Tips

Today, many workers are being offered the opportunity to work remotely instead of going into an office every day to work. This is seen as a benefit, and many workers do take advantage of it. But before you accept, it’s worth taking a closer look at both the pros and cons of this arrangement. 

Autonomy

When you work at home, there’s no boss looking over your shoulder, making sure you’re working on the tasks you’ve been assigned. There are no co-workers making sure you’re putting in your full 8 hours so you don’t “get away” with anything they can’t get away with. For people who are more productive alone, this is a nice benefit.

The flip side of this is loneliness. Even people who aren’t particularly social may feel that working home alone leads to a sense of isolation over time. They may miss the chatter of others working around them, or even the feedback that a boss may offer over the course of a workday.

Commute

If you previously had a long commute to work, working from home can feel great. You no longer have to sit in traffic, on a bus or a train for that long ride into the office. The lack of having to commute gives you more hours to yourself each day, which is a definite benefit.

But commuting has its benefits, too. Many commuters find that this alone time to and from work gives them a breather, or allows them to enjoy time reading a book or catching up on the news. Even those who commute by driving often enjoy the alone time in the car to reflect on things or strategize certain work-related situations.

Flexibility

When you work from home, you gain a great deal of flexibility. You can get up and go to the kitchen to get a snack whenever you want. You can throw a load of laundry in the wash, or sneak out for a quick 15-minute walk for exercise, fresh air and sunshine. Most remote workers highly value this benefit.

But the same flexibility that you have by working from home can be problematic, too. You might find that you snack a little too much, or you get distracted by those side tasks around the house, and your actual work falls behind. Unless you’re a highly disciplined individual, flexibility might end up being a challenge to overcome, rather than a benefit.

Expenses

Working from home means that you’ll have a home office, and a home office equals tax deductions. Your CPA can help you to calculate exactly how many deductions you may be entitled to. They can be significant, so you don’t want to miss out on any of them. You might also save money by not having to spend so much on a business wardrobe.

The tax deductions you get from working at home could be offset a little, since you’ll be using more energy resources. You’ll be operating things like a computer, peripherals, etc., so your energy use will go up, too. You might even need to buy more food, since you’ll be making all your meals at home. Still, in this category, the savings and deductions win out over any little extra expenses you may incur by working from home.

Distractions

At work, you may have had to contend with a chatty coworker who feels compelled to regale you with all her life’s details or all the office gossip. This is a common complaint that office workers have, and there’s no easy way to stop someone who’s essentially just being overly-friendly in a work environment. So being able to avoid this by working at home is a great feature.

But distractions at home can be worse. Younger children may not have the capacity to grasp that even though mom or dad is at home, they can’t get attention from them all day long. It may be even harder to tell your kids not to bother you than it was to tell your co-worker you need to get back to work. Also, friends and family members who aren’t work-minded may need to be taught how to respect your work boundaries. This is all navigable, but it’s a common challenge that remote workers have to deal with.

There are also some straight cons to working at home, too:

Blurred Boundaries

Working from home can make it difficult to separate work from personal life, leading to a lack of boundaries. When your home becomes your office, it’s easy to find yourself working longer hours or constantly checking emails, even during personal time. This blurring of boundaries can result in burnout, as employees struggle to disconnect from work and relax.

Lack of Access to Resources and Support

In an office environment, employees have immediate access to resources such as office supplies, high-speed internet, and IT support. Working from home may require individuals to provide their own equipment, which can be costly and may not be as reliable as the resources available in an office. Additionally, remote workers may find it more challenging to receive timely support from managers or colleagues, especially when dealing with technical issues or urgent tasks.

Feeling Professional

In an office environment, you’re forced to groom and dress in an appropriate manner for doing business. At home, remote workers often brag about being able to work in their pajamas. But there’s something inherently negative about this. Dressing for work gives you a certain feeling of being professional and accomplished, whereas you may begin to have doubts about your abilities if you never change out of your pajamas. 

Both working from home and working in an office have their pros and cons, and the best choice depends on individual preferences, job requirements, and company policies. While working from home offers flexibility, cost savings, and increased productivity, it also presents challenges such as isolation and blurred boundaries. If you’re given the option, it’s worth at least trying to work from home. If it doesn’t work, talk to your boss about switching back to working in the office.

by Kate Supino

As a loving parent, one of the best things you can do for your kids is to teach them about money. If you can give them the gift of financial literacy, you’ll be giving them something they can use their entire lives, and even pass on to their own children. Conversations about money are rarely easy, so here are some tips to help.

Start While They’re Young

As soon as your child is able to verbally communicate with you, you can begin teaching the basic concepts of money. It can be as simple as playing “store” with your child, letting them be the cashier with a toy cash register and toy food or other items around the house. This shows them the give and take that happens with commerce. 

Gift your child a cute piggy bank so they can deposit coins they get from relatives and friends. Help them learn how to count coins, and note how the number of their coins is increasing over time. This helps to teach about saving. 

Little things like this help to bring about an awareness about money and how it works in everyday life.

Consider Giving Your Child an Allowance

Until they turn 16, your child won’t be able to earn a paycheck. But that’s a little late to teach about money, considering that they’ll turn 18 in just two years. Instead, when your child is in elementary school, you could start giving them a small allowance to manage. This allows them to practice making decisions about how to use their money, whether it’s saving for something special or spending on small treats. By the time they reach middle and high school, you can discuss more advanced topics such as earning money, banking, credit and the impact of financial decisions on their future.

