With October being financial planning month, it gives us a prime opportunity to refocus our attention on our financial well-being. This month serves as a reminder to take a step back, evaluate our financial goals, and make necessary adjustments to secure and realign our financial plan and journey. In this blog, we’ll explore why Financial Planning Month is a great time to revisit your plan and what financial planning items to focus on.

1. Setting Clear Financial Goals

October presents an excellent chance to set or refine your financial goals. Whether you’re looking to build an emergency fund, pay off debt, save for retirement, or invest in your dream home, setting specific, measurable, achievable, relevant, and time-bound (SMART) goals is essential.

2. Reviewing Your Current Financial Situation

To effectively plan for your financial future, it’s crucial to have a clear understanding of your current financial situation. Review your income, expenses, debts, and investments. Take the time to create or update your budget, assess your net worth, and review the bigger picture. Understanding where you stand financially is the first step toward making informed decisions. Remember that open enrollment season is right around the corner, so evaluate your blin spots or wrk with an advisor to help spot what’s missing and where you can improve.

3. Budgeting

With the holiday season just around the corner, October is the ideal time to start budgeting for holiday expenses. By planning ahead and setting a budget for gifts, travel, and entertainment, you can avoid overspending and prevent post-holiday financial stress.

4. Tax Planning

As the year draws to a close, October is an excellent time to start thinking about tax planning. Work with your financial advisor in conjunction with your CPA t run tax projections and consider ideas to minimize your tax liability. Being proactive in your tax planning can lead to substantial savings when tax season arrives.

5. Retirement Planning

Retirement planning is a critical aspect of financial planning. October serves as a reminder to assess your retirement savings goals and contributions. Whether you’re just starting your retirement savings journey or nearing retirement age, use this time to evaluate where your contributions are for the year and make the applicable changes.

Financial Planning Month serves as a timely reminder to take control of your financial future. By setting clear financial goals, reviewing your current financial situation, budgeting for the holidays, and addressing tax and retirement planning, you can make meaningful strides in your financial life. Consider working with a financial professional to help seamlessly approach this financial reset and evaluation. If you have any questions on how to get started, email info@shermanwealth.com.

This week, the IRS issued new 2023 required minimum distribution (RMD) relief for IRA beneficiaries. This inherited IRA question has been on many individuals mind’s for some time, so see below for the IRS updates. If you have any questions or want further clarification, check out the IRS website, or email us at info@shermanwealth.com.

We’ve been talking a lot about the importance of having a financial plan in place, especially given the current market climate with hot inflation and rising interest rates. Establishing financial goals and creating a roadmap to achieve them is extremely important to your financial life.  It’s often hard to see the whole scope of your financial picture on your own, which is why we want to discuss the value of establishing a financial plan. So, for those of you who have never utilized a financial place, let’s discuss some services you can expect.

Whether you work with a financial professional or build a financial plan on your own, having all your finances in one place with a strategic plan and goals in mind is crucial. Financial literacy in this country is lacking, so it’s extremely important to educate individuals on the true value of financial planning. Financial planning isn’t as daunting and scary as you might think – it’s actually quite a seamless process that allows you to organize yourself and set you and your family up for financial success in the future. 

At Sherman Wealth, we take a holistic, micro and macro approach when attacking your financial plan, beginning with a qualitative risk tolerance questionnaire to gauge your comfortability with your current asset allocation risk and risk for future investments. We then take a look at everything you have, aggregating your whole financial into our financial software in order to analyze it and see the bigger picture.

As you can see in the document above, we offer many services and can help you in all assets of your financial life, whether its getting organized and automating, establishing a budget and goals, discussing your cash flows and tax efficient strategies, reviewing your insurance and estate planning needs, or preparing for college. While these are only a few of the services we offer, having a financial concierge to talk these topics through with can simplify your life.

For example, given where interest rates are, many people have questions on what the best vehicles are to park cash. It’s okay not to know what to do with your money, but it’s important to seek advice or ask for help. A solid financial plan can help you separate your needs from your wants and create a budget that allows you to put your money into “buckets” – one for saving, one for investing and one for spending. 

Many people think they are in a good financial situation if they can simply pay their monthly bills and have some money in a savings account; however, oftentimes, this mindset won’t allow you to reach your financial dreams. While this isn’t necessarily a bad position to be in, creating a financial plan can help you learn some different ways to grow your money and how to save for retirement. 

At Sherman Wealth, we say that life is complicated, but your finances don’t have to be. We have designed a customized and comprehensive financial plan system that helps you see your whole financial picture and makes sure you don’t forget about things such as investing, employee benefits, and more. Encourage your friends and family to start thinking about their personal finance and empower them to seek help to better their financial future. If you have any questions or would like to demo our financial planning software, email us at info@shermanwealth.com or schedule a complimentary 30-minute consultation here. 

 

Given the events of the last year, with the Federal reserve raising interest rates to combat high inflation, the consumer has had to shift the way they think about their money, especially their cash. With higher interest rates, comes the opportunity to earn more interest on your cash, but also makes it more expensive to take on debt and loans, leaving you with some decisions to make. So, let’s discuss a few smart money management tips you can adopt during financial literacy month.

