Budgeting Tips

Successful business people and financial experts often say that you should run your household like a business. This is good advice, since it can keep your household activities and your finances in good order. But it’s not as simple as that sounds. When you have multiple family members, not everyone may have the same money skills or inclinations when it comes to spending. What one person calls a necessary expense, another may call an indulgence. That’s all well and good, but if these disparities in financial attitudes are causing economic woes it’s time to take a closer look at possible overspending. Here are some common signs of household overspending.

You Have Little or No Savings

Ideally, there’s something left over at the end of each month to put into savings. After all, if your work isn’t getting you ahead financially, then you’re working for someone else without reaping any long-term payoffs. If your savings account isn’t growing or, worse, you have no savings at all, it’s time to assess your spending habits. Emergency funds are crucial for handling unexpected expenses like car repairs or medical bills. Without savings, you might find yourself relying on credit cards or loans, which can lead to a vicious cycle of debt.

Your Credit Card Balances Are Edging Higher and Higher

Credit cards aren’t inherently bad. They can help households get through temporary financial crunches. But if you find that you’re routinely only paying the minimum on your credit cards and your balances are increasing, that’s a sure sign of overspending. Worse, it’s a fast track to a debt crisis. Eventually, you may find yourself unable to even pay the minimum due each month.

You’re Buying Things You Don’t Need

If money’s tight, you’re not alone. Millions of people today barely have enough to get by. But buying more things isn’t the solution. Impulse buying and emotional buying will just get you into more hot water. Track your expenses for a month to see how much you’re spending and on what. Categorize your expenses into essentials (like rent, groceries, and utilities) and non-essentials (like dining out, entertainment, and shopping). This will give you a clear picture of your spending habits and help you identify areas where you can cut back.

You Don’t Have a Budget

Not always, but sometimes, people who don’t have a household budget don’t want to deal with their financial problems in black and white. If there’s no budget, then all the household spending is probably just willy nilly, and odds are good that there is overspending going on. A budget works to keep things in check so that there’s enough money to go around.

You Can’t Pay For Things That are Needed

If you find yourself putting off necessary things like dentist appointments, doctor appointments, or replacing those worn out sneakers you wear everyday, that’s a sign your household is overspending. You need to be able to pay for things that keep your family safe physically and medically. If you can’t, then you need to make some serious financial changes in your household.

Tips to Curb Overspending

Create a Realistic Budget

A budget is your roadmap to financial stability. Start by listing your income and fixed expenses, such as rent or mortgage, utilities, and loan payments. Then, allocate funds for variable expenses like groceries, transportation, and entertainment. Be realistic about your spending and include a category for savings. The goal is to spend less than you earn, so you can save for the future and avoid debt.

Use Cash More

When you use cash, there’s a definite feeling of handing over money, and being left with less in your wallet. With a card, people tend to spend more, because it doesn’t feel like “spending.” Set aside a specific amount of cash each week for non-essential expenses like dining out or shopping. When the cash runs out, you’ll know it’s time to stop spending. This method can help you stay within your budget and avoid overspending on impulse purchases.

Rethink Essentials

No one is asking you to live like a monk and do without the small creature comforts that give you joy in life. But it’s important to separate essential spending from discretionary spending. Having your hair and nails done isn’t essential, no matter how bad you are at styling your own hair and using nail polish. If these kinds of things are essential because of your career, see if you can lower their costs by switching providers or learning how to do it yourself at home.

Plan Meals and Shopping

Eating out frequently can drain your budget quickly. To save money, plan your meals for the week and make a grocery list based on your meal plan. Stick to the list when you shop, and avoid buying unnecessary items. Cooking at home is not only healthier but also more cost-effective than overpaying for restaurant meals.

Have a Family Meeting

If the overspending problem isn’t yours alone, convene with your family members. Have a detailed discussion of the problem, and ask for input from your family members. Ask them to come up with ways they can help contribute to the solution. If the ideas come from them, they’re more likely to follow through, rather than if you just tell them to stop spending so much.

Avoid pointing fingers at any one person; instead, frame it as a family problem that can be solved as a family.

Overspending can have serious consequences for your financial well-being, but it’s a problem you can solve with awareness and discipline. By recognizing the signs of overspending and taking steps to control your expenses, you can improve your financial health, reduce stress and achieve your long-term goals. Remember, the key to financial stability is living within your means and making intentional, informed choices about how you spend your money. Talk to your CPA for more ideas about increasing the health of your household spending habits.

by Kate Supino

High energy bills are a common frustration for many, straining household budgets and causing financial stress. The relentless rise in utility costs can feel overwhelming, particularly for families and individuals trying to balance their expenses in an increasingly costly living environment. This financial burden is not just about numbers on a bill; it affects daily life, sometimes forcing tough decisions between energy usage and other necessities. Beyond the financial impact, there's also the concern of environmental sustainability, making the issue of high energy bills a multifaceted problem that demands practical solutions. Here are some energy-saving tips as we head into the colder months.

1. Maximize Insulation Efficiency

One of the most common issues homeowners face during colder months is the loss of heat through poorly insulated walls, roofs, and windows. This not only leads to a chilly and uncomfortable living environment but also results in higher energy bills as heating systems work overtime to compensate for the heat loss.

Start by inspecting your attic and walls: these are prime areas where heat can escape. Adding or upgrading insulation in these areas can significantly reduce heat loss. 

Don't overlook windows and doors. Double-glazing windows and using weather-stripping around doors can further prevent heat from escaping. In areas with particularly harsh winters, consider heavy curtains or thermal blinds to provide an additional layer of insulation.

