1. Women earn less money — Every woman reading this has already experienced this inequity, but now you have the facts to back up your suspicions. Ten years after college women make only 69% of what their male peers earn, even though they have slightly higher grade-point averages than men do in every major (even math and science). Women who attended highly selective colleges earn the same as men who attended minimally selective colleges, which shows that they lack compensation for their scholastic performance. On average, full-time, year-round, working women earn roughly 74% of what men earn.
What to do
Resourceful women have found ways to overcome this barrier, including becoming business owners, budgeting with an emphasis on saving money, networking with other women (including online websites such as womencorp.com), working harder and longer hours, getting higher education, doing extra part-time or home based jobs, and making education about financial matters a priority. There are countless other ways to overcome the barrier.
2. Women’s Health Insurance May Cost More — High-deductible health insurance plans cost women more. When an employer changes to a high-deductible plan, it costs on average $1000/year more for women than for men because of mammograms, the cervical-cancer vaccine, Pap tests, birth control, and pregnancy-related services. Generally, women also go to the doctor more regularly for preventative care.
What to do
While the inequity exists, women must make an extra effort to contribute the difference to a Health Savings Account or to other savings. Medical expenses have risen dramatically in the last several years, so regardless of the kind of health insurance (or lack thereof), women must work toward having a contingency fund for medical and other emergencies.
3. Women May Take ‘Time-outs’ from work — Women need these ‘time-outs’ to care for children or aging parents, which means less total earnings over time and less money automatically deposited into 401(k)’s. With the aging Baby Boomer population, many women will have taken time out to raise children and may need to take time out again to care for elderly parents. Caring for both ends of the age spectrum has historically fallen to women; this shows that women are strong, loving, and selfless caregivers.
What to do
Being aware of how these ‛time-outs’ can affect retirement can help women realize the urgency of continuing to contribute to a retirement account (or savings and investments) during times when they are not earning an income, and to save consistently while they are working.
4. Social Security Checks May be Lower for Women — Less money goes into Social Security accounts for women who earn less than men over their lifetimes, either because of the inequities in income between men and women or because women earn less when they take ‘time-outs’ from work.
What to do
Even if women make less money than men, being armed with the knowledge of how that may affect retirement should give women an extra incentive to contribute as much as they can into their retirement accounts, even if it means doing without some wants (not needs). Since no money counts towards Social Security during a ‘time-out,’ it makes contributing to an IRA during these times even more critical.
5. Women Live Longer than Men — A longer lifespan requires more years of living from retirement savings. The average lifespan for women is 79, compared to 72 for men. Therefore, women need to plan for at least seven more years of retirement. Living longer is a great problem to have; it just requires women to be aware of the need for more money in retirement as they create their financial plans.
What to do
If you are married, make sure you are contributing as much to your account (or more) as your husband contributes to his. If you are single, make sure your retirement plans are geared toward a longer lifespan.
6. Single Mothers are the Poorest in Retirement — Single mothers earn less than any other group (1/4 that of married couples with children and 3/5 that of single childless women).
What to do
With lower earnings and without the retirement benefits of a spouse, single mothers need to be especially savvy about finances in order to avoid poverty in retirement. Take every opportunity to educate yourself about your finances on everything from great budgeting habits to retirement planning. Get help from trusted advisors whenever possible. Also, many churches offer help and information for single parents, such as free financial counseling, free oil changes, free school supplies, etc.
7. Women May Make Less on their Investments — Women sometimes invest more conservatively than men, which can sometimes prevent them from seeing the higher rates of return that men who take more risks may see. Women are legitimately more afraid to make any mistakes with their finances, and they prefer fixed/steady returns, because making up for a mistake could take a lot longer for a woman who earns less than a man.
What to do
Seek help from trusted professionals and/or educate yourself about wise investing. If your company has a Human Resources department that oversees your 401(k), seek advice from them regarding your individual situation. Also, contribute the maximum amount to get matched contributions from your employer. Also, in divorce situations, seek advice from your attorney to make sure the investments will be divided evenly).
8. Women Are Not Well Represented in The Financial Planning Industry — The financial planning industry is dominated by males. Historically, very few women (or minorities for that matter) have gone into financial planning careers, so women’s issues may have been unintentionally under-represented. Also, women have historically been more intimidated about financial issues and may also have deferred to their husbands regarding financial decisions, leaving many questions unasked.
What to do
As a group, women need to become more educated about financial matters (including the inequities in retirement). The financial planning industry has begun to address the unique needs of women, but it will take some time for the industry as a whole to increase awareness. As with any other field, as women begin entering the financial planning industry, women’s issues will begin to enter the forefront.
