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In addition to opening up with your significant other and getting through some tough money conversations together, you need to be able to communicate about finances with two other important people in your life:

Your parents.

Yes, it can be awkward to ask your parents about money — especially about their money. (Can you believe 54 percent of adults would rather talk to their own kids about sex than talk to their aging parents about money?!)

But keeping open lines of communication about their financial situation as they approach retirement is important for both your sake and theirs.

They may not need (or want) your help today, but you might need to help them at some point in the future. The more you can understand about their financial and retirement plans today, the easier it will be to help them when they need it.

How to Bring Up Money Questions with Your Mom and Dad

This doesn’t mean you need to start offering your unsolicited advice. But you can open up the conversation with a few questions to better understand their situation and what they may need to do to keep their financial ducks in a row.

You can also talk about your own situation or share a story about a friend to get them talking. Be mindful about when you ask questions or bring up these topics, too. Finding a time when they’re not overly emotional or stressed is important.

And if they’re still resistant to talk about it? Remind them that you want to ask the questions and understand the answers now so you can help them avoid financial trouble in the future.

After all, should anything go wrong with their money plans, you’ll probably be the one on the hook for getting them through it.

As a last resort, you can help them find an objective third-party. They may not want to burden you with the details of their financial situation, but they may open up to a fee-only financial planner whose job is to provide unbiased financial advice and plans.

These are the biggest questions you should be asking your parents to help them — and you — maintain the financial success your whole family wants.

What’s Your Retirement Plan?

This might be one topic that’s easy to get your parents to talk about if they’re excited about an upcoming retirement. Make sure you understand what they’re planning on for life after their working career — and how they’ll fund their plans.

You can ask questions like:

  • When do you plan to retire?
  • Where do you want to live? Will you stay in the same place or do you have plans to move somewhere else?
  • Will you do something else for work once you retire from your current job? How will you spend your time in retirement?

Once you understand what they have in mind, you might want to ask an important follow-up question: what will you do for income?

They could use savings, a pension, government benefits — or they may continue to work part-time. There’s no right answer here. The important thing is they have a spending plan and a way to fund it.

How Will You Handle Healthcare Expenses?

In addition to understanding what your parents’ retirements may look like, you’ll want to ask about their plans for dealing with healthcare.

Your parents shouldn’t take this question personally. For one, healthcare costs are some of the most expensive costs in retirement. Medical bills could eat up a large chunk of their budget if they don’t have the right strategy in place to handle those costs.

If they haven’t retired yet, you can help them find ways to plan for healthcare expenses, like opening and funding an HSA while they’re still working if they qualify. You can also help them figure out what kind of government benefits they might be eligible for an how those could help pay for healthcare costs.

You might also want to ask if they’ve considered long-term care insurance — especially if you and your family aren’t in a position to provide for your parents should they reach a point where they need 24/7 care.

Do You Have Your Estate Plan in Place?

This question might be a little harder to ask, but it’s critically important. Do your parents have an estate plan, which includes things like a will, healthcare directives, and other important legal documents that lay out your parents’ wishes should they become incapacitated or pass away?

If they don’t have these documents, they need to speak with an estate planning attorney (and sooner rather than later). You can acknowledge that it might be difficult or just feel morbid, but remind your parents that they don’t have to go through the process for themselves.

Getting an estate plan helps protect not just their assets, but you and the rest of their family. If anything were to happen to your parents and they didn’t have wills or estate planning documents, decisions about how to distribute their assets and property would go through probate court.

Probate can be a long, complicated, stressful process. And anything that goes through probate becomes public record, too. And because a probate judge makes the decisions, it could open the door for disputes within your family and further legal procedures if any relatives challenge the probate court’s decisions

If they do have an estate plan, make sure you know who the executor is. That person, whether it’s you or someone else, needs to understand where to find their will and who to contact should they need to make decisions around your parents’ estate.

Will You Need My Help?

One of the reasons to ask all these money questions of your parents is to understand whether or not they have the financial means to enjoy the retirement they want. These questions can also help you understand if they have the financial means to enjoy any retirement at all.

It might be hard to imagine, especially if you’re doing your best to work your wealth right now. But the reality is, half of American families have nothing in retirement savings.

According to the Economic Policy Institute, the median savings households where the income earners are between 50 and 55 years old is $8,000. For those between 56 and 61, it’s $17,000.

With numbers like these, it shouldn’t come as a shock if your parents will need a little help. It’s important to ask and get a straight answer here so you can plan ahead.

Do they anticipate needing financial support for living or healthcare expenses? Make sure you understand what their budget is, how much of their expenses they can handle themselves, and what shortfalls they may face.

Once you understand the reality of their financial situation, you can make a plan for next steps. That might be helping your parents come up with a more realistic spending plan, or it could mean paying a financial advisor to help them.

There are a lot of other things you can do to help your parents without hurting your own financial situation, but there’s no way to know the right thing to do until you ask these important money questions and understand what their finances actually look like.

The post The Money Questions You Should Be Asking Your Parents appeared first on Workable Wealth.

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If you’ve got kiddos, you don’t need me to tell you: childcare costs can seriously add up. And quick.

I know you want the best for your children, and that can make it even harder to manage the expenses associated with raising kids. Sometimes the best is awfully expensive.

That’s especially true when it comes to the biggest childcare costs, like daycare. Depending on where you live and what your options are, sometimes it’s even cheaper to become a stay-at-home parent than to continue working to pay for childcare.

But many parents want to continue working — and that’s absolutely fine if you fall into this camp. You just need to figure out how to manage the cost of childcare so you can achieve the balance you want in your life.

If you know your family will need some form of childcare in the next year or two, the time to start planning for it is now.

Here are five ways to get out in front of that need — and even save money while you’re at it.

1. Take Advantage of Company and State Benefits When You Can

All states require employers to provide 12 weeks of unpaid parental leave when your child is born. Only California, New Jersey, Rhode Island, and New York currently offer paid family leave.

Connecticut, D.C., Hawaii, Maine, Minnesota, Oregon, Vermont, Washington and Wisconsin all offer expanded versions of the required 12 weeks unpaid leave, too. Be sure to check up on the specific benefits offered by your state to see what you’ll be able to use.

The United States is a little infamous for its poor benefits offered to new parents. There are a lot  of caveats to know about before you can take advantage of unpaid leave.

To qualify, you must:

  • Work for a company with 21 or more employees
  • Worked at least half-time for a year, and have been with the company for at least a year

You also have to take your parental leave within a year of the birth (or adoption) of your child, and you need to request it first.

