If tax time leaves you feeling stressed every year, you’re among many. The American Psychological Association says that money is the leading cause of stress for most Americans.
Gathering all your necessary documents is a small but very important part of the tax filing process. But you could misplace W-2s or never even receive them from your employer.
With talks of trade and tariffs filling headlines, I thought it fitting to explain what these terms actually mean and how they affect our economy.
In its most basic form, trade is the exchange of goods and services. What we’re talking about, however, and why this article is so relevant, is global trade.
The current “trade war” between the U.S. and China is about “unfair” trade (so President Trump says). Now I’m not debating as to whether trade between our two countries is fair or if I agree with his use of tariffs, I’m going to explain why this all matters.
China and the U.S. are complete opposites when it comes to trade. China is a net exporter and the U.S. is a net importer. China exports more than it imports and the U.S. is the reverse of that.
China is able to produce goods at a much lower cost because their cost for labor is so low. The U.S., on the other hand, is more costly to employ workers.
President Trump is utilizing tariffs to do two things. One, he’s trying to keep people employed domestically, instead of companies shipping jobs overseas.
A tariff increases the overall price of a good. By doing this, it gives employers an incentive to keep jobs in the U.S. because the money they save by shipping jobs abroad is reduced or taken away.
Two, he wants to reduce our trade deficit. Remember the U.S. is a net importer. By slapping tariffs on Chinese goods, it encourages U.S. consumers to buy products from U.S. manufacturers. Thus, fewer imports from China.
In theory, this sounds like a great plan, but in practice, however, it’s the consumer that pays the price.
When a tariff is used, the exporting country doesn’t see any taxes or penalties. The end result is an increased cost for each product.
For example, if you bought a pair of headphones for $100 and the electronics that make up those headphones are the recipient of a 15% tariff, those same pair of headphones now cost $115.
Now here’s where things get a little more complicated.
China has retaliated with tariffs of their own, but what they’ve also done is manipulate their currency.
You may have seen that in the news a few weeks ago when President Trump labeled them a currency manipulator.
When Trump put tariffs on Chinese goods, China reduced the value of its currency compared to the USD (U.S. Dollar).
This counteracts the effect those tariffs have.
One, the markets hate uncertainty, so the more this is dragged out, the less likely we are to see an agreement between the two countries. Uncertainty leads to volatility, volatility leads to selling, and selling leads to declines.
Two, through the use of technology and more efficient supply chains, our planet has become very interconnected.
Global trade is a great thing. Each country has its strengths and weaknesses. When countries can focus on their strengths, we can produce more of something for less cost, and then trade with each other. Everyone wins.
This trade war does the opposite. It’s reducing everyone’s willingness to work together by creating a protectionist environment.
A protectionist mentality favors home country and doing business only in your home country. That restricts global trade and the exchange of goods.
The goal here is creating a fair trade agreement that benefits the global economy and (now) minimizes damage to individual economies.
The most challenging part about this whole situation is we don’t know what’s going to happen. If a deal gets done, the market will like that, but if a deal doesn’t get done, I see a stock market decline in our future.
How do you prepare then? My best advice is the same as the advice I usually give, allocate according to your risk tolerance and time horizon. Those two things should dictate your investment strategy and whether or not you should be concerned with the outcome of this trade war.
Further reading:
Trade, Interest Rates, and Australia
Questions You Need To Ask Yourself
Please be advised: Everything written in this article is for informational purposes only and should not be taken as investment advice. Opinions are my own and do not reflect the opinions of this publisher or my employer.”
Jacob Sensible is a financial advisor with decades of experience in the financial planning industry. His journey into finance began out of necessity, stepping up to support his grandfather during a health crisis. This period not only grounded him in the essentials of stock analysis, investment strategies, and the critical roles of insurance and trusts in asset preservation but also instilled a comprehensive understanding of financial markets and wealth management. Jacob can be reached at: jake.sensiba@mygfpartner.com.
Whether it’s a new home, a sweet ride, or a dream vacation across the globe, everyone has a dream of what they’d like to do with their hard-earned money.
But in order to achieve your dreams, you need to understand the methods of proper cash flow based financial planning that will set you on the path toward success
[Read more…]
With Fall quickly approaching I thought it’s fitting to write an article about the (inexpensive) activities you can partake in that won’t break the bank.
Below you’ll find a large number of fun things you can do when the leaves start to change.
All-in-all, autumn is my favorite time of year. I love the weather, the leaves changing, and all of the fun things you can do. I recommend doing at least one of these activities in the next few months!
