Monday, January 10, 2022

Evaluate Your Earnings

Earning what you're worth

We all work for multiple reasons, making an impact in the world, following our passions, expressing creativity, and of course earning a living. But no matter what you do you need to make sure you're paid appropriately and maximizing your earning potential. First. Consider how you spend your time. Time is truly a finite resource.

Once you spend it, it's gone. If you're actively looking to grow your income start looking at how you invest your time. Spend time expanding your skills or finding a mentor or taking classes or researching what other companies in your industry pay. Think of it this way. Spending 5 minutes an hour checking your social media is the equivalent of reading nearly a hundred books a year. Related, this is time that you could be spending earning more money too.

Every year there's more ways to flexibly translate your time into money through taking on gig work or consulting within your field of expertise, or even spending time figuring out how to put your assets to work for you. Second, try to stop thinking of your income as a fixed number but a number that grows as you grow. Remember salary increases are rarely given, they're earned and even more importantly they are asked for.

Over the years, I've done hundreds maybe thousands of performance reviews. One thing I've learned is that the people who asked for more money would generally not the people who really deserved it, they were just more confident so make sure you ask. Third, follow the money. Go ups stream and really understand who is paying you and how you're creating value for them. Try to quantify your value to the company and think about how you can highlight that value to the people who make decisions on your salary.

If you're working for yourself, think about how you can make more money not just by adding hours, but by adding value. Think of new services or add on that can bring your charge rate up and make sure you keep track of references reviews and build a portfolio of your work that can be used to grow a more valuable brand for yourself. All of this leads directly to the golden rule of work, know your worth. Your worth is not what you're paid but the value that you bring.

When you know your worth you can negotiate, you can confidently present your value to your employers and customers, also know that your worth is relative. What do other people make for the same job? Can you take on additional tasks that can save your company or your client money. Compare and quantify your worth and take on roles that can add value to your employer. This can be frustrating in the short term, especially if you don't think you're being paid what you're worth but knowing where you stand and quantifying where you'd like to be are the best first steps to increasing your earning over time.

Finding multiple income streams

For many people, income equals salary, but that definition can hold you back. There are many ways you can earn income. For example, active versus passive, regular versus sporadic, dividends, royalties, and rent. First, salaries are great because they come week after week without interruption. Salaried employees may also enjoy benefits like bonuses, commissions, a retirement plan, stock options, maybe even a pension. 

The problem with salaries is that they can be hard to grow. You generally earn the same income until you prove your worth, get promoted and get a raise, and with companies often capping their raised budget at three to 5%, often, you need to move to a different company and a new role to get a real bump in your salary. Regardless of your current situation, make sure your job entitles you to regular performance reviews where you can make your case for promotions or pay bumps. 

Start thinking about quantifying your contributions so you can justify increased compensation based on your deliverables, and don't forget to look at the value of benefits that are attached to your position. For example, landing a good retirement plan or stock options may not pay the bills today, but over time, they could be very lucrative. 

If you're looking for a little more flexibility or an additional income stream, you can look to become an independent contractor or a gig worker. These jobs can be great if you're good with hustling for your work and following up to make sure that you're paid, but the downside is the fact that income can be sporadic, and as you know, your bills don't press pause when your income goes down. 

Build a savings cushion when you do get paid to insulate you from times, you're not generating much income. Also, see if the work you're doing comes with the flexibility to set your own prices. If you can't argue for the value of your work and set a price for your work, you won't be able to earn more money per hour as you get better at your job, and don't forget payment terms. 

Keep them short so you get paid quickly. Finally, there's income earned from investments where you invest money in stocks, bonds, or real estate. This is how the wealthy make their money. As one of my bosses once told me, "No one ever got rich through their salary." Another form of passive income is investing in a rental property, a franchise opportunity, or an existing business that generates cash. 

Just make sure you do the math and confirm that the investment will generate a profit and is worth the risk. Finally, don't think of these options as either/or propositions. Empowerment comes with multiple income streams. Investing your time, attention, and money in more revenues than just your primary career is a great way to ensure that you can grow your income and net worth over the long-term.

Tax and your hard-earned dollars

It may not be pleasant to pay taxes, but taxes to pay for the things we need, like roads, police and schools. What's important is making sure that you pay the right amount of taxes. Every individual who earns a high enough income is obligated to pay personal income taxes. And these are generally withheld from your paycheck. So, a couple of things to note right away. The withholding on your paycheck is a prepayment of your taxes. 