This is just what is required by law. Depending on the company you work for, you may receive benefits that include more time off, paid leave, or other support.

All this being said, use what you can for as long as you can. While you’re at home with your child, you can save on childcare costs by providing that care yourself.

Talk to your HR department or manager now to find out what you’re entitled to — and if you need to apply for or request those benefits before you take them.

2. Do Your Research and Ask Childcare Providers About Discounts

Planning to head back to work? Research childcare providers and options now. Compare reviews from other parents and consider prices and features each offers.

As part of your research, reach out to each provider and ask if they offer any discounts. Some could provide price breaks to parents who belong to the military. Others may offer a discounted price if you place more than one child with them.

Of course, the price isn’t everything when it comes to a caretaker. Look for discounts where you can — but understand that the best option for your family might not be the absolute cheapest.

This is where planning ahead can come in handy. Once you understand the monthly cost of childcare, create a budget that makes room for that expense now — and start using that budget today.

Because the expense for childcare will be in this budget but you’re not paying it quite yet, that creates a savings opportunity for you. Put that money into a cash savings account that you can use for additional childcare expenses down the road.

3. Look into Options Beyond Full-Time Childcare

Enrolling in daycare full-time isn’t the only choice you have. If you find it’s prohibitively expensive, consider the alternatives.

You might want to work — but could you cut back on hours or take a different position that allows for flexible work time?

You also don’t need to hire an entire daycare center to care for your children. Consider hiring a nanny or au-pair. Depending on where you live, this could be a better value for you and your family than sending your kids to a childcare center.

Grandparents are also the standard go-tos for babysitting and childcare help, so I’m sure you’ve considered that option. But have you considered aunts, uncles, adult cousins and siblings?

And what about other parents who may stay at home and could provide care to your kiddo for a smaller fee than what a professional nanny would charge? You may also be able to join a parenting group that shares in childcare responsibilities.

Take this as an example: A neighborhood mom may watch your kids during the week while you’re at work. You could watch her youngest on some weeknights in exchange when she needs to runs her oldest to extracurriculars after school.

It takes a village to raise a child, right? Don’t hesitate to call on your community to come up with creative options for childcare that could end up costing everyone less.

Ultimately, there’s no one right answer. Just focus on what works best for your family.

4. Take Advantage of Tax Breaks

If your employer offers a dependent care flexible spending account (FSA), don’t think twice about using it. This account allows you to use pre-tax dollars from your paycheck to pay for certain childcare-related costs.

Your employer determines how much you can contribute, but the IRS allows up to $2,500 per year if you’re married but file your tax returns separately. You can contribute up to $5,000 if you’re single or married filing jointly.  

Another option is the Child and Dependent Care Credit. If you paid for childcare expenses for a qualifying child to enable you to work or actively look for work, you can get this credit when you file your tax return.

The credit is calculated based on a percentage of your costs, and the total expenses you use to calculate the credit can’t exceed $3,000 for one child or $6,000 for two or more children. (You can’t get this credit if you’re married but file your taxes separately.)

Be careful how many tax advantages you try to take, though. In this case, you can’t use both these benefits for the same childcare expenses. It might help to consult a tax professional to determine the best tax saving strategies for your family.

5. Save in Advance

One of the savings hacks for childcare costs we used in our own family was to start funding daycare as soon as we found out we were pregnant with our second child.

We opened a savings account earmarked for daycare costs and starting contributing immediately. We were able to save up almost a year’s worth of daycare costs before we ever needed to use those funds, which was a huge help.

Sometimes, it just takes a little planning ahead to make it much easier to manage childcare costs.

If you feel like you don’t have enough cash now to set aside for later, it might just take a little shifting of priorities. Take a look at your monthly expenses and find areas where you can cut back a little to focus on this important savings goal.

It might not be easy. But I bet together, we can make it possible.

As a parent, I get how important it is to you to put your child’s well-being ahead of everything else. I don’t think the answer is just to find a cheap daycare and choose a childcare provider based off price alone.

That being said, you need to balance that with your own financial reality. Choosing the most expensive, exclusive childcare option is just as unrealistic.

If you take the time to research and plan well in advance, it’ll become easier to choose the right option for you — and financially prepare to handle the added expense.

The post How to Plan for (and Save on) Childcare Costs appeared first on Workable Wealth.

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Filing your taxes can every year be tough — especially if you don’t spend any time thinking about it the rest of the year.

Don’t worry, you’re not alone if you fall into that “I don’t think about this stuff” category. And while there are benefits to being more aware of your tax situation throughout the year, there are still things you can do quickly now to make tax time a little easier to bear.

You could potentially even increase your tax refund by getting proactive today!

Make taxes a little less painful this April by considering these 4 ideas to help you prepare.

1. Look for These Documents and Get Yourself Organized

Depending on your situation, there are different documents you might need to properly file your return. No matter what, gathering this paperwork now is going to make your life a whole lot easier.

Here are the main documents most folks need:

W-2: If you earn a wage or salary, your employer will likely send you a W-2 by the end of January.

This form shows a few things, including how much you earned for the year, how much tax you already paid through withholdings, and how much you contributed to an employer-sponsored retirement plan.

1099s: Your employer or clients will likely send you 1099s to show how much they paid you throughout the year.

Not sure if you should look out for these forms? If you made money on your own as a freelancer, you work for someone as an independent contractor, or you earned some extra cash on the side of your day job through a side hustle, you should receive them.

Again, the person or company issuing the 1099 should send this to you by the end of January.

Bank statements: If you’re self-employed and not paid on a 1099 basis, you’ll need to use your bank statements to calculate income. (These are also handy to file away for a variety of reasons no matter how you earn your money.)

Receipts: If you plan to itemize your deductions, you need receipts for any charitable contributions you made or medical expenses you incurred throughout the year.

If you own a business, you need receipts for all the business expenses you plan to claim. You can also deduct a lot on your taxes for activities or purchases you had to make for business purposes, like travel, entertainment, home-office expenses, and more.

2. Choose How You’ll File: CPA vs. DIY

What’s the best way to get your taxes done? Should you do it yourself or hand all your paperwork to a pro to do it for you?

The answer usually depends on the complexity of your financial situation.

If you’re a W-2 employee and don’t plan to itemize your deductions, there are several tax preparation services that can help you file your federal taxes for free. You can consider using tax software to help you DIY, too.

If you do itemize or have a little more going on than just a W2 form, taxes get trickier.

As complications in your financial situation increase, a CPA is probably the right way to go. They can help you navigate complicated tax laws and point out tax breaks that you may not know about.

Additionally, a CPA can help handle things if the IRS decides to audit your return.

