you know that is living a “good life” in your opinion? What are they doing “right”? How can you apply that knowledge to your own life so YOU can live your amazing life?

Taking some time to reflect on this will set you up not only for financial independence but for a fulfilling life. And everyone here at South Bay Financial Partners want to help you live your AMAZING life!


Because life is too short to not spend it doing the things you love, and your finances should support that.

So, we’ve created a community for passionate young adults to master the intimidating world of money, simplify confusing financial decisions, and manage their expenses all while hanging out with fun, like-minded people working towards one common goal (the best goal in our opinion): living an AMAZING life.

To do this, our community, Your Amazing Financial Life, features…

  • Access to the SBFP team’s advice, guidance, and support
  • Monthly topics (with conversations, learning, and planning)
  • Monthly Q&A video calls with the team
  • Monthly wine and cheese events
  • Special access to courses, office hours, challenges, and events
  • A book club
  • Personalized ADVICE from us and STORIES from others that can’t be found anywhere else
  • And so much more!

Our mission is to provide financial advice and information to as many people as possible, at as low of a price as possible, and we’ve finally found the best place to do it. We do hope you’ll join us over there!

And even better? This month we’re talking all things financial independence (and how to reach it) in the group!

>> It’s time you start living Your Amazing Financial Life!! Come join us! https://yafl.southbayfinancialpartners.com <<


admin March 5, 2020 No Comments

Meghan Markle and Prince Harry want to be financially independent — here’s what that means

Alizah Salario Published Thu, Jan 9 20205:09 PM EST
This article originally appeared in Grow Acorns.

This week, actress and activist Meghan Markle and her husband Prince Harry announced that they intend “to step back” from their duties as “senior” members of the royal family and “work to become financially independent.” In a break from tradition, the couple plan, going forward, not to receive funding from the Sovereign Grant, which is a lump sum of taxpayer money used for official royal duties.

The Duke and Duchess of Sussex have an estimated net worth ofbetween $30 million and $45 million. So in their case “financial independence” appears to mean relying more on their own funds in exchange for the freedom from the expectations and obligations of public life, as well as more flexibility around where they live and the work they do.

For the rest of us, though? It varies. “Financial independence means different things to different people,” says Tara Unverzagt, a certified financial planner at South Bay Financial Partners in Torrance, California.

Here are three kinds of financial independence and strategies experts suggest to help you achieve them.

1. The means to pay bills and cover basic expenses

For young adults, the core of financial independence often is self-reliance. “Some people just out of college are trying to get financial independence from their parents,” says Unverzagt. “They are working towards getting out of the family house and paying for all of their bills themselves. That’s financial independence for them.”

Striving to be more financially self-sufficient in your 20s is smart, but being fully independent, in practice, can be harder than it seems. The majority of Americans say young adults should be financially independent by age 22, but only 24% of them actually are by that age, according to a 2019 analysis from the Pew Research Center.

Among those who still rely on at least some financial help from a parent, 60% say that the assistance is related to basic household expenses such as groceries or bills.

If you’re working toward more self-sufficiency, start by getting a better understanding of what’s going on with your money, including both how much you’re making and how much you’re spending. The “first step to getting your financial foundation laid is tracking your expenses” using a budgeting app or a spreadsheet, says Unverzagt.

That can help you get a sense of where you are financially, she says, and knowledge is power: “If you don’t have a handle on your cash flow, you’ve relinquished control of your financial situation.”

2. Freedom from family expectations

If you rely on financial assistance from a family member, it’s not unusual to feel bound by obligation to them. That can mean having to make minor adjustments, like limiting your data usage if your parents pay your cellphone bill. Or it can mean compromising on major decisions, such as picking a college major or career in line with someone else’s expectations instead of your own desires.

“The primary benefit of financial independence is that you cut many of the emotional strings that tie you to family money,” says Justin Pritchard, a certified financial planner and the founder of Approach Financial in Montrose, Colorado. “The things you do in life can become more of a choice, as opposed to obligations that you might feel as a result of your good financial fortune.”

If you’re lucky enough to be in a position to receive “financial scaffolding” from your parents as a way to develop your skills or build a business, feel free to “take advantage of the window of opportunity” when you’re young and accept some financial support, says Michael Caligiuri, a certified financial planner and the founder of Caligiuri Financial in Columbus, Ohio.

The primary benefit of financial independence is that you cut many of the emotional strings that tie you to family money.Justin PritchardCERTIFIED FINANCIAL PLANNER

It can help to weigh the short-term compromises against your long-term goals. For Julia Peña, who graduated from Syracuse University in May 2019, living under her parents’ roof over the summer allowed her to achieve her goal of saving the majority of her $3,500 in earnings from her summer job.

“I basically put about 90% of what I made into my savings account, so typically I went back to school with about $3,000 to last me through the fall,” Peña told Grow last year.

The privilege of financial support from a loved one may come with compromises, but it can also have a positive influence on your long-term financial health. If you live at home in order to save up or pay off debts, for example, you may be even better poised to get a lucrative job or build a firm financial foundation when you do strike out on your own.

3. Increased flexibility and options

At advanced levels, financial independence is “having enough money that you can quit your current job any time you want,” says Unverzagt. “You could go part-time, change jobs, change careers, take a year off, etc. They can’t stop working forever but they have enough money to have a lot of flexibility.”

Typically, getting to this stage requires a combination of time and effort. FIRE devotees, or members of the Financial Independence, Retire Early movement, tend to set aside huge portions of their income, for example, and have extra streams of income.

But even with just a single paycheck, if you make contributions to your retirement fund consistently, you can stay on track to meet your financial goals. Consider setting up automatic withdrawals from your pay that go directly into a retirement account or a targeted savings account to make investing and saving even easier.