When you file your tax return, those prepayments are reconciled with what you filed and if you paid too much in withholdings, you would get a refund. If you do get a refund, it means that you essentially loaned the government money in overpaid withholdings, which they paid back to you the next year as a refund, which is very nice of you but not a great financial idea. You really should try to match your withholding to what you will file on your return. 

On the other hand, overpaying on your withholding is something of a forced savings plan and people love getting that big fat refund check. I get it. So how do you lower your tax bill? In most countries, you can claim medical, education and charitable expenses as tax deductions. So, keep receipts so that you can lower your taxable income. Also, make sure to investigate contributions to retirement or education accounts, which you may be able to use as a deduction. 

And don't forget tax credits, which reduce your tax owed and, in some cases, like the earned income tax credit in the US, can give you a refund even if you don't owe tax. If you're self-employed, make sure you have enough money set aside to pay your taxes yourself. Usually a few times over the year. But this headache is offset by the fact that you can deduct expenses that regular employees can't. For example, you can probably deduct some of your internet, phone, travel and even rent if you use those items in your work. 

But be careful, there are limits to what expenses can be deducted. An accountant can be amazingly helpful in telling you what you can and can't deduct. And a quick side note for the self-employed, investigate creating a Limited Liability Company for yourself. Allows you to keep your work and life expenses separate but more importantly, it shelters your personal assets from any work-related legal issues. 

Finally, there are taxes on investments. When you sell an investment for a gain, you owe a capital gains tax on that gain. There are different rules for different countries but in general, capital gains taxes are usually lower than the tax you pay on your paycheck. So, make sure you take advantage of the lower tax rates to growth your savings. And one last word, as painful as it may seem, make sure you pay the taxes you owe as they come due. Building up a tax bill can and will hurt your personal finances over time.

Embracing the future, you

If you had a magic wand, what would you wish for your 72-year-old self? Healthy, free of money troubles, ability to provide for the people you love. So how do you get to that version of yourself? It's not easy to imagine but start by being kind and considerate to that future you. Think of it this way. Plenty of people aren't fortunate enough to make it to that age. 

Now remember, there are very rarely straight-line journeys in life, and it's not like you must have options A, B and C all figured out for yourself. It's more getting yourself to a place where you can take opportunities as they arise and take the bumps which will inevitably come. Think of a savings cushion if you lose your job or going back to school to change career direction or moving to a city with more opportunities for work. 

It means you have the resources available so you can zig if the world zags and all that comes down to good financial practices. If you have high-interest debt, think about paying that off first. Think of every dollar that you're paying in interest payments is one less dollar the future you must spend. The same goes for how you approach spending. 

Sure, you need to live your life and enjoy yourself, but are you robbing the future you to keep the current you happy? We have been hardwired to consider spending on things that we maybe cannot rationally justify with you deserve it and treat yourself. I spent decades in the marketing world where brilliant people spend their days figuring out how to separate you from your money today. 

It's not a failure to be in debt. It's by design. This is where budgeting and planning and looking to optimize your income and your assets come in. To get to that future you, sit down once a year and look at how you've done over the previous year and plan for the next year, and the best time to do that is at tax time. You'll have all your numbers in front of you. 

It's a great time to look back over the year and compare it to previous years. Check to see if your income grew and if your savings grew, and if they did, keep doing what you're doing. If not, try to think about how you can bump your income, reduce spending, and increase your savings. To dig deeper into this, see my other LinkedIn Learning course, and in the meanwhile, be kind to your current and your future you.

Building your nest egg

Although retirement may seem like something far away and only for old people, the reality is that everyone, if they're lucky, will get old one day. How you take care of yourself and your loved ones when you're older is dependent on plans you make when you're much younger. The old school way of retirement planning is to pick an age when you want to retire and build up a big old nest egg to live off after that age. 

But times have changed. People are living longer and healthier lives. Life doesn't stop at 65, so why should your income? Writers, artists, musician, clergy, politicians, and intellectuals don't have a socially enforced retirement age, so why not you? Think of all the things that you love to do that will pay you beyond the age of 65 and that you can build on now before you retire. 

Secondly, think of government assistance plans and pensions. These can be immensely helpful in retirement. Government plans will not pay all your bills, but they can certainly help, and why not think about moving to a public service job later in your career where pensions are more common. You may take a pay hit to your earning potential when you're younger, but the lifelong pension income could be a godsend. 

