Mental Health Awareness Month: Tips for Financial Wellness
May is Mental Health Awareness Month. Financial wellness, or the lack of it, can contribute to your level of financial stress. Financial wellness has a number of definitions. Financial wellness is about managing your economic life and your economic well-being. This includes concepts such as: Spending within your means, having control over your day-to-day and monthly finances. Having the financial freedom to make choices about how you live your life. Having the capacity to absorb an unexpected financial hit. Getting on track to meet your long-term financial goals. Financial health and mental health There is a definite connection between your financial health and the state of your mental health. Research has shown that those experiencing financial difficulties often experience signs of depression and anxiety. On the flip side, those suffering from depression and anxiety may find it difficult to focus and succeed financially. How to improve your financial wellness Everyone’s situation is a little different, but in general here are some ways to help improve your overall financial wellness. Get a handle on your monthly spending, consider creating a budget to track your monthly spending and income. Create an emergency fund to save for unexpected expenses. Many experts suggest having six months’ worth of your regular and ongoing expenses in an account that is liquid and can be tapped easily if needed. Be sure that you have a list of when all monthly bills are due, things like your mortgage payment, credit card bills and any loan payments. That will help prevent late payments which can impact your credit. Make a plan to pay down debts. This might include credit card bills, student loans and other debt that might be keeping you from building wealth for your future. Get in the habit of planning for your financial future. This can include goals such as buying a home, saving for college expenses and retirement. Working with a financial advisor can help The issue of financial wellness spans the spectrum of age and wealth levels. A financial advisor can help with your financial wellness at all stages of your life and your career. Those who are starting out can benefit from a financial check-up with an advisor. Those who are further along in life and who have accumulated assets can benefit from the in-depth guidance that an advisor can provide. Meaghan McKenzie, Managing Director, Investments with Wedbush Securities in Seattle says, “Financial well-being starts where you are right now. You can’t tell where your financial well-being is until you meet with your financial advisor for a check-up. Just like going to your doctor or dentist. You don’t know if there is an imbalance. Be proactive, keep your financial advisor up-to-date with any changes that may affect your life. Plan to meet with your financial advisor every six months to a year.” Some specific areas where a financial advisor can help with financial wellness include: Providing an independent third-party view of your financial situation. Helping you articulate your financial goals. Reviewing your current situation relative to these financial goals and working with you to devise a plan to achieve them over time. Tax planning to help ensure that your investing and saving efforts are as tax-efficient as possible. Developing an investing strategy tied to your financial goals that takes your risk tolerance into account. Working with you to develop an estate plan to help ensure that your loved ones are taken care of in the event of your death. This can include ensuring a will is in place, that all beneficiary designations are current and that you have proper life insurance coverage. Developing a withdrawal plan once you reach retirement. The prospect of outliving your money in retirement can be a source of financial stress for many. These are just a few ways that a financial advisor can help you improve your financial wellness and reduce financial stress. Even those who have achieved a level of financial success can experience stress over their financial situation. Contact your Wedbush advisor to discuss your situation and your financial planning needs, especially if you haven’t met for a while. As Meghan McKenzie suggests, set up a regular schedule to meet with your advisor to discuss your situation and make sure that you are on track financially. You will likely find this helps reduce your overall financial stress level. Looking to build a financial plan based on your goals while considering market trends and risk factors? Click here to check out our approach to Wealth Management. Disclosure These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice.
How to Budget and Plan for Summer Vacation While Costs are Rising
Inflation is impacting virtually everything we spend our money on. Groceries and gas have been hard hit and so has the cost of travel. These rising costs can be a challenge in planning your summer vacation and other travel during the year. Rising travel costs Two areas that have shown among the highest levels of price increases in recent months are car rentals and lodging. Perhaps surprisingly, airfares in most cases are still at or below pre-pandemic levels. Even here the news is not all great as airfare costs are up double digits compared to the same period in 2021. Other travel related areas that have seen price increases are restaurants and many entertainment venues. And of course, driving vacations will be more expensive due to the rising cost of gasoline. A side impact of inflation are cutbacks or “shrinkflation.” This refers to things like some hotels cleaning rooms less often or only if the guest specifically requests the room be cleaned. There may be fewer towels in the room than in the past. Lobbies and public areas are typically unchanged, but the hotels are subtly cutting back on these other types of amenities to save money. Staffing issues can also come into play not only with hotels but with airlines and other travel related industries. In the case of airlines, travelers may notice a greater use of automation such as chat boxes in customer service where they could more easily speak with a human in the past. Travel demand is robust Despite any inflationary issues, demand for travel remains robust. According to recent data from travel site Kayak, online searches for domestic flights were up 78% over a year ago and searches for international flights were up 140%. After being cooped up at home for the better part of two years, people want to get back out there. Jack Johnson, Senior Vice President, Investments in Wedbush Securities Los Angeles office says, “Over the last couple of years due to the pandemic most of us put all, if not most, of our travel plans on hold. When planning a vacation, you will see that a lot of items have become more expensive due to inflation. I am recommending to clients to take into account that they spent little to nothing on travel and leisure over the last couple of years.” He adds, “Keep in mind that the cost may have gone up, but you have not been spending this money over the last two years, so you were forced to save up for this trip. If you