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3 Financial Moves To Make When You Get Promoted

Promoted

There are few things in life that deserve a glass of champagne more than a well-earned promotion. After years of blood, sweat, and tears, your company has finally recognized your efforts and decided to move you into a more meaningful role within your company. Sometimes, only title are associated with these promotions, but more often than not there will be financial rewards as well. This is exactly your time to fall into the lifestyle inflation trap and make some really smart financial moves that will pay dividends down the road.

  • The Pay Raise- Generally, a new promotion will also mean more responsibility which often equals more pay. If your salary jumps by $10,000 or even $50,000 dollars this will mean a significant bump in your cash flow for your family. What should you do with this money? Is it best to add to your 401(k)? Start paying down the mortgage? Or time to purchase that new vacation home? With pay raises and bonuses, people often don’t deploy the important rule of 1/3rds. What this means is that at least 1/3rd of the raises and bonuses should be captured immediately with some form of forced savings. This should be priority number one.
  • Tax Planning- After all of the excitement subsides from the new title or even the new office, you should begin to ask yourself if a new tax planning strategy should tax effect. Did you now fall into a new tax bracket with this additional income? Is it time to readjust your withholdings for each paycheck so you don’t get stung during tax season? Did you trigger additional Medicare tax or the Obamacare
    surtax? Will your itemized deductions and personal exemptions start to phase out now? All of these should be considered along with the appropriate tax mitigation strategies so you can keep as much as possible from this hard earned pay raise.
  • Stock Options and/or Restricted Stock– If you hit a magical band level in your company, you may now be eligible for non-qualified stock options, incentive stock options, performance units, or restricted stock. These programs vary in how you can financially benefit from a rise in price or overall performance of your company and should come under much scrutinization. I’m always baffled at how people who get this stock spend more time getting advice from the office next store than a qualified professional. It is paramount that you put a disciplined strategy in place with these types of programs to grow your overall financial success. Should you cash in right away? Should you sell every year? Should you use limit orders? You may have even qualified for a deferred compensation plan if your company offers it to certain level of executives.

You should be proud of yourself for getting promoted. For most of you, it will mean another three to five year stint in a different part of the company, a different part of the country, or even learning a different skill set altogether. Now is the time to make smart money moves to set yourself up to make work optional one day in the future.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by Hello My Name Is, LLC to provide information on a topic that may be on interest. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2014 Hello My Name Is, LLC.

5 Financial Moves To Make On Your Birthday

Happy BirthdayOur birthdays are usually a day of reflection and celebration all at the same time. It’s often the one day of the year we measure ourselves against our goals, take stock of where we are in life, and think about what may be coming in the near term horizon for our future. You’ll often compare how you look versus your friends on places like Facebook and think about where you are in life when it comes to your money and savings. Here are my five smart money moves tips you should be considering on each and every birthday.

1. Insurance When it comes to life insurance, every year you get older there is more of a chance that you will die. Thus, the cost of life insurance will continually go up. You may need to decide what kind of insurance to buy whether it be a 10, 20, or 30 year term insurance or maybe this is the year you should lock in for more permanent life insurance due to increased health concerns. It’s best on your birthday to be considering how much insurance you need an make sure you have the right coverage in place.

2. The Bucket List– Not all great things in life have to wait until you retire. I recommend you plan at least one small or large bucket list into your overall budget every year. This is can range for tickets to a concert or sporting event to a trip for three weeks to Australia. I’ve seen many people wait too long for their bucket list items and you should be trying to check one of these off each and every year you get older.

3. Your Health— Medical bills can be extremely costly to the bottom line of your personal financial picture. This can range from the cost of health insurance to overall out of pocket medical costs. On the top of the ‘important list’ items is making sure you budget out how you will spend your money to take care of your health. Does this mean joining a gym? Will this include eating healthier food? Do you need a personal trainer? Poor health can invade on performance at work hurting your earnings beyond the medical cost itself. Birthdays are a great time to take stock of this smart money moves item.