Many aspects of financial matters are unique for women and should be taken into consideration in any financial plan. If you are able to afford a financial planner, make sure he/she is aware of the inequities women face and is making your financial plans accordingly. Do not be intimidated or afraid to ask questions. You may even take this article with you to make sure you are on the same page. If you are not able to afford a planner, consider doing the planning yourself online with eFinPLAN.com.
Laura D. Irwin is CFO and co-founder of eFinplan, LLC. She has a degree in Communication, but her life’s joy has been raising her two children. She can be reached at [email protected].
Kent E. Irwin is CEO and founder of eFinplan, LLC. He is also a Chartered Financial Consultant (ChFC), a Chartered Advisor in Philanthropy (CAP) and a Chartered Life Underwriter (CLU). He can be reached at [email protected]. For more information about eFinplan, visit eFinplan.com.
Copyright © 2007 eFinplan, LLC. All Rights Reserved.
]]>A very important part of personal financial planning is tax planning. This issue will help you Take the Mystery out of Personal Tax Planning by providing a financial planning perspective for your overall tax situation. We have also included reminders for some of the common areas of tax savings and some year-end tax savings tips. (This article does not include special issues that relate to business or self employment). This is to serve as a general guide to help you be more informed. We are not legal or tax advisors; consult your legal and tax advisors regarding these and other items that may apply to you.
1. Be aware of the different types of taxes
Many people are not aware of the different types of tax systems that we have.
– Income: Federal, State and Local
– Real estate tax
– Tax on Investments: Dividends, interest, capital gain, and passive income on stocks, bonds, mutual funds, investment real estate, savings accounts
– Estate or Inheritance Tax: Federal and state tax due on the estate or the inheritor
– Gift tax: tax on giver of large gifts
– Entitlement Tax: Social Security and Medicare (FICA), Federal Unemployment (FUTA)
– Self Employment and Business taxation
– Sales tax
2. Consider working with a Qualified Tax Professional
Tax planning can be complex for many people, therefore it may be wide to work with a trusted professional tax advisor.
Tax advisors not only prepare your taxes but can help make decisions that will affect your future. They can serve as advisors for a whole host of matters and they can represent you if you face the dreaded audit. Consider the following when selecting a tax professional:
– Local: Someone that you can easily meet with face to face
– Personable: Someone that you can interact with and who cares about you
– Proactive: Some tax preparers simply look at your previous year’s return and plug your current numbers into last year’s format. This of course assumes that last year’s preparer knew what he/she was doing. Try to find a preparer who knows your situation. A proactive professional will ask questions that will help you anticipate changes in your tax situation to help you properly plan in advance
– Reputable: Find a professional with a good reputation. Ask people you admire for a referral.
– Skilled: Look for an accountant that is very competent. You have to be smart to obtain a degree in accounting or law. Designations such as CPA (certified public accountant), EA (enrolled agent) and LLM (master’s degree in tax law) are not prerequisites but may be helpful.
Fees: Find out up front what they estimate their fees to be, what they charge to file electronically and whether they will represent you in an IRS audit. Avoid any ‘early refund’ ploys like the plague. Some well known tax preparation companies ‘provide’ this service which charges a hefty fee (with a lot of small print) and a lot of advertised hype for you to get your refund ‘early’. It is basically a high-interest loan. Just waiting for your actual refund will save you a lot of money.
3. Remember, tax preparation entails both art and science
The science involves the mathematical calculations that in most instances can be figured using calculators and software, and the infinite number of complex tax laws.
The art of tax planning comes into play with interpretation of any special circumstances. There are some areas of tax law that leave the government’s intentions unclear. No law can completely anticipate each person’s situation. You could call a dozen different IRS agents with the same question and get as many different answers. A proactive planner will research any unusual circumstances you may have and help you plan a course of action.
4. Doing Your Taxes Yourself?
I firmly believe in getting professional tax assistance. However, I realize that many people prefer to do their own taxes perhaps to save money, or perhaps you have cleaned up the mess a ‘store front’ preparer made of your taxes and vow to do your own. It has been my experience that often the professional tax preparer has saved us the amount of their fee in our taxes. The peace of mind that the taxes are done right has a value all its own.
However, people who have prepared their own taxes at least once with paper and pencil or software usually understand taxes much better. If you self-prepare your taxes, consider having a qualified accountant review them before you send them in. They may find things you or the software might have missed.
