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5 Habits You Should Start in the New Year

5 Habits Checklist

 

The New Year is underway, the holidays are behind us, and your financial situation is stabilizing now that you have paid all the bills.  Now it is time to begin to think about how you are going to help your financial future.  The New Year is always a good time to start new habits- realize I did not say “make resolutions”.  As a firm, we find that people who make resolutions typically end up retreating on them within 1 to 8 weeks of making them.  Habits, however, once started and continued will become a part of your daily life, and they tend to stick around for the long term.  Depending on the person, habits may take 21 to 60 days to become a part of your daily life.

There are five habits you should start today that will help you in reaching and attaining both your short term and long term goals.

1) Create a Budget

Take stock of how much income you have coming into your household each month and what expenses your income is paying each month.  You can do this by simply putting pen to paper or utilizing an online tool that will track this for you.  Each month, review the expenses and see if there are items that can be reduced or eliminated.  For instance, you may have forgotten about automatic monthly payments set up for services you no longer use.  This will put you in a position to review each expense and make sure it is a necessary one for your household.  In addition, you will have an excellent view of whether or not you are cash flow positive (having more income than expenses each month) or cash flow negative (having more expenses than income each month).

2) Start and Maintain an Emergency Fund

Years ago, our parents and grandparents frequently spoke about saving money for a rainy day.  The modern day term is an emergency fund.  Depending on your employment status, whether you are an employee or own your own business, and your level of comfort will dictate what size emergency fund you should maintain.  Each person is different, and we have recommended anywhere between a 6 month to 18 month emergency fund for clients.  This is money that should be kept in a separate account from the account by which you pay your monthly bills.  This account should be liquid, meaning you can use the money on a moment’s notice if needed.  A savings or money market account will work well for these monies.  You will want to determine what size your emergency fund should be and begin to accumulate funds until you reach that amount.  Once you reach the desired amount you should only use these monies for an emergency.  Things that may warrant you tapping into these funds may be the loss of a job or income, unexpected home or car repair, or simply any unexpected expense.  After the emergency is paid for, you will want to replenish this account at your earliest convenience.

3) Pay Yourself First

Ideally you want to pay yourself first each time you get paid, and then learn to live on the monies that are left.  There are a few ways to pay yourself first depending on your type of employment.  As an employee, you will want to take part in your company’s 401(k) or retirement plan.  A small business owner or independent contractor may want to consider setting up a retirement plan if they do not have one.  The last option would be for those that do not have, or cannot set up, a retirement plan and they would have to use either an IRA or brokerage account.  A good target would be to try and pay yourself 10% of your pre-tax earnings if you are deferring to a retirement account, which is preferred.  You may need to adjust this a bit if you are contributing after tax.

4) Review Beneficiary Designations Annually

We all face critical financial and life events that will impact us during the course of a given year.  You certainly would not want your assets to end up going to beneficiaries which you did not intend them to go.  Beneficiary designations should be reviewed at least annually, or if you experience a major life event or change.  Examples of times that you would want to review these designations would be: the birth of a child or grandchild, marriage, divorce, death, disability, or job change.  Whether you are digital or analog, place a reminder on your calendar to review this each year.

5) Rebalance Your Portfolio Annually

Rebalancing is something you will want to make sure you review at least annually; whether you manage your portfolio yourself or use an advisor.  Typically rebalancing has a tendency to get forgotten when markets are going up because people tend to get complacent and think there may be no risk in waiting.  Rebalancing will help you maintain your portfolio allocation and risk with its intended targets.  You may recall back in the late 1990’s, when technology investments were booming, the technology bust.  There were many investors that saw their portfolios assets allocation change from 10% allocation to technology stocks to 70% in a relatively short period of time.  In many cases this large allocation to technology was a huge overweight, meaning more money was allocated to that sector than you initially intended.  This was great while those securities were doing well, but what these investors did not realize was the risk they were imposing on their assets.  When the technology sector busted they had 70% of their portfolio at risk instead of the original 10%.  Had they rebalanced along the way, a good deal for this risk could have been avoided.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Are Your Adult Children Still On Your Payroll?