Support Their Business Ideas

If your child seems to have a creative knack for coming up with business ideas, be as supportive as possible. If they want you to buy them a shovel so they can go around to neighbors’ houses and shovel driveways, tell them it’s an investment in their business and you expect to get your money back, plus a few dollars of interest. If they want to “invent” a product, sit down with them and help them plan it out, including coming up with a plan for how much it would cost to make it and how much profit there might be. 

Use Everyday Experiences as Teaching Opportunities

Everyday activities present numerous opportunities to teach your kids about money. Grocery shopping, for instance, is a great way to introduce concepts like budgeting, comparison shopping, and the difference between needs and wants.

Involve your children in the shopping process by giving them a budget for a specific item or letting them help you compare prices. You can explain why you choose certain products over others, such as opting for a generic brand to save money,  buying in bulk to reduce costs or paying extra for value, for an item that will last longer. These practical experiences help your children understand the value of money in real life, and how to make informed financial decisions.

Introduce the Basics of Credit and Debt

As your child approaches their teenage years and reaches the legal age to get a job with a paycheck, it’s important to introduce the concepts of credit and debt. Explain how credit cards work, the importance of paying off balances in full, and the potential dangers of accumulating debt. Discuss how interest works and how borrowing money can lead to paying back more than the original amount borrowed. You can also talk about the importance of maintaining a good credit score and how it affects their ability to borrow money in the future, such as for a car loan or mortgage. Teaching these concepts early on can help your children avoid common financial pitfalls and develop a responsible approach to credit and debt management.

Be Honest About Money

It’s understandable if you don’t wish to share the details of your household finances. You also don’t want to burden your kids with financial worries. But it’s helpful to be honest about money, too. If it’s getting near the end of the month and you need to curb spending so you have the mortgage payment, you can share that you can’t afford certain things at this time. Explain about cash flow, and how proper budgeting can ensure there is plenty of money for essentials, but not always money for indulgences. This is also a good opportunity to explain that not every family has the same financial resources, but that’s okay. That’s what capitalism is about, and some people earn more, while some people earn less. 

Discuss Money and Power

Money gives a person the freedom to have more power over their own lives to make choices. But make sure you also explain that just because a person has more money than someone else, that doesn’t make them better or smarter than others. It simply means they have more money. As your child gets older, they’ll form their own opinions about money and power, but you want to ensure that they don’t attach emotional feelings to money. It’s simply a vehicle for commerce, and not something to love or hate. This will help to ensure that your child develops a healthy attitude toward money, using it to reach financial goals.

Talking to your child about money is a crucial part of their education. By starting early, using everyday experiences as teaching moments, and being open and honest about finances, you can help your child to develop the skills they need to manage money wisely their entire life.

by Kate Supino

When you think of a CPA, you might be like many people and view them through the lens of tax return preparation and tax compliance management. But the role and capabilities of Certified Public Accountants extends much further. These licensed financial professionals can be an indispensable business ally, fueling your company’s growth while you focus on overseeing its operations. Here are just some of the ways that CPAs add value to your business.

Financial Analysis and Reporting

CPAs have a tremendous advantage in that they see every single money transaction that takes place within your business, down to the last penny. Combined with their training and experience, this offers them a unique perspective, where they can see the big picture in relation to the smaller financial moves your company makes.

What this boils down to is their ability to provide in-depth and insightful financial analysis to help you guide your business’s growth. Not only will you get the standard financial reports like P&L statements, cash flow reports, etc. You can also get expert analysis of financial statements, which you and your CPA and financial team can use to identify trends, measure performance against benchmarks, and highlight areas that require attention. This detailed financial insight allows businesses to make data-driven decisions that enhance efficiency, improve profitability, and foster growth.

Cash Flow Management

Maintaining positive cash flow is one of the most important factors in running a successful business. CPAs are trained to keep an eye on cash flow at all times, even when it seems like a torrent of water gushing through a river canyon. In fact, these are the times when the CPA is looking ahead, making sure that the flow isn’t going to dry up. In so doing, CPAs are able to develop strategies to keep that river of cash flowing, such as helping business owners to manage receivables and payables, sourcing and securing lines of credit and assisting in planning for seasonal fluctuations. With a CPA’s guidance, businesses can maintain healthy cash flow and avoid cash droughts.

Risk Management

Every sized business faces a variety of risks, whether they’re risks from the inside (shoplifting, employee theft, legal liabilities, etc.) or risks from the outside (competition, supply shortages, market fluctuations, etc.). Some risks are assumed on purpose, like taking on a business loan, entering new markets, launching a new product, etc. Whatever the source of the risk, CPAs are trained to be able to assess the risk, much like an insurance risk analyst comes up with the data behind premium determinations.

CPAs play a vital role in risk management by identifying potential financial risks and developing strategies to mitigate them. They conduct risk assessments, implement internal controls and ensure compliance with regulatory requirements. By proactively managing risks, CPAs help businesses protect their assets, maintain financial stability and create a solid foundation for growth.

Business Valuation

Business valuation is a highly complex calculation with multiple factors playing into the final number. CPAs are up to the task. When conducting a business valuation, a CPA employs a systematic approach that includes several specific steps and methods to arrive at an accurate and comprehensive valuation that stands up to third-party scrutiny. This information is vital for negotiating deals, securing financing and planning for the future. Even if you have no intention at the moment of approaching investors, having an up-to-date business valuation is still important, as it can help you to do things like secure business credit or track your business’s record of growth over the years.

Budgeting and Forecasting

Effective budgeting and forecasting are key components of successful business planning. CPAs assist businesses with creating realistic budgets and accurate financial forecasts. They analyze historical data, market trends, and economic indicators to project future performance. This enables businesses to set achievable goals, allocate resources effectively, and prepare for potential challenges. With robust budgeting and forecasting, businesses can navigate uncertainty and pursue growth with confidence.

