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Category: Financial Planning

Family Finance Meetings

Posted on by Robert Blakely

Authored by ROBERT BLAKELY, CFP®, AIF®, CHFC®

Holiday gatherings are an opportunity for families to grow closer to each other and to build life long memories. It’s also a great excuse to schedule and discuss financial well-being and preparedness since important topics like this are often overlooked. As a financial planning firm, we often schedule periodic reviews with our clients throughout the year to plan, reassess strategies, and refine direction based on changes to our client’s needs. So, wouldn’t it make sense for families to have the same conversations with each other?

You work hard to teach your kids what they need to become well-rounded and successful adults. You teach them which foods are good for them, how to play fairly with friends, and encourage them to build a strong work ethic and moral compass. You do these things because you recognize that the lessons, they learn today will ripple outwards through their lives as they move on to their own careers, their own families, and their own challenges.

Why not work just as hard to teach your family to build strong financial habits?

Letting these difficult conversations slide may be easier, but when you rob your children of their ability to learn from your mistakes, you doom them to learn from experience. The cost of poor money decisions your child makes in their twenties could permanently dampen their lifetime earning potential and set them back decades. Families who make a concerted effort to have financial discussions and pass on healthy habits have a better opportunity to grow financially stronger than those who avoid the talk.

Family finance meetings aren’t just for those of us with kids, however. Statistics tell us that one in five couples who filed for divorce last year cited finances as the reason that they split. Whether we like to admit it or not, money plays a role in just about every aspect of our lives. Your financial resources will directly impact the vacations you take, the insurances and protection you can afford, the opportunities you can provide to your spouse, and everything in between. You and your significant other can stay in sync on spending and other related finances by having regular healthy planning discussions.

How do we broach what sometimes can be difficult financial subjects with loved ones? The simple answer, like most things in finance, is that there is no one size fits all solution. Not only do people, and their family relationships differ greatly between individuals, but the value itself is subjective. What’s important to one family may be far down on the list for another. What one couple might find to be a perfect solution could create additional stress for another. The answer starts with open and honest communication. That’s how we approach it with our clients at Blakely Financial.

Create an environment where each member of the family can discuss where the finances are today, and where they would like them to be in the future. For couples, try sitting down once a month, opening a bottle of wine, and reviewing the credit card statement. Create a judgment-free zone, where line by line you review spending habits and come to an agreement on things you’d like to do more or less of. Keep in mind that the objective here is not necessarily creating a budget or identifying wasteful spending, it’s simply to recognize and reconcile each person’s view of the family’s finances.

Financial teamwork strengthens bonds by cultivating a sense of camaraderie and a mutual appreciation for each other’s work. If you and your spouse can calmly and openly discuss spending and savings habits, you will be well on your way to not only financial balance but a healthy happy relationship. Seeking advice and guidance from a financial professional is also a great addition to the conversation. This will quickly set yourself apart from the average American household.

For those with children, discussing dollars and cents may seem a little more difficult if the people at the table are more worried about superheroes and sleepovers than they are with financial responsibility. Once again this will need to be a discussion that couples have together on how best to involve children in the family finances. Keeping everyone at the table after dinner to discuss a savings goal may be a good place to start. Beginning with something tangible, a reward even, may also lead to some interesting discussion.

Bring the family together to decide on where next year’s vacation might be, discuss the costs associated, and in simple terms draw up a savings goal for your trip. Each month discuss how much you were able to save, how much you have set aside, and how close you are to achieving your goal. Encourage your children to contribute small allowances and thank them for doing so. When trip time comes around, recognize that you are only able to enjoy this experience because of the hard work and patience you showed in saving up.

Something as simple as creating a basic family budget, where monthly amounts are discussed amongst everyone at the table can begin to introduce your children to the concept of planning out income and expenses ahead of time rather than taking them on as they come. In an era where most families are living paycheck to paycheck, you will be giving your children a head start to communicating about finances. As many people learn the hard way, we inherit many of our habits and behaviors from our parents, good and bad. Even if your children are only loosely connected to the discussion, they will be internalizing some very important skills. You will be giving them exposure to prudence, cooperation, and communication, valuable traits that will serve them well for the rest of their lives, and their children’s lives.

The importance of having a family finance conversation cannot be understated. Money is threaded through everything that you and your family hope to do in your lives, and it can make or break you. Don’t procrastinate or let tensions boil over concerning finances. Be a family that cooperates and plans together. This holiday season schedule in a “Family Financial Meeting”. You will be able to experience more, together, for generations to come.

