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Why Understanding Your Paycheck Stub Is Important

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Understanding your paycheck stub is essential. Your paycheck stub is included when you get paid. Whether you do direct deposit or get paper checks, the pay stub will show important information about your pay.

There are several key pieces to the paycheck stub – gross earnings, taxes, deductions, and net earnings. There are also other, seemingly, unimportant things on your paycheck. The information included on a paycheck stub include:

  • Hours works
  • Wages earned – gross and net
  • Overtime
  • Benefits – i.e. health insurance premium payment, retirement plan contributions
  • Taxes – federal, state, fica (social security 6.2, medicare 1.45, and .9 surtax if you earn over $200,000
  • Year to date info – hours, wages, taxes, benefits, etc.\
  • Personal information – name, address, social security number
  • Date of pay period
  • Pay rate
  • PTO, sick days, vacation days

Why is understanding your paycheck sub so important?

A pay stub is a way of keeping accurate records. It shows what employees worked, what they were paid, what taxes were taken out, retirement contributions, etc.

Because it’s your responsibility to report and address discrepancies. If you think you got paid less than you were supposed to or worked more than what’s reported, you need to bring that up. If your deductions (retirement plan contributions, taxes, health insurance premiums) appear to be less or more than you assumed, you need to bring that up.

Why are those things important?

  • What you earn is what allows you to afford to live. If you worked more or worked overtime, and it wasn’t reported correctly, your paycheck can suffer.
  • Taxes are incredibly important – if you expect to get money back on your tax return, but come to find out they weren’t withholding enough, you can end up owing instead. Your withholdings are very important to understand.
  • Health insurance premiums – if you’re not paying enough, your policy can cancel due to non-payment. What happens then? You go to the doctor and pay through the nose because you don’t have coverage?
  • Retirement plan contributions – If they “contribute” too much, you will have less on your check. If they “contribute” too little, your nest egg will suffer.

Paycheck stubs are incredibly important. They help you and your employer keep track of pertinent information, like taxes, health insurance premiums, retirement plan contributions, and your salary. Make sure you understand it and make sure you address any sort of discrepancy. That’s your responsibility.

Related reading:

Paycheck Stubs

Three Accounting Tools Every Small Business Needs

Does Health Insurance Affect Your Taxes

Is Long Term Disability Insurance a Good Buy?

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Is Long Term Disability Insurance a Good Buy?

Most professionals spend time planning for the future. The issue is, not everyone considers what they would do if they were suddenly unable to work. Having your income disappear due to a disability could be earth-shattering. As a result, many begin to explore their long-term disability (LTD) insurance options. But figuring out whether LTD insurance is a good buy can be challenging. If you want to see whether securing a policy is a smart move. Here’s what you need to know.

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Here’s What Kinds of Deaths Are Not Covered by Term Insurance

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Here's What Kinds of Death Are Not Covered by Term Insurance

Term life insurance can be a valuable tool for protecting your family’s financial well-being. Especially, in the case of the primary or secondary breadwinner’s death. However, term insurance doesn’t cover everything. The answer to the question, “What kind of deaths are not covered in term insurance?” is surprisingly long. If you want to know what the coverage excludes. Here’s a look at the types of deaths that don’t qualify for a term life insurance payout.

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7 Kinds Of Insurance Every Business Needs

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Commercial Insurance Broker Toronto | KASE Insurance

When people start making plans to start their business, they sometimes overlook the fact that they need to get different types of coverage. Thousands of companies provide guarantees to protect owners against any unforeseen costs related to lawsuits, thefts, and accidents, among other things. Commercial Insurance Broker Toronto | KASE Insurance like companies, cover several policies under a single contract to make it easier for their clients. Here are the various plans every establishment owner should consider getting. [Read more…]

How Can Disability Insurance Help? All You Need To Know

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You may have got insurance for your home, car or health because this is something that everyone does. But have you thought about insuring your ability to make a living? Probably not, even though you will now realize that it matters the most! Getting disability insurance is a smart move in this context because it pays up a portion of your income if you cannot work for a prolonged period due to an injury, illness or workplace accident. In fact, anyone who relies on a paycheck and has dependents to support should absolutely have this coverage. Here are some facts that you need to know about disability insurance.

