In 2022, the US inflation rate was the highest it had been since the early 1980s (1). This puts a lot of strain on the income Americans are earning. Getting a raise, especially a significant one, can go a long way to helping pay for those increases in goods and services. In some cases, it can also be as much of a curse as a blessing. Here are some smart steps you can take to make the most of your raise.
Two things in life are certain: death and taxes, but have you ever considered the impact your death has on the taxability of your things? Depending on how you are saving, you could potentially be passing a tax obligation onto your heirs.
Let's face it; no one enjoys paying taxes. Often I’m asked about managing money in a way that avoids taxes altogether. I’m here to tell you that there is no secret sauce. I think that people have the wrong idea about their taxes. It is not a matter of avoiding them altogether but rather paying them at the lowest rate possible. I’d like to put a few tax-planning strategies on your radar for when tax planning season comes around. This is by no means a comprehensive list, but rather a few key concepts that I think are often overlooked:
Anyone can seem like a good financial advisor when markets are doing well. The expectation investors have when investing in capital markets is to make money, so when expectations are easy to meet, the bar tends to be set pretty low. However, it’s downturns in the markets that separate great financial advisors from mediocre ones. It’s times like these when people may wonder what their financial advisor is doing during this bear market.
There are a number of ways to describe the stock market when it is down: Bear Market, Correction, Bubble Bursting, Oversold, or Downward Volatility. But have you ever heard the word “opportunity” in unison with the former? Of course, what I am talking about is Tax Loss Harvesting.
2022 has been a challenging year! We’ve seen markets hit lows with virtually every market segment falling in value, including bonds. Inflation skyrocketed, hitting rates the US has not seen in 30 years. The most recent Consumer Price Index numbers were released this morning, reflecting a 7.1% inflation rate for the United States through November(1). This comes as reassuring news, as many economists were expecting higher numbers to close out the year. Albeit, 7.1% is still mighty high.
There is no doubt that the rapidly growing inflation rates seen around the world in 2022 have severely impacted Americans. September 2022 numbers show the US inflation rate hovering at about 8.2% for the previous 12 months(1) as American families struggle to keep up with rising costs of basic needs like food and gas. The IRS recently released adjustments for over 60 tax provisions in response to the overwhelming inflation rates...
Found money is really so much more disposable than earned money. It really is easier to spend “found” money on something fun, whereas earned money feels like it must be treated with extreme prudence. A tax refund can really feel like found money and often it gets treated as such. I know many friends, clients, and even myself have spent tax refunds on fun purchases like electronics and vacations. I get it. It's nice to feel like once a year you're getting a little windfall that you can spend on something fun, but I’m here to tell you there are good reasons to not want a refund.