If you made less than $54,000 in 2007, you can file your taxes electronically for free through the irs.gov website http://www.irs.gov/efile/article/0,,id=118986,00.html . If you use tax software and wish to e-file be aware of the fees so that you can budget and compare prices properly. For example, a download of Turbo Tax Home and Business Federal and State for 2006 cost just under $100 and the filing fees cost around $30. Some States allow you to ‘phone in’ your State return for free.
If you choose to mail your return, go to your local post office and send it ‘Certified Return Receipt’ mail to insure that you have a record that the IRS received your paperwork. This will cost around $10 or less and will be worth every penny should the IRS contest the receipt of your return.
5. Keep great records
If you are already very organized you may read this section just to feel great about your organization skills or skip to the next section. If, however you have heard ‘get organized’ many times before and if you are the type of person who balks at the idea of organizing that mess of receipts just remember how you felt last year as tax time approached. You could become organized in only one evening of television viewing with the right tools. Arm yourself with an accordion file with at least 16 sections. Label them according to your situation or use the following sections: Auto, Bank, Business, Credit Cards, Dental, Medical, General Receipts, Grocery, Income, Insurance, Mortgage, Utilities, School, and Taxes. Now sort your receipts into these sections. Organizing your receipts will help you “Take the mystery out of…” your financial situation. Use a new accordion file every year. Not only will this help you find needed information, it will also help you find a receipt in case you need to return an item you purchased.
Your tax professional will be sending you a tax organizer the end of December or the first of January. In this organizer will be a list of information that you will need to gather. Becoming organized will help you easily gather the information you need to fill out your tax organizer.
6. Start early
Do not procrastinate on your taxes. Tax professionals are unbelievably busy January through April. Firms who prepare business returns also have a crazy March 15 business deadline. We are providing this information because we want you to get the most attention from your preparer during their craziest season. As soon as you get your organizer, begin gathering the needed papers. If you are only missing one or two pieces of information return the organizer to your accountant with a note that says what is missing. They will begin entering the information in their software. Try to get a January or February meeting with your accountant. These months are the best to meet because they will have more time to spend with you and they will be able to think proactively. If you are looking for a professional, start looking now.
Another reason to start early is allowing yourself time to look for records, ask financial institutions for copies of lost information, or calling investment companies for statements.
7. Judicious Paycheck Tax Withholding
Many people like to overpay their taxes, so that they get a nice refund in time for vacations or other wants and needs – Kind of like a forced savings. Overpaying taxes is like a giving the government an interest free loan of your money.
Good financial management involves developing savings habits so that you set aside money in an interest bearing account from each paycheck for future needs, wants and emergencies. This helps you to avoid using credit cards for those things and not having to wait until refund time. Secondly it then allows you to manage how much you can afford or are able to put into 401(k) plans at work. This accomplishes two things, first you are managing your money better and you are saving for retirement. Saving for retirement in tax deductible retirement plans like 401(k)s will also lower your taxes, enabling you to save more for retirement and everyday needs and wants.
If you want to lower the taxes that are being withheld from your paycheck, file a new W-4 form with your employer to claim an additional withholding. Make adjustment for getting married, divorced, having children and for increasing contributions to tax deductible retirement plans. Your accountant will help you estimate this.
8. Tax planning is not the tail that wags the dog
Taxes consume a large if not the largest single percentage of your income, therefore good financial planning should strive to lessen them, by whatever means possible as allowed by law.
However, tax planning is not the only core issue of good financial planning. Tax planning works in concert with your overall goals and your individual situation.
financial matters, but few know exactly what they are or how to overcome them. As we began researching women’s financial issues we were stunned at these inequities; therefore, we offer this information in the hope that women will become aware of these inequities and plan for their retirement accordingly.
1. Women earn less money — Every woman reading this has already experienced this inequity, but now you have the facts to back up your suspicions. Ten years after college women make only 69% of what their male peers earn, even though they have slightly higher grade-point averages than men do in every major (even math and science). Women who attended highly selective colleges earn the same as men who attended minimally selective colleges, which shows that they lack compensation for their scholastic performance. On average, full-time, year-round, working women earn roughly 74% of what men earn.
What to do
Resourceful women have found ways to overcome this barrier, including becoming business owners, budgeting with an emphasis on saving money, networking with other women (including online websites such as womencorp.com), working harder and longer hours, getting higher education, doing extra part-time or home based jobs, and making education about financial matters a priority. There are countless other ways to overcome the barrier.
2. Women’s Health Insurance May Cost More — High-deductible health insurance plans cost women more. When an employer changes to a high-deductible plan, it costs on average $1000/year more for women than for men because of mammograms, the cervical-cancer vaccine, Pap tests, birth control, and pregnancy-related services. Generally, women also go to the doctor more regularly for preventative care.