Caligiuri adds, “Financial independence to me is when you’ve created a situation where, whether it’s through support or not, you’re getting to where you’re doing what you want to be doing.”

admin March 5, 2020 No Comments

‘Being objective is incredibly hard’: top financial advisers reveal their strategies for 2020

Published: Jan. 6, 2020 at 10:01 a.m. ET

Andrew Keshner

This article originally appeared in MarketWatch.

Experts discuss inflation rates, investment ‘wish lists’ and the perils of market timing based on the 2020 presidential election

Self-care, simplified finances and unemotional investing choices are some of the ways financial advisers are planning to better themselves in 2020.

Despite their differing goals, the advisers who answered a MarketWatch question about their New Year’s resolutions repeated a common theme in their replies. 

They all want to achieve 20-20 vision on their personal and financial well-being in the New Year, regardless of all the noise and distractions out there. 

An estimated 99 million Americans are making financial New Year’s resolutions this year and the top goal is saving more, according to a WalletHub survey. 

Like regular consumers, many advisers also want to save more. They just might have different approaches on the annual rite of attempted self-improvement, talking about inflation rates, investment wish lists and the perils of market timing based on the presidential election.

Financial advisers make a living doling out money and investment advice, so here’s the recommendations they want themselves to follow this coming year: 

Taking care of yourself (and those around you)

Advisers said they wanted to take better personal care of themselves this year. “2020 is the year I’m making sure to take care of myself and my relationships, face to face, not online,” said Tara Unverzagt, founder of South Bay Financial Partners in Torrance, Calif. 

She spent five years building up her firm and “2020 is the year I start riding my bike regularly, do my yoga every week, and take a few moments every day to meditate and clear my mind. I expected my financial life will be no worse off and who knows, my business may thrive even more because of it.

2020 is the year I start riding my bike regularly, do my yoga every week, and take a few moments every day to meditate and clear my mind

Sometimes, the self-care entails spending some money to show gratitude for the support of others.

Ian Bloom, the owner of Open World Financial Life Planning in Raleigh, N.C., plans to keep building his business with a growing client list and his visibility with a forthcoming book in a series. But he’s also going to get his wife the new couch she’s been eyeing. 

“As an entrepreneur’s wife, she’s gone without a few of the luxury goods she’s been wanting in order for me to start my business,” he said. “It’d be cool to be able to give her a significant item that she’s been interested in over the last year and relieve a little of that ‘belt-tightening’ feeling that is required when one launches a new business.”

See also: All the ways your burnout is costing you money

He also hopes to sneak some more vacation time with her and pour more money into his retirement account. “Given that we didn’t buy the couch, you can imagine we also haven’t been saving as much as we’d hoped over the last year. Again, that was a calculated decision. Starting a business requires capital and going without for a while. But it would be nice to get back to growing our net worth instead of just breaking even next year,” he said. 

Ron Strobel, the founder of Retire Sensibly in Nampa, Idaho, is planning on buying cars. That’s not going to be as easy as it sounds. “I’ve always been a proponent of buying cheaper used cars. I’ve repeated that advice hundreds of times to clients and friends,” he said.

The 12- and 13-year-old vehicles he and his spouse drive are now on the fritz and he’s worried about an unsafe breakdown in a remote spot. A new Toyota TM, -1.980% RAV4 and 4Runner would cost a combined $1,300 monthly payment, he said. That’s without insurance costs, too. 

“We can afford it, but I just can’t stop thinking about what else I could do with that $1,300 each month. I could save more, I could make an extra payment on my mortgage, I could buy a rental property. I could take several fairly luxurious vacations each year,” Strobel wrote. “I suppose you could say that my goal for 2020 is to stop being so frugal and treat myself occasionally, especially when it comes to my own well being.” 

Simplify, simplify, simplify!

Leibel Sternbach, the founder of Yields4U in Melville, N.Y., knows money matters can be complex and emotional. That’s why he’s going to hire a financial adviser to grow his own money in 2020.

‘One of the hardest lessons for me to learn was that when it comes to yourself being objective is incredibly hard.’

“One of the hardest lessons for me to learn was that when it comes to yourself being objective is incredibly hard,” he said. Despite his education and expertise, “as I sit here helping my clients get their end of year finances in order, I realize how much I have missed for myself over the year.”

He wants “a financial adviser who can help keep me in line and check with my own finances, just like how I work to help my clients stay on track.”

Don’t miss:This financial planner racked up $12,000 in credit-card debt — ‘I went a little overboard’

Jennifer Weber, vice president of financial planning at Weber Asset Management in Lake Success, N.Y., said one might assume that because she’s a financial planner, she abides by a strict budget. “I wish I could say this was true! In reality, it’s much easier to give advice than follow it,” Weber said. 

She and her husband have their financial goals like saving for retirement, travel, home improvements and college savings for their kids, she said. “To help keep things in perspective, and keep ourselves on track, I plan to go back to advice I give and want to follow: The simple 50/30/20 rule. 50% of take-home pay on necessities. 30% of take-home pay on wants. 20% of take-home pay on savings and debt repayment,” Weber explained.

‘To help keep things in perspective, and keep ourselves on track, I plan to go back to advice I give and want to follow.’

She’s going to go through the household budget and re-automate accounts as much as possible to meet the 50/30/20 rule.

David Haas, owner of Cereus Financial Advisors in Franklin Lakes, N.J., is taking a simple, but crucial step. He’s compiling a list of all his personal financial accounts and making sure his wife can access them if Haas becomes incapacitated or dies. 

