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Category: Investing

Tips for Managing my Money in the New Year

The 4 A’s of Your Personal Finances

Posted on by Steve LaFrance

As the saying goes, there is no better time than the present. When it comes to setting up a system for managing your personal finances, the beginning of a new year is the perfect time to begin. The easiest way to be successful with a cash management program is to develop a systematic and disciplined approach. Spending a few minutes each week to maintain your cash management program can help you to keep track of how you spend your money and pursue your financial goals.

Any good cash management system revolves around the four As – Accounting, Analysis, Allocation, and Adjustment.

Accounting 

Accounting involves gathering all your relevant financial information together and keeping it close at hand for future reference. Gathering all your financial information — such as income and expenses — and listing it systematically will give you a clear picture of your overall financial situation.

It’s important to note all of your expenses, subscriptions, memberships, and more. The small items add up quickly.

Analysis 

Next, you need to sit down and review your financial situation once you have accounted for all your income and expenses. You will almost invariably find yourself with either a shortfall or a surplus. Ideally, you should be spending less than you earn, if this isn’t the case, you will need to take a very close look at your spending habits. 

Allocation 

Now you must determine your financial commitments and priorities and distribute your income accordingly. One of the most important factors in allocation is to distinguish between your real needs and your wants. If you need to reduce your expenses, you may want to start out by cutting back on your discretionary spending. This can help to free up cash that can either be invested for the long term or used to pay off fixed debt.

Adjustment 

Even with a set budget, it’s important to be flexible and account for needed changes. You may want to review your budget monthly, quarterly or biannually to be sure it fits your lifestyle and needs, wants, and wishes Above all, be flexible. Any budget that is too rigid is likely to fail.

Using the four As is an excellent way to help you monitor your financial situation to ensure that you are on the right track to meet your financial goals.

Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.

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.

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.

The Importance of Establishing a Budget in the New Year

Establishing Your 2023 Financial Goals

Posted on by Emily Promise

As we enter 2023, there is constant talk about New Year’s resolutions and how to make this year better than the last. If you’re looking to start this year on the right foot, your finances are a great place to start. Below are tips to get started and a few ideas to keep you on track. 

1. Examine your financial goals

Before you establish a budget, you should examine your financial goals. Start by making a list of your short-term goals (e.g., new car, vacation) and your long-term goals (e.g., your child’s college education, retirement). Next, ask yourself: How important is it for me to achieve this goal? How much will I need to save? Armed with a clear picture of your goals, you can work toward establishing a budget that can help you reach them. At Blakely Financial, we often refer to your needs, wants, and wishes. This method can work for retirement as well as monthly budgeting.

2. Identify your current monthly income and expenses

To develop a budget that is appropriate for your lifestyle, you’ll need to identify your current monthly income and expenses. You can jot the information down with a pen and paper, or you can use one of the many software programs available that are designed specifically for this purpose.

Start by adding up all of your income. In addition to your regular salary and wages, be sure to include other types of income, such as dividends, interest, and child support. Next, add up all of your expenses. To see where you have a choice in your spending, it helps to divide them into two categories: fixed expenses (e.g., housing, food, clothing, transportation) and discretionary expenses (e.g., entertainment, vacations, hobbies). You’ll also want to make sure that you have identified any out-of-pattern expenses, such as holiday gifts, car maintenance, home repair, and so on. To make sure that you’re not forgetting anything, it may help to look through canceled checks, credit card bills, and other receipts from the past year. Finally, as you list your expenses, it is important to remember your financial goals. Whenever possible, treat your goals as expenses and contribute toward them regularly.

3. Evaluate your budget

Once you’ve added up all of your income and expenses, compare the two totals. To get ahead, you should be spending less than you earn. If this is the case, you’re on the right track, and you need to look at how well you use your extra income. If you find yourself spending more than you earn, you’ll need to make some adjustments. Look at your expenses closely and cut down on your discretionary spending. And remember, if you do find yourself coming up short, don’t worry! All it will take is some determination and a little self-discipline, and you’ll eventually get it right.