2. Practice Smart Thermostat Usage

Smart thermostats offer the ability to program heating schedules aligned with your daily routine, ensuring your home is warm when needed and conserving energy when it’s not. For instance, setting the thermostat to lower the temperature during the night or when the house is empty can result in significant savings.

To maximize benefits, place thermostats away from direct sunlight, drafts, doorways, or windows, as these can affect temperature readings. Also, resist the urge to crank up the thermostat drastically; a moderate and consistent setting is more energy-efficient.

For households without a smart thermostat, manually lowering the temperature by just a few degrees during hours of inactivity can still offer substantial energy savings. Each degree lowered over an eight-hour period can reduce your energy bill by around 1%.

3. Install Energy-Efficient Lighting

A significant portion of household energy usage, especially in the longer, darker months of the year, goes towards lighting. Switching to energy-efficient lighting is an easy yet effective way to reduce this consumption. LED bulbs are an excellent choice; they use up to 75% less energy and last 25 times longer than traditional incandescent bulbs. This not only cuts down on your electricity bills but also reduces the frequency of replacements. Consider using motion sensors or timers for outdoor lighting to ensure they are only on when needed. In indoor spaces, maximize natural light during the day and turn off lights in unoccupied rooms.

4. Have Regular HVAC Maintenance

Conducting routine HVAC maintenance is crucial for ensuring the system's efficiency, particularly during colder months when heating demands are high. Neglecting maintenance can lead to decreased efficiency and increased energy consumption, leading to higher utility bills. Regular check-ups by a professional can identify and resolve issues like clogged filters, leaky ductwork, or inefficient operation. Homeowners should replace or clean air filters regularly, as a dirty filter restricts airflow and forces the system to work harder. Also, ensuring that vents are not blocked by furniture or curtains can improve air circulation, enhancing the system’s efficiency. Routine maintenance, such as duct cleaning, not only optimizes energy usage but also extends the lifespan of the entire HVAC system, making it a cost-effective practice for maintaining a warm and comfortable home environment.

5. Leverage Natural Heat Sources

Leveraging natural heat sources is an effective and eco-friendly strategy to reduce reliance on artificial heating during colder months. One of the simplest ways to do this is by maximizing sunlight exposure. Open curtains during the day to let in natural light and warmth, especially in south-facing rooms, and close them in the evening to retain heat. Consider rearranging your living space so that frequently used areas are located where natural light is abundant. Planting deciduous trees near windows can provide shade in the summer while allowing sunlight to penetrate and warm your home in the winter. Integrating these natural heating methods can significantly lower energy bills and create a more sustainable living environment.

6. Install Hot Water on Demand

Incorporating an on-demand hot water system is a highly efficient way to reduce energy consumption and save on water. Traditional water heaters continuously heat and reheat water, leading to unnecessary energy use and higher bills. In contrast, on-demand or tankless water heaters heat water directly as it's needed, providing hot water instantly and only when required. This eliminates the energy wasted in maintaining a full hot water tank at a constant high temperature. Additionally, these systems typically occupy less space and have a longer lifespan than conventional water heaters. By switching to an on-demand system, households can enjoy significant energy savings and an uninterrupted supply of hot water, making it a smart choice for both efficiency and convenience.

7. Seal Drafts and Leaks

If you have an older home, you may have invisible heat loss occurring. You may be aware of some of the more obvious ones, but even small drafts can add up to a lot of energy loss. Common areas where drafts occur include windows, doors, and places where plumbing and electrical lines enter the house. To address this, apply weatherstripping around doors and windows to seal gaps. For larger openings, use caulk or expandable foam. Installing door sweeps on exterior doors can also block cold air from entering underneath. Checking for drafts around electrical outlets on exterior walls and sealing them with foam gaskets is another step that can make a noticeable difference.

These energy-saving tips can be implemented relatively easily, and with minimal cost. The large savings you experience will come over a long period of time, but you may notice a decrease in your next energy bill. For help with cash flow and managing your household budget, work with a CPA.

by Kate Supino

Does your money seem to shrink overnight? Do you make a decent salary but still can’t seem to make ends meet? Or is there just enough to pay the bills but never enough to tuck away into savings? You aren’t alone. The mystery of the missing dollars is something that a lot of people are dealing with these days. If you’re living paycheck to paycheck with never a dime left over to get ahead in life, it’s time to take a close look at where your money is really going and why.

Possible Reasons Why You’re Living Paycheck to Paycheck

These reasons might be hard to face, but if you never look the truth in the eye, you won’t be equipped to make the important changes needed to get ahead. Read these possible reasons why you’re living paycheck to paycheck and see if any of them resonate with your situation.

1. You’re Paying Too Much For Housing

The top reason why many people are cash poor is because they’ve bit off more than they can comfortably afford, often in the housing category. It’s possible that your mortgage payment or monthly rent is too much for you to sustainably carry. In the past, the rule of thumb was you shouldn’t pay more than a quarter of your net monthly income in rent (or mortgage). Now the rule of thumb is a third, but the people who changed the rule aren’t paying your rent. Stick to the quarter if you have a chance to move at the end of your rental lease, and you’ll be much happier.

2. You’re Living Beyond Your Means

What about the rest of your spending habits? Are you overspending? Chances are you may be trying to live in accordance with what you feel you deserve, instead of what you can afford. How many splurges do you indulge in each month? It might be time to actually make a budget instead of just thinking about a budget. Your CPA can help with this, reviewing what a healthy spend amount would be in each category, with regard to your income.

3. You Just Make Too Little
In every area of the country, there’s an amount that’s needed to live comfortably; that is, being able to sleep at night and put money into savings. Maybe you just make too little to live where you live. It might be time to consider a move to a cheaper area. But what would be better is if you start looking around for work that pays more, or get a second job. Consider asking for a raise or dusting off your resume so you can bring home more money.

