Financial Planners Offer Spring 2021 Story Ideas

SPRING CLEANING YOUR FINANCES

Amy Braun-Bostich, CFP®, APMA, CFS, CLTC, Founding Partner and CEO of Braun-Bostich & Associates, an SEC Registered Investment Advisory and wealth management firm based in Pittsburgh, says that many of their clients are finding it easier to save now. “Why? Because they don’t go out to eat as much, they aren’t traveling, they aren’t driving as much, and they aren’t going to entertainment venues. Over the course of the year, this has added up to $20,000 or more for some clients.” Putting that money to work in a tax-sheltered investment account is a good idea.

Braun-Bostich provides this age-old advice: Pay your essential bills then tuck away your savings before you do your discretionary spending. “What I mean by that is if you pay your fixed expenses first (rent/mortgage, utilities. auto and other loan payments, food etc.), with whatever is left over, put aside the amount you need to build your reserve or amount needed to provide for short-term goals. Then, go have a good time. I also emphasize the use of payroll deduction for retirement plans, insurance, and HSAs. You spend less when less is available.”

“Clean up old 401(k)s, IRAs and bank accounts,” says Nicole Strbich, CFP®, CPWA, EA, Director of Financial Planning at Ohio-based Buckingham Advisors, an SEC Registered Investment Advisory firm that also offers tax preparation services and strategic planning for small business owners. “Leaving old accounts can mean extra fees and unmonitored and potentially under-performing investments. Look for opportunities to consolidate accounts, review fees, and make sure you have primary and contingent (secondary) beneficiaries listed for each account.”

One way to add a “green element” as you do your spring cleaning is to move your bank accounts to an online vendor or a community bank or local credit union. “Local banks and credit unions typically support the community with activities such as bringing in shredding trucks, providing a glass recycling bin, or cleaning up local park,” says Kacie Swartz, CFP®, CIMA®, a partner at Stone Wealth Management, an SEC Registered Investment Advisory and financial planning firm based in Austin, Texas. “Online banks may have better rates for savings accounts and could potentially also run a greener business because people don’t have to drive to the facility, and use more fossil fuel in the process, in order to use their services.”

ESG INVESTING STRATEGY

Haleh Moddasser, CPA, a partner with Stearns Financial Group, an SEC Registered Investment Advisory and wealth management firm based in North Carolina, and author of the book Women On Top: Women, Wealth and Social Change, says that now is also the perfect time to scrub your investment portfolio. “Today’s women control an unprecedented amount of wealth, making now the time to leverage those dollars to propel the changes you want to see in the world,” Moddasser says. “Look beyond traditional philanthropy and political activism to discover the powerful role of Environmental, Social, and Governance (ESG) investing.

As a young mother, Moddasser often thought about the world her children would inherit - wanting to make it kinder, gentler and more just. But it was not until many years later, when her kids were adults, that she revisited those earlier dreams and embarked on a new journey of purpose. Now, she helps other women build and grow their financial independence, as well as learn how to invest in a way that helps both their situation and the world they wish to impact.

“Fortunately, there is now a new way to throw the power of your wealth behind issues you care about,” Moddasser says. “It is called ESG investing, which stands for Environmental, Social, and Governance. It incorporates a dual mandate that allows you to invest your wealth for the purpose of earning a financial return, while simultaneously impacting the causes you care about.​”

Kacie Swartz, CFP®, CIMA®, of independently owned and operated financial advisory firm Stone Wealth Management in Austin, concurs. “Consumers and investors can take an Earth Day approach to their finances. If climate change and the environment are important to them, they can manage their finances in a way that supports that. They can look at banking, budgeting, spending, housing, investing, etc. with an eye toward supporting the companies that support their world views.”

ESG investing might also be of interest to those who want to use the power of the new screening systems to align their portfolio holdings with their personal concerns about the environment, problems in society and corporate governance. There is collective power via proxy voting and shareholder advocacy. “You can replace any standard investment with an ESG component,” Swartz says. “You could even allocate 100% to ESG – especially if you want to tilt toward clean energy and the environmental impact. You can make just as much using an ESG strategy as with a traditional investment strategy.”