Are Your Children Still On Your Payroll

There has been a tremendous spike in financial support given by families to their adult children in the last twenty years. This can come in the form of a place to live, paying expenses like cell phone bills and care insurance and even paying off debt. We all want the best for our children, but at the same time this may present a tremendous burden to the parents if they do not have enough income or assets to continue this level of support.

The days of children leaving the home and being responsible for their own personal and financial wellbeing seems to have gone the way of the rotary phone. According to theU.S Census Bureau, 34.1 percent of people aged 18-34 lived under their parents roof in 2015. This is up from 26% in 2005. An astounding 25% of young people living in their parents’ home do not work or go to school. These are staggering statistics and yet another contributing factor to people working longer. The financial dependence of their children are draining resources that otherwise would have been available for their own retirement.

It is important for our kids to be prepared to take on the world and be financially prepared for it. Financial education is a key to their success and the earlier you begin the better. I remember when my kids were young we wanted to teach them about money. One of the best tools we used to help educate the kids was a piggy bank, but not your ordinary piggy bank. The bank we provided to our kids had three slots, instead of one. There were slots for savings, spending, and charity and when they would receive money they would portion out the funds to each of these areas. It created a great opportunity to discuss the concepts of needs, wants and helping others. Educational ideas like this will stay with a child for a long time. We find that many financial habits of adults come from what they learned as children and how they observed their parents with money.

The help provided to adult children come at a price, far more than the dollars you spend on their behalf, and have the potential to put them in a bad financial position for much of their adult life. What happens when you are no longer here? How will they be able to support themselves? Take a look at your household bills and see what type of support you are currently lending to your child. Sit down and provide them with a list of the current expenses you are paying and develop a game plan to shift those expenses from you to them. In addition, this will offer an opportunity to work to educate them about the importance of long term financial stability and independence for themselves. You will see that this is a gift that will help them immensely in their life going forward.

Helping your children become and remain financially independent will not only be a gift to them, but you as well. It will put you in a better position for retirement, remove worry and stress from your life and most likely help your marriage, if you are married. We find that usually when a child is being support by their parents one spouse is typically in favor, and the other not, of helping them out financially leading to stress in the relationship.   I think financial independence is summed up best by this proverb, “Give a man a fish, and you feed him for a day. Teach a man to fish, and you feed him for a lifetime.”. Provide your child with support, and you help them now. Teach your child how to handle money, and you help them for a lifetime.

We would welcome the opportunity to help you get your children on the road to financial independence. Feel free to contact us, Mitlin Financial, at (844) 4-MITLIN x12 if you or someone you know needs assistance in this area.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Life Insurance Review

Life insurance can be very effective in providing financial insulation, security and peace of mind to those who elect to safeguard their loved ones from the financial travesty that can result from an unexpected tragedy. It is important to understand that just because you’ve implemented this layer of financial protection by securing an insurance policy does not mean that you can lock it away for decades and expect it to remain optimal for your ever-changing financial life.

            You may have full faith and confidence in your current insurance broker and the policy they helped you secure based on your facts and circumstances at the time. It is very important to ask yourself and identify any impactful life changes that may have occurred since you had this insurance policy written. As time goes on, it is likely that your financial facts and circumstances have changed. Based on these changes, it is important to review your own insurance coverage on a regular basis to make sure that it is still relevant.

Mid-Year Financial Check

Mid Year Financial Check

 

Almost three quarters of the year is now behind us and before you know it the holidays and New Year will be here. I am not trying to rush things, but at the same time, we want to make sure that you are prepared for what the year will bring in terms of your tax situation. It is important to take a look at your financial situation for the year thus far and make sure you are positioned properly for your 2019 tax filing. You do not want to wait until the last week of 2019 or even April to learn of potential issues you may encounter.

