How do we honor the Lord with our stewardship at Christmas and as we plan for the new year ahead? Here are seven year-end financial moves to consider.
Rest your heart. Contentment grows as we trust God’s leading. I’ve found that Galatians 5:16 presents a wise heart posture for biblical stewardship as Paul tells us to “walk by the Spirit.” As the Spirit graciously leads, we remember that God owns it all, and He honors faithfulness.
Plan and monitor your financial journey. Set goals and practice sound giving, saving, spending, and investing strategies. User-friendly financial software packages like Quicken and Ramsey Solutions can support your journey. Likewise, the expertise of a competent and godly financial advisor or Certified Financial Planner (CFP®) may be beneficial.
Prioritize charitable gifts. Besides being generous and cheerful while funding the Great Commission, you should be able to deduct the amount of such contributions on your tax returns if you itemize deductions.
Evaluate your investments. Ponder what types of companies are owned in your portfolio. Do they appropriately honor your values? Also, this is an opportune time to assess the performance of your portfolios. For example, for investors who meet regulatory requirements, allocating a portion of investments to alternative assets such as private real estate, private equity, and private debt may offer new opportunities for diversification and higher returns.
Open and use a Donor Advised Fund (DAF). A DAF with an organization such as the National Christian Foundation of Alabama may simplify and organize your charitable giving. Consider donating appreciated assets like stocks, real estate, and business interests.
“Bunch” your charitable contributions for tax savings purposes. “Bunching” allows you to make multiple years of gifts into a DAF in a year, itemize those gifts, and then grant those contributions to charities over successive years. In the subsequent years, you should be able to use the standard deduction of $27,700 for couples or $13,850 for singles.
Consider tax-loss harvesting. If you have losses in your taxable investment portfolio, you may “harvest” (sell) these to offset recognized capital gains this year. This tax strategy can yield attractive results, though there are specific IRS rules to be followed.
May your year-end moves take you along a joy-filled path of stewardship!
BMSS Wesson Wealth Solutions offers comprehensive financial planning and investment strategies aligned with your values. We specialize in serving business owners, corporate executives, and families stewarding earnings or inherited wealth. Please feel free to contact me to discuss your interest in our services. Qualifying portfolios may be eligible for a review at no cost.
Watch this video to learn more about year-end financial moves.
The issue of downsizing is one that many retirees will consider. If you have children, and they’ve grown and left the home, you might find yourself with more space than you really need. Of course, this doesn’t necessarily mean you must pack up and scale down yourself. You might love your home and neighborhood and see no reason to go. But if you’re open to a change, you could find that moving to a smaller house, a condo or an apartment may make sense for you. Let’s consider some of the advantages of downsizing.
You could save money. Moving to a smaller space could lower your utility bills and upkeep costs.
You could save effort. A smaller home will mean less maintenance and cleaning.
You could de-clutter. Over the years, most of us accumulate more possessions than we really need. Downsizing gives you a chance to de-clutter.
You could make money.If you’ve had your home for many years, it’s certainly possible that it’s worth more- perhaps a great deal more- than what you paid for it. So, when you sell it, you could pocket a lot of money- possibly without being taxed on the gains. Generally, if you’ve lived in your home for at least two years in the five-year period before you sold it, you can exclude $250,000 of capital gains, if you’re single, or $500,000 if you’re married and file taxes jointly. (You’ll want to consult with your tax advisor, though, before selling your home, to ensure you’re eligible for the exclusion, especially if you do own multiple homes. Issues can arise in connection with determining one’s “primary” residence.)
While downsizing does offer some potentially big benefits, it can also entail some drawbacks. First, it’s possible that your home might not be worth as much as you had hoped, which means you won’t clear as much money from the sale as you anticipated. Also, if you still were paying off a mortgage on your bigger home, you may have been deducting the interest payments on your taxes — a deduction that might be reduced or lost to you if you purchase a less-expensive condo or become a renter. Besides these financial factors, there’s the ordinary hassle of packing and moving.
So, as you can see, you’ll need to weigh a variety of financial, practical, and emotional issues when deciding whether to downsize. You will also want to communicate your thoughts to grown children or other family members who may someday have reason to be involved in your living space. In short, it’s a big decision- so give it the attention it deserves.
Watch the video above to learn more about the benefits of downsizing.
If you have teenagers who may be starting to work at part-time jobs, now may be a great time to introduce them to investing — and one place to begin might be a Roth IRA.
