Category: Financial Advisors

How to Simplify Your Financial Life

No Comments Financial Advisors

We’re entering a new year and decade, and many people use this change of season as a kick-off point to organize their finances. Unfortunately, when people dive into creating a plan, they put too many systems in place, and overcomplicate their money. It’s tempting to download every app, try an overly strict budget, or force yourself to sit down every day to review your spending.

The more hoops you push yourself to jump through the less likely you are to stick with your plan and accomplish your goals. That’s why it’s key to find ways to simplify your financial life.

The less energy and effort you have to put into keeping your finances on track, the more likely you are to find success and reach your goals. Not sure where to start? Let’s go over a few easy ways to start simplifying your financial life during this new year.

Get Organized

It’s one of the number one recommendations for simplifying your finances for a reason! Too often people have piles of financial statements, insurance documents, loan and mortgage paperwork, and more odds and ends information tucked away somewhere in their filing cabinet. Then, when it comes time to file their taxes or organize a financial plan, they’re completely overwhelmed by the task of finding the information they need. Here are a few tips to get started organizing your financial information to streamline and simplify:

1. Go digital

If you can, create a secure, digital “home” for all of your financial information. Upload key documents to a secure folder (think: Dropbox, Google Drive, Box, etc.), and switch all of your financial statements to digital to save paper (and filing cabinet space).

2. Store your passwords

Once you create a digital “home” for your financial information, you can save a document there that contains critical financial passwords for ease of access. Alternatively, consider a secure service like LastPass or Dashlane to save your digital passwords in one place.

3. Shred old documents

It’s nerve wracking to get rid of financial paperwork, because you’re never sure when you might need it again. Here are a few good rules of thumb:

a. Keep tax paperwork (proof of income, deductions, receipts) until each filing season – and then save copies with your return.
b. Keep tax returns for up to 3 years after filing (per the IRS).
c. Create and keep a separate file for important permanent records (marriage and birth certificates, Social Security cards, etc.)
d. Scan bills and financial statements to store them digitally, or request for them to be delivered to you via email for easy storage and access.
e. If you have financial statements for an asset you own, keep them as long as you own the asset (cars, home, etc.)

4. Automate money dates

Have you and your partner ever set aside regularly scheduled time to look at your finances and evaluate your financial life? Money dates are a key component to a healthy financial relationship! Set an automated calendar reminder to meet monthly or quarterly, and outline an agenda ahead of time so you always know what you’re reviewing. For example, reviewing your budget, progress toward savings and debt repayment goals, and any financial changes (like increased salary or unexpected costs) are all good, recurring items to discuss.

5. Update your beneficiaries

This sounds small, but so many people put off updating their beneficiaries! Take the time to go through your retirement accounts, life insurance, and any other assets you have to ensure the correct beneficiary is listed.

Look at Consolidating Your Loans

Are you tracking a laundry list of loan payments every month? More often than not, when individuals graduate college, they have at least a few different student loans for various semesters and study abroad trips. Then, as you move through adulthood, you may accrue other loans.

One way you can consider simplifying your finances is by consolidating your loans and refinancing where applicable. Consolidating private student loans into one loan could help lock in a lower interest rate. This could minimize the number of loans you need to keep track of.

Streamline Your Budget

Raise your hand if you have ever started a budget, only to fall off the bandwagon because it felt too time-consuming.

We’ve all been there!

The truth is that budgeting doesn’t have to be as complicated as people often make it. Having an overly strict budget can feel suffocating. Categorizing expenses into 25 different sections, tracking every line item daily, and weighing each purchase against an app on your phone is exhausting.

What you may not realize is that a strict budget doesn’t actually guarantee that you’ll move closer to your goals. In fact, the more you restrict yourself, the more likely you are to burn out and swing in the other direction – making big, unplanned purchases that completely blow your budget.

Instead of creating a strict and tough-to-follow budget, try streamlining. Start by determining your big-picture goals and reverse engineering how much you need to save, put toward your debt, and spend in order to achieve those goals.

For example, you may want to save toward retirement through your workplace 401(k), contribute toward a 529 Plan for your kids, pay off your student loans, and save for a house downpayment.

With these goalposts in mind, you can determine how much you need to save or funnel toward your student loans. Then, you can divide the leftover cash flow toward necessary expenses like mortgage or rent and lifestyle-focused categories. These could includel travel, experiences with family and friends, or grabbing a latte before work.

Focus on One Goal at a Time

The biggest problem people run into when it comes to building a financial plan is that there are so many goals to pursue. It can be hard to focus and one goal for long enough to see any progress.

You might even find yourself “goal hopping” as you enter different seasons of life. This can leave you feeling frustrated and like you’re treading water.

Although it’s not possible to solely focus on one goal at a time, you can do your best to single out what goals are most important to you and zero in on the ways you can move the needle.

For example, you might want to save toward retirement, pay off your student loan debt, and prioritize travel for you and your family. You could automate saving toward retirement and your monthly loan payments. Then, you could put extra cash flow toward a savings account earmarked for travel.

The key here is, once you’ve decided the handful of goals that are most important to you, stay focused. Don’t allow yourself to get distracted, and dedicate your financial decisions to working toward those goals whenever possible.

Set Up Automated Bill Pay and Contributions

Are you still manually paying your bills every month? Save yourself both time and brainpower by setting up automated bill pay everywhere you can. If you’ve budgeted for your expenses correctly, there should always be more than enough money in your account to pay your bills. Automating your bills helps you to take one more financial “to do” off of your list. Additionally, automatic bill pay often comes with discounted payments for some services.

Another added benefit is that automatic bill pay takes the human element out of getting your bills done each month. Let’s face it, we all have busy months when paying the bills falls to the bottom of the list. Eventually, if you’re manually paying everything, you’re more likely to slip up and miss a bill. Take the stress out of the equation with automation.

Ready to take your automation to the next level?

Try automating your financial goals, as well. The two most popular goals to automate are savings and debt repayment. To automate your savings, you can:

1. Automate contributions to your workplace retirement plan.
2. Set up direct deposits to your savings account to help you reach short-term savings goals.
3. Create automatic monthly or quarterly deposits to any 529 Plans, Donor Advised Funds or IRAs you’re funding.
4. Schedule overpayments on your mortgage in advance.

Automating debt repayment is a little more straightforward, but just as important. You can start by automating your monthly bill payments. Then, if your goal is to pay your debt off more quickly, you can set your monthly payment to be higher than what you owe.

Taking the human element out of bill payment helps you to pay your bills on time, and the concept applies to automating your financial goals. If you’re saving and paying your debt off each month automatically and only spending the cash leftover, you’re more likely to accomplish them. However, if you are forcing yourself to manually save or pay extra toward your loans, you’re more likely to skip a month when it’s less convenient. Consistency is key when it comes to financial success, and automation helps you stay on track.

Evaluate Your Insurance Coverage

When was the last time you took a closer look at your insurance coverage? Evaluating your health, life, home, and auto insurance should be on your financial to-do list at least once a year. You want to make sure that your coverage is still meeting all of your lifestyle needs, and that you aren’t overinsured, either. Health and life insurance are likely relatively straightforward and can be reviewed through your employer during open enrollment.

Choosing the right home and auto insurance, however, may take a little more research. You may find that shopping around for lower rates periodically and being willing to move all of your coverage under one provider might save you a notable amount of money every year. Taking the time to do a bit of research at least annually helps you to ensure you’re getting the most bang for your buck when it comes to the coverage you need to protect your wealth.

Get Your Financial Team in Place

Working with a CPA, an estate planning attorney, and a financial planner can help you take your financial life from good to great. Even if you’re consistently moving toward your goals, having a team of experts in your corner can open you up to other financial opportunities you may not have seen on your own. Additionally, outsourcing your wealth management and taxes can free up your time and ensure that you’re getting the most out of your money.