But in the end, saving up for retirement is up to you. Most governments have setup tax sheltered accounts to help you save for a time and faster, but almost all the risk and responsibility to save enough for retirement is up to you. So, to help you get there, there's a couple of things that you need to do. Start putting money aside as early as you can, and if you're like most people who funnel every dollar into their home, spend those dollars with an investment mindset. 

You're spending to maximize your nest egg. Not just because you like it. Stay on top of the value of your long-term savings. Do a check-in at least once a year on both the number and your assumptions of how much money you think you'll need when you're older, and if you do have an employer-sponsored retirement plan, you need to think about what to do with that money. 

Some plans allow you to choose between set investment options, but often, you're on your own to choose those investments. If you do, make sure they're not too risky and are low cost. If you use a professional advisor to buy your investments, make sure the advisor justifies their costs and the cost of the investments that they're buying. So how much money do you need to retire? It's a great question. 

My answer is usually as much as humanly possible. 

Asking for a raise

I talk a lot about following the money and knowing your worth, but these things do nothing to help you increase your income if you don't ask. So, here's some practical advice on how to ask for more money. First, it's vital that you understand the context of your ask. Here's some questions to answer. How's the company doing? Is there a hiring spree or mass layoffs? 

Either way, it's important for companies to keep their high value team members. So never let that put you off asking. How does the company see you? Are you meeting or exceeding your goals? Are you respected and seen to be contributing? Or do you keep your head down and hope someone will notice? Do you have skills that pay a premium? 

Sometimes it's not the bosses that make the most money, but the people who do the specialized work that's hard to hire for. Make sure you know what other companies are paying for your skills. Is there a formal review cycle? Do you know when conversations will happen or is it ad hoc? Either way, don't wait until your review to bring up your request. 

Next, prepare. Use the online tools in your market to find competitive and comparative positions. Gather data on what other people with your scope of work and experience are being paid or go a step further and ask your colleagues what they're being paid. And finally, have the conversation. Remember, this is a negotiation. And one big rule of negotiations is doesn’t take a no from someone who isn't empowered to say yes. 

A raise isn't a favor to be doled out, but a business case to be made. Bring the data for these four things, your scope of work and how you're adding value over what you're being paid for. Comparative data from your own company or your industry, your commitment to the company, and ideas for how you will expand your contributions and the number you want, whether it's salary or a bonus, and add 10 to 20% to give room to negotiate down. 

Practice your conversation. Your pitch should be no more than 90 seconds to cover these points. Make the ask and then stop talking. And don't leave the conversation open-ended. Ask clearly what the next steps are. 


What's your money story?

Every day is we work, spend and save, we are writing our money story. The seeds of this story usually begin with our parents and whether we like it or not, we often take on facets of their relationship to money.

Over our lives our money stories are constantly growing and changing. Sometimes they're bumpy, sometimes smooth but one thing's for certain, you can help guide and shift your money story by understanding the fundamentals of earning, saving, and growing your money and adapting your money habits over your lifetime.

Welcome to personal finance fundamentals. I'm Jane Barratt. The foundation of my money story is that my parents told me I could do anything in life as long as I paid for it myself. This was great advice, especially given I'm one of eight kids and my dad worked multiple jobs as an electrician to feed all those hungry mouths.

After spending 20 years selling things to people and managing Madison Avenue Agencies, I shifted my focus and became an investment advisor. Helping people both keep money in their pockets and grow it over time.

I'm now the chief advocacy officer at MX, a technology company that builds solutions dedicated to empowering the world to be financially strong. At the end of this course you'll see that money isn't linear. It's not something that comes to you from working and goes out the door of spending, but is actually circular. 

Your spending doesn't disappear into the world, it's income or investment growth for someone else. Reducing your spending or earning more will help you save more and saving more will help you grow your money. And putting that to work through investing takes you back to earning more. No matter where you are on your money journey, knowledge is power.

So stick with me as we work through the building blocks of personal financial management. We'll cover the basics of earning more, paying down debt, working up a good credit score, what tools you can use to get organized and how to be a confident investor.


Friday, December 3, 2021

Sign Up For 5 Weeks to a Financial Fresh Start

 This money challenge will be the New Year’s resolution you actually keep.

Each year we set New Year’s resolutions – packing gyms and tossing out sweets – that seem to be all but forgotten by the year’s end. Alongside the typical fitness and diet goals, money is one area where many of us struggle to improve year after year.