What is a Roth IRA? A Roth IRA is a popular retirement savings vehicle. Its earnings can grow federally tax-free, provided withdrawals aren’t taken until the investor is at least 59½ and has had the account for five or more years. But because a Roth IRA is funded with after-tax dollars, contributions can be withdrawn at any time, penalty-free, to pay for any expenses including college. Roth IRA earnings can also be used to help pay for college, although these withdrawals will be taxable. However, if a child is the account owner, a lower tax bracket will likely apply.
In 2023, up to $6,500 per year can go into your teenager’s Roth IRA, as long as the amount contributed doesn’t exceed the amount of their taxable compensation for the year. And your child doesn’t have to put all the money in. You and the child’s grandparents can also contribute. In fact, you might want to “match” your child’s contributions up to the limit to provide an incentive for them to continue investing in the Roth IRA. Not only will your matching contribution help build the Roth IRA’s assets, but it can also instill in your child’s mind the benefit of earning a match – which can prove valuable later on when your child is in the workforce full time and has a chance to receive an employer’s matching contributions in a 401(k) or similar plan.
If you have a family business, you can employ your teen to provide income that can go into a Roth IRA. Furthermore, if the business is one parent’s sole proprietorship, or it’s a partnership in which each partner is the parent, the payments for a child younger than 18 are not subject to Social Security and Medicare taxes. As an employee, your child must perform reasonable tasks necessary for the business and be paid reasonable wages — that is, wages comparable to what you’d pay a regular employee for the same work. But wherever your child’s wages come from, using some of them to help fund a Roth IRA can be a good move. Once your teen’s first paychecks start coming in, consider bringing up the idea of opening a Roth IRA. You may well be opening the door to a lifetime of consistent and informed investing.
According to data compiled by TechJury, almost half of Americans report that they are workaholics. 77% say they’ve experienced career burnout. Nearly 66% of workers admit that they don’t have the work-life balance that they really need. A simple question to consider: is this life to the full and the journey God calls us into? Here are three things to consider.
1. Set priorities. Even if you are not a top-level executive, you can create margin. Simple changes like adjusting your sleep schedule can create valuable time that you can use to pray, exercise, read, and rest in the knowledge that you don’t have to chase after the sun; you are already God’s beloved. To some degree, you also have the power to create boundaries. That might mean setting a strict clock-out time and creating a ‘do not disturb’ schedule so you can be present where you are.
2. Monitor progress. Do you measure success in other avenues of life beyond the professional? If you notice you’re crossing off work tasks ahead of time but missing precious time with your family, those blank boxes where checkmarks should be will point you back to your schedule and your priorities list. Another valuable form of “measurement” is having people in our lives who hold us accountable like a mentor you’d like to emulate. Working with a financial advisor can help you stay on track towards short-term financial goals, like buying a new house, while also progressing towards long-term security in retirement.
3. Reevaluate goals. Your hopes as a 20-something college graduate were very different than your hopes at age 50. Once you near retirement age, the prospect of life without full-time employment will recalibrate honoring God means for you all over again. As you begin a new year, set aside time to reflect. Ask yourself, “What am I working towards?” Do the goals you had earlier in your life still apply? Or are you simply going through the motions and cashing a paycheck? Are you happy with the amount of time you’re able to devote to your faith, family, and friends?
At OneAscent we will partner with you as you walk out these questions. Our desire is to care for you and help you steward your values and your valuables. Let’s meet and discuss what life trajectory you desire and what steps you can take to walk on that path.
Investment advisory services offered by OneAscent Wealth Management, LLC, a registered investment advisor with the United States Securities and Exchange Commission.
OneAscent is hosting two events on January 17 that you’re invited to attend. At 10 a.m., join OneAscent Investments for a Quarterly Market Update Webinar. At 11:30 a.m.- 12:30 p.m., join OneAscent Wealth at the OneAscent office, 23 Inverness Center Parkway, Birmingham, 35242, for a Values-Based Investing Workshop.
According to the latest data from the USDA, parents can expect to spend between $200,000 – $300,000 raising a child from birth to age 17. And that’s just spending on necessities like food, clothing, transportation, and medical care! Once you add any extra-curricular, educational, or entertainment expenses of having a family, that number will surely go up. You and your partner probably have an extensive to-do list lined up for the next nine months. Try to tackle the following financial prep items a little at a time as you move closer to the big day.