4. Monitor your budget

You’ll need to monitor your budget periodically and make changes when necessary. But keep in mind that you don’t have to keep track of every penny that you spend. In fact, the less record-keeping you have to do, the easier it will be to stick to your budget. Above all, be flexible. Any budget that is too rigid is likely to fail. So be prepared for the unexpected (e.g., a leaky roof, failed car transmission).

Tips to help you stay on track

  • Involve the entire family: Agree on a budget up front and meet regularly to check your progress
  • Stay disciplined: Try to make budgeting a part of your daily routine
  • Start your new budget at a time when it will be easy to follow and stick with the plan (e.g., the beginning of the year, as opposed to right before the holidays)
  • Find a budgeting system that fits your needs (e.g., budgeting software)
  • Establish your needs, wants, and wishes.
  • Build rewards into your budget (e.g., eat out every other week)
  • Avoid using credit cards to pay for everyday expenses: It may seem like you’re spending less, but your credit card debt will continue to increase

Commonwealth Financial Network® or Blakely Financial does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.

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.

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.

Blakely Financial Investment Committee Updates

2022 Investment Committee Updates

Posted on by Emily Promise

As 2022 comes to a close, it is helpful to look back on the changes we have made to keep up with the market to help you continue on the path toward your financial goals. We hope this information gives you more insight into our investing philosophies and strategies, so you can be confident in your choice to work with Blakely Financial. 

What has the Investment Committee been doing to keep up with the volatile market?

Here at Blakely Financial, we base our decisions on the long-term future of your investments combined with your overall goals. Though it can be difficult to navigate a bear market, rational thinking and patience are the best ways to ensure the success of your investments over time. There were a number of changes this year but none of them would be considered radical adjustments or departures from our long-term investment objectives; the overall allocations of stocks to bonds remains largely the same and we don’t recommend any changes in that area. It’s very possible that the drawdown in the first half – and the ongoing choppiness today – is the market pricing in this economic weakness. By the time a recession arrives, if it ever does, the market may have already moved on.

How does the Investment Committee stay up-to-date on market trends?

We constantly monitor the economy, the markets, and your portfolios to assess how our chosen investments are performing, and decide if changes are necessary or prudent. These efforts constitute a significant part of our everyday work. We keep a close eye on even the slightest changes in trends so that you don’t have to! Though we do not use market timing as a strategy, we use all of the information we gather on a daily basis to inform any portfolio adjustments. 

What are some examples of portfolio adjustments? 

We recently executed a number of trades in early August, here is a high-level summary of those changes:

  • Decreased international developed exposure
  • Increased U.S. exposure in Large-Cap Growth and Value
  • Increased U.S. exposure in Mid-Cap Value
  • Marginally increased duration positioning
  • Adjusted credit exposure
  • Systematic Multi-Strategy fund replaced some fixed income.
  • Proportionately reduced all fixed-income funds; using alternative and multi-strategy funds as complement/substitute for fixed income.

 

Though nobody can predict for certain what 2023 has in store for us, here at Blakely Financial we are confident in the future of your investments, and the decisions we have made in the past year. 

 

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.

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.

Your Guide to Asset Protection in Estate Planning

Posted on by Emily Promise

You’re beginning to accumulate substantial wealth, but you worry about protecting it from future potential creditors. Whether your concern is for your personal assets or your business, various tools exist to keep your property safe from tax collectors, accident victims, health-care providers, credit card issuers, business creditors, and creditors of others.

To insulate your property from such claims, you’ll have to evaluate each tool in terms of your own situation. You may decide that insurance and a Declaration of Homestead may be sufficient protection for your home because your exposure to a claim is low. For high exposure, you may want to create a business entity or an offshore trust to shield your assets. Remember, no asset protection tool is guaranteed to work, and you may have to adjust your asset protection strategies as your situation or the laws change.

Liability insurance is your first and best line of defense

Liability insurance is at the top of any plan for asset protection. You should consider purchasing or increasing umbrella coverage on your homeowner’s policy. For business-related liability, purchase or increase your liability coverage under your business insurance policy. Generally, the cost of the premiums for this type of coverage is minimal compared to what you might be required to pay under a court judgment should you ever be sued.