Jacob Sensible is a financial advisor with decades of experience in the financial planning industry. His journey into finance began out of necessity, stepping up to support his grandfather during a health crisis. This period not only grounded him in the essentials of stock analysis, investment strategies, and the critical roles of insurance and trusts in asset preservation but also instilled a comprehensive understanding of financial markets and wealth management. Jacob can be reached at: jake.sensiba@mygfpartner.com.
Money management is tough no matter how old you are. However, it’s particularly challenging when you are in college. This is because you either have no income at all, or you make a small amount of money with a part-time job. However, the expenses are many- lodging, tuition fees, textbooks, transportation, etc. This is why it’s important that college students learn how to spend their money responsibly, especially in light of the many reasons why you should save money.
The following are some of the points that you can keep in mind to save money as a college student:
Spending money without a budget is like driving a car without the headlights on- you don’t know where you are going. You may think that you only need to record the “big” transactions like the tuition fees, dorm rent, etc. but the truth is that every small expense including the can of coke that you consume more than a few times every other day can add up and affect your finances.
Maintaining a budget isn’t that hard. All you have to do is create three records- earnings (allowance from parents, income from a part-time job or freelance gigs, etc.), fixed expenses (college fees, Internet service, etc), and flexible expenses (food, transportation, etc) and then figure out how much you are saving every month. You can also use any of the popular mobile apps for budgeting viz. Mint, PocketGuard, Mvelopes, etc.
College students usually have so many expenses already that insurance may seem like a luxury that they can easily avoid. However, nothing could be further from the truth. This is because the students need insurance just as much as salaried professionals and business owners. For instance, you can benefit from an affordable health insurance plan as it’s cheaper at a young age. In the same way, you can get renters insurance if you are living somewhere as a tenant for protection against thefts, floods, earthquakes, etc. Just make sure that you know what does renters insurance cover before you sign on the dotted line.
Credit cards can be extremely useful to college students. However, they can also lead to a massive debt if used carelessly. For instance, if you have become fond of making “minimum payments”, then you will be surprised to know that these can increase your debt too. This is because these payments only prevent fines and penalties for not clearing your balance but the remaining amount (balance-minimum payment) is carried over to the next month still. This amount collects interest i.e. debt.
If you don’t want to waste money, then it’s better to control your spending habits and reduce debt. If you already have debt, then you can learn how to overcome credit card debt online or by approaching a credit expert.
College textbooks can be rather expensive. Thus, it’s better to buy used books that can be easily obtained at up to 50% or lower prices of the new ones. Besides, there are various platforms where you can buy and sell used books including the following:
Shopping online is convenient and easy. However, it can also help you save a lot of money. For starters, you get to compare the prices of the same product under several brands and pick the one that gives you a bang for your buck. You can also take advantage of promotional offers, discounts, cashback, etc. to save additional money on top of the existing discounted prices. There are even dedicated platforms like coupons.com where you can find coupons for various ecommerce stores and service providers.
Student life doesn’t have to be stressful. You may often find yourself short on cash, but it doesn’t mean that you can’t get on top of your finances. Just apply the information above and you are sure to notice a spositive impact on your personal finance.
About 68 million people don’t have an open checking account.
If you are one of those people, you may be able to benefit from having a prepaid card.
Security is not the only benefit of using prepaid cards. Keep reading for 7 essential benefits of using prepaid cards.
Retirement can seem like a long way away.
So far away, in fact, that it’s easy to ignore altogether.
This might explain why the average American has a paltry $96,000 saved for retirement.
That, of course, isn’t going to go far. Unfortunately, at the current rate, the possibility of ever retiring seems unrealistic! It’s a shocking realization. After all, nobody wants to work longer and harder than they have to.
Of course, it’s in everyone’s interest to retire as early as possible. Nicely, it’s absolutely possible.
It just takes the right know-how. With a few lifestyle changes and sensible decision-making, you can bring your retirement date forward by decades. Sound good? Want to learn how to do it?
Keep reading to discover exactly how to retire at 50!
Nobody retires at 50 by living paycheque to paycheque.
If you’re forever spending everything you earn, then you can never expect to retire at a reasonable time. The only way to do it is by being rigorous and regular with your saving.
The trick? Start as early as possible and invest what you save.
You have to make your money work for you. Sticking it straight into a typical saving account is good for nobody. Having cash is okay, but interest rates are at an all-time low at the moment.
Combine that with rising inflation and your money can end up depreciating in value over time.
Saving larger amounts earlier, and investing it all, helps you leverage the power of compounding. This is when money grows exponentially over time via interest. The earlier you start investing, the better. It gives you more time for compounding to take effect.
