Children play a humongous role in your financial life. When adding a child to your family, you should prioritize and address the most critical areas of your finances to prepare for the future. Having a child involves estate, insurance, tax, and education planning. For more information on how a child affects each of these key areas, read this Financial Tip.
If you are 50 years old or older by the end of your retirement plan year, you are eligible for a catch-up contribution allowed in IRA, 401(k), 403(b) and SIMPLE plans. For more information on the amount of the catch-up contribution allowed by each type of plan and other frequently asked questions, read this Financial Strategy.
Now is a great time to assess your financial needs and set achievable goals for your financial future. One way to accomplish this is to develop a financial plan. Simply, financial planning is a process in which you determine what you want to achieve in life and how best to do it with the money you have and will earn.
If you were faced with an emergency, would you have the funds to cover it? Emergencies may vary from needing a new roof for the house to unemployment. An emergency fund with cash and cash equivalents in low-risk investments provide easy access to money should you need it. For more information on how much you should have in your emergency reserve, read this Financial Strategy.
If you owe taxes this year and cannot afford to pay the full amount, there are options that you can take to ensure that you will not incur late filing penalties. The best option is to pay as much as you can by the deadline. While you will still incur late payment fees, you will not be penalized for filing late. For more information about this option and to learn more about the possibility of an Installment Agreement, read this C.P.A Insight.
Municipal bonds are issued by a city or other local government, such as counties, redevelopment agencies, special-purpose districts, school districts, public utility districts, publicly owned airports and hospitals and any other state government entities. Also known as “munis,” municipal bonds are attractive to many investors within taxable accounts, because the interest income is exempt from federal income tax, and in many cases, state and local taxes as well.
Your credit score is usually based on the FICO model that weighs reported credit activity in five categories, which consist of payment history, debt-to-credit ratio, length of credit history, new credit applications and types of credit used. For more information on how your credit score is used and how your credit activity is ranked, read this Financial Strategy.
If your thoughts of spring include a tax refund check, you may opt to use your windfall to benefit your future, rather than spend it now. Some uses you may consider include adding your refund to your retirement savings or investing in continuing education. For more ideas on how to make your refund work for you, read this C.P.A. Insight.
A living Will and a Healthcare Power of Attorney can be used to make your wishes known if you become incapacitated and can cannot make decisions regarding your medical care. You can make your wishes know in advance regarding resuscitation, and the administration of food and water. For more information on planning health care decisions in advance, read this Financial Strategy.
If you take a distribution from a retirement account before you reach the age of 59 1/2, generally, you will have to pay a 10% early distribution penalty. However, if you take an early distribution to pay for unreimbursed medical expenses or qualified higher education expenses, you may be able to avoid the early withdrawal penalty. For other common exceptions in which you may not be subject to the 10% penalty, read this C.P.A. Insight.