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.

ROBERT BLAKELY, CFP® is a financial advisor with BLAKELY FINANCIAL, INC. located at 1022 Hutton Ln., Suite 109, High Point, NC 27262. He is the founder and president of Blakely Financial, Inc. celebrating 25 years in business.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.

Tap and Go: Understanding Mobile Payments

Posted on by Steve LaFrance

Presented by STEPHEN LAFRANCE, CFP®, MBA

Purchasing items with your phone may seem complex, but getting started is much easier than you may think.

Carrying around a hefty, jam-packed wallet is starting to fall out of style—just like bell-bottomed jeans and leg warmers. Instead, many are embracing the advent of mobile payment methods and turning to their smartphones to make payments.

More than 58 million American adults have made a mobile payment, and analysts predict that usage in North America will more than double by 2025.1 A mobile payment refers to a digital transaction that occurs through a mobile device (you may hear the term mobile wallet used as well).

Making purchases with your phone can seem intimidating. Here’s what you should know about paying through your touch screen.

How Safe Are Mobile Payment Methods?

You may feel hesitant to type or scan your credit card or bank account information into your phone. However, mobile payment methods may actually be safer than using a credit card or cash.

Mobile wallet apps such as Apple Pay, Google Pay, and Samsung Pay use near-field communications (NFC) to convey transactions between your phone and the terminal. You may have witnessed the person in front of you in the grocery store line pay for their food by holding their phone near the chip reader. They were likely using NFC. The person’s credit card information traveled directly to the terminal without crossing through the internet.

Most mobile payment methods also encrypt your personal information using tokenization, a process in which your bank details are stored as a series of randomly generated numbers (tokens) instead of your actual information. Tokenization ensures that account details on your phone can’t be cloned and are less vulnerable to fraud. Apple, Google, and Samsung Pay add an additional level of protection with their fingerprint or facial recognition features.

Due to these multiple layers of security, many people consider mobile payment methods to be safer than paying with a physical credit card that is subject to fraud and theft.

What Mobile Payment Methods Should I Consider Using?

Apple Pay, Google Pay, and Samsung Pay are all standard mobile payment methods that can be connected to your credit card. At least one of them should already be installed on your smartphone, and they all work in essentially the same way (check your phone settings to see which one you have). Besides their convenience and easy set-up, these three mobile payment methods have so far proven to be secure and could save you some time in the checkout line.

PayPal functions in a similar way, except that users often connect it directly to their bank accounts. It originally became popular as a payment method for online shopping, and some brick-and-mortar stores now accept it.

Venmo is another popular payment method, although its purpose is slightly different. Venmo is generally used in a social context as an easy way to split a check at a restaurant or to repay a friend for a purchase. You should only give or receive mobile money through Venmo with people you know.

How Can I Get Started?

Mobile payment method apps are intended to be user-friendly. Start by searching for Apple Pay, Google Pay, or Samsung Pay in your smartphone’s settings, or download the Paypal or Venmo app. Just make sure you choose a secure password when you’re ready to get started.
Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.

STEPHEN LAFRANCE, CFP®, MBA is a financial advisor with BLAKELY FINANCIAL, INC. located at 1022 Hutton Ln., Suite 109, High Point, NC 27262. 336-885-2530.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.

Prepared by Hartford Funds

Creating a Holiday Budget

Posted on by Emily Promise

Authored by EMILY PROMISE CFP®, AIF®, APMA®, CRPC®

Do you ever wonder where your money goes? Especially around the holidays? Well, you are not alone. Not only are you spending money on gifts, but the holiday season also comes with a myriad of other expenses that include entertaining, decorations, travel to relatives, holiday cards, mailing of packages, and charitable giving. If you are hoping to avoid the dreaded overspending and exorbitant bills in the new year, come up with a spending budget now that is realistic and one that you can stick to.

Putting together a holiday budget is a lot like preparing a monthly spending budget. Identify how much money you have coming in and where you want to allocate those dollars. Calculate your normal monthly living expenses and earmark what is left to your holiday budget.