Fundraising and Capital Management

At some point in your business, you’re going to be looking for funds for growth. Whether it’s for a working capital loan application, a business grant application or something similar, CPAs can help. They help prepare financial statements, business plans, and presentations that may attract investors and lenders and appeal to the interests of those lenders and investors. CPAs also advise on the optimal capital structure, balancing debt and equity to support growth while managing risk. With their expertise in fundraising and capital management, CPAs enable businesses to secure the resources needed for growth initiatives.

Enhancing Profitability

Profits help a business to grow by providing the necessary funds to pay for needed equipment, materials and more. It can be said that ultimately, business growth is driven by profitability, although there are other factors that have important roles. CPAs help businesses enhance profitability by identifying cost-saving opportunities, improving operational efficiency, and maximizing revenue. They conduct detailed financial analysis to uncover inefficiencies and recommend strategies for improvement. Whether it's reducing overhead costs, optimizing pricing strategies, or increasing sales, CPAs provide actionable insights that boost profitability and drive growth.

Performance Measurement

It’s essential for business owners and other stakeholders to consistently measure performance in order to keep steering the business in the right direction. This task is time-consuming, and many factors play into it. CPAs assist with performance management by developing KPIs (key performance indicators) and other metrics that reflect how a business is performing on various fronts. The results can be used to help guide the business toward future goals.

As you can see, CPAs aren’t just there at tax time, waiting to sign off on your returns. They can perform important functions that are vital to the success and growth of your business. They provide critical insights, strategic planning, and financial expertise that help businesses navigate complexities, seize opportunities, and achieve sustainable success. For more information about ways your CPA can assist your business growth ambitions, contact us today.

by Kate Supino

Good credit is one of the keys to financial success. Many people suffer from some financial stress over the course of their lives. They may go through periods where debt gets the better of them, unable to pay bills on time or without sufficient income to meet minimum payments. One of the solutions available is a credit repair company, advertised heavily. Credit repair companies claim to be able to get a person’s credit back on track by raising scores. If you’re suffering from less than ideal credit, you may be tempted to hire a credit repair company. But there’s a cost associated with this service. Is this the right choice for you, or should you try other means?

What Does Credit Repair Involve?

Credit repair involves identifying and disputing errors on your credit report, negotiating with creditors and taking steps to improve your overall credit profile. Errors can include incorrect personal information, outdated accounts, duplicate accounts, and inaccurate account statuses (such as a payment reported as late when it was on time). Ultimately, improving your credit score may also involve developing better financial habits and ensuring that your credit report reflects your responsible behavior. You may be inspired to keep the momentum going by paying more attention to credit matters. 

What Exactly Do Credit Repair Companies Do?

In general, credit repair companies are independent businesses that offer to help you improve your credit score by:

• Reviewing your credit reports from the major credit bureaus (Experian, Equifax, and TransUnion).

• Identifying errors or inaccuracies that may be negatively impacting your credit score.

• Disputing these errors with the credit bureaus on your behalf.

• Negotiating with creditors to remove negative items or settle debts.

• Providing advice and resources to help you build better credit habits.

Benefits of Hiring a Credit Repair Company

There are definite benefits to hiring a credit repair company. When deciding, you should weigh these benefits against the cost of hiring them.

Expertise and Experience

Credit repair companies typically have experience dealing with various credit issues. They understand the intricacies of credit reports and the dispute process, which can be beneficial if you're unfamiliar with how to navigate these systems.

Time-Saving

Disputing errors on your credit report can be a time-consuming process. It involves writing dispute letters, keeping track of correspondence, and following up with credit bureaus and creditors. A credit repair company can handle these tasks, freeing up your time for other responsibilities.

Professional Negotiation

Credit repair companies often have established relationships with creditors and are skilled in negotiating the removal of negative items. Their expertise can sometimes result in more favorable outcomes than you might achieve on your own.

Tailored Strategies

A good credit repair company will develop a personalized plan based on your specific credit situation. They can offer targeted advice and strategies to help you achieve your credit goals more efficiently.

Reasons Not to Hire a Credit Repair Company

On the other hand, there are plenty of drawbacks to hiring a credit repair company. They include:

Cost

Credit repair services are not free, and they aren’t cheap. Companies typically charge an initial setup fee and a monthly fee thereafter. These costs can add up, especially if your credit issues are complex and require several months to resolve. You may be better off taking that money and putting it toward some of your credit card bills.

No Guarantees

While credit repair companies can help improve your credit, they cannot guarantee specific results. The success of their efforts depends on various factors, including the nature of the inaccuracies on your credit report and the willingness of creditors to negotiate. You won’t get a refund if they’re largely unsuccessful.

Potential for Scams

The credit repair industry is unfortunately rife with scams. Some companies make false promises, such as guaranteeing to remove all negative items or offering to create a new credit identity. It's essential to thoroughly research any credit repair company before signing up for their services. Even then, you could get the short end of the stick.

Alternative to Hiring a Credit Repair Company

You should know that a credit repair company has no more power than you do, although they have more experience and expertise, as mentioned above. You could do everything that a credit repair company can do. But it would require a great deal of reading, research and work on your part. If you decide to go it alone, here’s what’s involved: 

Obtain Your Credit Reports - You’re entitled to a free copy of your credit report from each of the three major credit bureaus once a year through AnnualCreditReport.com.

Review for Errors - Carefully review your credit reports for any inaccuracies or outdated information.

Write Dispute Letters - Draft dispute letters for each error, explaining why the information is incorrect and providing supporting documentation.