“It is so important that loved ones can have access to your accounts and information when bad things happen, but increased security means this can be very difficult. Like everyone, I put these things off, but I really need to do it in 2020,” he said. 

Others say it’s critical to plan ahead for all sorts of account access. For example, one grieving man needed a court order before Apple AAPL, -1.944% would give him access to cloud-stored photos on his dead husband’s account.

Investing wisely 

For Mike Silane, the founder and managing partner of 21 West Wealth Management in Irvine, Calif., the holiday season means a review and update of his “investment wish list.” These are the companies, funds and ETFs he wants a share of, but are too expensive right now. “I check it twice too!” he added.

Silane also says around this time, he’s reviewing liquidity needs “so that I’m not letting cash sit around uninvested, earning close to zero.”

To make all his money work for him, Silane starts by thinking about how much cash he might need quickly and then considers putting money in a money market fund, a certificate of deposit or a short-term bond or ETF. “For longer term investing, I of course consider if I want to add to equities at this time. With constant inflation, even very low inflation, uninvested cash is always a money loser.”

Don’t miss:This strategist picked two blockbuster stocks in 2019 — here’s what he likes for 2020

Some advisers are already thinking how they will handle the hard-fought presidential election in November 2020 and vowing not to mix politics with investing choices. 

Money on the side lines does little in the context of achieving long term goals, no matter the party that gets elected.

It’s understandable why they’d want to think it through. President Donald Trump’s impeachment for his alleged pressure on the Ukranian government so far hasn’t rattled investors based on expectations that any trial in the Senate wouldn’t result in removal.

Democratic challengers, like Sen. Elizabeth Warren and Sen. Bernie Sanders are vowing more taxes on the super rich and the effects could be tough on the stock market, some well-heeled observers argue. 

Far from the political fray, Ashlee deSteiger, the founder of Gunder Wealth Management in Birmingham, Mich., said she is trying to educate her clients — and remind herself — about how important it is to keep money in the market and have a long-term focus despite any volatility.

“Money on the side lines does little in the context of achieving long term goals! No matter the party that gets elected, tactical portfolio changes are likely to be made based on emotions versus fundamental investment principles,” she said. “For that reason, I’m a proponent of reminding my clients about staying the course and not letting the election alone change their investment allocations in 2020.”

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Advisors’ Advice: 10 Biggest Tax Mistakes Clients Make

By Ginger Szala | March 04, 2020 at 10:50 AM
This article originally appeared in ThinkAdvisor.

With tax time upon us, we tapped our best resources — advisors themselves — to learn about how they’ve helped their clients correct some big tax mistakes. Many were willing to share their horror stories, but here are 10 of the top mistakes by clients.

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How to Teach Delayed Gratification to Kids

By Donna Freedman — Jan 7, 2020

This article originally appeared in Fabric.

In the famous “marshmallow experiments” of the early 1970s, researchers at Stanford University gave preschoolers a choice: Eat one marshmallow now, or wait 15 minutes and you’ll get twomarshmallows. (Spoiler alert: More than half of them couldn’t wait.)

You might be thinking, “Ha! My kids wouldn’t last 15 seconds!”

That’s totally normal. Take it from Sigmund Freud: Your kid is driven by id. When kiddo sees that new brand of cereal or an awesome Lego playset, the rest of the world ceases to exist. The craving must be satisfied. Now.

As parents, we need to teach our kids to tame their impulses—and not just because it’s annoying when they keep pleading for more Legos. It’s to help them become competent, successful humans, rather than little gremlins driven solely by their desires.

Learning to control our immediate impulses means the ability to pause and figure out whether a purchase is really worthwhile. Taming that id also helps us understand that we can have (almost) anything we want, but we can’t have everything we want. 

Teaching your kid to tame that voice that says now-now-now is important, as long as the lessons are age-appropriate and consistent. Certified Financial Planner Tara Tussing Unverzagt calls this “a series of practice decisions.” 

Here are some ways to pull it off.

1. Give Kids Their Own Money

One of the most fundamental ways to teach a kid how to make smart decisions is to actually let them make decisions. Often, this means encouraging your kid to manage their own money . . . within a parent-defined framework. 

Unverzagt  used the “three jars” concept with her kids, splitting the funds among saving, spending and giving categories. “I was surprised how quickly they learned to save for what they wanted,” says the financial planner, who’s based in Torrance, California.

If you have older kids, you might give them a debit card. Two years ago, retail expert Trae Bodge started a bank account for her 11-year-old’s allowance and gift money. While Bodge takes care of necessities (clothes, new shoes), her daughter is responsible for buying everything else. “She has to make very thoughtful decisions. And sometimes that means she has to wait for things,” Bodge says. 

If you want a higher level of control, companies like Greenlightgohenryand FamZoo say that their cards let adults observe and guide their children’s spending. Parents can create a virtual three-jar setup or specify a percentage of money to go to charity. They can also set limits on withdrawals or the types of places where the cards can be used (for example, ATMs and stores but not online). FamZoo and Greenlight let parents opt to pay “interest” on their children’s accounts, to incentivize saving. 

Unverzagt notes that she doesn’t think kids younger than 10 should have debit cards. First teach them what money is—how it’s earned, how it’s spent—and gradually introduce the idea of cards.

2. Help Them Learn From Their Successes and Failures

No bailouts, ever. Unverzagt suggests a hands-off approach to letting kids manage their own money. Instead of, say, setting a “no more than $5 per day” boundary, let your kid figure things out on his own. Suppose he spends everything on the first day before finding out his friends are going to the movies on Saturday. Guess he’s staying home.

“Let them make those mistakes,” she says.