A Declaration of Homestead protects the family residence

Your primary residence may be your most significant asset. State law determines the creditor and judgment protection afforded a residence by way of a Declaration of Homestead, which varies greatly from state to state. For example, a state may provide a complete exemption for a residence (i.e., its entire value), a limited exemption (e.g., up to $100,000), or an exemption under certain circumstances (e.g., a judgment for medical bills). A Declaration of Homestead is easy to file. You pay a small fee, fill out a simple form, and file it at the registry where your deed is recorded.

Dividing assets between spouses can limit exposure to potential liability

Perhaps you work in an occupation or business that exposes you to greater potential liability than your spouse’s job does. If so, it may be a good idea to divide assets between you so that you keep only the income and assets from your job, while your spouse takes sole ownership of your investments and other valuable assets. Generally, your creditors can reach only those assets that are in your name.

Business entities can provide two types of protection — shielding your personal assets from your business creditors and shielding business assets from your personal creditors

Consider using a corporation, limited partnership, or limited liability company (LLC) to operate the business. Such business entities shield the personal assets of the shareholders, limited partners, or LLC members from liabilities that arise from the business. The liability of these owners will be limited to the assets of the business.

Conversely, corporations, limited partnerships, and LLCs provide some protection from the personal creditors of a shareholder, limited partner, or member. In a corporation, a creditor of an individual owner is able to place a lien on, and eventually acquire, the shares of the debtor/shareholder, but would not have any rights greater than the rights conferred by the shares. In limited partnerships or LLCs, under most state laws, a creditor of a partner or member is entitled to obtain only a charging order with respect to the partner or member’s interest. The charging order gives the creditor the right to receive any distributions with respect to the interest. In all respects, the creditor is treated as a mere assignee and is not entitled to exercise any voting rights or other rights that the partner or member possessed.

Certain trusts can preserve trust assets from claims

People have used trusts to protect their assets for generations. The key to using a trust as an asset protection tool is that the trust must be irrevocable and become the owner of your property. Once given away, these assets are no longer yours and are not available to satisfy claims against you. To properly establish an asset protection trust, you must not keep any interest in the trust assets or control over the trust.

Trusts can also protect trust assets from potential creditors of the beneficiaries of the trust. The extent to which a beneficiary’s creditors can reach trust property depends on how much access the beneficiary has to the trust property. The more access the beneficiary has to the trust property, the more access the beneficiary’s creditors will have. Thus, the terms of the trust are critical.

There are many types of asset protection trusts, each having its own benefits and drawbacks. These trusts include:

  • Spendthrift trusts
  • Discretionary trusts
  • Support trusts
  • Personal trusts
  • Self-settled trusts

Since certain claims can pierce domestic protective trusts (e.g., claims by a spouse or child for support and state or federal claims), you can bolster your protection by placing the trust in a foreign jurisdiction. Offshore or foreign trusts are established under, or made subject to, the laws of another country (e.g., the Bahamas, the Cayman Islands, Bermuda, Belize, Jersey, Liechtenstein, and the Cook Islands) that does not generally honor judgments made in the United States.

A word about fraudulent transfers

The court will ignore transfers to an asset protection trust if:

  • A creditor’s claim arose before you made the transfer
  • You made the transfer with the intent to defraud a creditor
  • You incurred debts without a reasonable expectation of paying them

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.

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.

Understanding Your 401(k) - Key Terms to Know

Understanding Your 401(k) – Key Terms to Know

Posted on by Emily Promise

Planning for retirement is a key point of financial wellness- but how can you make the most of your 401(k) plan without understanding all of the vocabulary? We’ve compiled a list of the most common terms used in employer-sponsored retirement plans to help you invest with confidence. 

Types of Retirement Plans

401(k): A 401(k) plan is a company-sponsored retirement plan that eligible employees can contribute a portion of their salary into through a variety of investment options. In some instances, employers may also offer to make matching contributions. Many people find success in using both a 401(k) and a Roth IRA to fund their retirement. 

IRAs: IRAs are a type of savings account designed to help you put money away for retirement in a tax-advantaged way. Two of the most common types are traditional and Roth IRAs. Though they are quite similar, the key differences lie in the tax restrictions and in the fact that traditional IRA’s require minimum distributions starting at age 72. 