Have questions about working with a financial planner? Want to know more about how you can start simplifying your financial life? Contact us today! We’d love to chat with you about your financial goals, and how you can streamline your money to help you live your best life.

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How (and Why) to Invest Intentionally

Do you want to make an impact with your money and learn how to invest intentionally? More and more, millennials and members of Gen X and Y are expressing an interest in using their wealth in a way that aligns with their values. A number of options for intentional financial planning have become popular in recent years. From Socially Responsible Investing (SRI), to Impact Investing, to where you choose to bank and spend your money, there are so many options available to help you invest intentionally. 

Before you start on your journey toward intentional finances, it helps to have a game plan. Try following these steps to ensure you don’t become overwhelmed along the way:

  1. Determine your why.
  2. Reverse engineer your strategy to accomplish your goals.
  3. Find experts who can help you work your wealth intentionally. 

Ready to learn more? Let’s dive in.

Know Your Why

What’s motivating you to build invest intentionally and align your money with your values? The truth is that everyone has a different “why” behind their strategy – and there are a variety of factors that go into it. Here’s what to consider:

  1. What do you want to personally achieve? In other words – why are you investing in the first place? Everyone has different long-term and short-term financial goals that investing can help them to achieve. Whether you’re saving for retirement, want to help fund your children’s education expenses, or want to reach short-term goals like purchasing your dream home or starting a business – it’s important to be very clear about what you want investing to help you accomplish. These ideas will help to guide your intentional investing strategy. 
  2. What kind of impact do you want to make with your investing? When you envision the kind of impact you want to make with your money, what do you see? Maybe you’re passionate about caring for your community, or you want to use your wealth to impact the causes you care about, like renewable energy, affordable housing, microfinance, access to healthcare and education, etc. Whatever kind of impact you want to make, there’s a way to tailor your investment strategy to help you get there. 
  3. How do you want your money to align with your values? This may be broader than just your investment strategy. How do you want to spend your money in a way that lines up with what matters most to you? Getting clear on what you value, and how you want your finances to support those values, is a critical factor in building your financial plan and determining where you allocate your dollars in every day life.

Reverse Engineer Your Strategy

Now that you’ve clearly identified the goals you have for your money, the values you hold, and how you want your wealth to make an impact, you’re ready to start building a strategy to both spend and invest intentionally. Let’s start by looking at a few of the impact-focused ways you can work your wealth.

SRI and Impact Investing

SRI (Socially Responsible Investing) and Impact Investing focus on investing your wealth in funds that match your values. Whether you want to support specific kinds of businesses and organizations, or you want your portfolio to “screen out” companies that don’t score well on ESG (environment, social, governance) standards, those options are available to you. 

Various forms of socially focused investing have been around for the past few decades, but have dramatically increased in popularity over the last several years. As our culture becomes more and more socially conscious, investors want their money used in mindful ways without sacrificing their ability to invest and save toward their goals. 

Banking

You no longer have to select a bank solely based on convenience of location and whether or not they have ATMs in your hometown. Now, there are plenty of online and national banking options available who are raising the bar when it comes to being intentional with your money and with their revenue. For example, some banks choose to donate large percentages of their revenue toward charitable causes and avoid investing member funds in low-ESG-scoring accounts. 

It may be a small way you can focus on making an impact, but every little bit counts. Plus, you’ll feel more fulfilled knowing that your money is housed by an organization whose values align with your own. 

Charitable Giving

Looking for a streamlined way to give to charity and maximize tax benefits simultaneously? Options such as Donor-Advised Funds (DAFs) can help you to give money to charities you’re passionate about. You can donate appreciated assets to a DAF and receive the full tax deduction for your charitable donation while skipping any capital gains taxes you may have owed on the assets. 

Additionally, when you contribute to a DAF, your contributions are invested and can grow over time. Then, when you’re ready, you request a grant from those funds to charities of your choice. DAFs can, essentially, act as a way to both invest and donate in an intentional and impactful way. 

Spending and Saving

Don’t be afraid to look beyond investing when building your intentional financial strategy. You can choose to align your money with your values outside of the money you invest. Determining where you want to spend your money, or what goals you want to save toward can also impact the causes you’re passionate about. A few small examples might be:

  1. Consider supporting companies that are Certified B-Corporations, which are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.  
  2. Shopping local for birthday and holiday gifts to support small businesses.
  3. Focusing on purchasing sustainable and eco-friendly clothing. 
  4. Choosing sustainable home cleaning supplies next time you’re at the store.
  5. Buying organic or sustainably farmed food at the grocery store.

Shareholder Activism

Whether you’re invested in ESG-focused funds or not, you can get involved in more intentional investing just by speaking up as a shareholder. When you invest in a public company, you have a voice. As a shareholder, you can speak up about company policies, investments, and social actions through shareholder voting. You can also work to bring public attention to the actions of the companies you’re invested in. This is called “shareholder activism” and can alter the way companies choose to do business. 

Leaving a Legacy

If you’re struggling to build an intentional investment strategy, don’t worry. You can always hit “pause” and revisit your “why.” Your investing strategy, and your financial plan in general, should connect back to the legacy you’re passionate about building. Too often, investors get caught up in building their wealth to leave a legacy after they pass away when the truth is that you can start using your wealth to make an impact and build your legacy starting now

Any time you feel overwhelmed about investing intentionally, think back to your personal financial goals, and the type of legacy you’re working toward. Then, determine whether the investing paths you’re choosing move you toward those big-picture objectives.

Team Up With an Advisor

Working on building your own strategy to invest intentionally?

It can be overwhelming trying to determine how you want to invest according to your values, or the best way to make the impact you want to make. There are so many options available, and it’s hard to know what investing strategies will actually move you toward your goals while still intentionally supporting your value system.

Sound familiar?

Contact us! Our team would love to talk to you about the goals you have for your wealth, and how you want to start building your legacy. Together, we can create a plan for your money that makes an impact you can be proud of. 

 

The post How (and Why) to Invest Intentionally appeared first on Workable Wealth.

How Practicing Gratitude Can Impact Your Finances

No Comments Financial Advisors

Do you have an attitude of gratitude when it comes to your money? As silly as this may sound, practicing gratitude in your financial life can have a positive impact on your habits, mindset, and more. 

When you incorporate gratitude into your financial plan, you are able to slow down, make better decisions about your money, and leverage your wealth to have a positive impact on the lives of others. More importantly, being grateful for your finances and for what you have can lead to you feeling more fulfilled in your daily life. 

Gratitude Can Prevent Overspending

Have you ever felt frustrated about where you’re at in life as you scroll through Instagram? While you’re scrolling, feeling down, you see an advertisement pop up in your feed for a new pair of workout leggings that you probably don’t need. But, because you’re already feeling a little down, you find yourself reaching for your wallet as you click through to the company’s website. 

This is a classic trap that many people fall into – and it’s not limited to targeted advertising on social media (although social media ads can definitely bust your budget if you’re not careful!). When you go through life feeling like your circumstances are less than what you need to be happy, you’re more likely to overspend to fill that void. 

Instead, if you focus on everything that you’re grateful for in your life on a daily basis, you don’t feel that same urge to “make up for” what’s not there. You may be working toward big goals in your life, career, or finances, but that doesn’t mean you aren’t happy with what you have right now. A daily gratitude practice can help to curb impulse spending and push you to stick to your budget. 

Stay Open to New Opportunities – and Make Wise Decisions When They Come Your Way

When was the last time you made a financial decision because you were afraid, or frustrated with your current circumstances? This pattern can show up in a number of ways, and doesn’t always directly connect to overspending. 

You may find that, because you’re not feeling fulfilled in your current lifestyle, you take a job offer that pays more even though the hours are more demanding and the position requirements don’t fit your career goals. Maybe you decided to move to a lower cost of living area because you wanted a bigger house, even though your new neighborhood isn’t as conveniently located and means a longer commute and time away from your family. 