First Trimester: Review Your Household Budget. The average cost for labor and delivery in the U.S. is almost $7,000. You could easily spend another $1,000 on newborn clothes, toys, a crib, car seats, strollers, and other essentials. Add in new monthly expenses like diapers, baby food, and daycare, plus any changes to your or your spouse’s employment status, and it’s safe to say that your new family probably needs a new budget. Review your last few months of credit card and bank statements. Determine how much money is left over at the end of the month and see if that amount can cover the upcoming baby expenses. If not, try implementing small changes that can free up much needed cash flow for when the baby arrives. Emphasize weekly meal planning to reduce fast food runs. Cancel subscriptions you don’t really use. Pay down any credit card debt you’ve been hanging on to.
Second Trimester: Update Your Estate Plan. No one likes to think about worst-case scenarios, but you really won’t be in the mood to write or update your will and health care directive when you’re caring for a newborn. Have these conversations with your partner and prepare those documents ahead of time. Also, if you and your partner don’t have life insurance, it’s probably time to purchase some. The younger and healthier you are, the lower your rates will be and the more coverage you’ll be able to afford.
Third Trimester: Plan for the Future. Babies bring many changes, and your future will now be markedly different. Start to consider what you want your family’s finances to look like: Do both spouses want to continue working? Will we need to move into a bigger space? Do we want our kids to go to college?
The only thing we love almost as much as new babies is helping new parents give those babies a head start. If your family is growing, we at OneAscent would be honored to serve you by helping you prepare for the many wonderful changes that are soon to come!
Investment advice offered through OneAscent Wealth Management, LLC, a registered investment adviser with the United States Securities and Exchange Commission.
“I want to go to the jump place!” Our three-year-old son loves a trampoline park and often expresses his love with this simple statement. Bless his little heart, he’s yet to develop the categories of what the trip costs and how often we can go based on said cost.
Most kids head into adulthood without a good understanding of money, but it does not have to be that way. As parents, we can teach our kids stewardship by orienting their hearts toward a world that is bigger than just their desires. Here are three ways parents can teach children the value of the dollar and start them on a path toward wisdom, stewardship, and generosity.
1. Let kids help budget for a family vacation. When kids think about a big family vacation, they picture endless entertainment. Putting a tangible value on rides, shows, and meal costs can help kids set realistic expectations and prevent the trip from turning into a spending spree. As a family, make a bottom-line budget for your trip. Then sit down and make line items. Start with essentials: gas, hotels, and park admissions. Add in the cost of meals at a destination restaurant. As the leftovers from your top budget number shrink, your kids will see how additional spending changes the substance of the trip.
2. Help kids set short-term and long-term financial goals. Buying everything your kid points to any time you go shopping can form a certain thought in your child’s mind. “I can have what I want when I want.” The next time your child eyes a new toy, talk to them about what that toy costs and how the child can help pay. A couple of extra chores might help the child appreciate the connection between work, money, and spending.
3. Encourage kids of all ages to earn money. A part-time job for a teenager is a great way to create a mindset of stewardship. They are paid a wage based on the labor they provided. Help them open a bank account for depositing those wages. Begin talking with them about saving, giving, and investing early.
Our great hope for our children is they would be fellow inaugurators of God’s kingdom. How they steward their money is an important component of their journey. When your children get a little older, consider bringing them into our office for a meeting. We can reinforce this idea of stewardship to your kids by talking through basic investing and savings principles all with the hopes they would view money as a gift to steward rather than a resource to exhaust.
Investment advice offered through OneAscent Wealth Management, LLC, a registered investment adviser with the United States Securities and Exchange Commission.
“The greatest legacy one can pass on to one’s children and grandchildren is not money…but rather a legacy of character and faith.” –Billy Graham
The purpose of a financial plan is more than just earning money. It’s to grow assets that enable you to live an abundant life and steward the resources God has given you. The following three questions are helpful markers to help illuminate your legacy.
1. What goals have I achieved? A legacy filled with redemptive stories doesn’t just happen. You must dream big, set goals, and work hard every day to make progress. If you want to be thought of as a faithful steward of your resources and gifts, start small. Identify small goals to achieve in six months to a year that build towards bigger overall goals. Long-term financial goals might start with a brown bag lunch three days per week while increasing monthly contributions to your retirement accounts.
2. How did I learn from the mistakes I made? No person’s life journey avoids every bump in the road. There will be times when you make the easy choice instead of the right choice. You’ll do things that hurt others or embarrass yourself. You might lose perspective and place your friends and family behind things of less importance. Although these kinds of mistakes happen, don’t let them define you. When you’re looking back on your life decades from now, these stories of growth will be far more important than the stumbles along the way.