Send Disputes - Send your dispute letters to the credit bureaus. They are required to investigate your claims within 30 days.

Follow Up - Monitor the status of your disputes and follow up as necessary. The credit bureaus will notify you of the results of their investigations within 30 days.

Another alternative to hiring a credit repair company is to wait it out. Negative credit drops off your report after seven years, automatically. This isn’t ideal, but it is an option. In the meantime, you could work on improving your credit worthiness score by paying bills on time, living within your means and avoiding getting into more debt.

Deciding whether to hire a credit repair company depends on your specific needs, budget, and comfort level with handling credit disputes yourself. While these companies can offer expertise and save you time, they come with costs and no guarantees. Alternatively, you can try DIY credit repair, credit counseling, or even financial coaching, all of which can help you achieve better results for your credit in the future. For more information about managing your money wisely, consult a CPA. 

by Kate Supino

In today’s digital age, online banking offers unparalleled convenience, allowing users to manage their finances from anywhere at any time. However, with this convenience comes the increased risk of cyber threats and fraud. Whether you are an individual, a small business owner, or a client of CPA services, it’s crucial to take proactive steps to secure your digital banking activities. Here are some helpful tips to help you keep your digital banking secure.

Understanding the Risks

Before getting into the specific security measures, it’s important to understand the types of risks associated with digital banking. Cybercriminals employ various tactics to gain unauthorized access to your accounts, including phishing attacks, malware, and social engineering. These threats can lead to financial losses, identity theft, and compromised personal information. Recognizing these risks is the first step in safeguarding your online banking activities.

Create Complex Passwords

A strong password is your first line of defense against unauthorized access. Create passwords that are at least 12 characters long and include a mix of uppercase and lowercase letters, numbers, and special characters. Avoid using easily guessable information such as birthdays, names, or common words.

Use Different Passwords for Different Accounts

Using the same password across multiple accounts increases the risk of a security breach. If one account is compromised, all accounts with the same password are at risk. Ensure each of your online banking accounts has a unique password.

Change Passwords Regularly

Regularly updating your passwords can further enhance security. Set reminders to change your passwords every few months and avoid reusing old passwords. This practice can help protect your accounts from long-term exposure to potential threats.

Add an Extra Layer of Security

Two-factor authentication (2FA) adds an extra layer of security to your online banking accounts. With 2FA, you must provide two forms of identification before gaining access: something you know (password) and something you have (a code sent to your phone or email). This makes it significantly harder for cybercriminals to access your accounts, even if they have your password.

Use Reliable 2FA Methods

Not all 2FA methods are created equal. While SMS-based 2FA is better than nothing, it’s more vulnerable to interception. Consider using app-based 2FA (such as Google Authenticator or Authy) or hardware tokens for more robust security.

Recognize Phishing Attempts

Phishing scams are a common method used by cybercriminals to steal sensitive information. These scams often involve fraudulent emails, texts, or websites that appear to be from legitimate sources. Be cautious of unsolicited messages requesting personal information or directing you to suspicious websites.

Verify Before You Click

Always verify the authenticity of any communication before clicking on links or providing information. Hover over links to see the actual URL, and if in doubt, contact the organization directly using a verified phone number or email address. Avoid clicking on links or downloading attachments from unknown or untrusted sources.

Keep Software Up to Date

Ensure that all your devices, including computers, smartphones, and tablets, have the latest operating systems and security updates installed. Regular updates patch vulnerabilities and protect against emerging threats.

Install Reliable Security Software

Use reputable antivirus and anti-malware software to protect your devices from malicious attacks. Ensure that your security software is always up to date and configured to perform regular scans.

Use a Secure Connection

Avoid conducting online banking transactions over public Wi-Fi networks, which can be easily intercepted by hackers. Use a virtual private network (VPN) to encrypt your internet connection, providing an added layer of security when accessing your accounts remotely.

Monitor Your Accounts Regularly

Regularly monitoring your bank account activity is essential for detecting unauthorized transactions. Review your statements and account history frequently, and set up account alerts to notify you of any suspicious activity.

Report Suspicious Activity Immediately

If you notice any unauthorized transactions or suspicious activity, report it to your bank immediately. Quick action can help mitigate potential damage and increase the likelihood of recovering lost funds.

Use Secure Banking Apps and Websites

Only use official banking apps downloaded from reputable sources such as the Apple App Store or Google Play Store. Avoid downloading apps from third-party websites, as they may contain malware.

Ensure Website Security

When accessing your bank’s website, ensure that the URL begins with "https://" and that a padlock icon is displayed in the browser’s address bar. These indicators signify that the website is secure and encrypted, protecting your data from interception.

Educate Yourself and Your Family

Staying informed about the latest security practices and threats can help you protect your digital banking activities. Subscribe to security newsletters, follow cybersecurity blogs, and participate in online forums to stay updated.

Educate Family Members

If you share banking access with family members, ensure they are also aware of security best practices. Educate them about the importance of strong passwords, recognizing phishing attempts, and safe online behavior.

Leverage CPA Services for Enhanced Security

A Certified Public Accountant (CPA) can provide valuable insights into securing your digital banking activities. CPAs are well-versed in financial security measures and can offer personalized advice tailored to your specific needs.

Implement Financial Controls

CPAs can help you implement financial controls to protect your business accounts. This includes setting up multi-user access controls, establishing approval processes for transactions, and conducting regular audits to identify potential vulnerabilities.

Stay Compliant with Regulations

CPAs can also ensure that your digital banking practices comply with relevant regulations and industry standards. Compliance with these regulations not only protects your finances but also helps you avoid potential legal issues.