In life, you’re going to have a number of opportunities and decisions that come your way. Some will positively impact your lifestyle, others will help you to increase your net worth, and some will do both. When you get a new opportunity or are faced with a big financial decision, it can be incredibly helpful to keep a gratitude mindset as you think through all of your options. 

When you’re grateful for what you already have, you’re able to honestly evaluate the pros and the cons of every financial decision you run into. You won’t be as likely to make decisions out of fear, or coming from a mindset of “not enough.” Instead, you’ll be empowered to make financial decisions that move you toward your long term goals, and positively impact both you and your family. 

Find Fulfillment (and Growth) in Your Finances

By focusing on what you’re grateful for, you’re more likely to feel fulfilled when it comes to your money. This has a number of positive benefits, including:

  • Doing a better job of sticking to your budget because you don’t feel like you need “more.” 
  • Setting goals and feeling accomplished as you work toward them. 
  • Enjoying the line items in your budget that are in line with your values – like time with family, or experiences with friends and loved ones.

However, feeling fulfilled in your finances has two other huge benefits that people often overlook. First, when you feel grateful for what you have in your life, you’re giving yourself the permission you need to leverage your wealth to positively impact the lives of others. This might show up in your financial plan as charitable giving, supporting a local community project, or even gifting money to a family member who’s fallen on tough times. 

There’s a psychological phenomenon that happens when you use your own wealth to improve someone else’s life. What many people don’t realize is that giving positively impacts your mental, emotional, and physical health. 

Studies have shown that the more people give, the more life satisfaction they report. Other studies indicate that charitable giving activates your brain’s pleasure centers that are connected to reward processing. It’s also been proven that engaging in charitable acts (volunteering or helping your family and community) can dramatically reduce mortality rates. In other words, you physically and mentally feel better when you give. 

The Abundance Mentality

The second often-overlooked benefit to practicing gratitude in your financial life is that the more you approach your money with an attitude of abundance, the more you attract additional abundance to you. This concept may sound a little woo-woo. I get it. It’s tough to wrap our minds around how feeling like you have enough could actually attract more abundance and wealth into your life. 

Many personal finance writers have discussed the scarcity mindset v. the abundance mindset. An abundance mindset means that you believe there’s plenty for everyone – and plenty for you. You maintain a positive outlook on your life and your money and don’t feel fearful about growing your wealth or accomplishing your goals. 

When you fear that there’s never enough, you fall into some of the negative financial habits discussed above – overspending or impulse purchases, and veering off course in a way that slows your ability to achieve your goals. However, when you have an abundance mindset, the opposite happens. 

If you genuinely believe there’s plenty to go around, and that you’re grateful for what you already have, you’re able to slow yourself down and take advantage of positive opportunities when they show up. Your ability to give to others and feel comfortable and confident in your own financial lifestyle gives you the flexibility you need to make future decisions that will continually increase abundance in your life. 

Creating a Gratitude-Focused Financial Plan

You may be thinking: How can I be grateful for my current financial state? I haven’t saved enough, I still have debt, and I’m nowhere near “perfect” when it comes to managing my money.

You’re not alone in thinking that your money isn’t a source of gratitude in your life. In fact, 30% of Americans are stressed about money constantly, regardless of their income or financial circumstances. So, rather than pivoting and focusing on feeling grateful about your lifestyle and your finances 100% of the time, it might be easier to start with a smaller step in the right direction. 

To start incorporating gratitude into your daily life, and your financial plan, try keeping a gratitude journal. This practice shouldn’t take you more than five minutes a day. Jot down 3-5 things you’re grateful for – and make just one of them about your money. It can even be something as small as: I’m grateful that I was able to spend $4 on a latte on my way to work this morning.

By slowly gearing your mind to focus on the positive aspects of your financial life, you’ll start feeling more gratitude when it comes to bigger financial decisions and reaping the rewards as a result.  

Not ready to start journaling daily? Start even smaller by having a conversation with your family, or just your spouse and partner, each day about one thing you’re grateful for. Sometimes just being able to vocalize your gratitude, and hear that your family is also grateful for what they have in their lives, is enough to trigger a more grateful life in a bigger way.

Do you want to start a financial gratitude practice? Not sure where to start? Reach out! My team and I would love to help you build a more gratitude-focused financial plan.

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What’s the Difference Between Investing and Saving?

No Comments Financial Advisors

In the world of financial planning, the terms “investing” and “saving” are sometimes used interchangeably. The ideas are the same – you’re spending time and energy on setting money aside for your future. 

However, within your financial plan, it’s important to realize that saving and investing serve different purposes. You can and should use both of these strategies to meet your goals, but it’s important to know how and where to leverage them in your own financial life. 

What Does It Mean to Save?

Saving is a strategy that focuses on accumulating cash by making regular deposits into a bank savings account. Saving with a bank helps you secure your money through FDIC insurance, making it a low-risk way to accumulate wealth. The FDIC, or Federal Deposit Insurance Corporation, is an organization separate from the government that protects bank patrons against losing their money if the bank should go under. 

FDIC-insured banks are the way to go for cash savings because the FDIC will protect your savings dollar-for-dollar including any insurance earned over the life of your account. The best part is that bank customers don’t have to do anything to apply for FDIC insurance. If the bank is insured, so are all account holders. Typically, traditional accounts are covered up to $250,000.

Growing cash savings in an FDIC-insured bank is a great way to boost your wealth and to meet short term goals. Because your money is insured dollar-for-dollar, and because you have easy access to cash in a savings account, this type of savings is ideal for meeting liquidity needs.

When Should You Save?

Saving plays a big part in your financial plan because most of your short-term goals can (and should) be met by cash savings. In a perfect world, you’ll always be able to save in advance for big, lifestyle-goal purchases. For example, you might start putting cash aside in an earmarked savings account for:

  • A new (or new to you) car
  • Travel
  • Holiday spending
  • New furniture
  • Concert tickets
  • A house down payment

Saving cash in FDIC-insured savings accounts for short-term goals like these helps you to prioritize spending goals and avoid getting into debt to fund your lifestyle. Another way to leverage saving is to build a cash account for emergencies. Typically, financial experts recommend having 3-6 months of living expenses tucked away in an emergency fund that you don’t touch unless you absolutely need to. 

However, this number can change depending on your current life situation. If you’re a freelancer or entrepreneur, for example, giving yourself a little bit more of a runway in your emergency savings can protect you against a lull in business, or losing your biggest client. 

Of course, on the other side of the coin, it’s possible to have too much cash in savings. If the risk that comes with investing makes you uncomfortable, you might be sitting on a surplus of cash – which can prevent you from growing your wealth for important long term goals like retirement. A good rule of thumb to follow is that your savings should be dedicated to an emergency fund and short-term savings goals. Beyond that, your money will earn more for you in the long run if you invest. 

What Does It Mean to Invest?

Investing is another tool in your financial plan that helps you grow your wealth. When you invest, whether it’s in the stock market or property, you’re putting your money in vehicles that earn a higher rate of return than a traditional savings account. High-yield savings accounts, on average, have a return of about 2% APY. Investing in the stock market, on the other hand, has historically earned investors an average return of 10% annually – closer to 7% if you want to be conservative in your projections. 

Keep in mind that investing doesn’t come without its downsides. The tradeoff for a higher annual rate of return is that, when you invest, you’re taking on a lot more risk than you do in an FDIC-insured savings account. There is no insurance or guarantee when it comes to investing. Even if you choose lower-risk investments like bonds or property in an up-and-coming area, you’re still walking into a situation where the money you’ve invested could be worth less over time in a worst-case-scenario.