Fabric’s editor-in-chief Allison Kade remembers when she forgot her lunch in elementary school and her mom refused to bring it to her: “It seemed pretty hardcore at the time, but you can be sure that I never forgot my lunch again.” In the end, forcing her to own up to her own mistakes changed her behavior over the long haul.

Celebrate successes, too. Let your kids know that you’re aware of how tough it can be to resist all those bright and shiny objects in the store in order to get that one toy they actually wanted.

3. Do the Math Together

Personal finance writer and author Emily Guy Birken has two sons, ages 6 and 9. Each one has not just a piggy bank but also a physical ledger for keeping track of money. 

“We’re hoping that the combination of the loss of physical money in their bank and the numbers in their ledger getting small will help them recognize that money is a finite resource,” Birken says. 

Her older son seems to be catching on. His school created a book of student poems and made it available for sale. When Birken asked whether he wanted a copy, his first question was if they’d get it for him or whether he had to pay for it. 

Incidentally: He has $300 in his piggy bank.

4. Make It a Rule: No More Getting Anything for Free

Personal finance blogger J. Money likes to visit garage sales with two of his kids. The boys, ages 5 and 7, would often get free stuff as a gift from the garage sale host, or they’d pluck items from the “free” box. 

In an effort to make them more discerning and to avoid piling up junk, he implemented a rule: “No more getting anything for free.” 

Now, even if they find something in a box labeled “free,” they have to offer some kind of payment to the garage sale host. This forces them to engage in their own version of cost-benefit analysis—is that object worth paying real money for? 

Indeed, learning how to say no to kids is one of the most important skills a parent can have.

5. Teach Them ‘the Pause’

When personal finance writer and author Cameron Huddlestoncontributed to a school fundraiser, her 8-year-old asked her to give more so he could “win” a prize. She said no—it isn’t really “winning” if your parent buys it.

She told him he could buy the prize for himself online, with his own money. But first, he’d have to wait a week to make sure he still wanted it. For two days in a row, he reminded her just how much he wanted the toy. Then he forgot all about it, and the money stayed in his piggy bank.

This technique is also very effective for adults: Give yourself a cool-off period of a week to see if your desire for that newest tech gadget or kitchen appliance continues to burn bright. Modeling this behavior shows kids that grownups also have that voice demanding buy this now! but part of being an adult is learning how to take a breath and make a calm decision. 

6. Put Your Money on the Table . . . Literally

If your kids don’t understand that you have bills to pay, try this: As an exercise, cash your paycheck instead of depositing it right away, and spread the money out on a table. 

Let your kids get an eyeful: Wow, we’re RICH!

Then start subtracting. “We need X dollars a month for rent/mortgage,” and take that much away. “We need X dollars a month for our car payment, gas and insurance,” and take that away. “We need X dollars a month for our emergency fund…” and so on and so on. 

The idea isn’t to get them worried about how their family’s financial wellbeing, but to reinforce money lessons:

  • It’s important to budget for commitments (monthly expenses, saving, giving) before buying fun stuff.
  • Make sure your expenses don’t exceed your income.
  • Since expenses can vary, it’s important to have an emergency fund.

“Showing that you are in control and have choices is a powerful message to send,” Unverzagt says.

7. Start Thinking Long-Term, Early

It’s human nature to prioritize short-term wins over the long-term slog toward prosperity, but we all know that focusing exclusively on today will have negative effects when we finally reach tomorrow

So, one way to teach your kids the importance of very long-term thinking—and to actually give them a leg up on getting there—is to start them off saving for retirement now, while they’re still kids. Yup, it’s super early. But since children have a much longer time horizon, they have many years to build wealth. Plus, watching their accounts grow teaches them to think about and save for the future. 

Here’s how: If your child has a source of taxable income (that includes things like babysitting or mowing lawns), then they can have a Roth IRA. This kind of account has the same benefit for kids as it does for adults: tax-free growth. 

If you want, you can choose to contribute to the Roth on their behalf, as long as it doesn’t exceed the annual maximum. (For minors, that’s $6,000 or their total earnings, whichever is less.) 

Certified Financial Planner Kimberly Foss started a Roth IRA for her 4-year-old son, Jack, who was being paid to do chores at her business: emptying wastebaskets, dusting, vacuuming, shredding documents.

“He thought it was cool that he could earn real money, and even cooler that the money could grow all by itself, without him having to add to it,” says Foss, founder of Empyrion Wealth Management in Roseville, California.

Bonus: Pre-retirement withdrawals can be made penalty-free under certain circumstances, including paying for school or buying a home. Jack, now 15, has his eye on both. “After watching his older sister and brother go into debt, he’s really eager to keep his education as debt-free as possible,” Foss says. 

The Bottom Line

Parenthood is about loving our kids, but it’s also about teaching them to (eventually) leave us. That means learning how to take care of themselves. 

A crucial life skill is knowing how to handle money—and sometimes that means knowing how to not spend it. This isn’t an easy lesson, so you need to model it consistently. If you don’t, your kids might grow up thinking that debt is both normal and inevitable.

Delayed gratification is a key component of financial independence. And, possibly, to bigger and better Lego sets.

admin March 5, 2020 No Comments

Talking about money improves marriage satisfaction. So why don’t we do it?

By Anna BahneyCNN Business

Updated 12:28 PM ET, Tue March 3, 2020

This article originally appeared in CNNBusiness.

(CNN)Research shows that talking with a spouse or partner about money increases relationship satisfaction. But many people still don’t do it. Couples typically don’t talk about money because they’re embarrassed or fearful, said Tara Unverzagt, a certified financial planner with South Bay Financial Partners in Torrance, California. Money is more attached to emotions than most people realize.