4. You’re in Debt Over Your Head

It’s far too easy to get into debt and stay there. At some point, you might have made a decision to only make the minimum payments on your credit cards. Unfortunately, revolving debt is your enemy, and it will keep you in debt for years to come. Look at your credit card statement near where your balance is listed. It should tell you the estimated length of time it will take you to pay off your balance. If you can pay even a little bit more than you owe each month, you’ll get ahead of the curve. Otherwise, the interest alone will keep you living paycheck to paycheck well into the future.

Where is Your Money Really Going?

If none of these things resonate with you, then it’s time to examine where your money is really going. It may surprise you how little money you actually end up with. Here’s an example of a person who makes $50,000 a year. (These numbers are estimated and it’s just an example, so actual figures would vary):

Gross monthly income: $4,166
Net monthly income: $3,125
Less:
Rent: $1,200
Gas: $80
Car payment: $300
Car insurance: $50
Health insurance: $75
Food: $300
So far, we’re left with $1,120. That’s not bad for a single person with no family to feed. But we aren’t done yet.
Utilities: $100
Internet: $40
Clothes: $200
Drinks with friends: $300
Gym Membership: $30
Streaming entertainment (Netflix, etc.): $40
Miscellaneous: $300
Hmmm. Now we’re left with only $110, and you still haven’t gone on any dates or had any emergencies to deal with, like having to replace a flat tire. This also doesn’t account for any credit card debt you might have.

As you can see, the money goes fast. $50,000 isn’t a whole lot of money per year, but it’s not too shabby, either. A person should be able to live on that comfortably, but unfortunately, that’s not the case, at least in this scenario. Can you see where changes can be made? If this person found a way to earn more money, find a cheaper rental, sold their new car and bought a used one, some positive steps could be made. They could still enjoy drinks with friends, a healthy gym membership and a nice wardrobe if they took care of the bigger ticket items.

Do the same with your finances and take a hard look at where your hard-earned money is going. Hopefully, you’ll find some ways to cut back so you have some money left over at the end of the month to invest or put into savings for a rainy day.

Did you know that your CPA can offer ways to help you to deal with cash flow problems? Book an appointment today to learn how to cut costs, take advantage of legitimate tax savings opportunities and keep more of your earned money.

by Kate Supino

Millennials are in a good position to achieve financial freedom. There are more opportunities than ever to make a good living, live debt-free and earn financial success. There are mistakes to avoid along the way, too. These tips for achieving financial freedom will help you to make all the right money moves.

Avoid Debt

Debt is the enemy of financial freedom. While it’s true that it’s important to establish good credit, it’s also true that holding onto debt can lead to a lifetime of financial hardship. Some debt is unavoidable. Millennials may have student loan debt, for instance. But credit card debt is one of the worst to carry. Use credit cards only to buy things that you know you’ll be able to pay off on the first billing cycle. Don’t overextend yourself with debt and end up having to carry debt over months. Every payment you make will eat into your income and reduce your investing power.

Set Financial Goals

Be clear about your financial objectives. You should set both long-term and short-term financial goals. Long term objectives may include paying off a student loan or buying a house. Short term objectives may be buying a business wardrobe or building an emergency fund. Financial goals enable you to create a roadmap to future wealth. The first step to setting financial goals is to make a budget, so you will know exactly how much you can set aside for each goal.

Save 15% of Your Income

Every time you get paid, set aside about 15% of your net pay. Tuck it away into a savings account and don’t touch it. If you do this as early as possible in your earning career, you’ll have a robust nest egg when it comes time to retire. It may be hard to put away 15% each payday, but if you stick to the plan it will become a habit over time that will be easier and easier.

Have a Safety Net

With every generation comes financial catastrophes. From skyrocketing inflation to economic bubbles to recessions and depressions, there’s no telling what kind of financial crisis may befall your generation. It’s important to have a safety net in place to ride out the rocky times. A safety net can take the form of an emergency fund. At the very least, try to build up an emergency fund with six months’ worth of living expenses. This emergency fund should be relatively liquid, meaning you should be able to access it almost immediately without paying a hefty penalty for withdrawal.

Another kind of safety net to have is job security. For millennials, it’s more common to have a side gig at the same time as a primary job. If you’re laid off, the company goes under or you’re fired, you still want to have some kind of income to pay for essentials like food and gas for your vehicle. The side gig can be anything at all, and doesn’t have to be related to your professional skills. It only has to provide you a minimum amount of money to bridge the gap until you can find another well-paying primary job. The side gig will help you to avoid emptying out your emergency fund too fast.

Start Investing

There are more ways than ever to invest money. Choose one or more and start investing as soon as possible. Some investment vehicles, like REITs and stocks, require only a minimum of around $50 to $100. Anyone can afford to invest something each month. The earlier you start investing, the more interest you’ll earn and the more you’ll have to invest later on when bigger opportunities present themselves.

Educate Yourself

Financial literacy is also key to achieving financial freedom. Take the time to educate yourself about personal finance, investment strategies, and economic principles. Read books, take online courses or attend seminars to expand your knowledge and make informed decisions. Learn about the different ways to invest money. Read biographies and how-to books by and about successful people.

Avoid Frivolous Spending

As easy as it is to find ways to invest money, there are even more ways to waste money. Frivolous and useless purchases include digital tools and toys in games and apps. Coffee houses try to encourage you to spend your hard-earned money on overpriced coffee by making you believe in the status symbol. You won’t get rich by depriving yourself of a latte every day, but you will develop better spending habits by avoiding spending on things that have little value beyond instant gratification.