CPAs are pretty much a must for business owners. It’s a smart investment that can save you from making some big, expensive mistakes if you file on your own.

3. Keep It All Together

Keep everything you need to file your taxes in the same place. It will help you avoid a last-minute scramble that delays your return or creates opportunity for errors.

Storing your files digitally is fine (as long as you store them securely!). Legitimate CPAs will have secure file-sharing systems for you to send them all your documents electronically.

For some people, paper copies seem to work better and that’s okay, too. Some experts even suggest keeping your tax stuff in a shoebox to make it easier to keep up with!

No matter what you choose, make that decision now — and then get organized.

4. Find Ways to Lower Your Tax Liability

Once you’re organized and know how you plan to file, the next step is to find ways to decrease how much you owe on your tax return (or possibly get a bigger refund).

Here are just a few things you can do now to take advantage of tax breaks:

Contribute more toward retirement. The contributions you make to certain qualified retirement accounts don’t count toward your adjusted gross income when you file taxes. That means your income looks lower, and you could pay less in taxes.

If you contribute $10,000 to your 401(k) and have an effective tax rate of 25 percent, for example, you get a tax savings of $2,500 and save money for the future.

Major win-win.

Just keep in mind that there are limits to how much you can contribute to tax-deferred retirement plans. For the 2018 tax year, that’s $18,500 for a 401(k) and $5,500 for an IRA.

Note that not all retirement accounts are tax-deferred. Contributions to a Roth 401(k) or Roth IRA won’t help lower your taxable income this year. If that’s the goal, focus on regular 401(k) and traditional IRA contributions instead.

(Those aren’t the only tax-deferred accounts out there. SEP and SIMPLE IRAs are, too, but you may not qualify for those depending on the status of your income and employment.)

Many of these accounts (except for your 401(k)) allow you to make “catch-up” contributions and fund the account for the 2017 year up until this’ year’s filing deadline. Act now and you could lower your tax burden while also giving your retirement savings a boost.

Take advantage of HSAs or FSAs: Health savings accounts (HSAs) and flexible spending accounts (FSAs) allow you to save for qualified medical expenses while also reducing your taxable income.

As with a qualified retirement account, contributions you make to an HSA or FSA are tax-free. Within an HSA, the earnings on your money that you may invest there are tax-free, too. When you spend on qualified expenses, you also get a tax break.

While you can’t make last-minute contributions to an FSA, you can with an HSA if you qualify to use one. You need a high-deductible health plan (or HDHP) in order to contribute.

And don’t forget that while HSA funds roll over from year to year, FSA money doesn’t! It’s use it or lose it. Plan ahead and make your necessary doctor’s appointments now to make sure that money goes to use this year.

Track your mileage: If you’re self-employed, you can deduct the miles you drive for your business. If you haven’t been tracking miles throughout the year, now is a good time to start.

Taxes Are Tough, But They Don’t Have to Be So Painful

At the end of the day, I can’t make taxes a happy, joyous time for you. (Don’t you wish there was a tax fairy who could magically make it all so much easier?!)

But I can help you reduce a little stress and make the process a bit less painful.

If you act now, you may be able to make some last-minute moves that could save you money and lower your taxable income. And at the very least, you’ll save time and stress if you get organized today.

The more time you spend preparing and strategizing beforehand, the better your tax season will feel.

If you want more tax time tips, don’t miss these podcasts:

Episode 45: Tax Planning Hacks and Getting On Track with John McCarthy

Episode 28: Tackling Your Business Taxes with Amy Northard

The post Preparing Properly: Use These 4 Ideas to Make Tax Time a Little Less Painful appeared first on Workable Wealth.

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Already excited about pumpkin-spice everything and the end-of-the-year holidays?

It’s that time of year again — and yes, that does mean crisp fall weather and seasonal festivities. But it also means it’s the season for open enrollment, which usually starts in November.

Now is the time to make changes, additions, or updates to some important benefits that could impact your finances. And even if you think you’re all set right now, it’s worth doing a quick review to ensure you’re not missing opportunities or skipping chances to save.

Here’s what you need to know about open enrollment, and how to make the most of it. Tis the season!

What Is Open Enrollment?  

If your employer offers employee benefits, open enrollment is the time when you can elect or change some or all of the perks your employer provides. This includes benefits like:

Open enrollment provides you with a period of time where you can update or change these benefits. This is a great opportunity, because as we know, life changes and it changes fast and frequently.

But many employees really don’t like this time of year or the chance to optimize their benefits. That’s because most of us think it’s something to deal with rather than something to take advantage of.

A 2016 study by the Society for Human Resource Management found that 41 percent of employees describe the open enrollment process as “extremely confusing.” And 49 percent of workers called making decisions about their health insurance “very stressful.”

Sound familiar? Let’s walk through this together, step by step, so you can get through your next open enrollment season — without suffering a breakdown.

1. Expect the Changes You Need to Make

The easiest thing to do come open enrollment season is to simply keep things how they are, but don’t stick with the status quo just because making changes is confusing.

For one, the options you originally chose may no longer be the best fit if you had a major life change. And two, companies often make changes to their benefits every year or two.

HR might have found a better health insurance plan or perhaps your company chose to improve its 401(k) plan or provide a higher match.

Either way, it’s worth reviewing to make sure you don’t miss out on more or better perks that what you enjoy now.

HR should provide information on new or updated benefits for you, either by email or in a company-wide meeting. If that still feels like a fire hose of information, don’t hesitate to reach out and ask for one-on-one guidance (or ask your financial planner to walk through options with you).

2. Evaluate Your Current Needs

What happens if you rarely go to the doctor and don’t have any major health issues? You could save some money if you can review your health insurance and “downgrade” to a plan that offers less coverage but also costs less out of pocket.

Or perhaps you plan to have baby in the coming year. Now is the time to consider the benefits you’ll want to use once your family grows.

Money you put into an FSA or HSA now could help for the delivery costs — and those funds can be used tax-free.

These are just examples and may not apply to you. So take a moment to think about the coming year. Then, consider all the benefits your employer offers and plan the best way to use them to your advantage.

That will help you make informed decisions around open enrollment, and can make things feel less overwhelming since you’ll have a better understanding of what you actually need.

3. Brush Up on Common Terms and Phrases in Benefits Packages

Employee benefits, especially insurance, come with a lot of jargon. That only adds to the sense of confusion and overwhelm when it comes to making decisions about your benefits during open enrollment.

Just like knowing what your needs are can help provide more clarity, understanding some basic terminology can help you better navigate specific benefits.