Start by listing all the people you would like to purchase a gift for. To keep this cost down, consider homemade gifts that might cost less. Budget for sending out those holiday cards and any decorations you might be purchasing. Think about do-it-yourself decorations. With so many great ideas available on-line nowadays, you can do a lot of things by yourself and save dollars in the process. Make sure to add in any extra entertaining you will do and how much the food and drink will cost. Consider potluck if you are entertaining to help keep within your budget. If you have a favorite charity that you support, include your donation in your overall holiday budget.

Once you put a list together of your expected expenses, if you see that there is not enough money to do the things you would like to do, consider other income streams. Do you have a Christmas Club at your bank that you could stash money into throughout the year? Can you take on a small part-time job to help increase your income stream for those extras? How about selling those unwanted items in your closet for a little extra cash? Try putting aside the money you spend every day on that fancy coffee and earmark it for the holidays? If you are lucky enough to get a year-end bonus, can part of that bonus be used for holiday spending? But a word to the wise, remember to never count on that bonus and spend it before it is in the bank.

Continue to track your expenses daily to make sure you are staying within your budget. Opening up a separate bank account with your allocated holiday budget may help you stay the course. And in today’s mobile world, checking on your balance is as easy as checking your app on your phone on a daily basis to monitor how you are tracking.

Doing a little preparation upfront before you begin spending for the holidays will help you to stay on track and not overspend. And when you stay within your budget, you will thank yourself in January when those bills begin to roll in.

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other individualized advice we can provide towards your financial well-being.

EMILY PROMISE, CFP® is a financial advisor with BLAKELY FINANCIAL, INC. located at 1022 Hutton Ln., Suite 109, High Point, NC 27262 and can be reached at (336) 885-2530.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser

Best Practices When Saving For Retirement

Posted on by Robert Blakely

Presented by ROBERT BLAKELY, CFP®, AIF®, CHFC®

It is “Save for Retirement Week.” One essential step in saving for retirement is to start as early as possible. It is more fun to get instant gratification from buying that five-dollar coffee or those fancy new designer shoes, but sometimes stepping back and thinking about your future goals will stop you from making a decision that may hurt you. Starting early and being disciplined will help you reach your goals and make retirement more enjoyable.

Write Your Goals Down

We suggest that you begin by writing down your financial goals. Writing them down makes it more likely to stay the course and achieve those goals. Meeting with a financial advisor to develop a strategy to achieve your goals is significant. And revisiting these goals often will keep you committed, driven, and on track.

Participate in Company’s 401(k)

One of the most important financial planning strategies in saving for retirement is to contribute to your company’s retirement plan and be sure to maximize your employer’s 401(k) match. Participating in your company’s plan and taking advantage of that extra money that is matched will help to accelerate your growth potential and get you on the road to a comfortable retirement.

Stay On Budget

Another crucial step in saving for retirement is staying within your budget. Budgeting is vital this time of year, with the holidays upon us and the temptations to purchase extras throughout the next couple of months. So often, we get caught up in the holiday spirit and forget about our bills during this time. To ensure that you do not overspend this season now is the perfect time to create a realistic holiday spending budget that won’t break the budget.

Saving for retirement does not have to be complicated. Start early, identify your goals, stay on budget, and maximize any matching money available to you, and you will be on the road to achieving your dreams and goals. And as always, meeting with your financial advisor will help you stick with your plan.

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.

ROBERT BLAKELY, CFP® is a financial advisor with BLAKELY FINANCIAL, INC., located at 1022 Hutton Ln., Suite 109, High Point, NC 27262. He is the founder and president of Blakely Financial, Inc. celebrating 25 years in business.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.

What To Do With Your 401(k) After A Job Change

Posted on by Blakely Financial

Presented by ROBERT BLAKELY, CFP®, AIF®, CHFC®

If you have lost your job, or are changing jobs, you may be wondering what to do with your 401(k) plan. Our team at Blakely Financial feels that it is important to understand your options.

For starters, many ask, “What will I be entitled to?”

If you leave your job (voluntarily or involuntarily), you will be entitled to a distribution of your vested balance. Your vested balance always includes your own contributions (pre-tax, after-tax, and Roth) and typically any investment earnings on those amounts. It also includes employer contributions (and earnings) that have satisfied your company plan’s vesting schedule.

In general, you must be 100% vested in your employer’s contributions after 3 years of service (“cliff vesting”), or you must vest gradually, 20% per year until you are fully vested after 6 years (“graded vesting”). Plans can have faster vesting schedules, and some even have 100% immediate vesting. You will also be 100% vested once you have reached your plan’s normal retirement age.