Pay Taxes

Financial freedom can be achieved without cheating Uncle Sam out of his cut. Be a good citizen and pay your taxes on time and in the correct amount. You can rely on the expertise of a quality CPA so that you’re neither overpaying nor underpaying the IRS. If you ever need to make a large purchase or borrow money to invest, you’ll be glad you have a clean record of tax returns and timely tax payments.

Avoid Lifestyle Inflation

As your income grows, it's tempting to increase your spending. However, avoiding lifestyle inflation by maintaining a modest lifestyle even as your earnings increase can significantly boost your savings and investment potential. Strive to live on your old salary whenever you get a raise or change jobs with an increase in wages. Put aside the extra money into an investment vehicle, and you’ll be financially free before you know it.

There are lots of ways to achieve financial freedom. The keys are to avoid debt, put money away into the right kinds of investment vehicles and avoid spending money that you don’t have. The earlier you start, the sooner you can find yourself free to take advantage of real investment opportunities that can set you up for a life free of financial worries.

by Kate Supino

Decluttering has become popular, based in part on the now famous teachings of Marie Kondo, and in part on the minimalist lifestyle movement. But you don’t need to be part of a cultural trend to want to get rid of things you no longer use. People have been selling unused items in one form or another since civilization began. In your lifetime, you may have driven past untold numbers of garage sales and flea markets. Online selling is an iteration of those platforms, where people can sell unused items and put a little cash in their pockets. Here are some of the most popular e-commerce platforms where anyone is welcome to sell without a business license.

Etsy

Etsy began as a platform for people to sell their handcrafted goods. Since its founding in 2005, it’s grown into an e-commerce market that rivals U.S. competitors like Amazon. Etsy’s now ranked at the 4th fastest-growing online sales platforms. Although Etsy’s market share is still quite small compared to Amazon, it’s become a viable place for people to sell their unused items as well as handcrafted goods. Buyers on Etsy often look for vintage items that are hard or impossible to find anywhere.

If you have older items or antiques that you no longer want, Etsy is a good marketplace to list them. It’s free to set up an account, and listing fees per item are nominal. You set your own price, write your own descriptions and make all the shipping decisions yourself. Your account is called an Etsy shop, and it feels very much like running your own virtual storefront. Etsy offers marketing services so you can get more traffic, or put special pieces front and center when visitors come to the Etsy platform. Seller payouts in the U.S. are in the form of direct deposits straight into your bank account each week.

Facebook Marketplace

Facebook marketplace has become an extremely popular way to sell unused items; arguably more popular than Craigslist. There are no fees to sell items locally on Facebook. Anyone with a Facebook account can post items for sale under various set categories like electronics, apparel, sporting goods and much more. It’s not uncommon to post an item on Facebook and sell it the very same day, depending on the item and market demand, of course.

To sell on Facebook, you just visit the Marketplace tab, choose “list an item for sale,” and follow the prompts. Successful items will have several clear photos from various angles, a clear description, including any flaws or defects in the item, and a reasonable price. Once a buyer indicates their interest in purchasing the item, you have to arrange a place for them to pick it up and exchange money. You can also have the buyer pay with Meta Pay, which deposits the payment into your bank account. The biggest downside to selling online through Facebook Marketplace is the danger in meeting strangers in real life. Facebook offers tips on how to stay safe selling on Facebook, and their advice should be carefully followed.

EBay

eBay was founded in 1995 and has since become a market leader in online selling. On this intuitive platform, sellers can list both new and used items ranging from apparel all the way up to raw land and Class A motorhomes. There is certainly a category on eBay for your unused items for sale.

There’s no fee to open an account on eBay, but if you want to sell on the platform, there are a few extra hoops to jump through. You’ll need a seller’s account, and you have to connect a credit card to pay associated listing and selling fees, which are nominal. You have lots of choices when listing your item, including whether to offer it as an auction or at a “buy it now” price. The buy it now option allows buyers to immediately buy your item at the terms you listed including any shipping fees. It’s then your responsibility to fulfill the terms of the sale. This includes shipping it in a timely manner to the correct address of the buyer, wrapping the item in a way that protects it against damage, and supplying tracking information to the buyer. Payment for your item is in the form of a direct deposit to your bank. Both the seller and the buyer can rate each other, enabling you to build up a good reputation as a trustworthy seller. With eBay, you could have money in your bank in as little as two days after a sale. You also have the option of daily, weekly, biweekly or monthly payouts.

Reporting Income From Selling Online

The IRS takes a dim view of selling online and not reporting that income. Even though it may seem like a small matter, the IRS takes it seriously. It’s even taking steps to initiate more scrutiny of online sales transactions. Your CPA will use Form 1099-K to track your income from online marketplaces in amounts that exceed $600 annually. While cash in hand payments are currently impossible to track by the IRS, you are still obligated to report that income when it exceeds the threshold of $600. Examples of online selling that the IRS specifically mentions include:

Auction sites (like eBay)
Crafter or maker marketplace (like Etsy)
Online marketplace (Like Facebook Marketplace or Craigslist)

There are others that don’t specifically refer to sites where you can sell unused items, but from this list you can see that the IRS requires income reporting from selling in this fashion.

Thankfully, official online selling platforms make it easy to track this income. They’re required to send you Form 1099-K, which sums up all your earnings for the year. You just supply your CPA with the form, the income will be reported and you’ll be in compliance with the IRS.