Let’s look at some common terms to know when you evaluate and choose a health insurance plan:

  • Copay: This is what you pay every time you visit the doctor. There can be different copays for different types of doctors (specialists, for example, may come with higher copays).
  • Deductible: This is what you pay before your insurance starts contributing. Typically, copays don’t count toward your deductible. Also, there may be individual deductibles for each person on the plan, and a family deductible for everyone together. Once you’ve reached the deductible, it doesn’t reset until the following year.
  • Coinsurance: Coinsurance is the percentage of the bill you’re responsible for at that point. A common coinsurance figure is 80/20, meaning you pay 20 percent of the bill, and the insurance company pays 80 percent.
  • Out-of-pocket maximum: This number is the most the insurance company will require you to pay for your health care for the year. Once you reach this number, the insurer pays 100 percent of your medical bills.

Other benefits can have similarly perplexing terminology, so take the time to make sure you understand what you’re getting yourself into before committing. That means if you have a question, again, ask HR or talk through what you don’t understand with your financial planner before making a decision.

4. Don’t Know the Answer? Know Where to Get It When Choosing Company Benefits

On that note, you also have other resources beyond HR and your advisor that you can check out for help during open enrollment.

These are some helpful and topic-specific guides to dive into on benefits that often need to be updated or changed during open enrollment:

The more prepared you are as open enrollment season begins, the easier it will be to get the elections that you need. Remember, this is an opportunity!

It’s a chance to make the most of the next year because you know you’re taking advantage of the best combination of benefits available to you.

The post A Guide to Choosing Your Company Benefits During Open Enrollment Season appeared first on Workable Wealth.

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Workable Wealth by Mary Beth Storjohann - 1M ago

As you have likely heard, Equifax recently reported a massive data breach potentially impacting about 143 million U.S. Consumers. If you are not familiar with Equifax, it’s one of the three credit reporting agencies, with a role of tracking and rating the financial history of U.S. consumers (i.e. they report your credit score).

CNN provided this article on the issue while Equifax has created a site specific to this breach with additional information. We won’t talk about the fact that although the hack was discovered back on July 29th, it took the company more than a month to come go public with the news (that’s for another day).

The below quote is from the Equifax site and provides some information on what type of data was stolen:

The information accessed primarily includes names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers. In addition, credit card numbers for approximately 209,000 U.S. consumers, and certain dispute documents with personal identifying information for approximately 182,000 U.S. consumers, were accessed.

Below are some questions and answers for you:

How do I know if I was affected by the breach?

You can find out whether your information was breached at this site that Equifax created.

Click on the “Potential Impact” tab and enter your last name and the last six digits of your Social Security number. Your Social Security number is sensitive information, so ensure you’re on a secure computer and an encrypted network connection any time you enter it. The site will tell you if you’ve been affected by this breach.

Equifax has offered a year of free credit file monitoring and identity theft protection with TrustedID Premier, an Equifax product. At first, the terms and conditions included language that indicated anyone who enrolled would give up their right to sue the company, but the company clarified late Friday that the arbitration clause wouldn’t apply to the data breach.

You may choose to enroll in this service to start, however you have other options available and in general it is recommended that you take steps beyond opting in for just one year of service because this information can be used by criminals for years into the future (not just the next 12 months).

What can I do to protect myself?

  • Check your credit reports from Equifax, Experian, and TransUnion — for free — by visiting com. Accounts or activity that you don’t recognize could indicate identity theft. Visit IdentityTheft.gov to find out what to do.
  • Consider placing a credit freezeon your files. Freezing your credit report makes it harder for thieves to open new lines of credit in your name. It may occasionally inconvenience you though when you are opening a new credit card, buying or leasing a car, or applying or refinancing a mortgage. Really, anytime you need to access your credit score. However, most of us don’t establish new lines of credit all that often and a few phone calls (to unlock your credit reports) prior to that process is likely well worth the added protection.
  • Monitor your existing credit card and bank accounts closely for charges you don’t recognize.
  • If you decide against a credit freeze, consider placing a fraud alert on your files. A fraud alert warns creditors that you may be an identity theft victim and that they should verify that anyone seeking credit in your name really is you.
  • File your taxes early. File as soon as you have the tax information you need, before a scammer can. Tax identity theft happens when someone uses your Social Security number to get a tax refund or a job. Respond right away to letters from the IRS.
  • Sign up for credit monitoring . There are free services like Credit Karma, which offers credit monitoring for free so you will receive notifications when someone pulls your credit report and there are paid for third-party services like LifeLock, that tend to track more sources to spot and alert you of suspicious activity (while also bundling in assistance to help victims handle credit problems).
  • Create complex passwords that identity thieves cannot guess easily. Change your passwords if a company that you do business with has a breach of its databases.

With regard to using complex passwords, I recommend a password manager, such as LastPass. These make using very challenging passwords much, much easier. In addition, you can also add a two-factor authentication component that will require your password and a random, frequently changing code to access sites. You can find more information about two-factor authentication here.

As I’ve always said, your credit score is your financial report card (except there’s no getting rid of it after college). This isn’t something to be taken lightly and if you’re the type that hasn’t checked your score or report in quite some time – NOW is the time to take action to protect yourself (your future self will thank you for it).

Feel free to share this with anyone you may think find it useful.

The post Equifax & Your Identity – What Now? appeared first on Workable Wealth.

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You can’t measure what you don’t manage — and this adage is particularly true when it comes to your personal finances.

You need to pay attention to your money if you want to grow your wealth. Part of that requires you to take some time to pause and reflect on where you started and the progress you’ve made.

The end of the year offers us a great opportunity to do just that. Before the clock hits midnight and we ring in 2018 together, let’s take a moment and ask:

Are you financially better off now than when you started the year?

Here’s what to evaluate to find out.

Calculate Your Net Worth

Your net worth is a useful measurement of your financial health. It’s not the only number you need to measure and evaluate your financial situation by, of course, but over time you should see an upward trend in growth.

Plus, you might feel like you’ve done a great job with your finances. But you can check that feeling against a tangible measurement, like net worth, to see if you’ve actually made progress.

Here’s how to calculate your number: Add up all your assets. That includes cash, investments, the value of your home or any other property you own, and so on. This is the valuable stuff to your name!

Then, do the same for your debts. Total up how many liabilities you have, which includes things like credit card debt, student loans, car loans, and your mortgage.

Then, subtract your liabilities from your assets. The number you get is your net worth (and yes, you can have a negative net worth — and you will, if you have more debt than assets).

Growing wealth is a process that takes time, so measuring your net worth weekly or even monthly may not be very helpful. But checking out how your net worth grows from year to year is a good way to determine whether you’re better or worse off financially over time.