KIDS AND MONEY

Parents can ease their own anxiety about money by teaching their kids about money. This type of interaction improves the financial literacy of both parent and child. Here are some thoughts from Marla R. Chambers, CPA, CFP®, Senior Financial Planner for Buckingham Advisors, an Ohio-based wealth management, business strategy and tax planning firm.

“Parents can create three savings receptacles (such as jars or piggy banks) when their children start earning allowances,” says Chambers. “Label one as Giving, another for a short-term want such as, Doll, and one for long-term needs such as, Education and Retirement. Then, when the children receive their monthly or weekly allowance, train them to set aside a percentage to Give to someone in need, 30% for the Doll, 30% for Education and Retirement, and then spend the remainder for something they want now.”

“In time, the parent will need to open a bank account for their child to accumulate the long-term needs. When children accumulate $10 or $20 in the long-term needs receptacle, then the parent should take them to the bank to deposit the funds into their savings accounts. Once they are teenagers and have jobs they can see how much their small investments over time have accumulated, and it may help them to continue a lifetime of good savings habits.”

“Teaching children to save a significant portion of their earnings for long-term needs, will help them prepare for large cash needs such as funding retirement. A child who has earned income may set up a Roth IRA and contribute up to 100% of their income up to an annual limited amount ($6,000 limit for 2021). If a teenager starts mowing neighbors’ yards or babysitting, they should report the income on a tax return and contribute as much as they can to a Roth. The Roth IRA grows tax free and provides flexibility. The original amount contributed to the Roth IRA may be withdrawn without a penalty if needed before the individual reaches 59 ½. Also, if the Roth IRA has been in existence for at least five years, a distribution may be eligible for a first-time homebuyer exception to the 10% early withdrawal penalty.”

Chambers adds that parents who own businesses have advantages when it comes to teaching their kids about money. Sole proprietorship and partners should consider employing their children. Their children’s wages may be exempt from FICA taxes and unemployment taxes. Then, the children can contribute to their Roth IRAs and save for other wants and needs.

Minor children of Sole Proprietors and Partners hired by their parents’ companies can earn up to the federal standard deduction ($12,550 for 2021) without being subject to Federal income tax, FICA taxes and Federal Unemployment Tax. If a sole proprietor who is in the 24% federal tax bracket hires two of his minor children and pays them $12,500 each, the parent could save approximately $6,000 in federal taxes (24%), up to $3,532 in Self-employment taxes, plus applicable state and local taxes on his tax returns.

EARTH DAY INFO

Earth Day is an annual event celebrated around the world on April 22 to demonstrate support for environmental protection. First celebrated in 1970, it now includes events coordinated globally by the Earth Day Network in more than 193 countries.

Earth Day is intended to inspire awareness of and appreciation for the Earth's environment. There are many ways that families can celebrate Earth Day. Not only is it the best time of year to get outside and enjoy the weather, it is a perfect opportunity to teach children how they can also enjoy, and take care of their environment for the future.

According to EarthDay.org, the 2021 celebration will begin on April 20th with a global youth climate summit led by Earth Uprising, in collaboration with My Future My Voice, OneMillionOfUs and hundreds of youth climate activists. Education International will on April 21st lead the “Teach for the Planet: Global Education Summit.”

Parallel to the Biden Administration’s global climate summit, EarthDay.org will have its second Earth Day Live digital event, which begins at 12 PM Eastern Time. Workshops, panel discussions, and special performances will focus on Restore Our Earth™ — they will cover natural processes, emerging green technologies, and innovative thinking that can restore the world’s ecosystems.

OTHER RESOURCES

Money Smart Week: https://www.moneysmartweek.org/

Financial Literacy Month: https://en.wikipedia.org/wiki/Financial_Literacy_Month

Sources for personal finance stories: www.MediaSourcePortal.com