3. How did I impact others? You may not love everything about your job, but you can choose to show up to work and love your neighbor. You may not be rich, but the way you give your life away will point you and others to the truth proclaimed in Mark 10:45 where Jesus says, “The Son of Man did not come to be served, but to serve and give his life as a ransom for many.” When considering your legacy, you won’t regret spending more time with your family, whether that’s taking your kids to school, or coaching their sports.
Authoring these kinds of life stories doesn’t just happen. Living an abundant life is a process that combines long-term vision with intentionality. If you need help writing your next chapter, OneAscent Wealth would be honored to talk about your life, goals, and legacy.
Investment advisory services offered by OneAscent Wealth Management, LLC, a registered investment advisor with the United States Securities and Exchange Commission.
As your parents begin settling into their final phase of life, their health, residence, and finances could become a significant factor in your own financial planning—especially if your parents have tasked you with settling their estates. Navigating the logistical and emotional challenges associated with caring for an aging parent is a challenge, but these four steps can help ensure that your parent (and you!) are safe, cared for, and financially secure.
1. Call a family meeting. Gather all close family members for an open, honest discussion. This is the time to discuss finances, health concerns, and expectations from everyone involved. Where will your parent live? How will care be provided if it’s required? These can be sensitive topics, and the conversation will need to be had with gentleness and care; but avoiding the conversation or not communicating openly can ultimately lead to hurt feelings and poor planning.
2. Gather the essentials. If your parent doesn’t keep all important documents in one location, now is the time to collect things like identifications, wills, online logins, and end of life directives. We can help you make a comprehensive list.
3. Tag along. Start attending your parent’s appointments. When they go to the doctor, ask questions to familiarize yourself with their health status. Ask your parent to introduce you to their financial advisor and attorney. Make sure the relevant professionals have all important information about changes to your parent’s health, mental capacity, or living situation.
4. Prepare your parent, and yourself, to finish well. As Moses approached the end of his life, he prayed, “Teach us to number our days that we may gain a heart of wisdom” (Ps. 90:12). It sounds counterintuitive but considering the brevity of life equips you to make the most of your remaining days. You not only notice the little things, but you start to prioritize the big things.
Get the logistical, medical, legal, and financial preparations done, so you can use your time for what’s most important: recounting the Lord’s faithfulness to your family (Isa. 63:7) and enjoying the blessings of generations being together (Prov. 17:6). If your parent is entering this stage of their life, OneAscent would be honored to help prepare your family to finish well.
Investment advisory services offered by OneAscent Wealth Management, LLC, a registered investment advisor with the United States Securities and Exchange Commission.
As your teen prepares to go off to college for the first time, they’ll have to learn to manage their money well. It comes as no surprise that most teens struggle with this the first year or two but teaching your child these five lessons early will help prepare them to be successful in college.
1. Teach them that bills always come first. When your child is living independently for the first time, they will be tempted to spend their money on fun things they’ve never had before. However, if they’re not careful, they won’t be able to afford the essentials. Make sure you go over a budget with them and teach them that they should always have enough to pay bills before spending for leisure.
2. Be clear in how much support you will provide.If your child goes to school full-time, they may only have time in their schedule for part-time work. It is essential to be clear on how much financial support you will provide and stick to that plan, so they learn to be responsible for the rest.
3. Teach the value of saving. While your child may be living on a tight budget, it’s important to teach them to save while in college. Even the smallest savings can help if they lose their job, have an emergency, or want to do something fun over the summer. As little as $50 a month can add up and help them feel more secure while away from home.
4. Use credit cards wisely.Helping your child get their first credit card can be a wise way to help them start building credit and ensure they can pay for emergencies. However, the temptation to use it irresponsibly will be strong, so make sure your student knows the responsibility of a credit card and takes it seriously. If used irresponsibly, credit cards can harm their credit instead of helping it, so have a conversation about responsible payment before signing them up.
5. Remind them that college is an investment.Most kids don’t realize the magnitude of the investment that is a college degree. College is expensive and sometimes comes with massive amounts of debt. They need to remember that the return on investment is much higher if they finish and make good grades.
With these tips and a little bit of learning as they go, your child will be well-equipped to handle a college campus. You can start teaching these lessons as early as you want, just as you can start saving for college at an early age through various investment avenues. If you’re ready to learn more about college saving plans, contact OneAscent today.
-Heath Morris CFP® Senior Lead Advisor 205-313-9142, [email protected]