It would be a great idea to reach out to your financial team to discuss any financial events so far this year that were out of the norm. The financial events that have taken place may, or may not, have an impact on your tax standing, but it is easier to review, guide, plan, and protect if they are discussed well before the end of the year. Once your team is aware, of what has happened, they can advise you on your options and propose the best course of action. You are much better off planning for this on October 15th than March 15th when some of your available planning options may no longer exist

As a firm, Mitlin Financial makes it a habit to ask our clients on a regular basis, at least two times a year, if there has been anything in their financial life that would warrant us to make any changes or adjustments to their plan. You would be amazed at some of the things we have been informed of at these meetings. Everything from, “I lost my job three months ago” to “I sold my house and we are moving across the country” have come out of this simple question. You would think these would be things they would be calling us right away to discuss and review the impact on their financial standing; but, unfortunately, life gets in the way sometimes. This simple question has allowed us to review, correct, and advise our clients to the best course of action knowing this new information.

Asking this simple question during our review meeting with clients has had a positive impact on our practice and our ability to help our clients. In many cases, it has allowed us to address potential issues that may have been unintended, but life just got in the way. This will also provide you with peace of mind knowing you have addressed the issues and will not need to wait until the last minute to come up with a solution. This would also be a good time to review year-to-date capital gains and interest income from your portfolio to make sure it is in line with previous years. Should there be a significant discrepancy from the prior year, this is something that should be addressed so you are not surprised with a larger than normal tax bill. This will save you significant time when it comes to the end of the year because you will be able to have a good idea of your current standing and then plan accordingly.

The last thing I want to leave you with, as we enter the end of the year, is to be careful purchasing mutual funds in non-qualified accounts. This has been something that has really caused many clients, and their accounting professionals, a lot of grief. As mutual funds begin to announce capital gains distributions for the year-end it is important to know what the distribution is and when it will be taking place. We have seen clients purchase mutual funds in late October, November, and December and receive huge capital gains distributions, which are taxable because they purchased a fund just prior to the distribution. Imagine owning a fund for a couple of weeks and getting a $10,000 capital gains distribution. This is not a surprise that you want to have, so just be cognizant of any mutual fund purchases before the end of the year that you are making in a non-qualified account. It may be ideal for you to hold off on investing new funds or use an ETF until the distribution has been completed.

The importance of having a review with your financial team is to make sure that you both are on the same page and no surprises will come at tax time. The year-end is crazy enough for most, you might as well make things as easy and problem-free as you can. It goes back to the old adage, an ounce of prevention is worth a pound of cure. 

I would highly suggest that you hold a mid-year check-in with your financial team. This could save you hours of grief towards the end of the year or at tax time next year. Be sure to contact us, Mitlin Financial, at (844) 4-MITLIN x12 to schedule a time if you are not having these reviews with your current financial team. Be sure to share this article with friends, family and business acquaintances who might be experiencing this too. We look forward to helping you, and them, get on the right path and stay there.

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Mitlin Minute: Founder, Lawrence Sprung, CFP® being interviewed at Nasdaq

In this edition of Mitlin Minute we feuture our Founder, Lawrence Sprung, CFP® being interviewed at Nasdaq.

Learn about Mitlin Fianncial's differentiating message and what they are advising clients during these volatile times.

Be sure to share this Mitlin Minute with your network and contact us if you would like any additional information about what is discussed in this Mitlin Minute or you would like to schedule a meeting to see if there is a fit for you and your family.

 Disclaimer: This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

Planning as a Process with Larry Sprung on the Money Savage Podcast

I recently had the opportunity to be a guest on the Money Savage Podcast with George Grombacher.  This podcast gave me the opportunity to discuss how planning is a process and not a one time event.  I hope you find this episode interesting and of value. 