“When two people come together, you end up with two sets of money stories, values and experiences,” she said.A recent study showed that married people have the fewest number of conversations about money out of any type of couple, including people who are co-habitating, dating or separated.

“We thought married couples would talk about money more because there is less taboo in the relationship and there would be some shared goals,” said Megan McCoy a marriage therapist, and co-author of the study. “We were shocked about how few were talking about money.”The obstacles are significant, but not impossible to overcome and doing so could even boost happiness in your relationship.

Define your terms

Money is never just money, said McCoy. It’s connected with an idea or a feeling that is often established early on in your life. “We often don’t realize that other people see money differently than we do,” she said. “Some see it as safety and protection, others as something to give away. For some it is something to do fun things with.” Talking with your spouse about what money means to you is a good place to start, said McCoy. From there, she said, focus on shared financial goals instead of the nickels and dimes. “Don’t get bogged down with how much one spends on biking and one spends on dining,” said McCoy. “Talk about, what are we doing to save for retirement? When will we pay off our student loans? How much do we want to fund our kids’ educations?”Keep in mind: People can be embarrassed about their habits or lack of money knowledge, so it’s important not to judge, she said.

Talk values

Natalie and Dan Slagle, a married couple who are both certified financial planners with Fyooz Financial in Rochester, Minnesota, specialize in young couples who are blending their finances. But that didn’t make their own money conversations any easier. “We found ourselves arguing about what decisions we should make with our money,” said Natalie. “We realized we were struggling because we didn’t have in-depth conversations about our philosophies with money and how we were raised with it.” Once they began talking about what they value and their experiences with money, they said they started to find common ground. “Dan and I both share a strong value in our health,” said Natalie. “So spending money on gym memberships, hiking shoes, and even running race registrations requires no convincing because it aligns with a value we hold. But if I were to randomly go out and spend $100 on a new dress, Dan would question that.” These conversations have made their relationship stronger, they said.

Face the fear

For many couples, avoiding money talks comes down to fear, said Ryan Sterling, a financial adviser and wealth coach at Future You Wealth in New York City.”Each spouse is operating in their own money silo,” he said. “They have fear of losing autonomy, losing control, or detaching from consumption and the status or pleasure that comes with that.”In order for couples to feel more secure talking about money, Sterling says they first need to get on the same team.To do that, he recommends couples start by writing their individual wish lists of what they hope to achieve with their money — like take care of family, eliminate debt or reach financial independence. Then, they should compare both lists and see which items match up and which ones don’t. “This process is for all couples — those that have a positive net worth and those with major credit card debt,” said Sterling. “We put it all out there and we work toward a set of agreed upon goals that align with true wants and values.”Money decisions after that are less about being good or bad, right or wrong, he said, and more about, “does this purchase get us closer to our goals or further away?”Talking about money with your spouse is rarely as bad as people think it will be, said Colin Moynahan, a certified financial planner with 2050 Capital Financial Advisors in Charleston, South Carolina.Yes, there are situations where one person is hiding some serious financial issues from the other — but better to know now. “Most people have built up issues in their own head that are not as bad as they think,” he said. “Once they have an open discussion and put a plan in place, they feel much better about the future.”And maybe even each other.

Tara Unverzagt December 3, 2019 No Comments

This Giving Tuesday, Don’t Forget to Give Some Time to Yourself

We love Giving Tuesday and all the generous activities that come with this special holiday – investment advisors paying off layaway bills for their clients, communities donating time and money to those in need, large companies donating their proceeds to charities. It’s a day to think of others and how to help them out.

In the spirit of giving, we’d like to help YOU by reminding you that your financial health depends on you giving time to yourself, your dreams, your income, and your expenses.

 

Spending a little bit of time every week reviewing your spending will go a long way to making you more financially healthy. People with good financial health are like people with good physical health, they take the time to focus on making themselves healthy.

Things to review each month:

1. Were my bill(s) paid correctly?

Did I pay my bills on time? Do I know how much I paid? Some people sit down once a month to pay bills while others have their bills paid automatically. Either way works, but those who pay automatically often don’t take the time to review their finances at all. Make sure you do!

2. How is my checking account balance looking?

Do I have enough for next month? Do I need to cut back? Do I have a little extra to put into investing so my money starts working for me?

3. What bills are being paid next month?

How much do I expect them to be? Am I prepared? Do I need to change my day to day spending to cover the big bills coming? Am I saving for future expenses like insurance every 6 months, a car in four years, being financially independent at some point in the future?


And once a year, take a look at your big picture. How much money are you spending? Look at the outflow on your checking account balance AND look at the growth in your credit card balances. Add them together and that’s how much is flowing out.

Keep track of the monthly inflows and outflows.

Do this by using an app like You Need a Budget or Mint, or create a spreadsheet. Is more flowing in or out?

If you see that more is flowing in, that’s great! Go one step further and look at how much you’re investing in your future. Do you have an emergency fund? An opportunity fund to go to the wedding or visit the friend that moved to India for a year? Are you accumulating wealth that will allow your investments to pay your paycheck one day and give you the freedom to choose not to work for someone else if you want?

If more money is flowing out, oops! Where are your big expenses? Housing? Car payments/repairs? Eating out? You can make a huge impact by having a roommate or becoming a roommate or moving to a smaller apartment or cheaper area. And just because you MADE a decision about that car doesn’t mean you can’t change your mind. Even if it costs you more in the short term, if it saves big bucks in the long term it’s more than worth it.

