Updated: Jan 4, 2020
(Hold on! Have you listened to the audio version yet? Here it is for you!)
Where you are in your financial journey?
It’s a good idea to take stock of your situation and know where you stand! In today’s blog, we’ll get you started on the way to financial freedom.
That includes the folks at Sonoma State University. I really appreciate the support up at Sonoma State. I'm going to talk especially about your benefits!
As always, I’ll include a disclaimer.
Sometimes dealing with new concepts can be intimidating. There are so many decisions you need to make around money, benefits, and investing, so please don’t hesitate to reach out to a fee-only financial planner if you need help.
Let’s jump in and look at your benefits!
Let’s start with the basics.
The first step is making sure that you have your emergency fund. That is always around three to six months of your living expenses, make sure those are sitting in a high yield savings account. Look for a high yield savings account that can get you near 2%.
You want that money to be easy to reach.
How much do you know about investing money?
This is a very technical topic, so my advice is to be very careful about how you handle it. We’ll jump into tax-loss harvesting.
If you have some items in your investments that have made a lot of money (this isn't taxable accounts), and you have some that have lost money, you might want to sell some of these things to offset the other.
This is also a time to see if a Roth conversion makes sense. You take money that you have in an IRA, and you convert it to a Roth IRA. That means you will pay the taxes today, and then it sits as a Roth.
When you go to use it later, you're not paying taxes on the money that you're pulling out, because you’ve already paid for it.
This makes sense for people who are in lower tax brackets today, and who have time for it to grow. You’ll save money because you might be in higher tax brackets later.
Right now, because of the tax laws, people tend to be in a little bit lower bracket today. This is another very technical topic.
Once again, you have to be very careful because if you have money in IRAs, or anything else, the full amount of money will be considered, not just the amount that you converted.
I’ll reiterate that you may need to seek out the advice of a professional or have them double-check any choices you’ve made.
Are you or your significant other eligible for a Health Savings Account?
The best idea is to maximize it. We want to get as much money into this health savings account as possible by the end of the year.
That includes the flexible spending account or a dependent care account.
Do not forget to empty these accounts before they lapse. There are some accounts that lapse at the end of the year, and some have a grace period.
Make sure that you sent in all your receipts, and you've received all your reimbursements.
What if you have money in the account?
Go to FSAstore.com to see all the eligible products. I would say the same thing for your dependent care account. Make sure that you keep your receipts and get all your reimbursements.
Don’t let your money go to waste!
Sonoma State University
Where do you want to save your money?
The good thing is that you have options. There are the 401(k), 403(b) or 457 options.
The 403(b) is run through fidelity net benefits
The 457 and 401(k) are available nationwide
You’ll need to look at each to determine which one you're going to select.
The 403(b) has a Roth option. Keep in mind that you don't have to roll money out of these accounts.
It’s always a good idea to weigh the pros and cons of why you're doing what you're doing. It will help you build a rationale for the move you make!
Are you a commuter?
You can make pre-tax contributions if you're commuting. An example is when you take the train or bus to work.
Do you need legal advice?
MetLaw is a benefit that offers access to different types of legal advice and document creation.
However, before you sign up for this service make sure they have someone qualified to do a specific type of work. An example would be choosing someone who specializes in estate document creation and trust documents.
Another great benefit is the discounts available to theme parks, aquariums, and specific companies.
Sonoma, if you're reading this and have additional questions, reach out and contact me.
Do you have any comments or questions about your benefits? Leave a comment below!
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Or... if you find yourself in need of someone who can help you navigate your way through your financial plan, check me out at Wealth of Confidence!
I'd love to help you.