Evaluate Your Debt

Another way to know if you’re better or worse off than when you started this year? Focus in on those liabilities you tallied up to calculate your net worth.

Did you pay off your credit card debt? Did you sell your expensive car for a cheaper, used one and got rid of your hefty auto loan in the process? Did you make progress on your student debt?

Debt will hold you down and keep you from making progress toward your goals, since paying it back requires so much of your cash flow and it makes whatever you borrowed more expensive (since you’re also paying interest).

Having less debt to your name today than you had in January is a good sign you’re doing better financially.

If you found that you have the same amount of debt — or more — than you did at the beginning of the year, look at why. It might be time to make some big changes to your spending habits if you’re living above your means.

Start tracking your spending and create a budget you can stick to so you can live below your means and quit adding to your debt load. Then, make a debt repayment plan so you can get rid of those balances in the new year.

Check on Your Savings Goals and Investment Contributions

Did you hit a savings goal this year? That’s an awesome measure of your progress! There’s not much more that says “financially better off” than achieving an important goal you set for yourself.

While you’re looking into your savings, consider your retirement plans and investments, too. If you started contributing to build your nest egg, that’s a great first step and should put you in a better place today than you were in the past.

If you were already contributing, did you increase how much you put away? This is an important step to take, especially as your income increases.

Look for Increases in Income

Speaking of, did the amount of money you earn go up throughout the year? That’s another good indicator that you’re financially movin’ on up.

Again, make sure you increase your contributions to savings and investments as your income rises.

If you didn’t see your income increase, ask why. Did you take on more responsibility and ask for or negotiate a raise? Make this a goal in the next year if you didn’t take action on this in the last 12 months.

On a similar note, consider your company benefits, too. Make sure you fully understand what’s available to you, and use the benefits that could save you money out of pocket.

Get Your Insurance in Place

Finally, if you started the year with a lot of risks you weren’t protecting — like skipping the insurance policies you really needed — you should have lined up the right solutions for you sometime in the last 12 months.

That might have been life insurance if you have dependents that need your income to be financially secure. It could have been disability insurance to protect that income, which is your biggest asset.

Let’s Recap: Are You Financially Better Off?

This should give you an idea of where your finances are headed — whether that’s in a good direction or one that needs a course correction in the new year. But to give you a quick and easy way to make sure, run down this list:

  • Did you increase your net worth?
  • Did you reduce your debt?
  • Are you tracking your spending and keeping a budget?
  • Did you reach a savings goal?
  • Did you ask for and/or receive a pay increase, or take advantage of your company benefits in a way that allowed you to keep more money in your pocket?
  • Do you have the right insurance policies in place?

If you said “yes,” to most of these items, nice work! You’re likely doing better financially today than when you started the year 12 months ago.

If you said “no” to a lot of these, it’s time to dig in and look at the root of the problem. That might be your spending, it might be that it’s time to increase your income by asking for a raise, or you might need to get organized and get a plan.

Whatever you do, make 2018 the year you commit to positive change in your financial situation so that when you look at this list again at the end of next year, you’re proudly checking off each box as a “yes” for what you accomplished.

If you want to chat about how to take better control of your finances in 2018, head here to schedule a call!

The post Are You Better or Worse Off Financially This Year? appeared first on Workable Wealth.

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Workable Wealth by Kalihawlk@gmail.com - 1M ago

The year is almost over — but there’s still time to make progress toward your financial goals. Let’s jump right in with 30 simple steps you can take in 30 days to end the year on a financially high note.

1. Review your budget.

Make sure you use your budget to help you spend on what you value and cut costs that don’t bring you joy. See if there’s any place in your current budget where you can eliminate expenses and save that money instead.

2. Set your savings goals (or make sure you’re happy with your existing goals).

Do you have your savings goals set for the new year? If not, think about what you want to accomplish and consider what it will take to get there.

If you have existing goals you’re in the process of working toward, take a moment to revisit them and make sure you still feel good about them and are on track to reach them.

3. Increase your retirement contributions.

Set your savings up to keep pace with your earnings. Go ahead and increase your retirement contributions — even if it’s just by a percentage or two. If you’re feeling really ambitious, make sure you max out these accounts!

4. Review your insurance policies.

Do you have the coverage you need? Do you need to update existing policies to provide more protection — or is it time to reduce how much coverage you pay for? Review your insurance so you know you have what you need.

5. Negotiate your bills and go rate shopping.

Speaking of insurance, set aside one day this month to gather all your bills (including what you pay monthly premiums on) and call up your service providers. Ask about discounts or cheaper service options that will help you save a little more money each month.

You can also browse around online and check out the rates of competitors. If someone offers the same service for less, use that as a bargaining chip — or cancel your existing service and get the better deal somewhere else.

6. Evaluate your emergency fund.

Do a quick rainy day fund check-up. If you used some of your emergency funds to take care of an unexpected expense in the last year, make sure you top off the account and replenish the fund. If you don’t have emergency savings yet, make a goal to put aside at least $1,000 for emergencies to start. Then work toward saving 3 to 6 months’ worth of income in your emergency fund.

7. Automate your savings.

If you haven’t put your savings and investment contributions on autopilot yet, do so now! Automating your savings means you can’t forget to fund your goals, or feel tempted to spend that money instead.

8. Think about new ways to save.

Do you have a 401(k) but not an IRA? Open up a roth individual retirement account (if your income allows) and start contributing there, too. Did you add to your family this year? Look into a 529 plan and start your college savings fund now.

9. Make a plan to increase your income.

Savings is (obviously!) important to financial success. But that doesn’t mean you should only focus on how much you can save and neglect the other side of the coin: how much you earn.

Before the end of the year, brainstorm some ways you can increase your income in the next 12 months. That might mean negotiating for higher pay at your current job. You might want to explore new career opportunities. Or you can think about a side hustle, like freelancing — or even starting your own business.

10. Keep up your motivation.

Reaching financial goals is hard work. If you feel exhausted just thinking about all your to-dos (or the work you still have to do to reach success), find ways to keep your motivation high. Consider creating a vision board or making a list of your goals and placing them on the fridge so you can remind yourself what you’re working so hard for each and every day.

11. Pay off your debt.

Okay, maybe you can’t pay off all your debt in a single day. But you can devote some time to evaluating your balances and creating a repayment strategy that helps you pay it off faster. Paying off balances starting with the highest interest rate loan first will help you save the most money on your debt.