It is important for you to understand how your particular plan’s vesting schedule works because you will forfeit any employer contributions that have not vested by the time you leave your job. Your summary plan description (SPD) will spell out how the vesting schedule for your particular plan works. If you do not have one, ask your plan administrator for it. If you are on the cusp of vesting, it may make sense to wait a bit before leaving, if you have that luxury.

Make sure you do not spend it.

While this pool of dollars may look attractive, do not spend it unless you absolutely need to. If you take a distribution you will be taxed, at ordinary income tax rates, on the entire value of your account except for any after-tax or Roth 401(k) contributions you have made. And, if you are not yet age 55, an additional 10% penalty may apply to the taxable portion of your payout. (Special rules may apply if you receive a lump-sum distribution and you were born before 1936, or if the lump-sum includes employer stock.)

If your vested balance is more than $5,000, you can leave your money in your employer’s plan at least until you reach the plan’s normal retirement age (typically age 65). But your employer must also allow you to make a direct rollover to an IRA or to another employer’s 401(k) plan. As the name suggests, in a direct rollover the money passes directly from your 401(k) plan account to the IRA or other plan. This is preferable to a “60-day rollover,” where you get the check and then roll the money over yourself because your employer has to withhold 20% of the taxable portion of a 60-day rollover. You can still roll over the entire amount of your distribution, but you will need to come up with the 20% that’s been withheld until you recapture that amount when you file your income tax return.

Should I roll over to my new employer’s 401(k) plan or to an IRA?

Assuming both options are available to you, there is no right or wrong answer to this question. There are strong arguments to be made on both sides. You need to weigh all of the factors and make a decision based on your own needs and priorities. It is best to consult with your financial advisor, since the decision you make may have significant consequences — both now and in the future.

Reasons to consider rolling over to an IRA:

You generally have more investment choices with an IRA than with an employer’s 401(k) plan. You typically may freely move your money around to the various investments offered by your IRA trustee, and you may divide up your balance among as many of those investments as you want. By contrast, employer-sponsored plans generally offer a limited menu of investments (usually mutual funds) from which to choose.

You can freely allocate your IRA dollars among different IRA trustees/custodians. There is no limit on how many direct, trustee-to-trustee IRA transfers you can do in a year. This gives you the flexibility to change trustees often if you are dissatisfied with investment performance or customer service. It can also allow you to have IRA accounts with more than one institution for added diversification. With an employer’s plan, you cannot move the funds to a different trustee unless you leave your job and roll over the funds.

An IRA may give you more flexibility with distributions. Your distribution options in a 401(k) plan depend on the terms of that particular plan, and your options may be limited. However, with an IRA, the timing and amount of distributions are generally at your discretion (until you reach age 72 and must start taking required minimum distributions in the case of a traditional IRA).

You can roll over (essentially “convert”) your 401(k) plan distribution to a Roth IRA. You will generally have to pay taxes on the amount you roll over (minus any after-tax contributions you have made), but any qualified distributions from the Roth IRA in the future will be tax-free.

Reasons to consider rolling over to your new employer’s 401(k) plan (or stay in your current plan):

Many employer-sponsored plans have loan provisions. If you roll over your retirement funds to a new employer’s plan that permits loans, you may be able to borrow up to 50% of the amount you roll over if you need the money. You can’t borrow from an IRA — you can only access the money in an IRA by taking a distribution, which may be subject to income tax and penalties. (You can give yourself a short-term loan from an IRA by taking a distribution, and then rolling the dollars back to an IRA within 60 days; however, this move is permitted only once in any 12-month time period.)

Employer retirement plans generally provide greater creditor protection than IRAs. Most 401(k) plans receive unlimited protection from your creditors under federal law. Your creditors (with certain exceptions) cannot attach your plan funds to satisfy any of your debts and obligations, regardless of whether you have declared bankruptcy. In contrast, any amounts you roll over to a traditional or Roth IRA are generally protected under federal law only if you declare bankruptcy. Any creditor protection your IRA may receive in cases outside of bankruptcy will generally depend on the laws of your particular state. If you are concerned about asset protection, be sure to seek the assistance of a qualified professional.