First and foremost, it’s important to create a well-diversified portfolio, maximizing retirement, short-term goals, and your cash. As it relates to your cash, make sure you are taking advantage of higher yield FDIC insured savings accounts, instead of large money center banks earning close to 0%. Shop around different high yield savings accounts and see where you can get the highest rate. Next, if you are willing to take on some more time risk, we’ve been seeing individuals purchase CDs and Treasury bills for one to two percent higher than the high yield savings rates. So make sure you are maximizing your cash and taking advantage of this high interest rate environment.

Next, as it relates to your investable assets, as we always say, avoid timing the market and focus on time in the market with your portfolio. Over the last few years, we have seen many individuals pull their money in and out of the market due to market volatility and anxiety, but as studies, time in the market always proves itself positively.

As it relates to your debt, stay on top of your variable interest rate debt, especially as the Federal Reserve continues to raise interest rates. Furthermore, re-visiting your budget to make sure that it works for you and your financial situation is extremely important during this time. With this changing economic environment, it’s super important to stay on top of your financial plan and make sure you are updating/altering it accordingly.

As we are halfway through financial literacy month, we want to ensure you are taking advantage of all that you can. It’s important you are capturing all of the interest you can earn and that your money is in the right places. If you are interested in re-visiting your financial plan or have questions about your cash management needs, email us at info@shermanwealth.com or schedule a complimentary intro call here.

As we kick off financial literacy month, we want to share some frequently asked questions we’ve received from clients and friends and provide actionable answers. As we embark on a new quarter and the spring season, it’s a perfect time for some “spring cleaning” and financial organization. Throughout the month of April, we want to stress the importance of financial literacy and spread the word about financial education and empowerment. We will be sharing questions, answers, and advice we receive in hope to help you all organize and prepare your finances for the rest of the year.  

Below you will find some frequently asked questions:

Q: How do I adjust my budget for inflation, and this higher cost of living?

A: With inflation sky-rocketing over the last year, and the Federal Reserve raising interest rates to bring it down, many individuals are needing to adjust their budgets, as the cost of their previous budget is now more expensive. So, let’s start by taking a look at your wants versus your needs…Are you spending money on items you really don’t need? Are there areas of the old budget you can omit? Make sure you are canceling old subscriptions and making sure your cash outflows are not exceeding your inflows.

Q: Is there anything I need to think about with higher interest rates?

A: This is a great question. Given the high interest rate environment we are currently in, there is lots to think about. First and foremost, make sure you are maximizing the interest you are earning on your cash. Don’t park your cash in 0% large money center banks, when you can make close to 4% in FDIC insured high yield savings account. Consider high interest paying vehicles, such as CDs and Treasury Bills/Notes. On the flip side, as it relates to your debt, make sure you know what rates you are paying on your variable rate debt, so that as it increases, you are not letting it get out of hand.

Q: As a new college graduate, where/how do I get started in terms of investing?

A: First and foremost, it’s important to take a step back and establish what your financial goals are. If you are saving up for a new apartment or expenses in the near future, maybe consider building up your emergency fund/savings account. If you want to set yourself up for a solid financial future, you should think about contributing to your retirement, in a 401(k) through your workplace, or a Traditional/Roth IRA if you don’t have a 401k at work.  But most importantly, don’t forget about that emergency fund.  If the last few years taught us anything, it’s to prepare for the unexpected.  

Q: How do I decide which credit card to apply for?

A: Before applying for a credit card and opening lines of credit, make sure you understand the responsibilities involved. When opening a new credit card, you must remember to pay your balances and statements on time in order to keep your credit score in tip top shape. That being said, opening lines of credits are crucial in establishing your credit score, so it’s important to do so. When deciding which credit card to choose, think about your expenses and where most of your dollars go. For example, if you spend most of your money at Amazon, consider purchasing an Amazon credit card that may provide you with cash back or points offers. Or, if you love to travel and dine at restaurants, consider a card that provides you with double points for those activities. Making the most of your credit cards is a great financial literacy tip to start the month. 

Implementing these small tips into your everyday financial routine is a great way to get organized and start off on the right foot. For more financial literacy advice and questions, stay tuned for our content and join us for our very special financial literacy event this month, Women, Wine, & Financial Fitness, where we will provide a open and informal space to empower women on their finances, accompanied by guest speaker, Estates and Trusts Attorney, Sarah Broder. Reserve your spot now: https://www.eventbrite.com/e/women-wine-financial-fitness-tickets-608759424827. If you have other questions similar to the ones above, please feel free to send them to us to answer at info@shermanwealth.com. If you would like to directly discuss your questions with us, please book a complimentary meeting here. 

In a widely anticipated move, the Federal Reserve has hiked interest rates by 25 basis points or 0.25%. Fed Chair Jerome Powell said the extent of future rate hikes is uncertain, indicating that they will take a wait and see approach. Remember, this is the eighth increase since the first one in March 2022 to combat inflation.