Securing your digital banking activities is essential in today’s interconnected world. By understanding the risks and implementing comprehensive security measures, you can protect your financial information and enjoy the convenience of online banking with peace of mind.

by Kate Supino

As people approach retirement, maximizing savings becomes paramount to ensure financial security and peace of mind during the golden years. While retirement may seem like a distant milestone for some, proper planning and strategic financial decisions in the years leading up to retirement can significantly impact one's financial well-being in retirement. In this article, we'll explore ten valuable tips to help individuals maximize their savings near retirement, offering practical advice and insights for a financially secure future.

Create a Comprehensive Retirement Plan

A solid retirement plan serves as a roadmap for achieving financial goals and navigating the complexities of retirement. Consider factors such as desired retirement age, anticipated expenses, sources of income (such as Social Security and pensions), healthcare costs, and desired lifestyle. Working with a certified financial planner or CPA can help tailor a personalized retirement plan that aligns with your unique circumstances and objectives.

Take Advantage of Catch-Up Contributions

Individuals aged 50 and older are eligible to make catch-up contributions to retirement accounts, such as 401(k)s and IRAs, allowing them to accelerate savings in the years leading up to retirement. Take full advantage of these catch-up provisions to maximize retirement savings and bridge any gaps in preparedness.

Evaluate Asset Allocation

As retirement approaches, it's essential to reassess asset allocation to align with changing risk tolerance and time horizon. Consider shifting towards a more conservative investment approach to protect accumulated savings from market volatility while still seeking growth opportunities. Diversifying investments across various asset classes can help mitigate risk and optimize returns.

Minimize Debt

High levels of debt can pose a significant obstacle to achieving financial security in retirement. Prioritize paying off high-interest debts, such as credit cards and personal loans, to reduce financial obligations and free up cash flow for savings. Avoid taking on new debt near retirement and explore debt consolidation strategies to streamline repayment.

Maximize Tax-Efficient Withdrawals

Develop a tax-efficient withdrawal strategy to minimize the tax impact on retirement savings. Consider factors such as tax-deferred versus taxable account withdrawals, the timing of Social Security benefits, and the sequencing of retirement account distributions. Consult with a tax professional to optimize tax planning strategies tailored to your specific situation.

Delay Social Security Benefits

Delaying Social Security benefits beyond full retirement age can result in higher monthly payments and increased lifetime benefits. While individuals can start receiving Social Security as early as age 62, delaying benefits until age 70 allows for accrual of delayed retirement credits, resulting in a significant boost to retirement income. Carefully weigh the financial implications and consider factors such as longevity, health status, and financial needs before deciding when to claim Social Security.

Explore Healthcare Options

Healthcare expenses can be a substantial portion of retirement costs, particularly as individuals age and require more extensive medical care. Research available healthcare options, including Medicare coverage, supplemental insurance plans, and health savings accounts (HSAs), to minimize out-of-pocket expenses and ensure comprehensive coverage in retirement. Factor healthcare costs into your retirement budgeting to avoid unexpected financial burdens.

Downsize Housing

Downsizing housing near retirement can yield significant cost savings and unlock home equity for retirement income. Consider relocating to a smaller home or a more affordable area to reduce mortgage payments, property taxes, and maintenance costs. Alternatively, explore options such as renting or downsizing to a retirement community to streamline expenses and enhance retirement lifestyle flexibility.

Stay Engaged in the Workforce

Many individuals choose to work part-time or pursue consulting opportunities in retirement to supplement income and stay engaged professionally. Explore flexible work arrangements, freelance opportunities, or encore careers that allow you to leverage your skills and expertise while generating additional income. Continued employment can also delay drawing down retirement savings, allowing for further growth and preservation of assets.

Review and Update Estate Planning Documents

As retirement approaches, it's crucial to review and update estate planning documents to ensure they reflect your current wishes and circumstances. This includes wills, trusts, powers of attorney, and beneficiary designations on retirement accounts and insurance policies. Work with an estate planning attorney to address any changes or complexities and ensure a smooth transition of assets to beneficiaries.

By implementing these tips, people can optimize their retirement readiness, minimize financial risks, and enjoy a financially secure and fulfilling retirement. Even if a person does a few of these tips, that will help to ensure that retirement savings are at the highest possible levels. No matter where you are right now, don’t feel discouraged if your retirement savings account is looking a little bit sparse. Whether you're on the brink of retirement or still in the planning stages, it's never too late to take control of your financial future and make informed choices that lead to a prosperous retirement lifestyle. As trusted advisors, CPAs play a vital role in guiding individuals through the complexities of retirement planning, offering expertise, and support every step of the way.

by Kate Supino

The final five years leading up to your retirement offer you final chances for solidifying your financial security, ensuring you can enjoy your later years without financial worry. This period is an opportunity to make strategic decisions with expert advice from your CPA to maximize retirement readiness. The sooner you start the process, the more secure you may be during the time of your life when you want fewer things to worry about.

1. Assess Your Retirement Goals and Financial Needs

The first step in preparing for retirement is to have a clear understanding of what you want your retirement to look like. If you haven’t done this already, this is the time to really envision yourself retired. Do you have any goals about traveling in retirement? Are you thinking about downsizing in a new city or even abroad? Would you like to live nearer to your grandchildren? What kind of lifestyle do you wish to maintain? Answering these questions can help you estimate the necessary retirement budget. Work closely with your CPA to analyze your current financial situation and forecast your needs. This includes a detailed review of your savings, estimated Social Security benefits, pension details, investment income and other sources of income you can count on in your retirement.