The stock market crash of 2008 is often something people reference when shying away from investing – and the truth is that there’s no clear guarantee that the market won’t crash again. Markets are meant to fluctuate over time, which is why it’s so important to invest responsibly and to focus on long-term goals instead of “get rich quick” investing strategies that may or may not work.

When Should You Invest?

Even though investing comes with more risk, it plays a big part in your financial plan. Investing is ideal for long-term goals and financial growth. Some long-term goals that might be a good fit for investing might be:

One of the easiest ways to get started with investing is through your company’s retirement plan. In fact, for most people, their 401(k) is their first experience with investing. Within your 401(k) (or other retirement plan offered through your employer), you can adjust your investments based on your risk tolerance and retirement timeline. Beyond your employer’s retirement plan, you might also get some early exposure to investing through employee stock options like RSUs, or other incentive plans. If either or both of those investing vehicles are available to you, make sure you’re maximizing the opportunity. 

Beyond investing for retirement, or having employee stock options, you could opt for another investing tool to help you diversify your portfolio and reach your long-term goals. A few investing accounts, or tools to look at are:

  • Bonds
  • Stocks
  • Mutual funds
  • ETFs (Exchange-traded funds)
  • Property or real estate
  • Hedge funds
  • Private equity funds
  • Commodities

Every investment type comes with its own unique risk. Before you jump into investing in any or all of the above, it’s important to take a step back and evaluate your long-term goals. Knowing the “why” behind a given investment can help you to decide whether a particular investment will work well in your overall portfolio. 

Why Both Are Important

Saving and investing both have a spot in your financial plan. If you’re just getting started with your financial planning journey, it’s easy to fall into the trap of thinking that cash savings should be your primary (and only) priority, but that couldn’t be further from the truth. It’s important to build your cash savings, and continue to put money toward short-term savings goals to keep you out of debt while still checking some big lifestyle to-dos off your bucket list. However, it’s also important to get started investing early. Even a small amount of money in a retirement account can earn you notable compound interest over time. 

When you look at how saving and investing play a role in your financial plan, it can be helpful to remember that growing your wealth is all about balance. You want to be able to reach short-term goals, like taking that family beach vacation next summer, because they make life worth living. You also want to be able to prepare for a successful financial future through retirement and beyond. Finding a way to balance both cash savings and a well-diversified investing strategy can help you further down the path toward your goals. 

Have questions about finding a balance between saving and investing? Not sure where or how to get started with your wealth-building strategy? Let’s chat! Our team would love to talk to you about your goals, and how you can combine saving and investing to reach them.

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How to Raise Financially Empowered Children

No Comments Financial Advisors

Do you ever catch yourself falling into negative financial habits that you learned from your parents? The truth is that the “money scripts” you use to make financial decisions as an adult are almost completely formed by age 7. So, some of the good and not-so-good habits you find yourself dealing with as an adult have likely been part of how you view money from the time you were a kid. 

Even though it’s not possible to go back in time and reverse the financial habits you learned from parents and mentors, it is possible to focus on raising your daughters and sons to be financially empowered and to focus on positive money habits. There’s no “perfect” way to teach your kids about money, but there are a few things you can start implementing today to make financial conversations easier, and even exciting, for your kids.  

Be Open

The first and most important piece of advice I give my clients who are parents is to be – and stay – open when you talk about money. This means having honest conversations about financial “wins” and mistakes with your kids, your partner, and the other people in your life. The more you can focus on taking the negative stigma away from money, the more you’re showing your kids that financial conversations aren’t something to be ashamed of, or shy away from. 

An easy way to start this is by having family meetings about spending, or how you can align your spending with your family values. Giving your kids some say in where funds that have been earmarked for charity go, or discussing how some “extra” expenses will have to be carved out of the family budget if you all want to spend the time and resources to have a fun family vacation, can help them to start understanding the importance of open communication. 

Of course, make sure the conversations you’re having are age-appropriate. Talking to your four-year-old about the fear you feel about retirement savings or your student loans may not be the best move, but walking them through budgeting basics and values-based spending absolutely makes sense. 

Address Gender Stereotypes

You can also help your kids to understand gender stereotypes, and how they may or may not be helpful. Talking to both your daughters and sons about how generalizing that “women are bad at math” or “men go to work and make money for the family” can hurt others and themselves is important. 

Daughters need to understand their worth and earning potential, while sons need to understand to respect women and that they don’t need to carry the full weight of “providing” on their shoulders. If these conversations are uncomfortable, that’s okay. Talking about stereotypes and discrimination is never comfortable, but it’s critical that we as parents can show our kids that these stereotypes are real and may impact how they interact with the world someday. 

Model and Celebrate Equality Whenever Possible

In your family, it’s important to model and celebrate equality. The more your kids can see you and your spouse or partner treating each other with mutual respect in finances and in life, and treating others in the same way, the more they’ll be likely to model that behavior. This might look like:

  • Talking openly about finances being a shared resource
  • Discussing opinions about money honestly with one another and with your kids
  • Treating members of a minority community financially equally
  • Focusing on avoiding gender-based assumptions that your kids may pick up on
  • Showing your kids that both you and your spouse or partner contribute to the family – financially and otherwise
  • Having equal money rewards or rules for each of your kids

It’s tough to address our own biases, but thinking about how you can intentionally model equality in your day-to-day helps you to raise kids who view financial equality as the norm. Taking it to the next level by celebrating equality in your home or workplace, and letting your kids see that, reinforces equality and inclusion as a positive behavior for them to emulate.

Ask Questions

Let’s get real – as a kid, money can be super fun. They don’t have bills, debt, or the stress of whether or not a trip home to visit family for the holidays is a more important budget line-item than a much-needed getaway with your spouse in January. Nope, kids get all of the fun parts of personal finances without a lot of the extra anxiety that adulthood brings to the table. 

So, during this season where money is still exciting and fun, focus on making it a learning experience for your kids. The easiest way to do this is to ask questions about money often. You don’t have to force the conversation, but working financial questions into your regular conversation with your kids can be a huge help. A few questions you might want to ask them are:

  • Why is that purchase (new toy, gumball, etc.) important to you?
  • Where would you like to give your “donate” funds?
  • What’s more exciting for you (when presented with two spending options)?
  • What are you saving for? Why?
  • What would you do with $100?
  • How do you want to budget your money?
  • Where does money come from?
  • How do you want to earn money? 
  • What chores do you think are worth more in your allowance? Why?

Pushing them to think more deeply about their finances can open up a lot of fun conversations about money, work, and life. You might be surprised by some of their answers!

Empower Them to Make Financial Decisions

Making all of the financial decisions your kids will face for them robs them of the chance to learn, or to have the exciting feeling of making a choice about their own money. Focus on big and small ways that you can empower them to make their own financial decisions. The more they practice this now, the more likely they’ll continue to make positive, values-based decisions in the future as adults.

Some decisions you might let them make on their own are:

  • What they want to use their allowance for
  • How they want to budget between spending, saving, and giving
  • Where they want to give their money (if that’s part of their budget)
  • What they’d like to ask for birthday or holiday gifts
  • What type of gifts they’d like to purchase for others

As your kids get older, they can be given more and more decision-making power. As they keep growing, you’re going to run into situations where they make mistakes – or where their decision doesn’t match the same one you’d make as their parent. 

In these situations, it’s important to approach your kids with curiosity – no matter how old they are. Work to get a deeper understanding of what’s motivating their decisions, and talk to them about balancing immediate wants (like impulse purchases) with long-term benefits (like saving for the toy they actually want that’s a little more expensive). 

Celebrate Their Wins and Guide Them Through Learning Experiences

Do you ever wish someone was there to celebrate you every time you hit a savings goal (besides your financial planner, of course)? How about when you knock out a big chunk of your debt? Positive reinforcement and affirmation that we’re having financial success is a really empowering and motivating thing. If you want your kids to continue making exceptional decisions with their money, celebrate their wins! Talk to them about how proud you are of them, or how excited you are about the recent success they’ve had.