So, in light of these rising interest rates, we want to discuss the impact that these rising rates may have on your wallet. Of course, anything that has an adjustable interest rate is set to go up, for example, home equity lines, credit cards, auto loans, and some student loans if they are attached to either the prime rate or a variable rate index. Also, of course many people are speaking about mortgage rates which are actually following the 10-year treasury yield and have seen a significant decline in rates since the fall. So, given this data, if you’ve bought a home in the last four to six months, make sure you re-visit the rates currently and your rates. If you need help assessing your situation, we are here and happy to help you!

So, given the anticipation of future rate hikes, think about your savings rates and make sure you are earning higher rates on your savings. If you are still earning zero or close to zero in your FDIC insured savings or checking account, seek a high-yields savings account to earn more interest on your dollars. We know that the current economic environment is constantly changing and you are adjusting to this inflationary and higher-interest rate climate, it’s important to stay on top of your interest rates and know what you have. If you need us to re-evaluate your personal financial situation, email us at info@shermanwealth.com or schedule a complimentary 30-minute call here.

The last few years have certainly changed the cadence in which many of us operate on a day to day basis. This is especially true with the emergence of technology and transition to remote work, telehealth, and curbside shopping. Another area that has shown significant change is in the use of robo-advisors. While robo-advisors can virtually help you with your finances on a daily basis, a Vanguard survey of 1,500 investors with at least $100,000 in investable assets found that “nearly 90% of robo-advised clients would switch to humans”. Given the current economic environment we are in, adjusting to a higher cost of living and rising interest rates, many individuals have more thoughts and feelings about their finances than ever. In these instances, having a human to vent to and talk through ideas with is so helpful and improves financial confidence. 

The survey also found that “more than 90% of human-advised clients say they would not consider switching to a digital advisor, while 88% of robo-advised clients would consider switching to a human advisor in the future.” While digital advice can get the job done, there is something to be said about the human connection that develops between an advisor and their client.

I would say it’s quite difficult to establish trust, loyalty, and a relationship with a digital robot, which is what differentiates the robo-advisor from working with a human advisor.  In fact, the survey discovered that loyalty within those who work with a human advisor is unmatched to those who are currently utilizing a robo-one. It is interesting to see that even though our society has transitioned a huge chunk of our lives online, human interaction within the financial industry is still the trusted and preferred method. 

At Sherman Wealth, we specialize in behavioral finance, which goes beyond just the quantitative aspect of investing that a robot can properly assist with. We customize each and every financial plan to fit the needs of each client. No one client is the same so their advice should not be generalized, rather tailored to fit their specific needs. In a world where the economy is ever-changing, having a pro-active and trusted professional to hold you accountable and constantly update your financial roadmap far outweighs an online robot. Studying the behavioral aspects of our clients allows us to build connections with them, uncover hidden complexities, and truly understand their biases and relationship with money and investing. We take pride in our 24/7 accessibility and being a “financial concierge”.

Given the rollercoaster we saw in the markets last year and the extreme volatility we’ve experienced, personalized advice is more prudent now than ever. With rising interest rates and this inflationary economy, having a financial roadmap and guidance can help you navigate this climate. If you haven’t done so, think about re-visiting your financial plan, whether its adjusting your budget for inflation, checking in with your asset and risk allocation, or just an overall check-in. If you haven’t done so already and we head into February, set some financial goals for yourself to achieve before the end of the year. If you need help or even just a sounding board to bounce ideas off of, we’re here to help! If you have any questions about your financial situation or current method of advice, email us at info@shermanwealth.com or schedule a complimentary intro call here. 

Financial literacy and empowerment stands as a core value of Sherman Wealth. We have long been strong advocates of improving financial education in our country and within the school system to educate our youth on financial concepts throughout their development. Understanding personal finance and feeling confident enough to make your own financial decisions is crucial in the society we live in and a predecessor to financial success. 

Despite thought leaders efforts to improve financial literacy in our country, it has still steadily decreased over the last 12 years. A FINRA Foundation National Financial Capability Study found that of 30,000 U.S. adults surveyed, the average respondent of the study only answered 2.6/5 financial literacy questions correctly, down from 3 of 5 questions in 2009. These findings are quite alarming and pose a warning that financial education and literacy needs to improve.

In the world we live in today, with constant change and unprecedented events such as the COVID-19 pandemic, it’s important to know the full scope of your finances, from the location of your various accounts, to your risk tolerance and asset allocation, your planning opportunities and tax consequences, your workplace benefits and more. Many individuals who lack financial knowledge are missing out on prudent opportunities in their young careers and life that could lead to long-term financial success. 

If you are feeling discouraged about your financial knowledge and confidence, now is a great time to think about working with a financial advisor such as Sherman Wealth, that will not only help you create a customized financial plan, but teach you everything you need to know in the process. If you have a child or grandchild in high school or college and want them to learn more personal financial tools before they embark in the real world, email us at info@shermanwealth.com to learn more about what financial literacy courses and tools we provide.  For more financial literacy content, check out our Q&A blog. To sign up for a complimentary introductory call, click here.