4. Did You Hit A Tax Age->Each year you get older, you may reach a certain age that will change what you can do from a tax perspective. For example, if you turn 50 at any time this year you will be eligible for ‘catch-up’ provisions for your 401(k), Roth IRA, or Traditional IRA contributions. If you turn 59 ½, you will become eligible for taking money out of retirement plans without the 10% penalty. It’s important to know what happens at what ages so you can take maximum advantage of the tax law.

5. Does My Portfolio Need To Change->Beyond the fact that you should be getting all of your information in one place so you have a singular picture of your overall financial situation, this is the one time per year that you should really be looking at your investments and determining what changes need to be made. Are you on track for retirement? Is enough being saved for your children’s college education? Should you be changing the stock/bond/cash split now that you are a year older? All of these questions are important to ask every year you get older.

Every year you get older, time seems to fly by faster. My theory on that is because the percentage growth each year gets smaller and smaller which is why it feels that way. When you are one year old, it takes 100% growth to get to two years old. Every year after that the percentage gets smaller and smaller which gives you the impression time is moving faster even though time is always the same. Make each birthday an opportunity to look at these five your smart money moves and you’ll be sure that one important thing that grows is your bottom line.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by Hello My Name Is, LLC to provide information on a topic that may be on interest. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2014 Hello My Name Is, LLC.

Four Financial Ideas on Your Work Anniversary

Work Anniversary

It’s another anniversary and a good time to reflect on where you are in your career both professionally and financially. It couldn’t be a better time to also take stock of where your overall financial plan is currently, and whether or not you are on track to make work optional. Here are four smart financial ideas to consider on this work anniversary.

1. Rule of 1/3rds Your work anniversary often signals a time where you could earn an additional pay raise. Most individuals often don’t deploy the important rule of 1/3rds. What this means is that at least 1/3rd of the raises (and bonuses) you get every year at work should be captured immediately with some form of forced savings. This should be priority number one. So, if you got a $10,000 pay raise, a 1/3rd is likely to go to taxes, a 1/3rd should go to some type of savings, and a 1/3rd should be spent on something you enjoy. This will prevent you from lifestyle inflation.

2. Time To Review Your Stock Options- Beyond the fact that you should be getting all of your information in one place so you have a singular picture of your overall financial situation, this is the one time per year that you should really be looking closely at your stock options to determine what the
best exit strategy is for that part of your portfolio. Non-qualified stock options will normally only last 10 years and you may be increasing your overall risk exposure by waiting until the last minute. If you get Incentive Stock Options or Restricted Stock Units, you should be paying close attention to vesting schedules and how to mitigate overall tax liability.

3. Time To Get A New Job?– Asking your boss for a raise or a promotion has to rank with cleaning out your garage or spending a weekend trapped in a cabin with your in-laws. However, you should be looking at data on www.glassdoor.com or www.payscale.com to see if you are in the ballpark from a salary/bonus perspective with other people in a similar type career. If you aren’t, perhaps it is time to pull up the bootstraps and ask your boss for some additional cash or consider exiting this opportunity stage left.

4. Skills and Competencies- If you love what you are doing, but really need to earn more income then you might consider what investment needs to be made in yourself to increase your skills and competencies. You should consider investing 1% to 3% of your income into yourself to help you improve your long term earning potential every year. That may range from a computer skills course to borrowing money for a longer term play such as getting an MBA. Increasing skills and competencies is the real way to grow your income unless you are incredibly skilled at office politics. You should see our guide on what kinds of people earn a $100,000 income these days.
Congratulations on your work anniversary. It is a fantastic time for us to connect up for a cup of coffee or a meeting and see how we can put a game plan to make great financial strides before your next work anniversary.

 

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by Hello My Name Is, LLC to provide information on a topic that may be on interest. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2014 Hello My Name Is, LLC.

Note: Due to industry regulations on communication, we are unable to allow for public comments on this blog. Please feel free to email me your questions and/or comments to kathy@fishandassociates.com. Thank you. Securities and Investment Advisory Services offered through NFP Securities, Inc., Member FINRA/SIPC. NFP Securities, Inc. is not affiliated with Fish & Associates.

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment Advisory Services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Kestra IS and Kestra AS are not affiliated with Fish and Associates. Kestra IS and Kestra AS do not provide tax or legal advice.


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