12. Get help with your student loans.

As part of the process of evaluating your debt, do a quick check into student loan repayment programs. If you qualify for a program that might make it easier for you to repay your debt, consider if it makes sense for you to enroll.

13. Sell your stuff.

A new year means a fresh start, and that can apply not only to your finances but to your home, too. Take a day to go through rooms and closets and declutter. You’ll probably want to trash or give away most of your clutter — but if you come across higher-value items that you could resell, go for it and make a little extra cash.

14. Rebalance your investment portfolio.

You have an asset allocation you want to stick to with your investments. But as the market moves throughout the year, that allocation can drift away from your ideal target (of, for example, 80 percent stocks and 20 percent bonds).

Check out your investments and rebalance your portfolios as needed to get back to the asset allocation that’s right for your goals and timelines.

15. Make use of your FSA funds.

If you have an FSA, make any appointments you may have been putting off now and use the money that’s in your account. FSA funds are a “use it or lose it” benefit, meaning they won’t roll over into the new year. Use them now!

16. Do some tax-loss harvesting.

As I explained for Kiplinger, tax-loss harvesting “is when you offset the taxable capital gains that you’ve had throughout the year on your investments by selling investments that have lost value. The realized capital losses help to reduce the taxes owed on the gains.”

17. Set up money dates with your partner.

Communication is key to financial success when you’re working toward it with a partner or spouse. Go ahead and block off times in your calendar to have monthly money meetings, where you can review your finances, talk about money, and ask important questions or make decisions together.

18. Get a little more for every dollar you spend.

If you know how to use credit cards responsibly, consider getting a rewards card that offers cash back or points you can use on something you value like travel. This will help you get about 1 to 3 percent more for the money you planned to spend anyway.

19. Learn more about money.

Knowledge is power. Check out some important personal finance books that can help you better understand your money and what you want to do with it.

20. Request your free credit report…

Go to AnnualCreditReport.com to request a free copy of your credit report. You can get the report for free once per year (after that, you need to pay a small fee to access it). Once you have the report, check it for errors. If you find a mistake, you’ll want to dispute it with the credit bureaus.

21. …and check your credit score.

Your credit report and your credit score are two different things. Get both to get a better understanding of the health of your credit. Many credit card companies now show you your FICO score with each statement.

22. Make any last-minute tax planning moves.

A lot of tax-related actions need to be taken before December 31. Call up your CPA and check to make sure you’re caught up on what you need to do to get the tax breaks you deserve when you file next April.

23. Cancel subscriptions and memberships you don’t use.

Yes, you might have paid for monthly passes to that trendy acro-yoga studio with the best intentions. But if you haven’t been to a class in months, it’s time to cancel that subscription and save your money instead. Look at all your recurring charges and cancel the ones that you don’t actually use.

24. Check your bad (and expensive) habits.

This is a good time to pause and reflect on your habits — and what you might want to change. Could you stop smoking or cut back on drinking? Is it time to challenge yourself to learn to cook a few basic meals at home instead of relying on fast-casual food?

The cool thing about dropping some of your bad habits and looking for ways to improve your life is that not only will you likely feel better physically and mentally, but you’ll likely give your financial health a boost too.

25. Know your paycheck inside and out.

If you only care about the number that goes into your bank account when you cash your paycheck, it’s time to get to know your pay stub better. Use this post to help you analyze your pay stub like a financial planner would.

26. Update your apps.

Do a quick review of what apps could help you better track, save, and invest your money in the new year. While you don’t need every app on the market, a simple budgeting app that makes it easy to track your spending can help you become more mindful and aware of how you use your money.

27. Get your estate plan in order.

Yes, you do need one. An estate plan protects your stuff, your assets, and more importantly, your loved ones should something happen to you. Talk to your financial planner to get a recommendation for an estate planning attorney, and start the process of setting up these important legal documents.

28. Determine if you’re better off financially now than you were at the beginning of the year.

Measure your progress by looking at your net worth. Did it increase? You can also ask yourself things like, did I pay off debt? Did I earn more money (and save more)? If you say “yes,” that’s a good sign you’re on the right financial track.

29. Treat yourself.

After all this hard work, make room in your budget for small treats every now and then. It could be as simple as buying a cupcake from your favorite bakery, or you might want to pamper yourself a little more with something like a massage. It’s important to prioritize your savings. But you also need to make some space for the fun stuff, too.

30. Talk to your financial planner — or set up an appointment to consider working with one.

You might want to check in with your financial planner to make sure you’re not missing any important money moves you need to make before the end of the year. Or, if you still don’t have a planner on your team, schedule a session to chat about your options for doing more to work your wealth now.

The post 30 Money Moves to Make in 30 Days appeared first on Workable Wealth.

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If you’re thinking about your responsibilities as a parent to your children, giving them the ability to pay for a college education might be top of mind.

You’re right to be thinking about college savings now. Today’s college graduates are leaving school with an average of $37,172 in student loans — and those degrees don’t automatically equal bigger paychecks when you get into the workforce.

But if you’re proactive about chasing down college savings hacks and finding ways to reduce college costs, the task of saving for college for your kids doesn’t have to be so daunting. Try one of these 5 savings strategies to help your child head to college (without landing yourself with a massive bill for the cost of that education).

1. Set Up a 529 College Savings Plan

Yes, you need to save now for your kid’s college, even if it’s still 10 years or more down the road. But don’t just sock the money away into a savings account.

Instead, consider using a 529 plan and let those savings work for you between now and when your child plans to go to school.

The money you invest in a 529 College Savings Plan grows tax-free as long as you use the funds for education-related expenses. Some states even have extra tax benefits as an incentive to contribute to one.

For example, Utah offers its residents a 5 percent tax credit on contributions up to certain limits, depending on your tax filing status.

Because the money in 529 plans can be invested, this is a good option if you know a college experience is at least 5 years away for your family. With a shorter time horizon, you may not want to expose your savings to market volatility by investing them.

2. Take Advantage of Tax Benefits

The Lifetime Learning Credit is a tax credit that allows you to get up to $2,000 of education expenses back. The caveat is that the credit isn’t refundable, so it will only go toward paying taxes that you owe.

If your family qualifies for the credit, you’ll get 20 percent of the first $10,000 you spend every year. So, if you only spend $5,000, you’ll qualify for a $1,000 credit.

There’s no limit to how many years you can earn this credit, but there are income limits. Check the IRS website for the current year’s limits.

3. Empower Your Kids to Work and Save Some of Their Own College Money

This may not be an option now, or even for every family. But if your child is interested in taking a gap year or can work part- or full-time while in school, consider it as an option for helping to pay some of the cost of college.