Before giving money on Giving Tuesday, make sure you give yourself the time to be financially healthy, the money to invest in your future, and then give what you can afford to others and feel good that you didn’t bust your budget doing it. And maybe that means giving your time volunteering at a charity instead of giving money. Time is precious and very much needed at charitable organizations! Just remember, whatever you give will be appreciated! 

Happiest of Giving Tuesdays from team SBFP!

admin August 29, 2019 No Comments

5 Steps to Financial Success

Whether you are about to graduate college, just landed a new job, decided to review your finances, or simply stumbled upon this post (hi!), it’s the perfect time to take a look at your spending and saving habits and make sure you’re taking these FIVE steps to reach financial success and live your best life ever!

Step 1 – Spend Less than you Make

The number rule in adulting is to learn to spend less than you make and save a little for the future.

Read more about how exactly to do this HERE. If you are blessed with nailing this concept from the beginning: what’s next?

Step 2 – Save Money

The main planning you need to worry about next is where to put your “saving money”. You have retirement plans, non-retirement investment accounts, the bank/savings/checking, and possibly debt to pay.

If you have debt, you do want to address that first. How much is the interest you’re paying? If it’s credit card debt, it’s probably 18% – 27%. That’s A LOT! There’s not much that will get you a better return than paying that debt. It’s sort of like having a bond in reverse. If you pay $1,000 extra, you will be saving 18%-27% which is like a $1,000 bond paying you 18%-27% or $180 – $270. That’s a great return!

The only thing that is a better return is if you can put money in a retirement account, a 401(k) or 403(b), and have your employer match it. If you put in $1,000 and your employer matches and puts $1,000, that’s 100% return! I don’t know of any “sure thing” investment that will do better than 100%. The problem is that it’s hard to get that money out. And if you need to take it out, you’ll pay taxes (at your tax bracket for federal and state) and a 10% penalty. So still a great deal but it’s not “liquid” or available money.

Step 3 –  Build an Emergency Fund

Why does having easily available money matter? If you get a traffic ticket or a flat tire or sick and have to pay for care, you’ll need cash in hand. The money in your retirement account won’t help you much. So you’ll need an emergency fund. How much do you put in an emergency fund and how big should your emergency fund be?

Well, this is where it gets tricky. If you can save 10% of your pay check and you have matching funds, consider putting 5% in your retirement account and 5% in your emergency fund until your emergency fund is half full.

What’s half full for an emergency fund? If you have a corporate job with a steady pay check, 3 months of expenses. Keep your emergency money either in the bank, in a savings account, earning interest or in a brokerage account (like a non-retirement Vanguard or Fidelity account) in a money market. Either will hopefully be paying 1% – 2% right now. If your emergency fund is in an account that’s earning less than 1% consider moving it.

If you are a freelancer that has fluctuating income (one month is a boom month and the next a bust), you need a larger emergency fund. Think more like six months to a year saved up. We suggest having a year in cash or cash equivalents.

Step 4 – Take a Deep Breath + Deal with your Debt

What if you have debt too!?!? Then it gets even more complicated! But don’t worry, YOU GOT THIS. You just HAVE to save for emergencies. If you don’t, you’ll be raking up even MORE debt when you get that flat tire or surprise trip to Urgent Care. And you really don’t want to miss out on your company’s matching funds either. So like many things, we recommend balance here.

Just like protein is good for you but you don’t want to skip your fat or carbs (fruits and veggies). With the retirement, emergency fund, debt trio, you need to balance your savings among all three until you’ve gotten on your feet.

If you have credit card debt, you have to pay the minimum. No debate about that. Figure out how much that amount is and look at how much savings you have left to allocate. At that point, if you are dividing up 10%, if you have matching money from your company for your contributions, I would continue to put 5% into your retirement account. And split the rest between your debt and emergency fund until you have at least half your emergency fund filled or you pay off your debt.

What about if you don’t have matching funds? Skip the retirement savings until you have your debt is under control and at least half of your emergency fund is filled. Why? Your debt is losing you money now. Your retirement fund is hopefully going to save you money in the future. It probably will but how much and when is uncertain. The 25% you will not be paying in interest on your debt is a sure thing now.

Also, debt is like an anchor that prevents you from living your dreams. A retirement and emergency accounts are the sails that helps you reach your dream destitution. But just like a ship that has it’s sails up but anchor down doesn’t move far, you also will be stalled in your progress until the debt is under control.
If you can save 20% or 30% or more now, do it! Believe it or not, the younger you are the easier it is to cut your expenses. As you get older, you have more expenses and expectations. It’s easy to live frugally and get your financial foundation rock solid.

On the other hand, if you’re getting off to a rocky start with low wages, that’s a bummer. You’ll also have to watch your expenses but will make less progress on your emergency fund, retirement savings, and debt. Keep working hard, looking for a better job, and find side gigs. Persistency can get you really far. Don’t give up and keep working hard to improve your income opportunities. We truly, truly believe in you.

Step 5 – Have Fun!!!

When planning your day to day budget, do set a little aside for some fun. A weekend away, a night out with friends, a concert or sports event. You do need to live your life and planning for fun will help you feel fulfilled. Don’t spend money on things that don’t matter to you, just because others are spending money (that perhaps they don’t even have) or it sounds good in the moment. Spend on purpose.

And there you have it, FIVE steps to reach financial success and live your best life ever!

If all of this sounds easier said than done, schedule a FREE 15 minute call with us. We are here to help!

admin August 29, 2019 No Comments

What the Heck are 401(k)s, HSAs, and Other Confusions

If you hear the words 401(k), HSA, and deductibles and you look like this…

You’ve come to the right place.

Whether you’re reading this because you just landed your first job (congratulations 🎉) or you’re just looking for some clarification, we’re here with all of the answers to make sure you find success in your career, finances, and life!