The more you save, the better.
Even relatively minor additions to monthly savings can make a dramatic difference in the long run.
For example, imagine investing an initial $1,000 and adding $100 per month for 30 years. An annual return of 8% interest will provide over $146,000 by the end. You’ve contributed $37,000 in total, but almost quadrupled your money thanks to compounding.
Amazing, right?
However, imagine the same setup, but this time you invested $200 every month. Now, you’d come away with almost $282,000. That’s an enormous jump for an extra hundred bucks a month.
As you can see, it’s in your interest to put more aside every month.
That takes sacrifice. Get into the habit of cutting back elsewhere so you can reach your monthly savings goals. For an extra hundred bucks, that might just mean cutting out your morning Starbucks coffee!
Oh, and want to know how much you’d get for saving $200 every month for 50 years (with an initial $1,000 investment)? A whopping $1.42 million. It’s a clear example of how starting earlier is in your interest.
The key to attaining these numbers is in investing.
We mentioned that earlier too. However, it’s worth digging into deeper. After all, investing is a total mystery to almost everyone out there. That’s one reason why not many people do it! Investing feels risky; in tricky times, it’s understandable to want to stockpile money instead.
However, investing should be for everyone. There are different ways to do it. Some are riskier than others. The trick is finding your risk tolerance and investing accordingly.
In truth, though, younger people can afford to invest more aggressively. What does that mean? It means investing larger sums in riskier assets (in other words, it means investing in stocks over bonds).
Market fluctuations are normal. They’re going to rise and fall. Over time, any falls will correct themselves and, like a pendulum, swing back into the positive. At a younger age, you’ve got more time to weather market downturns.
Want to retire by 50? Invest in riskier assets when you’re young. Then, as you get older, begin to reallocate your investments into ‘safer’ asset classes, such as bonds.
Taxes are anathema to early retirement plans.
Of course, they serve a vital societal function. However, there’s no point paying more than is necessary. Many people do this unknowingly. All the while, their retirement date gets pushed ever further backward.
Imagine meeting your savings goals. Years go by and you start feeling great about your retirement account. You congratulate yourself on your achievement. You go to withdraw your money, only to be landed with an unexpected tax bill that slashes the total by 30%.
It’s more than possible; it’s in your absolute interest to take sensible tax-reducing savings decisions.
Two accounts of particular note are your 401(k) and a Roth IRA. Both accounts provide means of sheltering your finances from undue tax obligations. The tax-savings can extend to thousands of dollars.
Be sure to look into them in more detail and leverage them in your bid to retire at 50.
Is everything about financial planning a mystery to you?
We don’t blame you! Investments, savings, and budgeting can get confusing.
Speaking with a retirement planning advisor may be a good idea. Sure, you’ll pay for the service; it’s always worth having a clear understanding of how much they charge.
That said, finding a reputable and ethical, financial advisor to help you plan for retirement can make a big difference. They can support you in setting goals and reaching them. How? By making solid recommendations based on expertise and knowledge, suggesting sensible investment allocations, and preparing you for market downturns.
For total newbies fixed on retiring at 50, this can be a sensible approach.
There you have it: 5 essential steps that help explain how to retire at 50 years old!
People are struggling to save for retirement. As it stands, the majority of Americans will struggle to retire at all! They won’t have enough saved up to cover themselves and provide any quality of life. However, that doesn’t have to be the case.
In reality, anyone can retire on time. Even better, taking early retirement is possible too! It just takes the right approach and know-how.
Hopefully, this post has highlighted the key steps in making it happen.
Want more articles like this one? Head to the Getting Finances Done section of our blog now!
Your money philosophy and how you think about your finances make a big difference in the decisions you make.
Whether you’re just starting your financial journey or you’re well into it, it’s a good idea to take a step back and define that philosophy.
Sure, there are monetary goals you would like to achieve. For example, $1 million nest egg has long been touted as the number you need to hit for a comfortable retirement, but hitting, somewhat, arbitrary numbers aren’t everything.
Money is a tool. If used properly, you really can achieve financial success. Taking the money you’ve saved and putting it to work for you is a very simple, yet effective way to use it.
Another monetary tool is a credit card. Credit cards offer a variety of reward programs, like travel miles, cashback, among others. Additionally, it enables you to build and strengthen your credit report.
It is important, however, that if you are using a credit card, you must do so responsibly. Accumulating credit card debt can really set you back, financially.
Related reading: A Deep Dive Into Credit Cards
Often times, we focus too much on the issues with our finances. I have too much debt, I have too little saved for retirement, or my expenses are killing my ability to save.