You can encourage and help your teenager or 20-something to look for positions that would specifically help pay for higher education costs. They can consider, for example, working for the school they want to attend.

Many colleges offer to cover a portion, if not all, of their employees’ tuition expenses. There may be some restrictions, though. Employees may have to work for the university for a certain amount of time before qualifing for the benefit. Or they may have to be a full-time employee.

To find out whether this is an option, reach out to the school to see what their policy is and whether there are any job openings that make sense for your student.

If working for the college directly isn’t an option, you can still explore earning more money to help pay for college costs in combination with taking steps to save what you can. Doing both will make it much easier to manage continuing education expenses.

And if your child works, remember that they can contribute to their own Roth IRA. If they’re in high school, this might be an option to help pay for college costs down the road (or to give them a good source of spending money that they have control over and must learn to manage).

4. Apply for Scholarships and Grants

Depending on where your child wants to go to school and what they want to study, they may qualify for scholarships and grants. And unlike student loans, you don’t have to repay these funding sources.

The trick to this tip is to do your research. It’s not likely that someone will go out of their way to offer this money to you — you need to find it.

Check with the university you plan to attend to see what types of financial aid they offer in the form of scholarships and grants. Also, look for other sources of scholarship and grant money using databases like CollegeScholarships.org.

Funds (that you don’t have to repay) for higher education are out there, but it takes a lot of legwork to uncover them. Brainstorm a list of organizations, foundations, or institutions that might provide grants or financial aid to students like yours.

If they’re involved in a specific extracurricular, part of a unique organization, or a member of a minority or special-interest group, make sure you think of businesses and companies that might support your community and check to see if they have scholarship programs.

5. Choose the Right School

One of the biggest ways to reduce the cost of college is to evaluate all the options and choose a school based on a number of factors — including price.

Well-known, famous, and “brand-name” schools may be at the top of your child’s list. But depending on what they actually want to attend a university for, it might not make sense to shell out a lot of money for those 4 years.

Consider what your child wants to do in college, and help them research universities with specific programs that align with your students’ desires, interests, and post-grad goals. Then compare the costs of those schools to help find the one that offers what your child wants and is reasonably priced.

Choosing a school this way rather than just going on name recognition alone can help your child have a better collegiate experience and be better prepared for life after school. In that context, it’s just a bonus that it could save you money, too.

Whatever You Choose, Start Now

There’s no one best way to reduce the cost of a college education, and not every option mentioned above is available for everyone.

It’s crucial that you start exploring your options now. Even if your plans aren’t solidified, having the financials figured out early can give you some peace of mind and help you determine what’s feasible for you and your family.

The post College Savings Hacks and Ways to Reduce Costs of Higher Education appeared first on Workable Wealth.

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Workable Wealth by Kalihawlk@gmail.com - 1M ago

No one enjoys dealing with health insurance. It’s complicated, confusing, and now, potentially a subject of conflict with your neighbors or relatives depending how you feel about things politically.

Like it or not, though, it’s an essential part of life as a successful, independent adult. That doesn’t mean it has to be an expensive part of your life.

While it’s a necessary cost, you can get proactive and take a few steps to find a reasonably-priced policy that also provides the coverage you and your family need.

Skipping Insurance Is Not the Cheap Alternative

Let’s just address this upfront: going with no insurance is not a way to save money on this cost. Paying for health care costs when you need care without insurance can drain your bank account of tens of thousands of dollars — or more.

Plus, under the Affordable Care Act, going without health insurance coverage means dealing with a tax penalty. (There are some exceptions to the rule.)

The penalty is a flat-fee that’s adjusted for inflation each year. In 2017, the fee for skipping coverage was 2.5 percent of your household’s adjusted gross income.

So if no insurance is not an option, what is when it comes to cheap health insurance?

Know Exactly What You Need

The best way to get cheap health insurance is to avoid paying for what you don’t need. If you’re young, healthy, and don’t often see a doctor beyond annual checkups, you could get away with minimal coverage.

And depending on your needs, you may not want to pay for additional policies like dental and vision. Paying for those visits out of pocket when you need to go could be cheaper than purchasing insurance that includes plans for these providers.

Obviously, you need to be honest with yourself here. Don’t skip on coverage that you are likely to use. It’s cheaper to be insured for what you need rather than to risk it and go without.

Evaluate and Compare Your Options

Once you understand what you need to cover, look for policies that provide just enough coverage (but not so much that you’re paying for something you’re unlikely to use).

You can work with an agent, use a database like eheathinsurance.com (or healthcare.gov to shop state exchanges), or do your own research and buy directly from insurance companies.

If you choose to work with an agent, make sure they’re an independent broker and not associated with a single company. You can also ask your financial planner for references if you don’t know where to start.

Seek Out High Deductible Health Plans

Deliberately looking for high deductibles might sound counter-intuitive. We’re on the hunt for cheap health insurance after all, right?

Yes, and a high deductible health plan (HDHP) can actually cost you less out of pocket than health insurance with lower deductibles.

Again, if you’re young, healthy, and rarely need health care outside of annual exams or don’t anticipate any major changes to your health in the next year, this strategy could help you save because high deductible plans come with lower monthly premiums.

In addition, having an HDHP allows you to access health savings accounts, which are really powerful saving and investing tools. You can contribute money to HSAs to use for medical expenses, which can help you manage that high deductible.

You can invest the money in certain funds in your HSA, too, which gives you a chance to put those savings to work for you.

Even better? Money you contribute to the account is tax-deductible and you don’t have to pay taxes on investment gains or what you withdraw from the account as long as you spend the money on qualified healthcare costs.

Here’s the catch with HDHPs: the deductible can be overwhelming if you don’t keep that cash on hand in the event of emergencies. So if you choose to get a high-deductible health plan to enjoy lower monthly premiums, ensure you keep the amount of your full deductible in your emergency fund should you ever need to pay it.

Take Advantage of Open Enrollment Periods

By knowing what you need, evaluating your options and shopping around for the policy with the lowest cost that still gives you the coverage you want, and making use of options like HDHPs, you can secure an affordable healthcare plan for yourself or your family.

But as you’ve probably noticed, things in this area of life change frequently. Whether it’s because new concerns about your health crop up throughout the year, family plans change, or national politics causes a disruption to your existing coverage, you can’t assume your existing plan will be the best plan for you next year.

Know when your open enrollment period is, and plan ahead each year.

Put a task in your calendar to review your coverage on an annual basis and chat with your fee-only financial advisor if you need help sorting through the options and determining which plan is best for your overall financial and physical health.

The post How to Find Cheap Health Insurance appeared first on Workable Wealth.