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How To Claim Insurance For Wrongful Death

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Losing a loved one is traumatic in itself, but it can be excruciating in case of unexpected or wrongful death. While it can leave you scarred for life, you may also face financial setbacks when a family member dies in an accident or a situation that could be avoided. The bereaved family has a right to approach the insurance company and claim financial compensation for the wrongful death of their loved one in such an event. However, it is better to know the law well enough before you file a wrongful death claim because it keeps you one step ahead of the insurance company. Here are some facts that you need to be aware about.

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Do I Really Need Disability Insurance?

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For most Americans, saving money is a priority. Unless you bring in an exceedingly high income –– or you have your priorities greatly out of whack –– chances are you think about ways to cut down on expenses and save yourself some cash from time to time. Unfortunately, young people in particular are prone cutting or omitting vital services from their budget. Consider disability insurance: it’s likely few people in their 20s or early 30s contemplate the possibility of suffering a debilitating setback. As such, it’s also probable that a great deal don’t bother applying for disability insurance coverage, or if they do, they don’t prioritize it. This oversight could prove extremely costly, though. For evidence to that point, here are three reasons why you should rethink disability insurance today:

Time is a Factor

As with just about any insurance program, the sooner you enter into it, the lower you can expect your rates to be. True, every case is unique, but in general younger people will pay lower premiums than their older counterparts. This is why it’s essential for young professionals to look into disability insurance programs now and to demonstrate a modicum of foresight. If you plan on starting a family in the future, signing up for disability insurance now will guarantee you cover yourself in times of need and lock in the lowest rate possible. Sitting around and waiting will only end up costing you in the end –– one way or another.

“Disability” is a Fluid Term

You may be wondering: if I don’t work in a high-risk work environment, why do I need to invest in disability insurance? It’s a good question, to be fair. And the best answer is the fact that “disabled” means a great deal more than most people realize ––  since different jobs require different levels of physical involvement. So what qualifies as “disabled” for one profession, might not for another. Think about doctors who utilize intricate equipment to perform surgery. If they then develop severe arthritis in their hands, they become unable to perform their duties as a result of physical disability. That’s why physician disability insurance is distinct from disability insurance for teachers, for example.

The Worst-Case Scenario

Of course, the most obvious reason why everyone should set aside some capital for disability insurance is the fact that the worst-case scenario without it hardly bears consideration. Indeed, if a person becomes physically unable to perform their job, it can then be extremely difficult –– if not impossible –– to support themselves. And that doesn’t even take into account the possibility of shouldering family-based financial burdens. Regardless of how substantial your emergency fund may be, it’s unwise to overlook disability insurance. In reality, paying a regular rate for disability insurance is a paltry amount when compared with the benefits it could provide one day. It’s never fun to think about calamity, but it’s irresponsible not to plan for it.

How does Investment Strategy Change with Age?

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As we all know, as we age and our lives change. Our financial responsibilities and investment strategies change along with it.

In most cases, there are two truths to abide by. You have saved as much as you can and invest according to your risk tolerance, time horizon, and goals.

But what else is there? How do my financial life and my investment strategy change with time?

Starting career

Either you are just out of school or have been in the workforce for a few years. Regardless of which path you came from, there are two things on your list. Get rid of debt, or at least get it under control, and save for retirement.

There are several ways to plan for debt repayment.

  • Debt Snowball
  • Debt Avalanche
  • Balance transfers (credit cards)
  • Personal Loan (loan consolidation)
  • Refinance (student loans)

Check out this post on paying off your debt, here.