Instead of focusing on the problem, focus on what can be done to fix it.
If you have too much debt, develop a plan to pay it down. If your retirement savings are low, figure out how you can increase your savings rate. Expenses hurting your ability to save, cut your expenses.
“Whatever the problem, be part of the solution. Don’t just sit around raising questions and pointing out obstacles.” Tina Fey
Related reading: How To Cut Spending
It is true that money is relatively important. I say relatively to try and redirect to my first point when I mentioned that money is to be used as a tool.
It affords you food to eat, clothes to wear, and a place to live, among other things. If your basic needs are met and future goals are being worked towards, you have to try and stop worrying that you don’t have enough.
This is extremely challenging to do because we, as a society, are so fixated on money and material items that money can buy. It also doesn’t help that comparing ourselves to others is essentially baked into our DNA.
Believe me, I know that learning to stop worrying is incredibly difficult, but retraining your brain to view your finances differently can be extremely liberating.
Related reading: The Psychology Of Money
To be a successful investor or to be able to financially plan effectively, you have to think long term.
The market is going to have its ups and downs. As an investor, it’s important to ride out those down periods and continue to invest. If you have 15+ years until you need that money, you should be able to recoup your losses.
With regard to saving, I typically take the “bucket” approach. I have three buckets, short-term, medium-term, and long-term. Be advised: the following is how I define these time horizons.
Related reading: How To Make Long-Term Investing Decisions
Money to a certain extent can buy happiness. As long as it’s being spent on experiences rather than stuff.
Memories with family and friends, visiting different destinations and attractions are the things we’ll cherish most.
Stuff breaks and toys are outgrown. What people won’t forget, however, is the time you spent with them.
Make that a priority. I know, as a fairly new parent (my son is almost 2), that I am constantly aware of how finite time is and that I need to make the most of those moments I spend with him.
The way you think about money pulls weight in how you use it. When creating a financial plan, I would prioritize figuring that out. How you think can lead to how you act.
Jacob Sensible is a financial advisor with decades of experience in the financial planning industry. His journey into finance began out of necessity, stepping up to support his grandfather during a health crisis. This period not only grounded him in the essentials of stock analysis, investment strategies, and the critical roles of insurance and trusts in asset preservation but also instilled a comprehensive understanding of financial markets and wealth management. Jacob can be reached at: jake.sensiba@mygfpartner.com.
Questions are a fantastic way to understand things better. They are vitally important in our everyday lives.
One area where I think they are underutilized is personal finance.
You NEED to ask yourself questions on the regular so you can discern if you are doing the right things and taking the correct steps for YOU.
In the following article, we’re going to explore the various questions you need to ask yourself in order to be financially effective.
This is a fairly general question, so we’ll break it down into three buckets: short term, medium-term, and long term.
Related reading: Financial planning for all ages
I almost always propose this question to new clients because it gives me a good understanding of their risk tolerance.
If they are only comfortable with losing 10 percent of their portfolio, they’ll be invested pretty conservatively.
On the other hand, if they can tolerate a 50 percent drawdown and not bat an eye, then we can “put the pedal to the floor”, excuse the expression.
Determine how much of a loss you can stomach and that will give you a good idea of how to allocate your assets.
Related reading: Are you taking on too much investment risk?
Questions regarding asset allocation, typically, pertain to risk and time horizon. For example, if you start saving for retirement when you’re 25, the majority of your portfolio will be in equities (stocks).
This allocation, generally speaking, is suitable for you for a couple of decades. At which point, you’ll probably (again, speaking generally) want to shift a little more of your portfolio to bonds.
Your allocation will, and should, shift over time, and once you get within a few years of your goal, the primary objective of your portfolio becomes capital preservation.
Related reading: Why asset allocation matters
Financial situation takes everything into consideration (income, debt, spending, savings, etc.) Actions can be anything related to those items.
Specifically what I’m talking about is how much you are saving, how much you are spending, and how much $ you’ve dedicated to paying down debt.
If you have a sizeable amount of debt and not a whole lot of savings, it’s time to cut your spending. Conversely, if you’ve paid down your debt and are ahead of the game with your savings, it would be alright if you loosened up a little and enjoy yourself.
Like everything in life, your personal finances are a delicate balancing act, and when you ask questions, you can figure out how to shift your priorities.
Kind of related to the last point. Tracking your spending to find out exactly where all of your dollars are going is an important step.
Another recommendation I usually make is to create a financial playbook. Here’s a brief outline of how I create a financial playbook:
Related reading: How to cut your spending
As I said in the beginning, questions help us understand the world, and ourselves, better.