2. Maximize Retirement Savings

As you approach retirement, it’s crucial to maximize your contributions to retirement accounts such as IRAs, 401(k)s, and other pension plans. Take advantage of your last remaining years earning a salary by making the highest contributions you can manage. The IRS allows individuals aged 50 and over to make catch-up contributions, enabling you to increase your savings significantly. Discuss with your CPA the best strategies for maximizing these contributions while considering your overall tax situation. 

3. Fine-Tune Your Investment Strategy

Review your investment portfolio with your CPA to ensure that it aligns with your risk tolerance and retirement timeline. You may also need to speak to your investment manager if you have one. As retirement nears, it's common practice to shift toward more conservative investments to protect your savings from market volatility. However, maintaining some exposure to growth-oriented investments can also be important to keep pace with inflation. Regular portfolio reviews and adjustments will help safeguard your assets as you move closer to retirement. This tip is not intended as investment advice, but only offers some aspects worth considering. 

4. Plan for Healthcare Costs

Healthcare is often one of the most significant expenses in retirement. As people age, they often develop conditions that require professional treatment. Consider your options for health insurance, such as Medicare and supplemental policies. It's also wise to look into long-term care insurance, which can cover costs not included in regular health insurance. Estimating potential medical costs and planning for them financially is something your CPA can assist with, ensuring you are covered for various health-related scenarios without leaving yourself short in the savings department.

5. Review Your Social Security Strategy

Deciding when to start taking Social Security benefits is a critical decision that impacts your retirement income. You can begin to receive benefits as early as age 62, but delaying benefits until full retirement age or even age 70 increases your monthly payments. Visit your local social security office to find out the exact dollar amounts you can expect when you retire. Then take these details and discuss with your CPA the best strategy for your specific financial situation, including how your decision will impact your taxes and overall retirement income.

6. Pay Down Major Debts

Entering retirement debt-free, or with minimal debt, is ideal. Focus on paying down high-interest debts such as credit card balances, personal loans and mortgages. A debt-free status can significantly reduce your monthly expenses, making your retirement savings stretch further. You’ll also sleep better at night knowing that you don’t have overwhelming debts. Your CPA can help you to devise a plan to tackle debt efficiently, considering the impact on your taxes and savings.

7. Understand Your Tax Situation

Taxes can significantly affect your retirement funds. Work with your CPA to understand how your income sources in retirement will be taxed, including Social Security benefits, withdrawals from retirement accounts and investment earnings. Planning for taxes before you retire can lead to substantial savings and more predictable financial planning.

8. Prepare Your Estate

Estate planning is vital to ensure that your assets are distributed according to your wishes and that your loved ones are cared for in your absence. This includes creating or updating your will, setting up trusts if appropriate, and ensuring all beneficiary designations are up to date on accounts like IRAs, 401(k)s, and insurance policies. Estate planning also involves preparing for potential incapacity through powers of attorney and healthcare directives. Your CPA, in collaboration with an estate attorney, can guide you through these preparations. Consider having a family meeting so that your beneficiaries and offspring can know what to expect after you’re gone.

9. Practice Living on Your Retirement Budget

One of the best ways to ensure you are ready for retirement is to practice living on your projected retirement budget. This can help you adjust your spending habits and identify any gaps in your financial plan. Use this trial period to refine your budget to reflect realistic spending in retirement. It may only take a month or two of this trial period to discover things you overlooked or expenses you underestimated, such as your food budget.

10. Consult Regularly with Your CPA

Regular consultations with your CPA throughout the last five years before retirement can ensure that you stay on track with your financial goals and adjust your plans as circumstances change. Your CPA can offer ongoing advice and support, helping you navigate the complex financial landscape as you transition into retirement.

The final five years before retirement are a critical time for making financial adjustments and decisions that will shape your future. By focusing on these strategic areas and working closely with your CPA, you can approach retirement with confidence, knowing that you are well-prepared for the years ahead.

by Kate Supino

In today's increasingly competitive job market, a college education is often seen as essential for securing a prosperous future. As a result, parents are under immense pressure to save for their children's higher education expenses. However, navigating the college savings landscape can be daunting, and making the wrong decisions can have significant financial repercussions. To help parents make informed choices, it's crucial to be aware of common pitfalls that can derail college savings plans. In this article, we'll discuss ten costly college saving mistakes to avoid, empowering families to better prepare for their children's educational journey.

1. Procrastination

One of the most detrimental mistakes parents can make is delaying the start of their college savings journey. With the rising cost of tuition, every year of delay can significantly impact the amount needed to fund a college education. Starting early allows for more time to benefit from compound interest and investment growth, easing the financial burden in the long run.

2. Not Setting Clear Goals

Without clear goals, it's challenging to develop an effective college savings strategy. Parents should consider factors such as the type of institution their child may attend, anticipated costs, and the desired amount of financial aid. Establishing specific savings targets provides a roadmap for contributions and investment decisions.

3. Overlooking Tax-Advantaged Accounts

Many parents miss out on valuable tax benefits by failing to utilize tax-advantaged college savings accounts, such as 529 plans or Coverdell Education Savings Accounts (ESAs). These accounts offer tax-deferred growth and tax-free withdrawals when used for qualified educational expenses, making them powerful tools for maximizing savings. Your CPA will have more details about how to manage these.

4. Ignoring Investment Risks

While it's natural to prioritize capital preservation, overly conservative investment approaches may not yield sufficient returns to keep pace with college inflation rates. Conversely, taking on excessive investment risks can jeopardize savings in volatile market conditions. Finding the right balance between risk and return is essential for achieving long-term growth while minimizing exposure to market fluctuations.