Types of 401(k) Contributions

By employees

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 2021, the maximum amount one can contribute was $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.

Roth contributions: 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.

Rollovers: After a job change, you have a few options for how to proceed with moving your retirement funds. This is a personal decision that depends on the employee offerings, read our blog to learn more about this transition! 

By employers

Matching: 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! 

Profit sharing contributions: Your employer may choose to make a voluntary contribution to your 401(k) plan called a profit share. This contribution is not based on how much you contribute and is completely voluntary on the part of your employer, meaning it can vary one year to the next. 

Investment Options

Most employer-sponsored plans give you a selection of mutual funds or other investments to choose from. Make your choices carefully. The right investment mix for your employer’s plan could be one of your keys to a comfortable retirement. That’s because over the long term, varying rates of return can make a big difference in the size of your balance.

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 financial tips we can provide towards your financial well-being.

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.

Blakely Financial Blog Images (2)

What You Need to Know About President Biden’s Student Debt Relief Plans

Posted on by Robert Blakely

On August 24, 2022, President Biden announced plans to offer student loan forgiveness to selected individuals. Below is a summary of the executive action that the Biden Administration plans to effectuate. It’s important to note that strong legal challenges to these provisions are likely because the changes are sought to be implemented without Congressional approval. Many of you or your family members may be affected, so the team at Blakely Financial wanted to update you with the information that we have so far.

Final Extension of Student Loan Repayment Moratorium

Borrowers won’t be required to make payments on their federal student loans through December 31, 2022. Borrowers haven’t been required to make student loan payments for more than two years thanks to pandemic-related relief for borrowers. No interest has accrued on federal student loans during the repayment pause. President Biden has indicated that this will be the final extension, and that borrowers will have to resume student loan repayments in early 2023.

Forgiveness of $10,000–$20,000 from Student Loan Balances

Individuals making less than $125,000 per year ($250,000 for married couples) in income will be eligible to have up to $10,000 of student loan debt canceled. For Pell Grant recipients, the cancellation amount may increase to $20,000. In most circumstances, the Department of Education will have individual income data to be able to automatically process the debt cancellation. In the event the government doesn’t have the relevant data, it anticipates providing applications in short order.

Proposed Changes to Existing Repayment System

The Biden Administration also announced proposed changes to income-based student loan repayment programs, whereby individuals could potentially be required to pay a lower proportion of their income to service their student loan debt. In addition, student loan forgiveness could be accelerated for some borrowers, depending on their student loan balances. The timeline or definitiveness of these changes is unclear; they have been announced as “proposed rules.”

Additional Resources

As with any government policy announcement, details are sparse; more information should be forthcoming in the coming days and weeks. For more information on debt relief actions, visit these resources:

You can also subscribe to updates directly from the Department of Education.

As always, we are here to help. Thank you for your continued trust and confidence.

 

Sincerely,

The Blakely Financial Team

 

These hyperlinks are being provided as a courtesy and are for informational purposes only. We make no representation as to the completeness or accuracy of information provided at these websites. 

Blakely Financial, Inc. is located at 1022 Hutton Lane Suite 109, High Point, NC 27262 and can be reached at 336-885-2530. Securities and Advisory Services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services are separate from and not offered through Commonwealth Financial Network®.

© 2022 Commonwealth Financial Network®

At What Age Should I Teach my Child about Money?

Posted on by Robert Blakely

There is no agreed-upon age to begin teaching your child about money. Some sources claim they should learn around age 7, while others say they need to be familiarized with the concepts at age 3. There are plenty of ways to teach your young child about money, especially in subtle ways that help them build the skills they will later need for financial literacy. 

Does a toddler really need to know about money?

As with many financial matters, our team at Blakely Financial believes the best advice is to start early. The sooner children learn financial fundamentals, the more likely they will become informed investors later in life. You never know; you may even benefit from learning alongside your child! If there are areas where you could use a refresher, take the time to review those topics as you approach them with your son or daughter. Remember to always consult with your financial advisor for guidance on investing and saving.