On the other side of the coin, don’t hesitate to address any money mistakes they may make. Talk about these mistakes as learning experiences, not moments to feel shame or hide from others. The more you can empower your kids to view financial mistakes on a small scale as something to learn from, the more likely they are to move on from big financial mistakes in their adult lives feeling stronger and better equipped to avoid similar pitfalls in the future. 

Teaching your kids about money is incredibly challenging, but so worth it. If you ever have questions about how to have age-appropriate and empowering conversations with both your daughters and your sons, our team is happy to share our own experiences and what’s worked for our families. Reach out by clicking here! We’d love to hear from you.

The post How to Raise Financially Empowered Children appeared first on Workable Wealth.

How to Raise Financially Empowered Children

No Comments Financial Advisors

Do you ever catch yourself falling into negative financial habits that you learned from your parents? The truth is that the “money scripts” you use to make financial decisions as an adult are almost completely formed by age 7. So, some of the good and not-so-good habits you find yourself dealing with as an adult have likely been part of how you view money from the time you were a kid. So how do you raise financially empowered children?

Even though it’s not possible to go back in time and reverse the financial habits you learned from parents and mentors, it is possible to focus on raising your daughters and sons to be financially empowered and to focus on positive money habits. There’s no “perfect” way to teach your kids about money, but there are a few things you can start implementing today to make financial conversations easier, and even exciting, for your kids.  

Be Open With Your Children

The first and most important piece of advice I give my clients who are parents is to be – and stay – open when you talk about money. This means having honest conversations about financial “wins” and mistakes with your children, your partner, and the other people in your life. The more you can focus on taking the negative stigma away from money, the more you’re showing your children that financial conversations aren’t something to be ashamed of, or shy away from. 

An easy way to start this is by having family meetings about spending, or how you can align your spending with your family values. Giving your children some say in where funds that have been earmarked for charity go, or discussing how some “extra” expenses will have to be carved out of the family budget if you all want to spend the time and resources to have a fun family vacation, can help them to start understanding the importance of open communication. 

Of course, make sure the conversations you’re having are age-appropriate. Talking to your four-year-old about the fear you feel about retirement savings or your student loans may not be the best move, but walking them through budgeting basics and values-based spending absolutely makes sense. 

Address Gender Stereotypes

You can also help your kids to understand gender stereotypes, and how they may or may not be helpful. Talking to both your daughters and sons about how generalizing that “women are bad at math” or “men go to work and make money for the family” can hurt others and themselves is important. 

Daughters need to understand their worth and earning potential, while sons need to understand to respect women and that they don’t need to carry the full weight of “providing” on their shoulders. If these conversations are uncomfortable, that’s okay. Talking about stereotypes and discrimination is never comfortable, but it’s critical that we as parents can show our kids that these stereotypes are real and may impact how they interact with the world someday. 

Model and Celebrate Equality Whenever Possible

In your family, it’s important to model and celebrate equality. The more your children can see you and your spouse or partner treating each other with mutual respect in finances and in life, and treating others in the same way, the more they’ll be likely to model that behavior. This might look like:

  • Talking openly about finances being a shared resource
  • Discussing opinions about money honestly with one another and with your kids
  • Treating members of a minority community financially equally
  • Focusing on avoiding gender-based assumptions that your kids may pick up on
  • Showing your kids that both you and your spouse or partner contribute to the family – financially and otherwise
  • Having equal money rewards or rules for each of your kids

It’s tough to address our own biases, but thinking about how you can intentionally model equality in your day-to-day helps you to raise children who view financial equality as the norm. Taking it to the next level by celebrating equality in your home or workplace, and letting your kids see that, reinforces equality and inclusion as a positive behavior for them to emulate.

Ask Your Children Questions

Let’s get real – as a kid, money can be super fun. They don’t have bills, debt, or the stress of whether or not a trip home to visit family for the holidays is a more important budget line-item than a much-needed getaway with your spouse in January. Nope, kids get all of the fun parts of personal finances without a lot of the extra anxiety that adulthood brings to the table. 

So, during this season where money is still exciting and fun, focus on making it a learning experience for your kids. The easiest way to do this is to ask questions about money often. You don’t have to force the conversation, but working financial questions into your regular conversation with your kids can be a huge help. A few questions you might want to ask them are:

  • Why is that purchase (new toy, gumball, etc.) important to you?
  • Where would you like to give your “donate” funds?
  • What’s more exciting for you (when presented with two spending options)?
  • What are you saving for? Why?
  • What would you do with $100?
  • How do you want to budget your money?
  • Where does money come from?
  • How do you want to earn money? 
  • What chores do you think are worth more in your allowance? Why?

Pushing them to think more deeply about their finances can open up a lot of fun conversations about money, work, and life. You might be surprised by some of their answers!

Empower Them to Make Financial Decisions

Making all of the financial decisions your kids will face for them robs them of the chance to learn, or to have the exciting feeling of making a choice about their own money. Focus on big and small ways that you can empower them to make their own financial decisions. The more they practice this now, the more likely they’ll continue to make positive, values-based decisions in the future as adults.

Some decisions you might let them make on their own are:

  • What they want to use their allowance for
  • How they want to budget between spending, saving, and giving
  • Where they want to give their money (if that’s part of their budget)
  • What they’d like to ask for birthday or holiday gifts
  • What type of gifts they’d like to purchase for others

As your children get older, they can be given more and more decision-making power. As they keep growing, you’re going to run into situations where they make mistakes – or where their decision doesn’t match the same one you’d make as their parent. 

In these situations, it’s important to approach your kids with curiosity – no matter how old they are. Work to get a deeper understanding of what’s motivating their decisions, and talk to them about balancing immediate wants (like impulse purchases) with long-term benefits (like saving for the toy they actually want that’s a little more expensive). 

Celebrate Your Children’s Wins and Guide Them Through Learning Experiences

Do you ever wish someone was there to celebrate you every time you hit a savings goal (besides your financial planner, of course)? How about when you knock out a big chunk of your debt? Positive reinforcement and affirmation that we’re having financial success is a really empowering and motivating thing. If you want your kids to continue making exceptional decisions with their money, celebrate their wins! Talk to them about how proud you are of them, or how excited you are about the recent success they’ve had.

On the other side of the coin, don’t hesitate to address any money mistakes they may make. Talk about these mistakes as learning experiences, not moments to feel shame or hide from others. The more you can empower your kids to view financial mistakes on a small scale as something to learn from, the more likely they are to move on from big financial mistakes in their adult lives feeling stronger and better equipped to avoid similar pitfalls in the future. 

Teaching your children about money is incredibly challenging, but so worth it. If you ever have questions about how to have age-appropriate and empowering conversations with both your daughters and your sons, our team is happy to share our own experiences and what’s worked for our families. Reach out by clicking here! We’d love to hear from you.

The post How to Raise Financially Empowered Children appeared first on Workable Wealth.

Financial Pressure & Benefits of Being a Breadwinning Woman

No Comments Financial Advisors

In today’s world, there’s a lot of pressure on women to succeed both in the workplace and at home. Yet, when people think of a household with dual-income, people often think of the man in a relationship being the family’s primary breadwinner.

It’s an old-school idea, but the outdated concept of who can be financially successful in a marriage (and who stays home) is still prevalent in our society. However, this idea isn’t always reality. 

The truth is that, as of 2016, women outearn their male partners in 29% of American heterosexual dual-income marriages – up from 18% in 1987. Other studies indicate that those numbers might be even bigger – that 4 out of 10 households are financially led by women

More and more women are starting to outearn their male partners, and I work with several families who are falling into this earning category. In fact, in my own family, I’m the breadwinner. With this much first-hand exposure to women who are taking the financial lead in their families, I’ve seen the benefits of this dynamic first hand. However, I’ve also seen the stress and anxiety it can cause if both partners aren’t dedicated to supporting one another. 