Step two is saving for retirement. If the company you work for offers a retirement plan, sign up for it. Max out your contributions if you can, but at the very least, contribute enough to get the employer match (if it’s offered).

Also, open a Roth IRA. If you have a little extra, contribute some to a Roth IRA in addition to your workplace plan.

Your investments. Time is your best friend at this point. Most of your investment allocation should be focused towards growth. Don’t put all of your eggs in one basket, diversify among stocks and bonds.

Again, the majority (at least 70%) of your portfolio should be in stocks, in some form or another.

Starting family

If you’re like the average American, your family starts to form around your 30th birthday. Hopefully, you’ve got a good head start on paying down your debt and saving for your retirement. Continue on that path.

With a family, comes saving for your kid’s college education, as well as other expenses (house, car, etc.). Contribute a little every month to a 529 College Savings Plan. The funds within this account can be invested aggressively, similar to your allocation in your twenties.

Your retirement savings is still in a good spot. Similar to your twenties, regarding the stock and bond allocation.

One last thing, get some disability and life insurance. If you have people that count on you, you need to protect them.

High earning years

More than likely, this will be your forties and fifties. At this point in your life, the average American is in their peak earning years, so take advantage of that and increase your retirement savings.

This will also be the time that your kids either go off to college or enter the workforce. Congratulations (kind of) you are empty nesters. You no longer have a college education to save for. More can go towards your retirement.

More than likely, though, you will have miscellaneous expenses from your kids that you will continue to pay for.

Your investment strategy will change slightly. You are getting closer to retirement so it’s time to start protecting what you’ve saved. A little less in stocks and a little more in bonds. Think 60/40 or 50/50.

Near retirement

You are in the home stretch! At this point, your debts (including your house, hopefully) should be paid off. All assets and your retirement savings should be looking healthy.

Your investment allocation will be similar to the last section. Definitely 50/50 if not 40/60, stocks to bonds.

Retirement

Congratulations, you’ve made it to your retirement. This can be liberating for some, but for others, this is an emotional challenge.

You’ve spent the last 40 or so years saving for retirement and now you are expected to start spending it. This is very tough for a lot of people.

From my experience and in my opinion, you should retain some sort of activity. Something that gets you out of the house, something that forces you to socialize, and something that makes you use your brain.

Staying social and sharp mentally could add some extra time to your life.

Your investments should be conservative. At least 40/60, but the more conservative the better. And it’s usually not a bad idea to keep some of your savings in cash, for emergencies such as health expenses (which will certainly go up at this point).

You don’t have many or any, more chances to earn more money, so it’s very important that you protect what you’ve saved.

Conclusion

The above information can be very useful to the average person. Paying off your debt and making your retirement savings a priority is very important.

Unfortunately, there is a retirement savings crisis in America. People aren’t saving nearly enough for retirement. They are counting on other sources, like Social Security or pensions to fund their retirement.

This isn’t enough. You won’t receive enough from Social Security to support yourself and pensions are few and far between, nowadays. We all need to do a better job of saving.

This article was created for informational purposes only. The above items are not to be taken for personal financial advice. Please consult with a professional about your personal situation.

To learn more about retirement savings and investing, and for our disclosures, visit our website: www.crgfinancialservices.com.

 

If reading this blog post makes you want to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.

Types of Life Insurance

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Insurance can take many forms, but one of the most important and often most overlooked is life insurance.

If you have a family or anyone that relies on you to support them, you need life insurance. Even if you don’t have a family, getting coverage now when it’s less expensive is a better alternative than waiting until you have a family, needing coverage, and paying more for it.

There are several different types of life insurance, however, and you need to know what they are before you can select the one that meets your needs.

What are the different kinds?

  • Term Life
    • Renewable
    • Level term
    • Decreasing Term
  • Whole Life
  • Universal Life
    • Guaranteed Universal
    • Indexed Universal
    • Variable Universal
  • Variable
  • Simple Issue
  • Guaranteed Issue

What are the characteristics?