look at it from a long-term perspective, you probably are still way ahead. Now, go out there and explore and have some fun.” How to budget and plan for your summer vacation in the face of rising costs You can’t do anything about rising costs and travel inflation, but you can help minimize the impact on your plans by doing some upfront planning. Here are a few things to consider. Plan ahead. Often booking hotels and other aspects of your trip in advance can save you money. A related consideration is supply and demand. If you wait until the last minute to book a hotel, your choices will likely be limited in many locations. All that might be left are the higher priced rooms. Book directly with the hotel, they will often be more flexible if you need to change your travel plans, including dates of stay, at the last minute. You want to avoid change or cancellation fees to the extent possible. Buy tickets early for flights. They can increase as the dates near and you might run into reduced availability to popular destinations. Besides a destination vacation, why not look at a “staycation” this year? If you live in a big city like Los Angeles, New York or Chicago, when was the last time you explored all of the neat things to do in your own city? Museums, live events, great restaurants and interesting neighborhoods are just some of the activities you can consider in these and many other cities around the county. If you live near areas that offer outdoor activities like hiking, get out and explore. You will get an escape from your daily routine and get some exercise too. A staycation is a great way to spend time with your kids and open their eyes to where they live. Even adults without kids can have some great experiences this way. You eliminate the costs and hassles of traveling someplace and you will still have a lot of fun. Maybe go away next year when things hopefully settle down a bit in terms of cost and demand. Whatever you decide to do this summer and for the rest of the year in terms of a vacation, planning and flexibility are keys to a successful vacation. Whatever you decide, take the time off and enjoy yourself, you deserve it. Looking to build a financial plan based on your goals while considering market trends and risk factors? Click here to check out our approach to Wealth Management. Disclosure These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice.
Student Debt: Why Borrowers Should Make a Plan for When Repayment Resumes for Federal Student Loans
The Biden administration recently extended the suspension in student loan repayments on federal loans until the end of August of 2022. This is the sixth extension since the pause was first introduced in March of 2022 as the impact of the pandemic first set in. This pause in payments also includes a pause in the interest accrual on these loan payments. The New York Federal Reserve estimates that this suspension has impacted some 37 million borrowers, saving them $195 billion in waived payments. For many Americans with student loan debt, this suspension of payments has helped them cope with reduced income and higher costs brought on by the pandemic. For some, the combination of higher prices due to inflation and job losses has been tough. The relief from student loan payments has been helpful to these folks. The suspension in payments also includes a suspension in collection efforts on delinquent loans and on the offset of Social Security payments for those with delinquent payments. The fact that there is a pause in the accrual of interest payments as well is a big plus. This means that the balance will not have grown for those borrowers who have decided not to make payments during this pause. Why you should make a plan for when repayments resume If you have taken advantage of this pause in payments over the past couple of years, your monthly budget may have gotten used to having this extra money to spend. Even if you were not hit by financial hardship as a result of the pandemic, it can still be an adjustment to have to make this monthly payment once payments resume. While there are some who want to cancel student loan debt for all or some borrowers, you can’t assume this will happen. Even if it does happen, we don’t know which borrowers will be covered. There might be income restrictions or other restrictions on eligibility for any forgiveness. While there is still time to prepare for the potential resumption in payments in September, you should start making adjustments to your budget. Perhaps you should consider setting aside the amount of your payment in a savings account to get used to having less to spend. Or consider diverting that amount to paying down other debts, such as a car loan or credit card balances, if applicable to your situation. Should you wait to pay your student loans? Another option is to resume making your student loan payments prior to the resumption in mandatory payments. This is a good way to reduce your debt even further than normal with the waiver of interest on the payments. Making payments now will result in a lower balance once payments resume and will save on your total interest costs over time. A recent article in the Wall Street Journal documented a number of success stories of student loan borrowers who continued to make their loan payments resulting in substantial reductions in their loan balance or, in some cases, even a full repayment of their loans. Another option is refinancing your student debt to a lower cost loan. There are a number of companies that specialize in refinancing student loan debt. If you decide to go this route, you might consider refinancing private student loans that are not eligible for the payment suspension and potential loan forgiveness if enacted by Congress at some point in the future. Refinancing these private loans could result in lower payments and lower interest rates, making it possible to pay off your balance sooner. Where does student loan forgiveness stand? As you might suspect, there is a division largely along party lines with the Democrats largely supporting forgiveness and Republicans largely against it. What form, if any, a student loan forgiveness program might take remains to be seen. Some proposals call for partial forgiveness, others have limits based on the borrower’s income. Since we don’t know what the future holds as far as any sort of student loan forgiveness or if the suspension of payments will be continued, this is the time to make a plan to deal with your student loan debt. For those who are able to do so, this is a great time to pay down this debt in conjunction with the suspension of the interest accrual on this debt. This will allow you to move past this debt and divert this money towards investing in your future sooner than you might have thought possible. Looking to build a financial plan based on your goals while considering market trends and risk factors? Click here to check out our approach to Wealth Management. Disclosure These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. The information presented here is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. The information in these materials may change at any time and without notice.