What The Griswolds Can Teach Us About Our Finances

What The Griswolds Can Teach Us About Our Finances

The holidays can be an exciting and joyous occasion or stressful depending on how you prepare for them. But, using the Griswold’s situation in National Lampoon’s Christmas Vacation as a learning experience, you can take some steps to make the holidays more bright. So, grab some eggnog and your moose mug, and consider the following as you prepare for the year ahead: Don’t write a check you can’t cash – Or, as the saying goes, “don’t count your chickens before they hatch.” By relying on a source of income that you haven’t yet received, you put yourself at risk of financial catastrophe. For example, if you decide to put in a pool, make sure to wait until you receive your bonus check. Make sure you have an emergency reserve – Should the unexpected occur (for example, getting fired after your crazy cousin kidnaps your boss), it is important to have a liquid source of funds available to meet your monthly expenses until you can recover. This account is normally recommended to cover approximately 3 – 6 months’ worth of expenses. Save some of your year-end bonus – While bonuses can be a nice surprise and should be enjoyed, we recommend saving at least a small portion. This could mean padding your emergency reserve, depositing money into a brokerage account, or contributing to an IRA. Consider pet insurance – Should your feline companion chew on a cord and get electrocuted, chances are the vet bill will be fairly high. Much like human health insurance, pet insurance allows you to set deductibles and coinsurance based on an agreed-upon monthly premium. While...
Year-End Tax Tip: Deducting Meals & Entertainment Expenses

Year-End Tax Tip: Deducting Meals & Entertainment Expenses

A taxpayer may deduct business-related meals and entertainment expenses incurred for entertaining a client, customer, or employee. Entertainment expenses are deductible only if they are both ordinary and necessary and meet one of the following tests: Directly-related test – The taxpayer must show all of the following: The main purpose of the combined business and entertainment is the active conduct of business The taxpayer did engage in business with the person during the entertainment period There is more than a general expectation of getting income or some other specific business benefit at some future time Associated test – Even if the taxpayer’s expenses do not meet the directly-related test, they may meet the associated test. Taxpayer must show that the entertainment is: Associated with the active conduct of the business, and Directly before or after a substantial business discussion Generally a taxpayer may deduct 50% of unreimbursed entertainment...
2017 Year End Tax Planning

2017 Year End Tax Planning

As we approach the end of another tax year, it is beneficial to consider certain actions that can not only result in a lower tax bill this year, but also in the years to come. Below are a number of strategies you may wish to utilize prior to December 31: Increase retirement plan contributions – Even though it is the end of the year, there is still time to save! If you find yourself with extra income, make sure to contribute any excess to your retirement plan during the last few pay periods; if you receive a year-end bonus, you can also redirect a portion of that to your retirement plan. Not to mention, you may qualify for a higher employer match. Take advantage of preferential capital gains rates – For those individuals whose income falls in the 15% marginal bracket, long-term capital gains are taxed at 0%. With this in mind, you may wish to consider realizing enough gains to “fill up” the 15% bracket and therefore pay no capital gains taxes on that income. However, be careful as an increase in Adjusted Gross Income (AGI) can affect taxability of Social Security, itemized deductions subject to thresholds, charitable deductions, credits, etc. Review your withholding – To reduce the chances of owing money at tax time, make sure that your current tax withholding is as up-to-date and accurate as possible. You can use online tools to help calculate the correct amount; if you have been withholding too little, try to approximate the amount of additional withholding necessary to break even. To adjust the percentage for the final few pay...
3 Easy Tips to Successfully Manage Your Business Finances

3 Easy Tips to Successfully Manage Your Business Finances

  When it comes to managing one’s business finances, having systems in place is key. Entrepreneur magazine suggests that business owners follow three simple tips: 1.) Have a separate checking account and credit card for the business. 2.) Capture receipts effectively, and consider using Shoeboxed for painless receipt scanning and management. 3.) Have a system for entering receipts. There are variety of ways to automate your expenses and receipts directly into your accounting software. Clint Haynes of Kansas City Financial Planner and President of Nextgen Wealth says, “One solution is to use an American Express credit card that will directly link up your debit or credit cards using Quicken and Expensify.” However, if you’re utilizing a spreadsheet that isn’t connected to accounts, you’ll have to manually enter receipts. If this is the case, he recommends entering them on a weekly basis rather than a monthly or quarterly one. Devote 30 minutes or so a week to take care of this. While it might seem hard at first, if you keep at it. It can become a well-oiled routine in no time. For more details on these and other tips for being a successful entrepreneur, you can read more at...
Where People Go Wrong with Their Understanding of Money

Where People Go Wrong with Their Understanding of Money

  Scott Sonenshein, Management Professor at Rice University, gets it right when he points out that people often misunderstand how money relates to their broader life goals: People often misunderstand that their relationship with money and how they manage their personal finances don’t exist in isolation of their well-being and the pursuit of their life goals. Since money is a component of our well-being, and a means to supporting our life goals, it warrants careful consideration. […] Too often we mindlessly chase after money (and lots of other things too). Sometimes the pursuit of more money might lead us astray from a meaningful goal, such as having enough time outside of work to enjoy family and friends, or the pursuit of a deep interest, such as learning a new language or how to play an instrument. There are even times when we’re so focused on accumulating money that we miss opportunities to do things that would bring us real pleasure, such as a barbeque with friends or a playing a recreational sport. This is something we talk with our clients about every day. In fact, helping people understand where money fits within their broader objectives and values is one of the greatest ways a financial planner can help, and this is why it’s a critical part of our own financial planning process. Again, Sonenshein, is spot-on when he says that “The best way to figure out the role of money is to reflect on and define our life goals.” This is important because it not only helps one have a holistic view of money, but it also can drive important tax, investment,...