Obviously, a toddler will not understand the importance of a diverse portfolio. There are ways, however, to provide children with skills that will help them make smart financial decisions as they age. The first few years of life are critical for mental development. Toys that incorporate counting, such as building blocks, can help your child develop mathematical skills. Many young kids books also cover important topics like saving, spending, and the value of a dollar. 

How can I teach money skills to a young child?

Teaching your child about money doesn’t just mean describing how to create a budget. Forming a positive association with the concept of money is essential to future financial wellness. Be sure you and your partner don’t instill a negative association with money in your child by arguing about finances in front of them. Do not avoid the topic of money altogether, but be careful not to speak in such a way that could cause your child to associate negativity and stress with the concept of money. Your child could develop “money avoidance” tendencies where they resist acknowledging their finances or learning more about budgeting and saving. 

Consider using physical cash more often. If your young child only sees things being purchased with a card, they may take longer to understand the concept of money and the value of a dollar! 

Another way to indirectly teach a young child about money is to educate them on the difference between wants and needs. When you are very young, it can feel as if you need something that is actually just a want. Be sure to discuss the difference between these terms with your child so that they can learn to categorize the two by themselves. Talk about wants and needs in terms of the consequences they will face if they don’t get to have/do the thing they want or need. This line of thinking will help them prioritize their needs over wants; an essential skill for dealing with money later in life. 

How can these skills be expanded as my child grows?

The skills they learn (physical cash, wants vs needs, math) can be applied to their own purchases as they begin to earn and possess their own money. If your child receives money from family members for birthdays or holidays, consider how you will help them use it wisely! Maybe you will offer to hold on to some of the money for them or get them a piggy bank. Try to discuss what they would like to do with the money and make suggestions, but don’t go overboard!

Let them make mistakes. Though it may be tempting to take full control over your child’s money, you need to allow them the freedom to slip up. If, for instance, they immediately spend all of their birthday cash on a video game, they will learn the consequences when they want something else and don’t have any money left over. This is a far more effective lesson than simply being told what to do, so be sure to give your child a reasonable amount of freedom when it comes to spending! By the time they become a teenager, these skills will help them navigate the financial freedom of their first job and beyond. 

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

Raising Money-Smart Teens

Posted on by Emily Promise

As teens look forward to summer activities, especially those that cost money, the next few months might present an ideal opportunity to help them learn about earning, spending, and saving. Here are a few age-based tips.

Younger Teens

Recently, apps have proliferated to help parents teach tweens and teens basic money management skills. For example, some money apps allow parents to provide an allowance or pay their children for completing chores by transferring money to companion debit cards. Many offer education on the basics of investing. Others allow children to choose from a selection of charities for donations. Some even allow parents to track when and where debit-card transactions are processed and block specific retailers or types of businesses.

Most apps typically charge either a monthly or an annual fee (although some offer limited services for free), so it’s best to shop around and check reviews.

Older Teens

Many teens get their first real-life work experience during the summer months, presenting a variety of teachable moments.

Review payroll deductions together. A quick review can be an eye-opening education in deductions for federal and state income taxes and Social Security and Medicare taxes.

Open checking and savings accounts. Many banks allow teens to open a checking account with a parent co-signer. Encouraging teens to have a portion of their earnings automatically transferred to a companion savings account helps them learn the importance of “paying yourself first.” They might even be encouraged to write a small check or two to help cover the expenses they help incur, such as the Internet, cell phone, food, gas, or auto insurance.

Consider opening a Roth account. A teen with earned income could be eligible to contribute to a Roth IRA set up by a parent — a great way to introduce the concept of retirement saving. Because Roth contributions are made on an after-tax basis, they can be withdrawn at any time, for any reason.

Roth IRA earnings can be withdrawn free of taxes as long as the distribution is “qualified”; it occurs after a five-year holding period and the account holder reaches age 59½, dies, or becomes disabled. Nonqualified earnings distributions are taxed as ordinary income and subject to a 10% early-withdrawal penalty; however, if the account is held for at least five years, penalty-free distributions can be taken for a first-time home purchase and to help pay for college expenses, which may be helpful in young adulthood. (Regular income taxes will still apply.)

 

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.

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

EMILY PROMISE 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 Commonwealth Financial Network®