Today, I want to talk about the experience of being a breadwinning woman – from the unexpected stresses, to how my family and others make this dynamic work. 

My Own Experience

For many years, my husband and I have been in a dual-income household. There were years when he was the primary breadwinner and recently we went through a stint where I was the sole provider. As of now, we’re back to being a dual-income household with me as the breadwinner while both of us work to develop our careers in new and exciting ways. 

There have been so many benefits to me being the breadwinner for our family – both when my husband was working, and when I was the sole provider. However, there have also been several unexpected drawbacks that I couldn’t have anticipated. 

The Pressure of Being a Breadwinning Woman

I should start by saying that my husband is always my #1 fan, and I’ve never made a career move that wasn’t supported 100% by him. I’ve also always been a proud, strong woman who has never been afraid to grow in my career. So, I was surprised when I felt a new kind of pressure stepping into a breadwinning woman role. In the back of my mind, there was a worry that people would judge how my husband and I chose to run our family. 

That’s because, even for someone who is as confident as I am, the pressures of our culture can eat away at anybody’s self-worth. Female breadwinners often are judged for whether or not they’re being a good enough mom, how they run their household, or what role they take on in their community. Male breadwinners are often viewed as responsible and as strong leaders in the workplace, while female breadwinners can be viewed as too aggressive. The hypocrisy is endless, and it can be overwhelming at times. 

The Financial (And Non-Financial) Considerations For Being a Breadwinning Woman

Beyond just the cultural stress and judgment that may accompany being a breadwinning woman, there are other pros and cons to consider. 

The Earning Gap

First and foremost, it’s important that we address the gender pay gap. In 2019, women only make $0.79 for every $1.00 that men make. 

Even if you’re the breadwinner in your family, and you and your partner are secure financially, it may feel like you’re hustling 10x harder to make the same amount that your male colleagues are bringing home. This can cause extra stress. 

Advocating for yourself in the workplace to continue to earn what you’re worth is a critical part of supporting your family financially, and continuing to increase your net worth.

Planning For Retirement

Another financial consideration is the longer lifespan that women often have. Whether you’re the breadwinner or not, it’s still important to think about how you’ll be financially supported should you outlive your partner. If you’re the primary income earner, you may be taking the lead on funding your savings goals – from building your emergency fund, to contributing to your retirement accounts.

Regardless of whether you or your partner earn more, a savings plan should be put in place to support both of you throughout your years as a retiree. Even if that financial stressor seems like it’s in the distant future, it’s worth the conversation with your partner. Take the time to determine what you’ll both need in retirement, and put a savings plan in place that protects each of you. 

Pressure In The Workplace

If you’re the breadwinner in your household, you might find a unique kind of pressure to continue providing for your family while still upholding a spotless reputation at work, and pushing to continue your career growth. It can be a lot of unexpected anxiety. Communication in your relationship, and in the workplace, can help to combat this. Worrying about whether or not you’re knocking it out of the park at work is normal, but if you’re feeling extreme pressure and anxiety to be perfect 100% of the time, it might be time to speak up and ask for support.

Being a Breadwinning Woman Works For My Family – And It Can Work For Yours

Despite the pressures of being a breadwinning woman, there are also many benefits. It’s worked for my family for years – and it can work for yours too. The key is to communicate clearly and often with your partner. Approaching decisions in your relationship, financial and otherwise, should be done together as a team. Here are a few ways you and your partner can find success as a family with you as the breadwinning woman:

#1: Understanding your own anxiety about being a breadwinning woman. The more you’re able to be honest with yourself and your partner about how you’re feeling and the stories or money scripts that may be playing in your mind, the less anxious or frustrated you’re going to feel. Don’t shy away from being introspective!

#2: Remember that you two define your roles in your family – nobody else. For example, having spent a period of time as the sole income earner, my husband took the lead on day-to-day parenting, time with our kids, and managing the household (a full-time job in itself). During this season I was growing Workable Wealth, investing time in my team, and expanding my personal finance educational platform. It helped tremendously to know that we had decided on these roles as a team, and that we were each contributing to our family’s success.

#3: Approach your financial plan together. By approaching your life and your family’s money as a team, you remove a significant amount of stress each of you can feel when being the primary provider. You’re also able to make ongoing decisions for the greater good of your team, without feeling frustrated with one another. 

#4: Get real about the division of labor. As the primary income earner in your house, there might not be time to crush it at work and keep your home life in perfect shape. Sit down with your partner to figure out who’s taking the lead on what household chores, or other family responsibilities and what you can outsource. Do you need a housecleaner, someone to help with laundry or meal prep? Be as specific as possible and delegate out if it’s within your means. The more clear you both are on how you’re working together and where you need help, the less likely you are to feel responsible for everything. 

#5: Set clear boundaries. It’s important to set boundaries both at work and with people in your personal life. This might mean you leave your phone on the kitchen counter in the evenings to avoid late-night checking your email. It might mean politely declining to talk about your family’s financial decisions with your friends or prying mother in law. You get to set boundaries with yourself and others to live your best life and protect your family. 

Being a breadwinning woman can be tough, even with the most supportive partner. The most important thing is that the two of you are making the best possible decision for your family as a team. All of the pressures you might face are so much easier when you face them together! 

Do you have questions about navigating financial roles in your relationship? Need help building a financial plan that supports both you and your partner during a season when you’re the family breadwinner? Let’s talk! Contact me today to learn more about working together.

The post Financial Pressure & Benefits of Being a Breadwinning Woman appeared first on Workable Wealth.

How to Know When It’s Time to Pivot in Your Career (And Financially Pull it Off)

It’s not a secret that I’ve recently had a pretty major career pivot as the founder of Workable Wealth. After spending years growing this platform as a financial planning firm and educational resource about all things personal finance, I decided to merge with another fantastic financial planning practice – Abacus Wealth. Going through this transition, I’ve heard a lot of questions about how you can make a pivot in your career successfully.

Whether you’re a business owner or a career professional who feels like it’s time for a change, making a pivot can be overwhelming and stressful. There’s a lot of fear before pursuing something new. Change itself is scary enough, but when you add in other question marks about your future salary, growth opportunities, and fulfillment, it’s even more difficult. 

So, let’s talk about how to know when it’s time to pivot in your career – and how to financially pull it off. 

What’s Your Why?

Everyone feels down about their job or career every once in a while. It’s called work for a reason, and even if you’re a business owner, or crushing it in a field you love, you’re still going to have days when work feels less than inspiring. Going through a tough season isn’t necessarily a reason to drop everything and pivot in your career or business. Before you make any decisions, it’s important to hit “pause” and evaluate the reason that’s driving your desire to make a change.

There are several reasons a career pivot might be appealing to you. However, they can be boiled down to three key categories:

1. There’s a fulfillment problem with your work.
2. There’s a fulfillment problem with your personal life.
3. You’ve reached a financial or career-growth ceiling in your current industry.

If you’re having a fulfillment problem with your work, it’s time to reality check yourself. Ask yourself a few key questions before making this major career (and financial) decision. Have you been feeling a lack of fulfillment, or generally uninspired for a while now? What about your current role isn’t meeting your needs? Do you need more of a challenge, or is it the work and/or industry itself that you’re not clicking with anymore?

A short-term season where you experience a disconnect is completely normal, and may not warrant a full pivot. However, if you’ve been feeling this way for a while, or have a strong drive to try something new, it’s worth listening to your intuition.

Fulfillment problems with your personal life may feel like a lack of work/life balance, wanting to relocate to another part of the country, or needing more cash flow to meet your financial goals. Sometimes personal life problems can be corrected within your current role. A frank conversation with your boss about virtual work, or a well-deserved raise, for example, can work wonders. However, sometimes a lack of fulfillment in your personal life is directly correlated to a career that isn’t meeting your needs anymore. 