What to do
While the inequity exists, women must make an extra effort to contribute the difference to a Health Savings Account or to other savings. Medical expenses have risen dramatically in the last several years, so regardless of the kind of health insurance (or lack thereof), women must work toward having a contingency fund for medical and other emergencies.
3. Women May Take ‘Time-outs’ from work — Women need these ‘time-outs’ to care for children or aging parents, which means less total earnings over time and less money automatically deposited into 401(k)’s. With the aging Baby Boomer population, many women will have taken time out to raise children and may need to take time out again to care for elderly parents. Caring for both ends of the age spectrum has historically fallen to women; this shows that women are strong, loving, and selfless caregivers.
What to do
Being aware of how these ‛time-outs’ can affect retirement can help women realize the urgency of continuing to contribute to a retirement account (or savings and investments) during times when they are not earning an income, and to save consistently while they are working.
4. Social Security Checks May be Lower for Women — Less money goes into Social Security accounts for women who earn less than men over their lifetimes, either because of the inequities in income between men and women or because women earn less when they take ‘time-outs’ from work.
What to do
Even if women make less money than men, being armed with the knowledge of how that may affect retirement should give women an extra incentive to contribute as much as they can into their retirement accounts, even if it means doing without some wants (not needs). Since no money counts towards Social Security during a ‘time-out,’ it makes contributing to an IRA during these times even more critical.
5. Women Live Longer than Men — A longer lifespan requires more years of living from retirement savings. The average lifespan for women is 79, compared to 72 for men. Therefore, women need to plan for at least seven more years of retirement. Living longer is a great problem to have; it just requires women to be aware of the need for more money in retirement as they create their financial plans.
What to do
If you are married, make sure you are contributing as much to your account (or more) as your husband contributes to his. If you are single, make sure your retirement plans are geared toward a longer lifespan.
6. Single Mothers are the Poorest in Retirement — Single mothers earn less than any other group (1/4 that of married couples with children and 3/5 that of single childless women).
What to do
With lower earnings and without the retirement benefits of a spouse, single mothers need to be especially savvy about finances in order to avoid poverty in retirement. Take every opportunity to educate yourself about your finances on everything from great budgeting habits to retirement planning. Get help from trusted advisors whenever possible. Also, many churches offer help and information for single parents, such as free financial counseling, free oil changes, free school supplies, etc.
7. Women May Make Less on their Investments — Women sometimes invest more conservatively than men, which can sometimes prevent them from seeing the higher rates of return that men who take more risks may see. Women are legitimately more afraid to make any mistakes with their finances, and they prefer fixed/steady returns, because making up for a mistake could take a lot longer for a woman who earns less than a man.
What to do
Seek help from trusted professionals and/or educate yourself about wise investing. If your company has a Human Resources department that oversees your 401(k), seek advice from them regarding your individual situation. Also, contribute the maximum amount to get matched contributions from your employer. Also, in divorce situations, seek advice from your attorney to make sure the investments will be divided evenly).
8. Women Are Not Well Represented in The Financial Planning Industry — The financial planning industry is dominated by males. Historically, very few women (or minorities for that matter) have gone into financial planning careers, so women’s issues may have been unintentionally under-represented. Also, women have historically been more intimidated about financial issues and may also have deferred to their husbands regarding financial decisions, leaving many questions unasked.
What to do
As a group, women need to become more educated about financial matters (including the inequities in retirement). The financial planning industry has begun to address the unique needs of women, but it will take some time for the industry as a whole to increase awareness. As with any other field, as women begin entering the financial planning industry, women’s issues will begin to enter the forefront.
Many aspects of financial matters are unique for women and should be taken into consideration in any financial plan. If you are able to afford a financial planner, make sure he/she is aware of the inequities women face and is making your financial plans accordingly. Do not be intimidated or afraid to ask questions. You may even take this article with you to make sure you are on the same page. If you are not able to afford a planner, consider doing the planning yourself online with eFinPLAN.com.
Laura D. Irwin is CFO and co-founder of eFinplan, LLC. She has a degree in Communication, but her life’s joy has been raising her two children. She can be reached at [email protected].
Kent E. Irwin is CEO and founder of eFinplan, LLC. He is also a Chartered Financial Consultant (ChFC), a Chartered Advisor in Philanthropy (CAP) and a Chartered Life Underwriter (CLU). He can be reached at [email protected]. For more information about eFinplan, visit eFinplan.com.
Copyright © 2007 eFinplan, LLC. All Rights Reserved.
