What Is Your True Purpose for Money?

Posted on January 24, 2012 by acollins

It seems like everyone wants more money. Even the wealthiest people in the world are striving to make more of it. But can you really gain your own personal wealth just chasing the almighty dollar? A better goal may be to have a true purpose behind your “why” for wanting to increase your bottom line.

When you have a reason, you have a foundation. Without it, you’re moving forward with no goal in mind. Sure, you might get to your desired destination, but how much longer will it take you to get there? Author Michelle Matson, in her book, calls this your True Purpose for Money. She suggests that you start with this question: “If I were at the end of my life, what would have to have happened financially for me to be able to say I have lived a life without regret?”

Once you delve down and determine what your life looked like from a future perspective, you’ll have better insight into what really drives you to succeed financially. Like any goal-setting exercise, you are starting at the end and working backwards. This will create your life goals.

Next, ask yourself, “What are the underlying values and priorities that each of my life goals represents?” Values may include love, happiness, security, confidence, faith, honor, or freedom. Consider also how accomplishing your life goals and staying in integrity with your values makes you feel. Get into your core.

To pull it all together, finish this sentence: “My True Purpose for Money is…” with one or two value words that call to you. You might want to tie them to an action, such as “…to create a life without limits.” Remember, there are no wrong answers here.

When you have purpose, you’ll find that you have a guiding light for how to make your fiscal choices moving forward. And that just might make all the difference.

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Financial Planning for Later-Life Marriages

Posted on January 5, 2012 by acollins

One of the benefits of marriage is co-mingling finances (leading to tax breaks), but that’s also one of the challenges—especially if you’re marrying later in life after you’ve established yourself. At 20 or 25, you probably didn’t own a whole bunch of “stuff,” but at 40 or 45, you may have a home, car, and children to consider when heading into a new marriage. Some pre-planning can save you a lot of headache down the road.

The first thing you’ll want to do is take stock of what each of you currently owns. Those might be hard assets, such as homes, automobiles, and stocks, but may also be retirement funds and even life insurance policies. Next, look at each of your debts: home and auto loans, child support and alimony payments, and insurance premiums. Once you know where each of you stands, you can have an informed conversation of which medical insurance coverage to choose and how you’d like your estates to be disbursed when you pass on.

Speaking of passing on, marriage provides the opportunity to make changes in your living will, power of attorney, and beneficiaries of insurance coverage. If one or both parties enter the arrangement with a number of assets, children, or other reasons to be wary, a pre-nuptial agreement may be appropriate.

Keep in mind that, while you are entitled to bequeath your IRA to anyone of your choosing, your spouse is entitled to half of all non-IRA retirement funds in the event of your death—unless he or she signs away those rights. This can get even stickier for a second or third marriage, especially if retirement benefits from previous partnerships are involved.

If you are planning a walk down the aisle, speaking to your financial team, which should include a financial advisor, CPA, and attorney, is a vital component of pre-marriage planning to be sure that both of you and your children are protected should one of you pass away or the union dissolve. Don’t let your initial joy be dampened by poor planning.

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Tax Planning: An Integral Component of Financial Planning

Posted on December 8, 2011 by acollins

It’s that time of year: the time of year when we look to make charitable donations. They certainly help us feel good during the holiday season, and they can make a difference in our tax filing for 2011. But it’s important to be smart in choosing the recipients of your donations and to remember the tax rules.

If you have to pay state tax, wouldn’t you feel better having a say in where it goes? In Arizona, the Charitable Contributions Tax Credit allows residents to donate money directly to a school or nonprofit organization and receive a direct credit for the contribution. The maximum donation is $200 for an individual and $400 for a married couple filing jointly. Donations have to be sent by December 31. A list of eligible charitable organizations is available online.

If you’re an investor, you can donate investments that have appreciated instead of directly giving cash. Donors can deduct the fair value of the asset from their tax bill and avoid the capital-gains tax that would have come from selling the investment. This type of donation is applicable to stocks, mutual funds, real estate, bonds, and some other appreciated assets.

Tax planning is a key component of a strong financial plan, and if you do a lot of charitable giving, you may want to consider a donor-advised fund. The fund itself is considered a charity, so you will receive the full deduction in the first year, giving you some time to choose your individual charities in forthcoming years.

If you have questions about how to take advantage of either the Arizona Charitable Contributions Tax Credit, set up a donor-advised fund, or make some last-minute donations to help with your tax and financial planning, contact us at 602-277-0611 or info@cambridgewm.com. We’re happy to help you finish 2011 on a high note and start 2012 off right.

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