If you have questions about money you receive from selling unused items, contact your CPA, who will help you to differentiate between taxable and non-taxable income.

by Kate Supino

Receiving a tax refund can be a nice financial boost. Technically though, if you’re doing things well, you shouldn’t be getting a tax refund. You can make sure you don’t pay the government too much during the year with the help of a CPA. But for now, if you do find yourself anticipating a gas return, there are some ways that you can maximize the potential of this so-called windfall. A large tax refund can make a big difference in your life if you use it strategically. It could even help support financial well-being in the future. Here are some smart ways to use your tax refund.

Pay Off Debt

If you find yourself with a revolving door of debt, you could use your tax refund to help get you off the hamster wheel. Making the minimum amount due each month won’t get you anywhere for a long time. In the meantime, you’ll be accruing more interest that is sure to keep your creditors happy, and keep you in debt for the foreseeable future. If this describes your situation, then using your tax refund to pay off debt is a smart idea. You’ll save a significant amount of money in interest charges and improve your credit rating. Start by paying off the debts with the highest interest rates first, as this will have the greatest long-term impact on your finances.

Build an Emergency Fund

An emergency fund is a crucial financial safety net, as you probably already know. Many people know they should have some money tucked away, but they find that there isn’t enough money left over at the end of the month to start such a fund. It’s hard to see a positive outcome when you can’t even get started. But if you’re getting a tax refund, this can be a great time to use a portion of it to start building your emergency fund. Seeing that money in your savings account every time you log into your online banking account will help motivate you to add to your savings. It will grow faster than you realize, even without the terrific interest rates that your grandparents enjoyed. And, by having an emergency fund, you'll be better prepared to handle future unexpected expenses or financial setbacks without relying on credit cards or loans.

Invest in Your Retirement

If your employer has a retirement account benefits, consider using all or a portion of your tax refund to contribute to an Individual Retirement Account (IRA) or a 401(k). These accounts offer tax advantages that can help you secure your financial future. If you're eligible for an employer match on your 401(k) contributions, even better. Take full advantage of it by depositing as much of your tax refund as makes sense for your household. 

Splurge a Little

There’s no reason that every penny of your tax refund has to go to productive use. If you’ve spent a long time watching your pennies and there’s something nice that you and your family have been wanting, it’s fine to splurge a little. Maybe it’s a bedroom renovation for your daughter who has recently become a teenager, or a fence around the yard that will enable you to adopt a puppy. Life is here to enjoy, and it’s okay to splurge a little once the essentials have been taken care of.

Home Repairs

Speaking of home upgrades, one of the smartest ways you can use your tax refunds is for home repairs that you might have been putting off. Homeowners can spend up to $20,000 a year on home repairs and maintenance, but if you haven’t got that kind of money, many needed home repairs go undone. Your home is probably the biggest investment that you make in a lifetime, and it stands to reason that you should do what’s necessary to protect that investment. If you’ve been putting off a new roof, new windows or other essential repairs, now’s the time.

Start a Business

The adage, it takes money to make money isn’t far off. Anyone with dreams of starting a business knows that it takes some seed money. If you’re thinking of using your tax refund to start a business, you’re on the right track. This is a great way to put that money to good use, because it could make you more money in the future. Just be sure to make a budget so you spend the money wisely, and consult with your CPA so you set the business up in the best way leverage tax advantages.

Work on Self Improvement

Another option to use your tax refund that can pay off in the future is to invest in self improvement. If you have an interest in a certain field where certifications can help you advance, then it makes sense to spend some money on coursework. Consider taking a course or workshop that can enhance your professional abilities or exploring a business idea you've been passionate about. Investing in yourself can open up new opportunities and increase your earning potential.

Invest in Your Health

Health and well-being is always a priority in life. If you’ve been putting off something important that your health insurance won’t pay for, this is a good time to invest in your own health. Unfortunately, the health system often forces people to sacrifice things they really need regarding vision, dental and overall health. Use your tax refund money to pay for anything you need that your health insurance or Medicare isn’t willing to cover.  The value in this is incalculable.

By paying off debt, saving for emergencies, investing in a new business, investing in your own education, paying for needed health care or simply adding something to your family’s quality of life, you’ll be using your tax refund well. Just remember, a qualified CPA can help to ensure that you don’t overpay tax throughout the year so that more money goes into your pocket with each paycheck.

In an era where traditional compensation packages are evolving, accepting stock options instead of a bonus or a raise is becoming a common practice, especially in the startup and tech industries. Companies often use this approach to conserve cash, motivate employees towards the company's success, and save on payroll taxes. However, this shift from immediate financial gain to a more complex, potentially lucrative reward system presents both opportunities and challenges for employees.

What Are Stock Options?

Stock options grant employees the right to buy a specific number of shares of the company's stock at a predetermined price, called the strike price, within a set time frame. The idea is that if the company performs well and its stock price rises, employees can buy the stock at a discount and then sell it at a higher market price, reaping a profit.

The Upside of Stock Options

Stock options are popular and attractive, for reasons such as these:

Potential for Greater Earnings

The key allure of stock options is the potential for significant financial gain. If the company does well, its stock price could rise substantially above the strike price, leading to a significant payoff when you exercise your options. In some cases, employees of startups that have gone public or been bought out have made substantial amounts of money from their stock options, sometimes far more than they could have earned from salary increases or bonuses.

Alignment of Interests

Stock options can also help align your interests with those of the company. As a shareholder, you may feel more connected to the company's success, which can enhance job satisfaction and loyalty.

Possible Tax Advantages

Depending on the type of stock options you receive, there can be tax advantages. Incentive stock options (ISOs), for instance, can offer favorable tax treatment if certain conditions are met.