You may be able to postpone the required minimum distributions (RMDs). For traditional IRAs, these distributions must begin by April 1 following the year you reach age 72. However, if you work past that age and are still participating in your employer’s 401(k) plan, you can delay your first distribution from that plan until April 1 following the year of your retirement. (You also must own no more than 5% of the company.) Currently, due to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, required minimum distributions (RMDs) are waived in 2020. Make sure to check with your advisor and tax preparer for more information.

If your distribution includes Roth 401(k) contributions and earnings, you can roll those amounts over to either a Roth IRA or your new employer’s Roth 401(k) plan (if it accepts rollovers). If you roll the funds over to a Roth IRA, the Roth IRA holding period will determine when you can begin receiving tax-free qualified distributions from the IRA. So if you’re establishing a Roth IRA for the first time, your Roth 401(k) dollars will be subject to a brand new five-year holding period. On the other hand, if you roll the dollars over to your new employer’s Roth 401 (k) plan, your existing five-year holding period will carry over to the new plan. This may enable you to receive tax-free qualified distributions sooner.

When evaluating whether to initiate a rollover always be sure to (1) ask about possible surrender charges that may be imposed by your employer plan, or new surrender charges that your IRA may impose, (2) compare investment fees and expenses charged by your IRA (and investment funds) with those charged by your employer plan (if any), and (3) understand any accumulated rights or guarantees that you may be giving up by transferring funds out of your employer plan.

What about outstanding plan loans?

In general, if you have an outstanding plan loan, you will need to pay it back, or the outstanding balance will be taxed as if it had been distributed to you in cash. If you cannot pay the loan back before you leave, you will still have 60 days to roll over the amount that has been treated as a distribution to your IRA. Of course, you will need to come up with the dollars from other sources.

Losing a job or making that change to a new one comes with a lot of stress and unknowns. Being aware of your options when it comes to your 401(k) plan will help alleviate some of that stress. And as always, when you are facing big life changes and entering new chapters in your life, our team at Blakely Financial recommends a review with your financial advisor to make sure you account for these life changes and your future financial plan and goals.

 

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.

ROBERT BLAKELY, CFP® is a financial advisor with BLAKELY FINANCIAL, INC. located at 1022 Hutton Ln., Suite 109, High Point, NC 27262. He is the founder and president of Blakely Financial, Inc. celebrating 25 years in business.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.

Prepared By Broadridge Advisor Solutions

Understanding 401(k)’s

Posted on by Emily Promise

All about 401(k)’s

Presented by EMILY PROMISE CFP®, AIF®, APMA®, CRPC®

A 401(k) plan is a company-sponsored retirement plan that eligible employees can contribute a portion of their salary into a variety of investment options. In some instances, employers may also offer to make matching contributions. 401(k) plans are an easy way to save for the future through payroll contributions.

If your company offers a 401(k) plan and you are not participating, you may want to revisit your decision as they are a great opportunity to save for retirement. Beginning early and consistently contributing to a 401(k) plan throughout your working years can assist you in reaching your financial goals for retirement.

If you have just entered the workforce, retirement may be the farthest thing from your mind. Or if you are an older employee nearing retirement, you might be thinking it is too late. For both life stages, 401(k)s can offer specific advantages that make them a great option for investing and saving.

401(k) contributions are typically ‘before tax’ money. The amount you choose to contribute is deducted from your paycheck before taxes are taken out.  This means you are paying taxes on a smaller portion of your salary.  There are limits each year on just how much you can put in your 401(k).   In 2020, the maximum amount one can contribute is $19,500. If you are 50 or older, you can make a catch-up contribution of $6,500 in addition to the $19,500 for a total of $26,000.

Many plans also offer options for employees to make post-tax ROTH 401(k) contributions from their paychecks. Post-tax ROTH contributions do not lower an employee’s taxable income, but they do grow tax-free and aren’t taxed upon withdrawal.

Many employers offer matching contributions. For example, your employer may offer a 4 percent match. This means they will contribute the same amount that you do, up to 4 percent. Of course, you can personally contribute more, but the company will match only 4 percent.  If you are not contributing to your company’s 401(k) plan and they have a match, you are leaving money on the table! Make sure to begin contributing at least to the amount of the match as soon as you can.

An additional benefit of a 401(k) plan is that when you finally pay the taxes on your 401(k) contributions, you may be at a lower rate. Typically, you begin withdrawing money from your 401(k) when you retire and you may very well be in a lower tax bracket at that time; thus you could end up paying less tax on your savings when you do eventually withdraw funds.