Having a better grasp on why and when we make certain changes or do certain things is a must if we are to be more effective in managing our finances.
Jacob Sensible is a financial advisor with decades of experience in the financial planning industry. His journey into finance began out of necessity, stepping up to support his grandfather during a health crisis. This period not only grounded him in the essentials of stock analysis, investment strategies, and the critical roles of insurance and trusts in asset preservation but also instilled a comprehensive understanding of financial markets and wealth management. Jacob can be reached at: jake.sensiba@mygfpartner.com.
Overspending is one of the reasons why individuals seek debt relief through a bankruptcy filing. Most individuals are guilty of overspending at some point during their adult lives. Below are eight causes of overspending and suggestions for how you can stop overspending.
Many people view personal budgets as denying themselves what they want to purchase. They overspend to maintain the lifestyle they desire without thinking about the future. Unfortunately, once you become accustomed to a specific lifestyle, you may borrow money and incur debt to continue the lifestyle even though you cannot afford the payments in your budget. At some point, the overspending will catch up with your budget.
The best way to avoid overspending is to create and live within a budget. Budgeting does not need to mean you have to give up what you desire. Budgeting allows you to reduce expenses so you can save money for the things you desire. Budgeting can also help you identify the difference between a “need” and a “desire.” You can make budgeting easy and less stressful by using an online budget tool such as Mint, Acorns, or YNAB.
Some individuals deal with stress or emotional situations by shopping. Often referred to as “retail therapy,” shopping can help you focus on something other than stressful situations or unhappy emotions. It can be difficult to recognize that you use shopping to deal with emotional issues and stress. In many cases, a family member or friend may say something.
According to John Scura from the Scura Bankruptcy Law Firm, many times due to uncontrolled stress, people tend to overburden themselves with more debt than they can handle.
If you find yourself purchasing items you do not need when you are stressed or sad, you may need to find ways to curb that spending, such as creating a budget, getting rid of credit card accounts, and finding another healthy outlet for stress and emotions.
Peer pressure is a common reason for overspending. You are out with friends, and your friends are spending money, finding great deals, and having fun. It can be difficult not to want to join in the fun by purchasing items that you cannot afford and that you do not need.
If you are trying to save money or living within a strict budget, do not feel shy about sharing this information with your friends. You may be surprised to discover your friends need to save money too. Try to find other activities to do with friends that do not involve shopping or spending money.
The holidays and special occasions can trigger overspending, especially when you are trying to please or impress someone. For example, you are attending the wedding of a college friend, and you think you need a new wardrobe, or the wedding is a destination wedding that you really cannot afford to attend. For Christmas or birthdays, you tend to purchase gifts that are extravagant and far more expensive than anyone else purchases for the occasion.
If you find yourself overspending during the holidays or for special occasions, you may want to try the envelope method of budgeting. Place money in an envelope with each person’s name. The money in the envelope is the maximum you may spend on that person or occasion.
Too many credit card accounts may cause overspending. Credit card companies entice consumers into opening new accounts with specific perks and benefits, such as no interest for an introductory period or rewards. Store cards are notorious for offering a percentage off your entire purchase the day you open and use your credit card.
You can limit your credit card debt by using one or two major credit cards with low credit limits. If you max out the card, you cannot charge anything else until you pay down the debt.
Some people cannot control their urges to purchase items. They purchase items they do not need, and they cannot afford. They may have multiple duplicates of items they purchase. In this instance, a person should consult a counselor or therapist to inquire about professional help with an addiction disorder.
Do you notice that you spend more money in the evenings when you are relaxed and shopping online or when watching shopping networks on television? Maybe you shop on the way home from work or on the way to work when you are rushed and less likely to pay attention to how much money you spend?
Some individuals create a habit of shopping at certain times of the day. If you notice that you shop or spend more money during certain times of the day or days of the week, you may want to make a conscious effort to cut spending on those days and at those times unless it is absolutely necessary.
In some cases, overspending stems from the lack of or poor money management skills. Managing money wisely is not something that humans instinctively know. Many of us learn our money management skills from our parents. Some individuals who overspend did not have positive role models for wise money management. However, you can learn how to manage your money wisely. You can take an online course to learn about personal budgeting, the wise use of credit, retirement savings, and managing debt.
Written by John J Scura III, Esq.
Partner, Scura, Wigfield, Heyer, Stevens & Cammarota, LLP
John has been Certified by The Supreme Court of New Jersey as a Civil Trial Attorney. Whether it is a personal injury case, bankruptcy case, litigation case or other type of matter, John wants his clients to participate in the decision making process toward solving their problem in the best way possible.