  • Term – This is the cheapest form of life insurance you can buy. There are no bells and whistles to this type of policy. You are paying for the death benefit, and that’s it. It can expire with term lengths ranging from 5 to 30 years.
    • Renewable term – Smaller term lengths, but the policy automatically renews at the end of each term. There is a step up in premium at each renewal, though.
    • Level term – Most common form of term insurance. Death benefit and premium payments stay the same over the life of the policy.
    • Decreasing term – Death benefit and premium payment decrease over the life of the policy. People buy this because as they accrue more assets, the less they think they’ll need for a death benefit to support their family.
  • Whole life – Is one of the more expensive forms of life insurance. You are insured for your entire life, and there are no expiration dates. Additionally, the policy will build up cash value through an investment component. The average rate of return is around 2%-3%.
  • Guaranteed Universal – Cheaper than most other types of life insurance, except for term. Generates little cash value, less than whole life. Late payments can forfeit the policy, wasting every past premium payment. The death benefit will not change.
  • Indexed universal life – Cash value component is marked to an index, like the S&P 500. Upon inception, you decide on the participation rate. If you select 80%, you will participate in 80% of the index. For example, if the market goes up 10%, you only go up 8%. However, if the market goes down 10%, you don’t go backward. Your return for that period is 0%. Additionally, there can be a cap placed on the amount of gains that you make. Premium payments and death benefit can be flexible.
  • Variable Universal – Cash value is tied to an investment account. Requires hands-on management. Can take partial distributions or loans from the cash value. Unlike the indexed universal, the cash value in a variable policy can go backward if the investment account declines.
  • Simple issue – All of the above policies require a medical examination. This is part of the underwriting process and helps the insurance company calculate your insurability. A simple issue policy does not require an examination. You take a questionnaire and that is it. However, you can be turned down depending on your answers. If you lie, you can be charged with fraud if caught. Don’t lie.
  • Guaranteed issue – This is the most expensive form of insurance you can get. Reason being is there is no underwriting of any kind. You get the policy you apply for. The coverage amounts/death benefits available are low compared to other coverages, however.
  • There are a number of smaller or niche types of insurance, a good example of these are marriage insurance, burial insurance, or final expenses insurance.

Which one should you buy?

Good question. I guess it all depends on what you are willing to pay and the features you want in an insurance policy.

In my opinion, life insurance should be viewed as any other type of insurance policy. You are paying for protection and that should be it.

If you want money to accrue in a cash value account, determine what it would cost for a whole life policy, compare that to the cost of a term life, and invest the difference between the two.

However, there are certain life insurance companies, usually the bigger, better-known ones, that have made dividend payments to whole life insurance customers.

Over the life of the policy, that dividend can grow large enough to where it actually pays your premium for you. But this isn’t the case with all customers and dividends are not guaranteed.

There are generally two things to consider when picking out a policy.

One, what are you looking for? Do you just want straight life insurance? Or are you looking for a few more features, like cash value or a chance for growth?

Two, what can you afford? Regardless, you should have some form of insurance coverage, especially if you have a family.

Conclusion

Life insurance is incredibly important. I stress this point even more if you have a family with people who count on you for support.

Consider each of the points illustrated above and choose the best form of insurance for your personal situation.

Life insurance product features and availability vary by state. Restrictions and limitations may apply. For federal income tax purposes, life insurance death benefits generally pay income tax-free to beneficiaries pursuant to IRC Sec. 101(a)(1). In certain situations, however, life insurance death benefits may be partially or wholly taxable. Please consult a financial professional for additional information. All guarantees are based on the claims-paying ability of the insuring company.

To learn more about life insurance and to view our disclosures, visit our site > www.crgfinancialservices.com.

 

If reading this blog post makes you want to try your hand at blogging, we have good news for you; you can do exactly that on Saving Advice. Just click here to get started.