5. Underestimating College Costs

Many parents underestimate the true cost of college, focusing solely on tuition expenses and overlooking additional costs such as room and board, textbooks, and miscellaneous fees. It's crucial to conduct thorough research and factor in all potential expenses when calculating savings goals to avoid coming up short when the time comes to pay for college.

6. Not Maximizing Financial Aid Opportunities

Some families assume they won't qualify for financial aid and overlook valuable opportunities for assistance. However, financial aid eligibility is determined by various factors beyond income, including family size, assets, and the number of children in college. Failing to explore financial aid options can result in missed opportunities for grants, scholarships, and low-interest loans.

7. Inadequate Diversification

Diversification is a fundamental principle of investing, yet many parents overlook its importance when managing college savings. Relying too heavily on a single investment vehicle or asset class exposes savings to unnecessary risk. A well-diversified portfolio can help mitigate volatility and improve overall performance, ensuring a more stable foundation for funding future educational expenses.

8. Failing to Adjust Contributions

Life circumstances and financial priorities can change over time, necessitating adjustments to college savings contributions. Some parents set a fixed savings amount and fail to revisit their plan regularly, potentially falling short of their goals. It's essential to periodically reassess savings targets and adjust contributions accordingly to stay on track for meeting educational funding needs.

9. Borrowing from Retirement Funds

While the temptation to tap into retirement accounts to fund college expenses may be strong, it's a decision that can have significant long-term consequences. Withdrawing funds prematurely not only jeopardizes retirement security but also incurs penalties and taxes that erode savings. Parents should explore alternative funding sources and consider the full impact on their financial future before resorting to retirement plan withdrawals.

10. Underestimating the Impact of Inflation

Failing to account for inflation can undermine the purchasing power of college savings over time. Tuition costs have historically outpaced the rate of inflation, meaning that what may seem like a substantial savings amount today could fall short of covering future expenses. Parents should consider inflation when setting savings goals and regularly review their plans to ensure they keep pace with the rising cost of education. Utilizing investment vehicles that offer potential for growth exceeding inflation rates can help safeguard savings against erosion over the long term.

11. Neglecting to Involve Children

Finally, excluding children from discussions about college savings can be a missed opportunity for valuable financial education. Involving children in the process fosters a sense of ownership and responsibility, instilling important money management skills from a young age. By educating children about the value of saving and investing for their future, parents empower them to make informed decisions and take an active role in their college planning journey.

Navigating the college savings landscape requires careful planning and foresight to avoid costly mistakes. By steering clear of common pitfalls such as procrastination, inadequate diversification, and borrowing from retirement funds, parents can better position themselves to achieve their college savings goals. With a well-defined strategy, proactive financial management, and a commitment to ongoing education, families can pave the way for their children's academic success without sacrificing their long-term financial well-being. As trusted advisors, CPAs play a crucial role in guiding families through the college savings process, offering expertise and support every step of the way.

by Kate Supino

Your credit report and score are always evolving. They reflect your record of paying debts on time, over time. Even if you had great credit in the past, it may be that your credit has suffered, and your score’s taken a nosedive. Even though that’s bad news, the good news is that credit is always changing, and it’s possible to come back from bad credit. Given enough time and the right moves on your part, it’s possible to get your credit back where it should be, where it can serve your needs instead of keeping you  back. Following are some steps you can take. You might not be able to do everything at once, but every little bit will help. 

Take a Second Job For Extra Income

A lot of times when someone’s credit suffers, it’s because they just didn’t have the money to keep up with monthly payments. If this is similar to your situation, you may want to consider getting a second job—at least temporarily—so you get some extra income to start making those payments. And even if this doesn’t describe your situation, you might still want a second gig because you’re going to have a lot of added interest to pay, due to the missed payments. After things settle, you can leave the extra gig, but then it may be time to take the next step on this list, re-evaluating your income.

Re-evaluate Your Income Needs

If your income hasn’t been enough to make your payments on time, it’s possible that you just aren’t making enough. You may need to talk to your boss about a raise, or start looking for a higher paying job elsewhere. Ideally, you want to be able to pay your bills and have enough left over for your savings. If this isn’t happening, then you either need to make more money every month, or consider the next item listed here.

Take a Look at Your Spending Habits

Are you living above your means? Sometimes people get into credit problems because they’re using credit cards to fund a lifestyle that they can’t afford. You want to be able to pay off your credit card bill each month, not just make the minimum monthly payments. And you also don’t want to be using your credit card for perishables like luxury items that are out of your price range. Again, if you’re using credit cards to pay for a lifestyle that’s above your means, you should work on your spending habits to keep them in check, so you can start building your credit back up.

Become an Authorized User

Becoming an authorized user on a family member or friend's credit card account with a positive payment history can be a strategic move to bounce back from bad credit. As an authorized user, you inherit the primary account holder's credit history, potentially boosting your own credit score. However, it's important to ensure that the primary account holder uses credit responsibly, as any mismanagement could negatively impact both parties. By piggybacking off their good credit habits and making timely payments, you can gradually improve your creditworthiness. This method offers a relatively low-risk opportunity to rebuild your credit.

Get a Secured Credit Card

A secured credit card is a tool to rebuild credit for those with a history of bad credit or no credit. Unlike traditional credit cards, secured cards require a cash deposit, which acts as collateral and sets the credit limit. By responsibly using the secured card, making timely payments, and keeping balances low, individuals can demonstrate creditworthiness to lenders. Over time, as the individual establishes a positive payment history, they may qualify for unsecured credit cards with higher limits and lower interest rates. This gradual improvement in credit utilization and payment behavior usually helps rebuild credit scores effectively.