Let’s get started.

So, what the heck is a 401(k)?

A 401(k) is your employer sponsored retirement plan.

They come in many different forms, but this is the most common and most well known. It’s an opportunity to save for retirement in a tax advantaged way. I’d say the first step is to figure out if your employer matches and how much you need to contribute in order to take full advantage of the matching schedule.

You may have two types of 401(k) accounts offered, a Traditional and a Roth.

Traditional 401(k)

Everyone will have a Traditional available and that allows you to put money into the retirement account BEFORE taxes are taken out. If you put in $1,000, that’s $1,000 off the top of your pay before taxes are taken out. But don’t worry, the government won’t let you NOT pay taxes. You’ll pay taxes on those dollars when you take them out during retirement. This is called “Traditional” because it was the way retirement accounts worked when they were first designed back when your grandparents were probably still working. The idea was that you would be in a lower tax bracket when you retire and therefore you would pay less taxes in the long run.

Roth 401(k)

Roth plans were introduced recently because it was discovered that people often are NOT in a lower tax bracket when they retire. Many people take as much out of their retirement plan after retiring as they were getting as salary before retirement and therefore they were in the same tax bracket. All that great planning was for naught. But the government realized the errors of their ways and designed the Roth plans. In these plans, the money you put in is AFTER taxes are paid. (The IRS wants taxes one way or another. No getting out of taxes completely!)

With a Roth plan, when you contribute $1,000 from your paycheck, you will first pay taxes on that money. Say you’re in the 20% tax bracket and your state taxes are 5%, you will have $250 go to taxes and $750 will be deposited into your Roth IRA. That may seem like a bad deal BUT, you will never pay taxes on that money again. Ever! Hopefully, that $750 grows for the next 10, 20, 30, 40 years. And say you have interest, dividends, and growth of $2,000 on that $750, you get to take out $2,750 in retirement and not pay a penny in taxes. Sweet deal, right!?

How much should I contribute?

It’s difficult to give blanket advice here about how much to contribute to Roth versus Traditional because there are so many variables involved. Our rule of thumb is 50/50. When you’re younger and in a lower tax bracket, you may want to put in more than 50% and when you’re older and in a higher tax bracket, you’ll want to put in less. But 50/50 is a good all purpose target.

Most employers that offer 401(k)s are now offering a Roth option so it’s important to make sure you are also taking advantage of this option, especially if you are in a lower tax bracket right now.

Some resources:

How to Set up Your 401(k)

3 Things to Consider before Maxing out Your 401(k)

Next, Health Insurance

What is health insurance?

In Julia Kagan‘s easy to understand words, “Health insurance is a type of insurance coverage that pays for medical and surgical expenses incurred by the insured. Health insurance can reimburse the insured for expenses incurred from illness or injury, or pay the care provider directly”.

When it comes to health insurance, Step 1 for young adults is to figure out whether you need to stay on your parents (if you are fortunate enough to have been on it to begin with) or switch to your own. Find out if your employer has a health insurance offering and if they do figure out how much, if any, of the cost that they cover. Do a quick cost comparison of how much the premium is on your parents versus how much your premium is through your employer. Make sure you compare prices for the same deductibles. Employers may pay half or even all health insurance premiums. Some will even put money into an HSA. We’ll discuss HSA in a minute.

What are copayments?

A copayment is the amount that you have to pay when you get medical services. Sometimes insurance plans require you to pay a percentage like 20% of the visit cost and the insurance pays the rest. Other times, you’ll pay a flat fee like $10 or $20 dollars. It’s typical for you to have to put “skin in the game” when you use medical services.

What is a deductible?

When you go to the doctor, your health insurance expects you to pay for the first dollars paid. If your deductible is $500, and you go to the doctor that charges $250, you’ll pay the whole bill since you are under the deductible. If you end up going to the doctor three times for a total of $750, you’ll pay $500 and the insurance may pay $250 (or more likely a little less because of the copayment).⠀

With a high deductible insurance plan, you pay a high deductible (hence the name) but you have the tax advantage HSA to help you save to pay for that deductible. After you finish paying the deductible, you then pay only the copayment, if you have one, for the rest of the year. Each year the deductible goes back to $0.

High deductible health insurance can work well if you are young and healthy. Again, this depends on the individual, their personal and family history, and financial situation. Most young people have low medical expenses and only need insurance to cover big bills.

What is an HSA?

An HSA is a Health Savings Account connected to health insurance that has a high deductible.

When you have a high deductible, a HSA may come in handy. Your HSA allows you to keep your insurance costs low but still have coverage for those emergencies that would otherwise wipe out your bank account and put you in debt. Employers who offer plans with HSA’s may put money into your HSA or match funds that you put in. It’s important to know what your employer does and what you can do to maximize your benefits.

More Resources:

https://www.nerdwallet.com/blog/health/health-insurance-guide/

https://www.nerdwallet.com/blog/insurance/disability-insurance-explained/

https://www.nerdwallet.com/blog/health/dental-insurance/

https://www.nerdwallet.com/blog/health/vision-insurance/

https://www.nerdwallet.com/blog/health/what-is-an-hsa/

We hope we’ve helped you understand all of this a bit more. If you’re still feeling confused, we invite you to join our private Facebook group and ask all of your questions there.

Tara Unverzagt August 29, 2019 No Comments

How I started Adulting

Hi all, Tara here! Recently a friend reached out and asked for some advice on how to best navigate post grad finances and “adulting”. Like so many other young adults, he was wondering how start working toward financial success while managing student loans, new jobs, and all of the other exciting, but overwhelming things that come after college. So, we wrote a few different blog posts to answer his questions (jump to the bottom of this post to find the list of these posts).