If you’re looking for a fresh start in 2022 and a resolution that will stick, sign up for the U.S. News five-week newsletter course to reach your money goals in 2022.

This course will ask you to reflect on the previous year and how you weathered the coronavirus pandemic’s economic impacts, then prepare you for the months to come – whatever they may bring. You’ll finish the course not only with a financial plan, but with the tools and mindset required to maintain it through the year.

What to expect: You’ll receive an email from our personal finance editor Emma Kerr each week containing one money goal for the year and four clear steps to achieve it. This course lasts five weeks and also includes fascinating, sometimes surprising, data to guide your financial decision-making in 2022.

Who should sign up: This newsletter is for everyone. The money goals and steps in this course can set you up with peace of mind during your first year living away at college or your first year of retirement – and everything between.

Wednesday, October 27, 2021

3 Financial Habits You Should Adopt Before Retiring

 3 Financial Habits to Adopt Before Retirement

Retirement is a time of freedom for most people as you no longer have to work hours and earn a living, but rather while you pursue your hobbies and decide what to do with your day, but you still have to be smart. Above. the financial decisions you make and make sure that you have good habits. To protect your financial security in your later years, here are three habits that you should implement before retiring from work.

Living on a Budget

Careful budgeting is essential for retirees to meet essential expenses, especially since most older people have steady incomes and high medical costs. most while making sure they don't miss out and go into debt or withdraw too much money from their retirement accounts. Budgeting also enables older people to spend more money so that they can better enjoy their newfound freedom. For some retirees, for example, having the money to travel or pampering grandchildren is crucial. A budget allows them to identify the cuts they can make to free up money for these purposes.

If you get used to living on a tight budget before retirement, you will spend less money as a retiree. As a bonus, you can also plan in some extra retirement savings to build up your investment accounts before you leave work.

Live within your means

Pensioners usually receive a certain income from social security, the rest must come from savings. In order to preserve their savings, seniors should ensure a safe payout rate and not withdraw too much from their investment accounts too quickly. The way to do this is to follow the 4% rule and withdraw just 4% of retirement savings in the first year to adjust inflation in subsequent years. Payout Rate. That means living within your means. It's much easier to get used to spending less than you make if you start before you retire. This can be particularly important if, as a retiree, you have less income than you do at work and you have to adapt your lifestyle accordingly.

Realign your investment portfolio annually.

Finally, older people should get into the habit of regularly reviewing their investment portfolios to ensure they have the right mix of assets. Over time, your portfolio may over-invest in a particular type of investment or industry. If so, you may be exposed to too little or too little risk. This is dangerous for any investor, but especially for those who are retiring or about to retire and may not have time to recover from losses or wait for the market to recover in the market. Realigning your portfolio involves reallocating your investments so that you have the appropriate asset allocation based on your age and risk tolerance. Make a habit of doing this at least once a year before retirement so you don't jeopardize the chances that your savings will support you.


Tuesday, October 26, 2021

Michigan students would have to pass the personal finance course under the new law

If passed, students would need to learn how to make, spend, borrow, save, and invest.

Credit Cards

Michigan lawmakers are considering changing the high school curriculum by requiring students to complete a personal finance course prior to graduation. The House Education Committee heard testimony on House Bill 5190, which would require all students to complete a half-credit financial education class in order to graduate. They cover topics such as making money, spending, borrowing, saving and investing. "Michigan schools have a duty to prepare students for post-graduation success," said Diana Farrington, Republican state representative in Utica. "Personal finance is one of the most important tasks in life when graduates reach adulthood, but our curriculum has failed to prepare our teens to properly manage their resources. Choice and require a course in business and personal finance.

To make room for the inclusion of a personal finance course, Farrington suggested reducing the requirement for learning a language other than English from two credits to 1.5 credits. The House of Representatives Education Committee did not vote on the personal finance class bill. there to pass, in full House and Senate, before Governor Gretchen Whitmer considers signing it into law.


Monday, October 25, 2021

PERSONAL FINANCE - Discuss your finances and assets with your children

 

Talking about your finances and estate intentions can be awkward, even with adult children. Rest assured that they probably know more about your finances than you think.