The Downside of Stock Options

Stock options aren't always ideal. Consider the drawbacks, such as:

Risk and Uncertainty

The potential for profit is coupled with risk. If the company doesn't do well, the stock's market price might not rise above the strike price, rendering your options worthless. This risk is especially relevant in startups, where success is far from guaranteed.

Liquidity Concerns

Unlike a bonus or raise, which provides immediate liquidity, stock options often come with vesting schedules, meaning you'll have to wait a certain period before you can exercise them. Moreover, unless your company is publicly traded or gets bought out, it might be challenging to sell your shares.

Tax Complexity

The tax implications of stock options can be complex and often less straightforward than those associated with bonuses or raises. Non-qualified stock options (NSOs), the most common type, may be taxed twice; at the time they're exercised and when the shares are sold.

In contrast, ISOs are taxed only when you sell the shares, potentially at a lower long-term capital gains rate, assuming certain conditions are met. However, exercising ISOs could trigger the alternative minimum tax (AMT). The AMT is a complex tax area and could result in a significant tax bill, even if you haven't sold the shares and, therefore, haven't actually made a profit. Contact your CPA to learn more about the tax implications of stock options.

Making the Decision
Deciding whether or not to accept stock options in lieu of a raise or bonus involves several variables to consider. Here are some factors to keep in mind.

Financial Stability and Cash Flow Needs

Analyze your current financial situation. Are your earnings meeting your day-to-day expenses with some room for savings and investments? If you're living paycheck to paycheck, grappling with heavy debt, or foreseeing significant expenses in the near future, a guaranteed bonus or raise could be a safer choice. This immediate cash influx can address your current financial needs more directly and provide a level of comfort.
On the other hand, if you have a solid financial safety net in place and can afford to wait for a potentially larger payoff, stock options could be worth considering. The inherent risk of delayed gratification could translate into a substantial financial advantage if the company performs exceptionally well.

Assessment of the Company's Future Growth

Evaluating the company's prospects is also a crucial step. How well do you understand the company's business model, market presence, competitive advantage, and growth potential? If you're optimistic about the future performance of the company and trust its leadership, accepting stock options could provide a significant upside.

Your Personal Risk Tolerance

If you're a person who prefers stability and predictability in your financial life, then the guaranteed increase from a raise or bonus may be more appealing. On the other hand, if you're comfortable with a certain level of uncertainty and are willing to potentially risk some financial security for the possibility of a larger payoff down the line, stock options could be an attractive choice.

Tax Implications

If you're on the cusp of a higher tax bracket, a raise or bonus could tip you over the edge, resulting in a larger tax bill. On the contrary, stock options, especially Incentive Stock Options (ISOs), could provide tax advantages if handled correctly. The timing of when you exercise the options and sell the stock could affect your tax liability significantly. The tax rules regarding stock options can be complex, with implications for both ordinary income tax and the Alternative Minimum Tax (AMT).

Stock options can be a valuable part of your compensation package, offering potential profits and tax advantages. However, they also come with risks and complexities, and this kind of compensation is not suitable for everyone.

Understanding all the nuances before you agree to stock options is essential. Did you know that you can bring your unsigned deal to your CPA for review? Your CPA can go over all the fine print and discuss everything with you so that you can come to an informed decision.

Managing personal finances can be challenging, but reigning in family spending often proves to be a more significant challenge. When different family members have diverse spending habits, it becomes essential to find ways to bring harmony to the household's financial situation. This article will explore various methods that can help families take control of their spending, ensuring everyone works together to achieve financial stability and peace of mind.

Leverage Communication and Transparency

A significant aspect of controlling family spending is establishing open communication among all members. Discuss your financial goals, concerns, and expectations with your spouse and children, and encourage them to share theirs. Transparency allows everyone to understand the family's financial situation and work towards a common goal.

Schedule regular family meetings to review expenses, discuss any changes in the financial landscape, and brainstorm ways to save money or reduce expenses. Encourage everyone to share their ideas and provide feedback to create a supportive environment that fosters collaboration.

Create a Family Budget

A well-defined budget is crucial for managing family spending. Begin by listing all sources of income and expenses, including fixed expenses (rent or mortgage, utilities, insurance, etc.) and variable expenses (groceries, entertainment, clothing, etc.). Categorize these expenses to identify areas where spending can be reduced or eliminated.

Involve everyone in the budgeting process, assigning each family member specific responsibilities for tracking and managing their expenses. Encourage younger children to participate by teaching them basic financial concepts and helping them understand the importance of saving money.

Set Realistic Financial Goals

Establishing clear and realistic financial goals is essential to control family spending. These goals could include saving for emergencies, paying off debt, saving for a vacation, or funding a college education. Be specific about the timeline for achieving these goals and determine the required savings amount.

Once the goals are set, encourage each family member to contribute to these objectives by finding ways to save or earn extra money. Regularly track your progress as a family and celebrate milestones to keep everyone motivated.

Implement a Cash-Only Policy

To effectively rein in family spending, consider implementing a cash-only policy for discretionary expenses. This approach involves allocating a specific cash amount to each family member for their monthly non-essential spending. Once this allowance is used up, they must wait until the next month for additional funds.

By employing a cash-only system, all family members will be compelled to think twice before making impulsive purchases, ultimately fostering a culture of mindful spending. Not only does this strategy help to limit unnecessary expenditures, but it also instills valuable financial habits that can benefit the family in the long run.

Utilize Financial Tools and Apps

There are numerous tools and apps available that can help families manage their finances more effectively. Some popular options include Mint, YNAB (You Need a Budget), and EveryDollar. These tools can help you track expenses, set budgets, monitor savings goals, and even offer personalized financial advice.