A few key points to remember about a 401(k); It is a retirement savings plan, so once you put money in, it is always best to leave it in. There are penalties if you take the money out before retirement age. Also keep in mind that if you change employers, you can roll your vested balance into your new employer’s 401(k) plan or into another qualifying retirement account such as an IRA.

If you have questions, it is always a great idea to call your financial advisor for guidance. But no matter what, please take advantage of any type of savings plan your current employer offers as the earlier and more aggressive you are, the closer you will come to achieving your financial goals.

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other expert advice we can provide towards your financial well-being.

EMILY PROMISE, CFP® is a financial advisor with BLAKELY FINANCIAL, INC. located at 1022 Hutton Ln., Suite 109, High Point, NC 27262 and can be reached at (336) 885-2530.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.

Life Insurance Awareness

Posted on by Steve LaFrance

Presented by STEPHEN LAFRANCE, CFP®, MBA

How much life insurance do you need?

Your life insurance needs will depend on a number of factors, including the size of your family, the nature of your financial obligations, your career stage, and your goals. For example, when you’re young, you may not have a great need for life insurance. However, as you take on more responsibilities and your family grows, your need for life insurance increases.

Here are some questions that can help you start thinking about the amount of life insurance you need:

  • What immediate financial expenses (e.g., debt repayment, funeral expenses) would your family face upon your death?
  • How much of your salary is devoted to current expenses and future needs?
  • How long would your dependents need support if you were to die tomorrow?
  • How much money would you want to leave for special situations upon your death, such as funding your children’s education, gifts to charities, or an inheritance for your children?
  • What other assets or insurance policies do you have?

Types of life insurance policies

The two basic types of life insurance are term life and permanent (cash value) life. Term policies provide life insurance protection for a specific period of time. If you die during the coverage period, your beneficiary receives the policy’s death benefit. If you live to the end of the term, the policy simply terminates, unless it automatically renews for a new period. Term policies are typically available for periods of 1 to 30 years and may, in some cases, be renewed until you reach age 95. With guaranteed level term insurance, a popular type, both the premium and the amount of coverage remain level for a specific period of time.

Permanent insurance policies offer protection for your entire life, regardless of your health, provided you pay the premium to keep the policy in force. As you pay your premiums, a portion of each payment is placed in the cash-value account. During the early years of the policy, the cash-value contribution is a large portion of each premium payment. As you get older, and the true cost of your insurance increases, the portion of your premium payment devoted to the cash value decreases. The cash value continues to grow–tax deferred–as long as the policy is in force. You can borrow against the cash value, but unpaid policy loans will reduce the death benefit that your beneficiary will receive. If you surrender the policy before you die (i.e., cancel your coverage), you’ll be entitled to receive the cash value, minus any loans and surrender charges.

Many different types of cash-value life insurance are available, including:

  • Whole life: You generally make level (equal) premium payments for life. The death benefit and cash value are predetermined and guaranteed (subject to the claims-paying ability and financial strength of the issuing insurance company). Your only action after purchase of the policy is to pay the fixed premium.
  • Universal life: You may pay premiums at any time, in any amount (subject to certain limits), as long as the policy expenses and the cost of insurance coverage are met. The amount of insurance coverage can be changed, and the cash value will grow at a declared interest rate, which may vary over time.
  • Indexed universal life: This is a form of universal life insurance with excess interest credited to cash values. But unlike universal life insurance, the amount of interest credited is tied to the performance of an equity index, such as the S&P 500.
  • Variable life: As with whole life, you pay a level premium for life. However, the death benefit and cash value fluctuate depending on the performance of investments in what are known as subaccounts. A subaccount is a pool of investor funds professionally managed to pursue a stated investment objective. You select the subaccounts in which the cash value should be invested.
  • Variable universal life: A combination of universal and variable life. You may pay premiums at any time, in any amount (subject to limits), as long as policy expenses and the cost of insurance coverage are met. The amount of insurance coverage can be changed, and the cash value and death benefit goes up or down based on the performance of investments in the subaccounts.

With so many types of life insurance available, you’re sure to find a policy that meets your needs and your budget.

Choosing and changing your beneficiaries

When you purchase life insurance, you must name a primary beneficiary to receive the proceeds of your insurance policy. Your beneficiary may be a person, corporation, or other legal entity. You may name multiple beneficiaries and specify what percentage of the net death benefit each is to receive. If you name your minor child as a beneficiary, you should also designate an adult as the child’s guardian in your will.