But his inquiry also inspired me to share my story with all of you. So without any further ado, this is the story of how I started “adulting” and navigating MY finances. Enjoy! And yes, that is me on the left!

I remember when I first graduated college.

I was super excited to start a real job. I had been freelancing through college and interned at a software company. All that seemed like small fries to this new, big job at Xerox Corp! The only problem (and I’m the only one who is going to see this as a problem!) was that it was in Los Angeles. I really wanted to go to the east coast, Boston in particular. Somehow I took a wrong turn and ended up on the left coast.
I was anxious to get started. The week after graduation, I got everything home from college. My furniture consisted of moving boxes, milk crates, plywood, and a foam fold out couch that served as a bed. I lived “ready to move” because I moved a lot in college.

At home, I filled a quarter of a moving truck (I have no idea who was in the other three quarters) and headed west. About a week after graduation, I had moved in with my grandmother who lived in the OC. That was handy. She drove me around looking for a car. There is nothing worse than negotiating a good deal with a car dealer with your grandmother all dressed up in high style and lots of jewels on. We had to explain “No, I’m paying for this. Grandma isn’t ‘helping out’!” I got a Doge Colt with no radio, no air conditioning, and no power anything. But it was CHEAP! and I could pay cash.

I was lucky enough to work my way through college, got a one-year Air Force ROTC scholarship (I just couldn’t sign away six years of my life going into Junior year), and lived like a starving college student. All that effort meant I graduated with the $10,000 that my parents had given me to pay for college.

I would love to take credit for great planning but the fact is the $10,000 was in a Treasury Note (earning about 15% interest, I might add!!! Compared to today’s 1.3% – 2% interest that Treasuries are paying!) I had forgotten about the money my folks were giving me and worked and saved through college. It wasn’t until years later that I realized I had put myself though college (with the help of the Air Force and generous employers/clients).

I was lucky to start debt free.

Starting out debt free was a fantastic advantage to me. Not many parents and students have that luxury today. Although, I find a lot of people end up with more student debt than they intend because they just aren’t paying attention or planning for the future. Both are easy traps to fall into that everyone does fall into at some point in their life. And I say this now just because if you are reading this and IN college or about to go to college (or parents of college students), you still have an opportunity to pay attention and plan (read more in our student loan 101 blog post HERE).
Once I got my car and started my job, about two or three weeks after graduating, I was working a full day and living in a hotel trying to find a place to live. I grew up with a financial planning mother, so I knew I wanted to keep my housing under 25% of my pay check. Not an easy feat in the LA area. And made harder because I just didn’t feel like I had enough time after work and on the weekends to do the research and find a place. I didn’t have the luxury of internet. I was looking through the paper’s want ads and driving around. Today it would be far easier and can have more work done remotely. But I can’t imagine that it’s “easy” even with technology.

I was also having an issue because the places I was renting from wanted a check with a local address on it. And I couldn’t get a local bank account until I had a local address. How is that supposed to work!?!? A family friend in the area helped me out. But I wonder to this day, how would I have resolved this without my network stepping in to help?

Luckily, I had enough money after buying my car to pay for first and last month’s rent. I also had a little extra to buy bare necessities in my new apartment. I was up and running but looking forward to that first pay check to fill my bank account a little more.

The first days of work were filled with filling out paperwork. Today it’s even worse because corporations back then paid for medical insurance, disability insurance, vision and dental insurance, and they had a pension plan. There was no 401k when I first started working. But there were IRAs. My financial planning mom said “Put $2,000 in every year. Buy one stock and in no time you’ll have a diverse portfolio.” I did that and still have many of those same stock in my portfolio today. And yes, they are worth far more than $2,000 today.

What would I have done without a financial planning mother?

I probably wouldn’t have started investing as early. And if I did, I certainly wouldn’t have known what to invest in. I was a computer programmer, not an investor. I did go to a financial advisor when I first started my job. He asked “What are your goals?” I said I didn’t have any. He asked “Do you want to buy a house, have a family, when do you want to retire?” I had no idea if I wanted any of those. I could just as easily see myself staying single and traveling the work picking up odd computer programming jobs as any of that. The advisor said he couldn’t help me. Hmm…

Today my kids and their friends are going through all this and it’s so much harder. Just getting a job today is hard. You can’t get a job unless you have previous experience, but how are you supposed to get previous experience if you never had a job. It certainly takes grit and planning to navigate today’s adulting process. And if you’ve successfully landed a job out of college, kudos to you! And if you’ve taken the freelancing path and have work (maybe not in the black yet, but have work), also kudo for the bravery and hard work to get there.

If you’re still looking for work, you are not alone and do use all your resources: college placement offices, county and state services, networking events, your family and friends. And keep busy, volunteer anywhere or do odd jobs/consulting/freelancing. Show that you can show up every day, meet deadlines, and put in a good day of work. That will take you far. You’ve got this!

Read more from our blog posts on how to best navigate post grad finances and “adulting”:

– How to Calculate your Cash Flow

– Five Steps to Financial Success

– New Job Confusions (What are 401ks, anyway??)

– Student Loans 101

What next?

Have you joined our FREE Elite Facebook Group that’s all about opening up conversations about money for Millennials? If not, what are you waiting for?

We understand that many financial problems start because most individuals DON’T talk about money and therefore DON’T know how to approach money decisions. But we’re different. We LOVE talking about money! And we are here to talk about it with you! So, we’ve created a safe space where we can talk all. things. money.

Want to join us? Click HERE -> http://bit.ly/SBFPMoney-Join