Using a financial app can make it easier for family members to monitor their spending habits and become more accountable for their financial decisions. Additionally, these tools can help identify trends and patterns in spending, providing valuable insights that can be used to make smarter financial choices.

Teach Children Financial Responsibility

Teaching children about financial responsibility early on is essential for fostering a healthy relationship with money. Encourage them to save a portion of their allowance or earnings from part-time jobs. Help them set up their own savings goals and teach them about the importance of budgeting and living within their means.

As children grow older, involve them in more complex financial discussions and decisions, such as choosing between different investment options or navigating college tuition and financial aid. This hands-on experience will prepare them to make sound financial decisions throughout their lives.

7. Implement an Allowance Plan

To rein in the excessive spending of certain family members, consider implementing a personalized allowance system. By allocating a fixed amount of money for discretionary spending, individuals are encouraged to budget and prioritize their expenses.

This approach not only helps to establish healthy financial habits but also fosters a sense of responsibility and independence. In this way, the allowance system empowers family members to make wiser spending choices while simultaneously fostering a collective commitment to long-term financial stability. Incidentally, this isn’t a new idea; it’s just one that has been lost to modern generations. In the past, non-working spouses were given a weekly or monthly household allowance, as were dependent children.

Open Separate Checking Accounts

In order to protect one family member's credit from being negatively impacted by another's irresponsible spending habits, establishing separate checking accounts can be a prudent strategy. By maintaining individual accounts, each person assumes responsibility for their own spending, ensuring that poor financial decisions do not adversely affect others in the family.

This strategy not only promotes financial independence but also encourages accountability for one's own financial choices. Furthermore, separate accounts can facilitate better money management and safeguard each family member's credit score, ultimately contributing to a more stable and secure financial future for the entire household.

Just Say No

Adopting a balanced parenting style by thoughtfully considering and declining additional requests for money can be beneficial. Sometimes just saying no is the smart answer. This approach sets reasonable boundaries and encourages family members to understand the importance of living within their means and making responsible financial choices.

By maintaining such limits, parents impart the value of budgeting, distinguishing between needs and wants, and nurturing financial responsibility. Note that this will be difficult at first, especially if you tend to be swayed by repeated requests or pleading. But hold firm (within reason) and the money just may stop pouring out of your household coffers.

Reining in family spending is vital if you ever want to build family wealth or even avoid financial catastrophe. Otherwise, no matter what you do, your efforts toward responsible spending will be negated by other members of the family who don’t share your priorities.

Whether you're trying to reclaim your credit score, or simply looking for a way to reduce your credit utilization, a balance transfer credit card can be a great solution. Depending on the terms of your balance transfer, you can potentially enjoy low interest rates, as well as a long promotional period that will allow you to pay off your debts in a shorter amount of time.

Beware of High Variable APR After Introductory Period

During the introductory period of your new credit card, you may be able to take advantage of a 0% APR. When you are looking for the best balance transfer credit cards, you will want to know what the APR will be after your introductory period is up. This may be higher than the APR on your current card. You can find out when your introductory APR ends by calling the customer service department, or you can check it online. If you are able to pay off your balance before your introductory APR ends, you will be able to save money on interest in the long run.

Balance Transfer Fee

Depending on the type of card you have, you may also have to pay a balance transfer fee. This fee usually ranges from three percent to five percent of the amount transferred. You will have to pay that balance transfer fee in order to qualify for the introductory APR.

Penalties

You will still have to make your minimum payments by the due date each month. Otherwise, you’ll incur additional fees and potentially higher interest rates. If you make a payment late, you may be charged a penalty APR that is higher than the APR you were charged before the payment was returned. Also, depending on the card you have, you’ll probably also have to pay deferred interest if a payment is returned.

Promotional Period

Typically, balance transfer credit cards offer an introductory 0% interest rate for only a set period of time. Typically, this ranges from six to 18 months. This can save you money over time, especially if you pay the balance off within the promotional period. However, there are a few things you should consider before applying.

You'll need to calculate how much time it will take you to pay off the debt. This will help you decide if a balance transfer is a good option. If you know you won't be able to pay off the balance within the promotional period, consider whether you'll want to carry the balance on the new card.

Credit Card Perks

You should also consider any perks that the new card may offer. Some cards provide purchase protection, rental vehicle insurance, and purchase rewards programs. These programs can allow you to maximize your earnings. You might also be able to leverage rewards to pay for things that you already had planned, such as travel flights and hotel stays. When weighing your options, balance what rewards you might get versus the potential cost of getting a balance transfer credit card.

Credit Score

You also need to consider your credit score. A good FICO score will give you a better chance of getting approved for the best balance transfer credit cards. One of the biggest factors that will affect your credit score is whether you make your payments on time. You can check your credit report for free. You may be surprised at what you find. You may find that you have too much revolving debt or that an old credit mistake is keeping your score down. It might be worth waiting to apply for a balance transfer credit card until after your credit score increases.

Calculate Your Debt

You’ll want to calculate how much revolving debt you have. It may or may not make sense to get a balance transfer credit card, because the actual act of getting a new card could lower your credit score, at least for a short while. Also, you may not qualify for a balance transfer credit card with high enough limits to handle all your revolving debt.
Alternatives to a Balance Transfer Credit Card
Instead of getting this kind of card, consider whether you could simply make a more concerted effort to pay down your debt. Is it possible to take on a side job to double down on your monthly payments? You may have other options for paying your outstanding debt that don’t require outside approval.
Another alternative to applying for a balance transfer credit card is to just get another regular credit card with a lower APR than one that you already have. Then, make higher payments on your old card and use the new card if you need to make new purchases.