What type of insurance is right for you?

Before deciding whether to buy term or permanent life insurance, consider the policy cost and potential savings that may be available. Also keep in mind that your insurance needs will likely change as your family, job, health, and financial picture change, so you’ll want to build some flexibility into the decision-making process. In any case, here are some common reasons for buying life insurance and which type of insurance may best fit the need.

Mortgage or long-term debt: For most people, the home is one of the most valuable assets and also the source of the largest debt. An untimely death may remove a primary source of income used to pay the mortgage. Term insurance can replace the lost income by providing life insurance for the length of the mortgage. If you die before the mortgage is paid off, the term life insurance pays your beneficiary an amount sufficient to pay the outstanding mortgage balance owed.

Family protection: Your income not only pays for day-to-day expenses but also provides a source for future costs such as college education expenses and retirement income. Term life insurance of 20 years or longer can take care of immediate cash needs as well as provide income for your survivor’s future needs. Another alternative is cash value life insurance, such as universal life or variable life insurance. The cash value accumulation of these policies can be used to fund future income needs for college or retirement, even if you don’t die.

Small business needs: Small business owners need life insurance to protect their business interests. As a business owner, you need to consider what happens to your business should you die unexpectedly. Life insurance can provide the cash needed to buy a deceased partner’s or shareholder’s interest from his or her estate. Life insurance can also be used to compensate for the unexpected death of a key employee.

Review your coverage

Once you purchase a life insurance policy, make sure to periodically review your coverage; over time your needs will change. An insurance agent or financial professional can help you with your review.

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.

STEPHEN LAFRANCE, CFP®,MBA is a financial advisor with BLAKELY FINANCIAL, INC. located at 1022 Hutton Ln., Suite 109, High Point, NC 27262, and can be reached at 336-885-2530.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.

Prepared by Broadridge Advisor Solutions

College Students, Start Investing Now!

Posted on by Emily Promise

Presented by EMILY PROMISE CFP®, AIF®, APMA®, CRPC®

With all that you have on your plate, from a full class load to sports practice and part-time jobs, thinking about investing is probably the farthest thing from your mind. But now is the time for you to take advantage of your youth and start planning for your financial future. Below are a few tips so you can start investing now which will pay dividends in the future.

By investing now, you are taking advantage of extended time in the market. The earlier you start investing, the more time there is for your money to grow. You can start investing now with any amount of funds. Whether it be $1,000 or $10,000, the most important thing is that you get in the habit of investing and paying yourself first.

Begin by putting a small amount each month (or even each week into your savings account, this will get you in the habit of saving for your future. By getting in the habit and setting up automatic drafts from your checking account into an investment account, you will never miss the funds.

Ways to start investing now:

  • Open up an individual investment account
  • Open a ROTH – if you have earned income
  • Start an automatic monthly draft into your investment account
  • Review your income and spending habits to determine how much you can afford to stash away into an investment account.
  • Look for ways to save money … bring your own lunch, skip the Starbucks line… then invest the money you saved!
  • Set goals, so you have something to save for
  • Seek the help of a financial advisor

Bottom line start investing today. The sooner you begin investing for your future, the sooner you secure your financial future. Your 40-year-old self will thank you for starting young.

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other individualized advice we can provide towards your financial well-being.

EMILY PROMISE, CFP® is a financial advisor with BLAKELY FINANCIAL, INC. located at 1022 Hutton Ln., Suite 109, High Point, NC 27262 and can be reached at (336) 885-2530.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser

Finance101: Dealing With Student Debt Now & Later

Posted on by Steve LaFrance

Presented by STEPHEN LAFRANCE, CFP®, MBA

The last thing on your mind as a college student is saving money, budgeting and managing your debt. But if you are not careful, college can create a future full of debt and angst over bills to pay and credit card debt.  We would like to share some thoughts on managing your debt while you are in college.

  1. Budgeting

Create a budget that is realistic and be disciplined about your expenses. Stick with it as the more you live within your means now, the faster you can move towards your goals in the future.

  1. Get a Job and Start Saving

By sacrificing and working a part-time job on weekends, during breaks and some after class you can begin to make extra money to help pay off those student loans and other expenses you accrue. You will be in such a better spot when you graduate.