Much has been written about teaching your children responsible use of money. A few months ago I discussed this topic, Prepare Your Children for Financial Adulthood, in this column. Today's column is the other side of that discussion; that is, what to tell your children about your finances. Many of us find it uncomfortable to talk to adult children about our own finances and wealth intentions. However, in my experience it is a mistake to delay discussing our finances with our children. While each family dynamic is unique, when I refer to children in this context, I mean mature children, say, college ages and older. At this age, I can assure you that your children probably know more about your finances than you think. And as uncomfortable as this conversation is for you, it will be less so for your children. Your kids can research pretty much anything online. At the very least, they can easily find the salary range for most jobs and occupations; and Zillo calculates the value of your home.

You are likely to keep copies of brokerage and tax returns in files that you may have "accidentally" found. As an example, I have a wealthy client who believed his college kids had no idea about his family's wealth, even though they had never flown advertisements in their life. Talk about naive! It is important that you have an open family discussion about your finances and your child will eventually find out anyway, likely without your explanation and guidance. I believe that your children should know the details of your estate plan, especially with regard to your dispositive intentions regarding inheritance (amount, time, possible restrictions and conditions); any ongoing responsibilities that may be required of them in relation to siblings; and possible philanthropic intentions. You also need to know if you trust them to take on future duties related to your ancillary estate documents, such as: B. Powers of attorney and agencies in the healthcare sector. and not about others, a discussion of your thinking now will prevent your future speculations on matters of parental affection. My advice is to structure the discussion in advance. I suggest that you consider covering several key points: financial status and retirement planning.

They want to talk about your general lifestyle, your retirement savings, and how to finance your retirement. Do you intend to downsize or move to a senior community? I recommend that it be as transparent as your level of comfort allows. It should also include a full discussion of your values ​​and the responsibilities, opportunities, and expectations that come with inherited wealth. Estate Plans Consider reviewing the details of your will and any trusts that have already been or are being drawn up under the terms of your will. It is also important that you discuss the reasons for your decisions. These documents reflect your values ​​and it is important that your children know their options firsthand and have the opportunity to discuss them with you. It is not uncommon for children to have unequal needs, and sometimes we choose to treat our children unequally to reflect those differences both in their lifetime and through our succession plans. It is important to discuss your reasons for doing this.

Having multiple children co-administrators and co-authors is unusual and often ineffective. It is better to discuss your options now rather than turning them into inaccurate and sometimes hurtful assumptions after your death. You may want to prepare a “final wish list” to share with your children. Preparing such a letter is always appropriate and meaningful. They can discuss funeral expenses and provide a variety of other information that is extremely valuable to your family. at the time of his death. There are many sample letters on the internet that you can use as a guide. Important documents and professional contacts To alleviate the fears and future administrative burdens of your children in the event of death, serious illness or the normal aging process. You should organize your financial records, family documents, etc., and share your location (and passwords) to make the transition easier. Children know how to communicate with their professionals like their lawyer, accountant, and insurance broker who can help them.

Talking openly with your children about your financial situation will benefit you and them. As a parent, you will feel comfortable knowing that your children understand your values, the basis of your decisions, and are provided with useful information that will serve them now and in the future. the future. Your children will appreciate your consideration. Over the years I have received feedback from clients who have had these family conversations; Everyone agreed that it was one of the most important conversations they'd ever had with their children.


Sunday, October 24, 2021

Could You Make a Living on Average Social Security Benefits in 2022?

 Could You Live on the Average 2022 Social Security Benefit?

In 2022, the average Social Security benefit will be slightly higher than it was in 2021, but could you live on your retirement benefits if you increase something that is on par with what a typical elderly person receives? The answer may surprise you.

Living with Average Social Security Benefit Could Be Challenging

By 2022, the average Social Security benefit will rise to $ 1,657. This is an increase of $ 92 from the average benefit of $ 1,565 retirees received in 2021. Inflation is high and seniors receive regular cost of living adjustments when prices rise. Retirees will see a 5.9% increase over the next year as consumer spending skyrockets.

What to do if you can't live with average social security benefit plan additional income.

If you have not yet retired, it is important to set yourself a savings goal so that your savings generate enough cash to supplement your retirement benefits. Start saving asap and try to automate the contributions to a retirement account to finish the money. If you've already retired, part-time work can help you get the extra cash you need when you don't have a lot of savings. You can also move into an economic community if you are trying to make a living on social security alone. Delaying a claim for benefits can also increase your social security income if you haven't already presented your checks. By waiting, you avoid prepayment penalties that would reduce your paycheck if you apply before full retirement age, and you can receive deferred pension credits up to age 70 that will increase your benefit amount. These steps won't give you a social security check to live with easily, but they can make up the bulk of your benefits if you rely heavily on them to support you after you retire.