Things to Keep in Mind

Remember, your relationship with your new credit card company will probably last years. Even though you may apply in order to meet short-term goals such as transferring high interest debt, you’ll be “stuck” with the new card company. Make sure it’s a reputable company that will serve you well in the long-term.

Also, remember what got you into this position in the first place, which might be overspending. When you transfer your balance, consider canceling your old card. The last thing you want to do is to ratchet up your debt again on the old card. Then you would have doubled your revolving debt, which is exactly the opposite of what you wanted for yourself.

If you are still in the market for a balance transfer credit card, the first thing to do is call your bank or credit card issuer and ask if they offer any special offers. A representative should be able to tell you the best available offers. Next, check online at sites that compare various balance transfer credit cards to try to get the best deal for yourself.

Finally, you might want to review your choice with your CPA. Your CPA can help you make financially sound choices about how best to handle excessive debt.

Investing in pet insurance can be a great way to protect the quality of life of your pet. It could save you money on pet medical bills. It would also give you the assurance that you would be able to pay for pet medical emergencies down the line. However, if your pet ends up being healthy and strong, you could end up paying those monthly premiums for no reason.
However, there are a few factors to keep in mind before you make a decision.

Consider the Age and Breed of your Pet

The age and breed of your pet factors into the cost of the pet insurance plan. It will affect the monthly premiums and the coverage. Dogs of certain breeds are more likely to get sickness, disease and injuries than other breeds. Just like “people insurance,” pet insurance companies have complex algorithms that determine the likelihood of having to pay out large claims. Factoring that in will make coverage for certain breeds more pricey than others.

Consider Genetic Predisposition

Some pet breeds have genetic predispositions that make them much more likely to develop serious medical conditions. German Shepherds, for example, are prone to get hip dysplasia in their senior years. Several other larger dog breeds are susceptible to the same condition. Treatment for this and other pet health problems will run into the thousands. Without treatment, the consequences are heart wrenching.
If you own a breed of animal that has certain predispositions like this, then pet insurance is almost certainly a wise investment. Consult with your veterinarian to learn their thoughts on your pet’s genetic predispositions and whether pet insurance makes sense for your household.

Consider Coverage Options

When thinking about pet insurance, you will also want to make sure the plan covers illnesses that your pet is likely to get. You will need to figure out what your pet's health risks are and how much you can afford to spend on monthly premiums. You’ll want to check with your pet’s vet to educate you about coverage options that you should be looking for. Be sure to carefully review any excluded conditions on the policy before purchase.

Per-Incident Deductibles

There are many types of pet insurance, including annual and per incident deductibles. A per-incident deductible is the amount you must pay before obtaining reimbursement for each occurrence for which you make a claim. Each disease, injury, or veterinarian visit that your pet encounters is considered an event. Prior to submitting a claim for an occurrence, you must pay your deductible. In contrast to other pet insurance policies that need you to fulfill a yearly deductible, you will pay a deductible for each event. Rather than being fulfilled once a year, your deductible is "reset" after each event. The cost for this type of deductible is typically lower than an annual deductible, but it's still an expense that you need to consider.

Lost Pet Coverage

If your pet gets lost or stolen, there might be help available from your pet insurance policy. Some pet insurance companies offer terms that include reimbursement for lost pet rewards. So you could put out the word that you’re offering the safe return of your pet with a reward. If your lost pet is returned, the reward amount—determined by your pet insurance coverage—would be paid for by the insurance company.

Of course, you can get by without a pet insurance reward, too. Another way to locate a lost pet is to have the pet microchipped or equipped with a tracker that has a GPS chip. There are many companies that offer pet tracking services nationwide, so you are sure to find one that suits your dog's needs. Some models have a limited battery life, but you can usually get a few months out of a model if you are willing to commit to it. There are also several companies that offer a pet tracker paired with a mobile app, which makes the process of retrieving your pet easier.

Benefits of Pet Insurance

The benefits of having pet insurance include having the financial resources available to pay for any medical care your pet may need. For some policies, this may cover routine wellness exams, teeth cleaning, and minor treatments such as for ear infections.
If something terrible happens, such as being hit by a car, getting arthritis, getting a broken bone or something similar, knowing that you have pet insurance to pay for your pet’s treatment is a wonderful thing.

Veterinary costs are surprisingly expensive. Like everything else, the cost for vet treatment has risen quickly in recent years. Even something so basic as flea and tick treatments often get into the hundreds of dollars. Pet insurance can cover or supplement these costs.

Cons of Pet Insurance

Pet insurance isn’t terribly expensive, but it is still an added household expense. If you pay a monthly premium over years, the cost of the insurance itself can quickly add up. And, if things go well, you may never need to make a large claim on your policy.

Alternatives to Pet Insurance

Depending upon your financial situation, pet insurance may or may not make fiscal sense. There are alternatives. These include:
Setting money aside in an account each month for veterinary bills. This way, if something does happen, you’ll have the money to pay for it. If nothing major happens, you’ll have the money to use for something else. If you start this savings habit when your pet is young, you could have a good amount saved up years later.

Another alternative is to just pay out of pocket for vet bills. If you’re a high income earner, it may not make sense to pay for pet insurance. Even if your pet needs costly surgery at some point, you could just pay out of pocket with little impact on your wallet. Of course, you need to weigh this with your ability to pay, and your perceived willingness to pay. Some people may not want to pay thousands of dollars to only extend a senior pet’s life for very little extra time. If you had pet insurance to pay for it, the decision would be more straightforward to go ahead with the costly surgery.

Whether or not to get pet insurance is not an easy choice. There’s no right answer for everyone. It is one that you need to make as a family, taking into consideration the factors mentioned above, including getting input from your veterinarian.