  1. Be Smart About Credit Cards

College students are hounded with, what sound like great offers for credit cards. Applying for one credit card in your name helps build good credit; however, using it for purchases that you cannot afford and racking up debt at very high interest rates will jeopardize your financial future. Be smart and put the credit card away!

  1. Cut Costs Where You Can

Buy used textbooks; purchase a coffee maker and reduce the expensive coffees you purchase every day; cut back on your meal plan if you find you are not utilizing the entire plan each year – these are just a few ways you can cut some expenses. The little things will add up fast.

  1. Start an Emergency Fund

It is always helpful to put some of your earnings into an emergency fund, just in case you find yourself with an unexpected expense.

Upon Graduation:

  1. Pick Your Loan Repayment Plan

Each plan is different and is dependent upon your level of student debt. Speak to your financial aid office for direction on your repayment of your student loans.

  1. Consolidate Your Loans

Once you graduate, normally you have six months before you begin paying back your loans. However, just because you have six months does not mean you have to wait. Begin right away paying off your loans as it will easily become a habit.  And, speaking to the right institution and consolidating your loans will make it easier to keep track of what you owe.

  1. Look Into Loan Forgiveness Programs

Some loans will allow you to push the time to pay them off and some careers allow for some of the debt to be forgiven. Make sure you do the research to get the most benefits.

  1. Avoid More Debt

It is natural to want to purchase fun stuff upon graduation; however, taking on more debt when you have student loans to pay off is not recommended.

Keeping on top of your expenses and developing a healthy relationship with money now will pay dividends in the future. Always remember not to take on debt you cannot afford. You will reap the rewards later.

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.

STEPHEN LAFRANCE, CFP®,MBA is a financial advisor with BLAKELY FINANCIAL, INC. located at 1022 Hutton Ln., Suite 109, High Point, NC 27262. 336-885-2530.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals

Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.

Authored by the Investment Research team at Commonwealth Financial Network

Finance101: Budgeting for College Students

Posted on by Robert Blakely

Authored by ROBERT BLAKELY, CFP®, AIF®, CHFC®

Budgeting for College Students

Your spending habits now impact not only your current well-being but forge the path for long-term future spending. Managing money and setting spending goals may be the last thing you want to think about after a busy day of classes, playing sports, and spending time with friends. But developing good habits now is worth the effort. In today’s blog, we would like to share our thoughts on how to think about your spending habits and create a budget that you can live with.

Studies have found that students who observe spending limits and savings goals early are less stressed when it comes to money and many have nest eggs when they graduate. Setting a budget does not need to be daunting and complicated.  Begin with the following:

  • Identify Your Expenses

Know the cost of room and board, textbooks and school supplies, and transportation. Add in any clothing, entertainment, laundry and food expenses.

  • Track Your Spending and Cut Back Where You Can

Keeping an eye on how you are spending your money does not need to be stressful. With the many on-line tools today like Mint and Left to Spend, you can easily pay attention to what money you have coming in and what money you have going out. Monitor this and see where you might be able to cut back. Perhaps you find that you are not utilizing your full meal plan. Next semester cut back to the lower plan. Buy used textbooks; purchase a coffee maker instead of those expensive coffees; cook for yourself; cancel memberships like Apple Music and use free services like Pandora. Even the smallest changes can bring big results.

  • Look Towards the Future

As you budget for your current expenses, do not forget that when you graduate, you will have certain goals and perhaps large expenditures like a car or a new apartment. Begin saving just a little every day and put it in an account that you will not touch. You will be surprised by how fast that account will grow and by doing this, you will be in a good financial position going forward.

By forming a healthy relationship with money and setting spending goals now, you will build a very strong base for the future. Allowing yourself to look at life after college and working towards those future goals will make it easier to manage as you move forward in your life.

Engage with the entire Blakely Financial team at WWW.BLAKELYFINANCIAL.COM to see what other financial tips we can provide towards your financial well-being.

ROBERT BLAKELY, CFP® is a financial advisor with BLAKELY FINANCIAL, INC. located at 1022 Hutton Ln., Suite 109, High Point, NC 27262. He is the founder and president of Blakely Financial, Inc. celebrating 25 years in business.

Blakely Financial, Inc. is an independent financial planning and investment management firm that provides clarity, insight, and guidance to help our clients attain their financial goals.

Securities and advisory services offered through Commonwealth Financial Network, Member FINRA/SIPC, a Registered Investment Adviser.