]]>Talk show guests are in short supply. Reporters often find it difficult to track down the people they need to comment on a particular story. And because newspapers sell more ads in December, that means more news pages to fill.
Here are ways your publicity effort can capitalize on the holidays:
Mark your calendar now to set aside some time before and after Christmas to pitch.
Publicity expert Joan Stewart, The Publicity Hound, publishes “The Publicity Hound’s Tips of the Week,” a free ezine that shows you how to generate thousands of dollars in free online and offline publicity. Subscribe at http://www.PublicityHound.com and receive free the handy checklist “89 Reasons to Send a Press Release.” She blogs at http://www.PublicityHound.net. Contact her at 262-284-7451 or at [email protected]
]]>We are now beginning to see what happens when an entire nation spends more than they make. The average savings rate for many years has been poor, and it is currently the lowest since the Great Depression. This is evidenced by high home foreclosures (up 90% May ’07 versus May ’06). Household debt has risen 80% since 1990 (adjusted for inflation).
In addition, a large percentage of baby boomers have not saved enough for retirement.
Most people struggle to make great financial decisions and prepare for financial difficulty. Economic forces have exacerbated this: Inflated costs of heath care, gasoline, and loan interest rates, jobs moving overseas and we are not making as much money as our parents (did when adjusted for inflation).
Inaction may deplete your savings and increase your debt to the breaking point. However if you follow these 5 steps, you will not only prevent financial disaster, but you will achieve your financial dreams.
Step #1 Get a financial plan now
A comprehensive financial plan will be the cornerstone to correcting mistakes and charting the course to your goals. Antoine de Saint-Exupery was correct when he said that “A goal without a plan is just a wish.” Begin planning today and you will achieve your dreams.
Starting a financial plan has never been easier. You have several options:
If you are in the upper income bracket and or have a sizable investment portfolio consider engaging a fee-based credentialed financial planner. The best ones are equipped with the latest software, knowledgeable and are worth their weight in gold. To find a good one ask friends, family or your other advisors for names of good ones. Fees usually start out around $5,000 per year.
If you are not wealthy, some planners will provide a financial plan coupled a commission or fee product.
eFinplan.com provides consumer web based comprehensive financial planning software for only $149. Unlike most internet calculators, this platform covers virtually every area of financial planning. Running the software on your own is very educational and you can perform multiple what-if scenarios to determine how the overall plan would change with each decision.
Step #2 Assemble a team of trusted professional advisors
You can’t go at it alone. The team of financial, investment, tax, legal and insurance advisors that you assemble are essential to helping you implement your plan. There are many excellent advisors of these professions that enjoy helping people. Ask friends and relatives for referrals, and begin a relationship that will help you for years to come. These advisors will become good friends and will be there to answer your questions, plan, and avoid traps along the way.
Step #3 Learn financial fundamentals
Are you skilled in budgeting, debt management, taxes and investing? Most people lack these skills since they were never taught them at home or in school. Everyone should be skilled in the basics so that they can make better decsions and avoid being scammed. There is a lot of learning material available on the internet, TV, in the bookstore and classes that are offered at a low cost to the public. You will find the information more easily to understand than you thought possible, and you can easily master the fundamentals.
Step #4 Implement and Take Control
Having a written plan to implement, trusted advisors helping you and knowledge is empowering. With this new power you can take control of your present condition, begin achieving goals because you are making great decisions.
Step #5 Give to philanthropy
Every other financial health checklist neglects this important element. Some believe that financial success leads to less stress, but research indicates the opposite—people that are less stressed actually achieve more success. People who contribute resources, such as time and money, are generally happier. Contribute today—don’t wait until someday when you think you might have abundance. Giving will not only help others, but you will appreciate the by-products of this generosity: less stress, more happiness and greater success.
Don’t become a financial statistic, act now and follow these 5 steps to financial success.
Kent E. Irwin is the founder of eFinplan.com which provides comprehensive financial planning software and educational information to consumers. See eFinplan.com for more information.
Want Financial Freedom?
If you are ready to enjoy the good life where you don’t have to worry about whether you can pay the monthly bills, send the kids to college or retire then here’s good news.
You can be financially free!
It starts with a step by step plan, the roadmap to wealth. It’s your chance to have sure-fire freedom once and for all from the life of living paycheck to paycheck or wondering if you’ll have to work for the rest of your life. And wouldn’t it be nice to buy that special car, vacation or retirement home? Well financial freedom is within your reach. Best of all it doesn’t require you pay a financial planner thousands of dollars to get you on the right track.
CLICK HERE TO GET THE INFO! |
Get More Tips, Strategies And Articles for Financial Planning HERE
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