Finally, if you’ve reached a ceiling of growth (financial or otherwise) in your current industry, a pivot might be appealing. Consulting, for example, can often yield higher pay from people who respect your experience. 

The “why” behind your career pivot will help you to determine which move is best for you both now and in the future.

What Pivot Makes Sense For You?

There are so many different ways to pivot in your career, and the change you make will likely impact multiple areas of your life. In general, you can pivot in one of three ways – you can get a new job, pursue work in a new industry, or start on a new career path in your current industry. 

New Job

A new job might mean applying for a different position within your organization, or job hunting at other companies. Your new job can solve many different problems that inspired your career pivot. You could find a position in an area you love, that has a higher salary or better benefits, or that is more flexible with a work schedule that fits your lifestyle needs. 

A new job might not necessarily mean a promotion – but it could! Explore positions that have a need for your unique skillset, and decide whether you want to find a job that’s similar to what you’re currently doing, or one that has different job responsibilities.

New Industry

If you’re feeling uninspired by your job and your industry as a whole, you might want to start looking to pivot your career to a new industry. There are many industries out there with different specializations within each field. Do some research to find the types of roles that inspire you. 

Reach out to people in those current industries or specializations to learn more about what they do. The last thing you want is to pivot to a new industry only to realize that the problem you were experiencing followed you to your new role.

New Career Path

A new career path within your current organization or industry can solve many problems, as well. For example, you may love the company you work for, but feel completely burnt out managing people in operations. If you work for a big enough organization that has flexibility with internal hiring, you could go to your HR department to discuss other opportunities within your company. This can be a fantastic pivot for someone who may not want to relocate, or even leave your current company or field, but is looking for a change. 

You might also decide to pursue a new career path within your industry that allows for more flexibility – like business ownership. Whether you want to do freelance work, act as a consultant, or even launch your own small business in your specialization, entrepreneurship may be the “pivot” you’re looking for.

Do Your Research and Build a Strategy

Regardless of what kind of pivot you want to make in your professional life, you have to have a plan in place to financially pull it off. Making a big change without thinking through its impact on your finances can cause a lot of problems in the short and long term. A new job, for example, could impact your budget – but it could also impact your ability to save for retirement if your new company doesn’t offer the same retirement saving benefits (like an employer match) as your old employer.

Before making any moves, take time to put a plan together. Break your plan into three steps:

Step #1: Decide On Your Pivot

What’s your move? Whether you’re looking for a new job in your field, or you want to change career paths completely, know what you’re looking to accomplish with this change. This will help you to narrow your search options, and weigh the pros and cons more clearly.

Step #2: Do Your Research

Don’t fly blindly into a career change! If you’re asking your boss about a new position with an increased salary, know what skills you have that match that job’s responsibilities, and the industry average salary for the role. If you’re thinking of launching your own business, understand what’s required by your industry to launch successfully. 

Some fields require regulation and registration (like financial planning!), while others may just require that you set up an LLC with your state to start working ASAP. Know what you’re getting into, financially and otherwise, before making a change.

Step #3: Know Your Limits

A career pivot sometimes means that you’re setting yourself up for a new season both in your career and in your personal life. A new role in a new industry might require you to take a job that is more entry-level, and doesn’t pay as much. Pursuing a different role in your current industry or organization may mean new demands on your time with changing job responsibilities. Understand what impact this new shift will have on your personal life – and look at both the best and worst case scenarios. 

Once you know what you’re walking into, set personal limits for yourself. For example, if you’re interviewing for roles in a new industry, you may have a minimum salary or benefits package in mind to make the pivot feasible. 

This might mean you’ve trimmed your budget to account for a pay cut, or it might mean you’re unwilling to sacrifice specific benefits that provide affordable health care to you and your family. You may find that the career pivot you have in mind isn’t flexible with income or benefits, and decide to postpone the change until you have a big enough nest egg built to sustain you while you grow in your new role. 

Whatever your limits are, they’re valid. Setting limits ahead of time, especially when it comes to your finances, protects you and your family against potential pitfalls of pivoting in your career. 

Brainstorm With a Financial Planner

You deserve a career that inspires you, but you also deserve to respect your own financial goals and needs. Making a fast decision to pivot in your career without setting some financial guidelines for yourself could hurt you in the long run, and leave you feeling even more stressed out and unhappy than you were before making the change. 

If you’re feeling overwhelmed by a drive to pivot in your career, but aren’t sure how to put a financial plan in place that supports your move, contact our team. As financial planners, we love helping clients brainstorm different ways that their financial life can support their short and long term career goals – and vice versa!

The post How to Know When It’s Time to Pivot in Your Career (And Financially Pull it Off) appeared first on Workable Wealth.

When Should I Exercise My Stock Options?

No Comments Financial Advisors

Stock options are a popular way for organizations to compensate their employees. They’re a convenient and cost-effective way to provide added value for the work that you do. Stock options also provide an incentive for employees to continue doing high-quality work for the company, because they tie a portion of your compensation to the company’s success. If the company does well, and the stock value rises, you’re in a good spot! 

Unfortunately, stock options aren’t as cut and dry as other types of benefits or employee compensation. Your W2 income, for example, is taxed at your regular income tax rate. You withhold taxes with each paycheck and file your return every April. There’s never a question of whether your paycheck will show up, when you’ll have access to the funds, or how they’ll be taxed. 

Stock options aren’t distributed or taxed with the same level of consistency. Although stock options can be a big financial benefit, it’s important that you understand how they work, and when to exercise them, to make the most of them.

What Are Employee Stock Options?

Employee stock options are exactly what they sound like – they’re an option that’s available to you to purchase a certain amount of company stock for a set price within a specific time frame. The price that your company offers the stock options to you is called the grant price. However, you won’t have the option to exercise your newly issued stock options immediately after you’re hired.

Companies like to create more incentive for you to stick around and keep working with them, so they may set your stock options to “vest” (or become available for exercise) after a set period of time. Once your stock options vest, you’ll have a set period of time to exercise them before they expire. 

Many people want to exercise their options right away to create a windfall for themselves – like a cash bonus. While this may be the right move in some cases, it’s important to weigh your options before going through the exercise process.

4 Considerations Before Exercising

There are a few things to consider before exercising your stock options:

1. What type of options are they? Typically, you’re working with either an Incentive Stock Option (ISO), or a Non-Qualified Stock Option (NQSO).These two types of stock options are taxed differently, which means you should approach exercising differently depending on the type you have access to. 

2. What type of taxes can you expect after exercising? When you exercise your ISOs, you don’t create a taxable event. So, you could feasibly hold onto the exercised options for a while, and pay long-term capital gains tax rates in a year or longer. NQSOs are counted as taxable income when you exercise, and you’ll still owe capital gains taxes when you sell them later. 

3. Will the options gain more value if you delay selling exercising? It’s important to note that there are no guarantees when it comes to market performance or the performance of your employer in general. While in some cases your stock options may continue to grow in value while your grant price stays the same, the decision on whether you delay exercising until your expiration date is ultimately a conversation to have with your financial planner. 

4. How will you use the profits from exercising your shares? It’s important to have a plan for the sudden influx of cash you’ll receive. After you set aside funds for the taxes you’ll owe on the sale of your shares, how will you use the money left over? Usually, it’s wise to have a specific goal in mind. 

The last thing you want is for the money to “disappear” with odds and ends expenses when it could have made a large and focused impact on your financial life.  Consider using the funds to boost your emergency savings, knock out a large portion of your debt, or contribute to a big financial goal (like education savings for your kids, or purchasing a home). 

You want to make sure you’re getting the most value out of your employee stock options. Having a strategy in place can set you up for long-term success. 

