Tax planning is like exercise: You may not always be motivated to do it, but once you’re tackled the task, you feel so much better. (And fortunately for everyone, you don’t need to do tax planning several times a week, consistently, to see a lasting benefit.) I’ve asked Matt Grodin, a San Mateo certified public accountant, to answer three taxing questions:
What are some of key changes in the federal tax law that will affect Bay Area taxpayers?
There’s a $10,000 limit on deductions for state taxes and a $750,000 limit for deductions on new mortgage debt. Previously, home buyers could deduct up to $1 million. As you know, home prices in the Bay Area keep rising to new heights—the median home price hit $820,000 in April—so any restriction on mortgage deductions isn’t exactly good news. (more…)
Not that long ago, retirement meant being put out to pasture, with long days punctuated by occasional games of golf and bridge. But today, with lengthening life expectancies and dwindling pensions, many Americans are looking to retirement as an opportunity to start a new business. “We’ve never before seen so many seniors who are this active and doing so many things,” says Lisa Gundry, a professor of management at DePaul University’s Kellstadt Graduate School, who has worked with seniors in DePaul’s business incubator program. “They’ve accumulated enough financial security so that they are better able to take a risk on a business than someone who is younger and has a mortgage and small children.” (more…)
Our attitudes and beliefs about money have their roots in value-laden messages we have picked up along life’s journey. These money messages are not only clothed in the words of others, but in their actions as well.
The following paragraphs include a series of questions designed to jog your money memories. To gain insight into your financial beliefs and behaviors, look first to your childhood experiences.
In your home growing up, was there an atmosphere of plenty or scarcity? How did your parents and grandparents demonstrate their money beliefs? Did the adults in your life demonstrate responsible or irresponsible money management behavior? (more…)
For many years, the prevailing theory was that individuals have a genetically determined happiness set point.
In other words, scientists believed that each person could temporarily experience more happiness (depending on circumstances, relationships, and life events), but would then slide back to his or her “pre-programmed” set point. In fact, less than two decades ago, one researcher was quoted as saying, “It may be that trying to be happier is as futile as trying to be taller.” (more…)
As parents, we want to shield our children from so many of the harsh realities of the adult world. Sometimes we try to “protect” our kids from other facts, too, even benign ones. Many parents resist or avoid telling their children what they earn or how much money they have saved for college.
Some parents feel uncomfortable revealing this information. Perhaps they fear they might be judged or questioned. Maybe they wish they had tucked away more. If teens have their sights set on an expensive college, their parents may be reluctant to explain that a school is financially out of reach. (more…)
Getting people to feel less stressed when thinking, talking, and making decisions about money is the goal of Financial Therapy; a combination of psychology and financial advice that is focused on developing healthy relationships with money.
While a financial counselor usually comes in at a point of crisis—like bankruptcy or intractable financial conflicts between spouses—the role of a financial therapist is to help us understand the stories we tell ourselves, true or not, about money. These “money scripts” usually reside outside of our consciousness, and act as an invisible force guiding our thoughts, feelings, and decisions about money. (more…)
In most parts of the country, buying a home is a rite of passage for a young or newly married couple or someone who has settled into a career.
The U.S. Census Bureau reports that at the end of last year, 64.2 percent of Americans were homeowners, but that percentage varies dramatically by age. Of people age 65 and older, 79.2 percent owned homes, but among those under 35, slightly more than one in three—36 percent—were homeowners.
If you live in the Bay Area, you might be chuckling at those statistics. Housing prices in this region are stratospheric and steadily increasing. Between the fall of 2016 and the fall of 2017, the median price for a single-family Bay Area home jumped 15 percent, to $825,000, a new high, according to CoreLogic. The dream of home ownership remains out of reach for many people, even when couples are each making six-figure incomes. (more…)
Is it possible to discuss spending and saving without mentioning the word “budget”?
Many people—and plenty of so-called financial experts—insist you can’t pay your bills, set enough money aside for retirement or understand your spending unless you create and follow a strict budget.
Their rationale is that when you see where your money goes, you can then trim your spending and siphon off cash for fun stuff like vacations or obligations like paying off your mortgage or credit cards. (more…)
In her blog “Good Thinking,” research psychologist Denise Cummins explains why the topic of allowances raises such a high level of concern and confusion for parents.
Allowances are powerful things. They are a child’s first exposure to the power of personal choice that financial means can bring. It is for this very reason that parents approach it with a mixture of fear and trepidation.
To some, it is the quintessential way to teach children financial literacy as well as character traits like patience, thrift and generosity. To others, however, allowances are dangerous things that take away parental power and authority, and teach nothing more than greed. (more…)
Learning good money management habits and basic financial knowledge will help to increase your confidence in making good financial decisions. But, more importantly, a growing understanding of the underlying emotional motivators that shape your attitudes and behaviors will give you the extra edge you need to achieve your financial and life goals.
Therefore, rather than using income and net worth as a measure of your financial health, take a more holistic approach by evaluating your progress in these key components of “true wealth”—Recognition, Resilience, Resourcefulness, Relationships, and Wisdom. (more…)