In today's conversation, George and I discuss the following:

1) One of the driving factors that led me to enter the field of Wealth Management

2) How financial education plays a role in your life

3) The importance of planning for your family and buisness

4) My one difference making tip

Money Savage Podcast Larry Sprung

 

 This podacst represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.

 

 

The Beyond 6 Seconds Podcast: Larry Sprung – Founder of Mitlin Financial and advocate for suicide prevention

I recently had the opportunity to be a guest on the Beyond 6 Seconds Podcast hosted by Carolyn Kiell.  We had a fantastic conversation about how I entered the financial services business and why I am such an advocate for suicide prevention. 

On this episode, Larry discusses the critical events in his life that shaped his career and advocacy:  

  • How his mother’s long battle with breast cancer led him to a career helping people plan for critical financial events in their lives, and
  • How the loss of his brother-in-law to suicide led Larry to become involved with AFSP and, along with his wife Denise, raise more than $1,000,000 for the organization through the Keith Milano Memorial Fund. The fund was created at AFSP in memory of Larry and Denise’s brother-in-law and brother, respectively.

Larry also talks about some of the important work that AFSP is doing to help people “Seize the Awkward” by having potentially life-saving conversations with the people in their lives who may be suicidal, and AFSP’s Project 2025, which aims to lower the suicide rate by 20% by the year 2025.

You can also find more information about AFSP’s work at www.afsp.org and the Seize the Awkward campaign at www.seizetheawkward.org .

 

Beyond 6 Seconds Podcast Lawrence Sprung

Disclaimer: This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.  Past performance is not indicitive of future results.

Wedding Bells and Your Wallet

 Wedding Bells and Your Wallet

 

One of the best times of our client’s life is when they or their kids have decided to get married. It means they are embarking on a new chapter in their life, either their own or through their children. This life event typically comes with a hefty price tag. According toValuePeguin, the average cost of a wedding in the US ranges from $12,000 (in Mississippi) to $88,000 (in Manhattan). The cost of a wedding can certainly take a bite out of your financial life.

Traditional wedding ceremonies and celebrations can be hugely expensive, as outlined above, and detrimental to your financial plan. We would recommend that you take a few minutes with your advisor and have them assist you through this financial juggernaut. It is key to determine what type of celebration is in your budget or to what degree you would be able to help your children. This is an expense that you would want to have as part of your overall financial plan. Hopefully it is part of your overall plan and you have a separate savings where you have been setting aside money for this momentous occasion. This would certainly help you reach your desired expectations while not forcing you into debt and hindering your financial goals.

Helping out children tends to be a bit more difficult conversation than speaking with a client that is planning their own wedding. We all want to help our kids and provide them with the best. We have seen some parents sacrifice their own financial stability for the pleasure of their kids. It is important to educate yourself on what you can and cannot afford. We have had our clients use us as the bad guy and inform their children that they only have a certain amount of financial resources, a dollar amount, available to contribute. These are not easy conversations, but ones that will help keep you from making a financial misstep.

There are many ways to celebrate a wedding and it is definitely a matter of preference. Spending tens of thousands of dollars for a several hour celebration may not be the best use of your financial resources. It is important that the happy couple or the parents and children sit down and outline what the expectations are for the cost of the wedding or what they will contribute to the event. Recently, we had a client who asked if they could take a deduction for the expenses they are incurring for their son’s wedding. This is not an option, but it makes you think if they would spend more if it were deductible. There are certainly ways to make a memorable event without bankrupting the family’s financial situation.

Every marriage should start out on the right foot and being in a financial hole does not help a marriage one bit. Please feel free to contact us, Mitlin Financial, at (844) 4-MITLIN x12 if you or someone you know is planning on paying for a wedding, their own or for a child. We look forward to helping you, and them, make the decision that is best for all.

 

This article represents the opinion of Mitlin Financial Inc. It should not be construed as providing investment, legal and/or tax advice.