Get a Loan to Pay Off Debt

Sometimes it makes sense to borrow money to pay off credit cards all at once. Only do this if you can get a low-interest loan from a lender or a friend. Never resort to hard money lenders or payday lenders; that will only dig you in a deeper hole than you were before. Once you get caught up with your payments, put the cards away and forget about them. The last thing you want to do is max out the cards again and then also owe money for the extra loan you got.

Stay in Touch With Creditors

Don’t ghost your creditors. Pick up the phone and make that difficult call to tell them that you know you’re late on your payments. They’ll want to know your circumstances and when you think you’ll be able to catch up with your payments again. In some cases, they may offer you a payment plan, or offer to stop charging you interest on your outstanding debt. Their response will depend on what kind of customer you’ve been in the past. If you are able to make a suitable payment arrangement, make sure you fulfill your part of the bargain. Otherwise, the debt will go to a collection agency, which will really make your credit report look bad. 

Talk to Your CPA

Your CPA may have some ideas about how to improve your financial situation. Don’t be afraid to ask for a consultation to discuss your issues. Remember, aside from you, they have the most information about your finances, so they can act as an objective counsel to give you tips about bouncing back from bad debt.

No matter how you got into a position of having bad debt, there is a way out. You will need to be patient. It can take a year—or even more—to improve your credit to the point where it used to be. Just stick with your plan and resolve to do things differently in the future, so you don’t find yourself in this predicament ever again!

by Kate Supino

When considering the purchase of a vehicle, the debate between opting for a new or used car is a significant one, impacting various aspects of your finances. Cars, second only to houses in terms of big-ticket purchases, demand careful financial planning and consideration of how they fit into your budget. This article delves into the various financial implications of buying new versus used cars, examining aspects such as down payments, monthly payments, operating costs, and depreciation.

Down Payment

The initial down payment is a critical factor in both new and used car purchases. A larger down payment reduces the amount you need to borrow, consequently lowering your monthly payments. Generally, used cars are less expensive, requiring a smaller down payment. However, it's important to consider the value depreciation of the car against the size of your down payment. Interestingly, new cars might offer manufacturer incentives like rebates, potentially reducing the required down payment.

Monthly Payments

Monthly payments are influenced by three primary factors: the borrowed amount, the loan term, and the interest rate. While new cars are pricier, they often come with longer loan terms and lower interest rates compared to used cars. For instance, a new car might cost more upfront, but the monthly payment might not be significantly higher than that of a used car when considering these factors. It's essential to balance the initial cost against the long-term financial implications of the loan terms and interest rates.

Adding monthly payments to your budget reduces your discretionary income, which in turn affects your capacity to seize investment opportunities. This reduced financial flexibility can mean missing out on lucrative investment opportunities that require immediate capital. Conversely, choosing a used car typically results in lower monthly payments, potentially freeing up more of your income. This additional liquidity can be crucial for taking advantage of investment opportunities as they arise, thereby potentially enhancing your financial growth and stability in the long term. 

Alternative Options

One cost-saving strategy is purchasing a low-cost, reliable used car. This option significantly reduces the monthly budget for a vehicle. The absence of monthly payments once the car is fully paid off frees up funds for other financial goals that may get you further ahead.

Leasing is another alternative that allows you to drive a new or nearly new car without the commitment of a purchase. Monthly lease payments are generally lower than loan payments for buying a car. Leasing also eliminates concerns about depreciation and allows you to upgrade to a newer model every few years. However, it's important to consider mileage limits and potential extra charges at the end of the lease.

For those who don't require a car daily, car sharing services or car subscription models offer flexibility. These services allow you to use a car when needed without the responsibilities of ownership, such as maintenance, insurance, or depreciation. This option can be cost-effective, especially in urban areas with good public transportation.

Insurance

Insurance costs vary quite a bit between new and used cars, presenting both pros and cons. New cars often attract higher insurance premiums due to their higher value and the cost of replacing parts or the entire vehicle in case of an accident. Comprehensive and collision coverage tends to be more expensive for new cars. However, they might also come with safety features that can lower insurance costs. On the other hand, used cars generally incur lower insurance premiums due to their reduced value. But, they may lack the latest safety features, which could potentially lead to higher costs in certain coverage areas. Older models might be more prone to theft if they are popular with thieves, impacting insurance rates. Ultimately, the choice depends on balancing these factors against personal needs and financial constraints.

Operating Costs

New cars typically offer the advantage of lower operating costs in the initial years, thanks to warranties that cover most repairs. In contrast, used cars might require budgeting for repairs and maintenance, especially those without warranty coverage. The savings on monthly payments or down payments for a used car should ideally include a reserve for potential repairs.

Depreciation

Depreciation is an unavoidable aspect of car ownership. New cars tend to depreciate more rapidly in the initial years, with a substantial drop in value occurring in the first year alone. Once you drive it off the lot, it automatically depreciates in value, and not by a small amount. Used cars, while depreciated, lose value at a slower rate in subsequent years. Planning for car replacement should factor in the vehicle's current value and its depreciation rate.

The decision between buying a new or used car depends on various financial considerations, including down payments, monthly payments, operating costs, and depreciation. New cars offer the benefit of lower operating costs and longer loan terms. They also hold appeal because you’re the first owner. The car comes to you clean, which is an inspiration to take good care of it. Used cars might be more budget-friendly in terms of initial cost and depreciation. They also carry the added risks of hidden problems that could prove costly, undoing any savings you saw from not buying new. Ultimately, the choice hinges on individual financial situations and long-term budget plans. If you need help deciding whether a new or used car purchase makes sense for your budget, consult with your professional CPA.

by Kate Supino