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When’s the last time you actually looked at your pay stub?

If you’re like most people, the number that really matters to you is how much is written on your paycheck. And if that’s directly deposited into your checking account, you may never hold a physical copy of your pay stub to begin with.

That doesn’t mean it doesn’t exist, of course. It also doesn’t mean it’s not important to review your pay stub and be able to analyze the information you find there and spot errors.

There are a lot of good nuggets about your finances located on this little slip, and carefully reviewing pay stubs is a step I take with all my clients to ensure they’re clear on available benefits, tax rates, employer matches, withholdings, and more.

So grab a copy of your latest pay stub and use this quick but comprehensive guide to know exactly what the numbers mean and learn how you can analyze your pay stub like a financial planner would.

Start with Your Earnings and Taxes

The majority of the information on your pay stub relates to your gross earnings and how much of those earnings were withheld for taxes and other uses. Let’s look at some of the common terms you’ll find here, and what they mean.

Gross pay: This is the total amount you earned during the pay period. It includes your wages or salary, plus bonuses and tips if applicable. Most pay stubs will also include how much you’ve earned year to date.

Net pay: Also known as your take-home pay, this number is what you receive on your paycheck after taxes, insurance premiums, retirement contributions, and other deductions have been taken out.

Pay Period: By looking at the dates on a client’s pay stub, I can tell if they’re paid monthly, bi-weekly or twice a month. This helps to know if we need to multiply the pay by 12, 26 or 24 to determine annual salary.

Pre-tax benefits: Some benefits may appear on your pay stub as pre-tax income. For example, if your employer pays for some or all of your childcare expenses, your phone bill, or your parking pass, these may show up as taxable benefits.

Federal income tax: Your pay stub will show how much money was taken out of your gross pay for taxes. The exemptions you claimed on your W-4 form determine the amount withheld for federal taxes.

This is an area I look at closely for clients. Are you over or under withholding? Are you claiming two when you should claim zero? You can change your exemptions at any time. This will impact how much money you take home each pay period.

If you opt to have less money withheld for taxes (meaning you’re claiming more exemptions), your paycheck will be bigger — but you need to plan ahead for tax filing time, since you might owe taxes instead of getting a return.

State income and local tax: If you live in a state that requires that you pay an income tax, that number will also be determined based on your W-4 exemptions. Cities, counties, and school districts in 14 states may also charge a local tax, but this is relatively rare.

Social Security tax: The federal government requires that every employee and employer pay a tax for Social Security purposes. That’s 6.2 percent of up to $127,200 in wages for 2017. So, if you earn $100,000 per year, your Social Security tax comes out to $6,200 for the year. This tax makes it possible for you to receive Social Security benefits when you retire.

Medicare tax: Similar to the Social Security tax, the Medicare tax is mandatory for employees and employers alike. You’ll pay a 1.45 percent tax on wages for 2017 so that you can benefit from the program at the same time as when you begin receiving Social Security benefits in retirement.

Understand Where Your Deductions and Contributions Go

Taxes usually make up the largest deductions to your paycheck. But depending on what kind of benefits your employer offers, there may be others you need to know. Review your pay stub for some of these items.

Insurance premiums: If your benefits include insurance like health, dental, vision, life or disability, your employer may require that you pay for at least a portion of the plans’ premiums. That cost will come out of your gross pay automatically, and how much you pay shows up on your pay stub.

I can easily tell if a client is taking advantage of these employer-provided benefits by looking at a pay stub and from there can dig in more to the types of coverage available.

Retirement plan contributions: This figure is how much you agreed to contribute to your employer-sponsored retirement plan. Common retirement plans include 401(k), 403(b), and 457 plans. If you get a match (free money!), this number is on your pay stub, too, which shows you how much your employer contributed.

I divide both the client and the employer’s contribution by their net pay to determine what percentage they’re contributing to their retirement accounts and can also tell whether it’s a Traditional or Roth plan.

Flex spending account (FSA) or health savings account (HSA): If you opted to participate in an employer-sponsored FSA or HSA, you’d typically see a deduction for these on your pay stub and also note whether your employer has made a contribution (i.e. more free money!).

Other deductions and additions: Depending on your employer, there may be more deductions. For example, you might donate part of your paycheck to a charity that partners with your employer — which should appear on your pay stub.

You might also see other numbers and information, depending on how expenses are handled for your position at work. If you receive expense reimbursements, for example, these will be included in your paycheck and recorded on your pay stub.

Wait: What About All These Letters?

If you thought you only needed to worry about the numbers on your pay stub — since this is about the money you make, taxes you owe, and contributions you put away in other accounts, after — you may feel overwhelmed by all the codes that appear.

Since there’s a lot of information to fit onto one paper, many employers abbreviate some terms. Here are some common ones to know:

  • YTD: Year-to-date
  • PPD: Pay period
  • REG: Regular hours worked
  • OT: Overtime hours worked
  • HOL: Paid holiday hours
  • VAC: Paid vacation hours
  • FT or FTW: Federal tax withheld
  • ST or STW: State tax withheld
  • LT: Local tax withheld
  • SS: Social Security tax
  • MED: Medicare tax withheld
  • FICA: Your employer’s portion of the Social Security and Medicare taxes
  • WC: Workers’ compensation contribution, typically paid by your employer
The Questions to Ask After You Analyze Your Pay Stub

Now that you know how to read your pay stub, take the next step by making sure everything is correct and in your best interests. Here some questions you may want to ask:

Which deductions can and can’t I change? You can’t do anything about Social Security and Medicare taxes, but you can increase or decrease your federal and state tax withholdings by updating your W-4 form.

You can also change some deductions by adjusting your insurance coverage or HSA and 401(k) contributions. You can typically only change FSA contributions once a year during open enrollment for the following year.

Are my tax withholding allowances up to date? If you got married or had a child recently, you may qualify for more allowances, which means less taxes withheld.

Contact the HR department to update your W-4 form.

Who should I talk to if I have other questions? While this guide will help you get started, there’s no way to cover everything that might pop up on your particular pay stub. If you have questions about something, reach out to HR to get clarification.

If you work for a small business with no HR, your direct supervisor or manager might be the best person to talk to. Or talk to your financial planner first. She can analyze your pay stub with you, and help you identify the specific questions to ask at work.

Now, you should be all set: grab that pay stub and check it out. Make sure you understand every piece of information on it — and if you don’t, reach out and ask the right professional. Whether it’s HR or your financial planner, we’re here to help you make smart money choices.

The post How to Analyze Your Paycheck like a Financial Planner appeared first on Workable Wealth.

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