Stock Option Exercise in Practice

Let’s take a quick look at a stock option exercise example to give you an idea of what you might be able to expect, and to put some of these terms and definitions into practice:

Your company has offered you the right to purchase 2,000 stock options at $20.00/share. You have until January 1, 2025 to purchase. 

You decide to sit on the stock option for a while until your company’s stock reaches $35.00/share on August 1, 2020, which is when you decide to exercise your options. 

When you exercise your options, you’ll buy the 2,000 shares for $40,000 (the rate of $20.00/share that you were granted). Then, with a current price of $35.00/share you can sell them for $70,000. This leaves you with a $30,000 profit – not bad! However, you’ll have to set funds aside for short term capital gains taxes, which could be as much as 10-37% depending on your income tax bracket. This could dramatically impact the amount of profit you have leftover to reach your financial goals, which is why it’s so important to do your research before exercising. Finding a stock option calculator can give you a better idea of what to expect before you exercise.

Navigating Your Stock Options

Navigating your stock options isn’t always easy. In fact, many employees are so overwhelmed by the process that they either wait until the last minute to exercise, or they exercise without having a strategy for holding or selling their shares. 

It’s important to walk into stock option decisions with your eyes wide open. Taxes around stock options can be complicated, and you don’t want to find yourself in a situation where you owe notably more than you had estimated when you exercised your options or sold them for a profit. 

If you’re ready to take a closer look at your stock options, and how they impact your portfolio, reach out! We’d love to chat with you about what options are available to you, and how you want to leverage them to reach your goals.

The post When Should I Exercise My Stock Options? appeared first on Workable Wealth.

4 Career Growth Moves to Make That Impact Your Net Worth

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In recent posts, I’ve written about how you can track your net worth, and what your net worth should look like in your 30s and 40s. It’s true that tracking your financial net worth can be hugely helpful when it comes to seeing big-picture goals, progress, and habits. However, your net worth statement is missing one major piece of the puzzle – you. 

That’s right. Your growth as an individual can impact your net worth over time. 

One of the biggest parts of your growth as a person that has a direct impact on your finances is your career growth. Over the course of your career, take advantage of new opportunities, expand your area of expertise, and make valuable connections with mentors and colleagues. The more you do these things, the more you’re able to “level up” your earning potential.

Having a Career-Growth Mentality

When you think of career growth, you might be thinking of the obvious:

  • Promotion
  • Salary increase
  • Increased responsibility in your job role

The truth is that the “usual” modes of career growth can feel out of reach sometimes. After all, how often do promotions or raises come around? Sometimes employees can only expect to have big, defining conversations about their career advancement once a year (or less!). This can be the case even if you work at a forward-thinking company, or are in a higher-up management position. 

If you think about it, it doesn’t make sense to wait for your annual review to focus on how you can advance in your career. How many other areas of personal growth in your life thrive when you only check in on them once a year? Probably not very many! That’s because growth takes time and continuous commitment. Your career is no different!

Growing in your current role, or finding ways to move forward in your organization, should be an ongoing practice – not an annual “to do” that you check off the list. Once you start embracing this new career-growth mentality, you’ll start to see other opportunities to grow your career outside of a traditional annual review or merit bonus season. 

High-Impact Career Growth Moves

Career growth doesn’t just happen when you get a raise, a bonus, or a promotion (although all of those events will bump your earning potential, too). As much as getting a pay increase or a promotion is somewhat under your control, you can’t always dictate exactly when it happens. 

There are more factors that go into corporate decisions than whether or not you’re a rockstar at what you do. Instead of waiting for those events to happen, it can be helpful to focus on smaller career growth moves that you can control – and that still have a high impact on your net worth and earning potential.

These high-impact career moves can be viewed as ways to increase your “human capital.” Your human capital is the financial worth of skills, knowledge, and experience you have – and it makes a huge difference in how much your net worth grows, and at what pace, over the course of your life. Let’s talk about a few ways that you can start to increase your human capital, grow your career, and boost your net worth.

#1: Focus on Education 

There’s never a wrong time to continue your education. You might want to go back to school to earn your Master’s or Ph.D. to advance your career. However, there are other ways that you can continue your education that don’t involve re-enrolling in college – which can be time-consuming and expensive. You could:

  • Sign up for an online course covering a topic you’re interested in – like social media marketing, how to use industry-specific software or ways to improve your leadership skills in the workplace.
  • Ask your employer about continuing education opportunities within your organization. You might be surprised by internal programs that are available to you.
  • Start studying for a designation exam that could increase your expertise. 

Continuing your education, and showcasing what you’ve learned in your current role, can signal to your employer that you’re willing to learn and grow. In the short-term, this might put you in the spotlight for upcoming opportunities or promotions. In the long-term, you’re building out an education background that can help catapult you into a dream job, or a higher-paying position at your current (or a different) company. 

#2: Read Everything

As a busy mom, entrepreneur, wife, and business partner, I know what it feels like to be short on time. Still, you can increase your human capital in just 20-30 minutes a day. Want to know how?

Pick up a book. Read an article from a trade publication. Click on that LinkedIn blog post written by the CEO of your company about market trends. 

There is so much content available for us to consume each day, it can be kind of overwhelming. But that doesn’t mean you have to get sucked into the black hole of celebrity gossip articles that land in your inbox. Every minute you have is precious, so use some of them to improve yourself, and increase your earning potential later on. You never know when a specific chapter in a business book or an article in an industry-specific magazine will change the way you work for the better.

#3: Create Your Own Opportunities

Whether you work for a big, Fortune 500 company, or a small start-up, you might feel a little bit “stuck” in your current role. It’s tough to focus on career growth, or increasing your human capital when it doesn’t feel like there is anything you can do right now

The best thing you can do is to stop waiting for your employer to create an opportunity for growth. Instead, create your own opportunities. A few examples of bite-sized opportunities you can create for yourself might be:

  • Asking to cross-train with an adjacent department to learn a new skill set
  • Offering to let new hires job shadow you to hone your leadership and management skills
  • Spearheading a Diversity & Inclusion Committee in your organization
  • Volunteering to sit on an advisory board for another local business to gain new insight

When you’re thinking about creating a career opportunity for yourself, think about the long term impact it will have on your human capital. Even small steps forward have the potential to accelerate your growth in new ways that open you up to new earning opportunities.

#4: Do Your Research

If you are going into an annual review, or a conversation about your future career path, it can pay to do your research. This is a small career move to make, but it can have a high impact on your future net worth or earning potential. A few key things to know are:

  • What responsibilities you own, and how your work is received
  • Where your weak spots are, and how you can improve them
  • How much colleagues who have similar responsibilities make
  • How much your role or position would earn at other organizations in your industry
  • Whether there are other industries that pay more for your skillset
  • What type of benefits or non-salary rewards would have the biggest impact on your financial life (think: childcare stipends, better health insurance coverage at lower premiums, free continuing education, assistance with student loan debt payoff)

When you walk into these bigger conversations equipped with research and a clear idea of what you’re worth, what you need in order to advance, or how your organization can continue to reward your hard work outside of a pay increase – you’re setting yourself up for success. The more you know, the more you’ll be able to grow your career and your net worth in the future.

Human Capital, Career Growth, and Your Finances

When it comes to your financial plan, never underestimate the value you bring to the table simply by being you. As you focus on increasing your human capital, and taking steps to grow your career, you’ll inevitably add to your net worth over time. Remember – even small steps toward growth can make a huge impact down the road! 

Want help creating a strategy to grow your career (and your wealth)? Struggling to think of ways you can “level up” and start earning more? Reach out! I’d love to see if our team would be a good fit to help you create a comprehensive financial strategy.

The post 4 Career Growth Moves to Make That Impact Your Net Worth appeared first on Workable Wealth.