March 8th is International Women’s Day – Be a Financial Powerhouse!

Studies have shown women are better long term investors than men. Women tend to be “buy and hold” investors and are less likely to make changes to their investments.  They are less emotionally attached to their investments and do not make rash sell decisions when the stock market fluctuates. Women also are much more likely to manage household finances and budgets. This is all good news!

While it takes time for society to change, to wake up to the resources it is losing by down playing women’s talent and abilities; you can change faster. 

However, women are more likely to be the family care givers, whether children or parents. This means more time off work, not working outside of the family or taking a job with family flexibility. Many companies do not provide adequate mentoring, promotions or clear career ladders for women. Income inequality still exists. 

All of that adds up to less income over the working years. What does this mean? Less savings in retirement plans, less pensions, less social security payments. Add longevity to that and you can see that there are large financial differences between the genders. 

Many women have grown to believe that investing is a man’s domain. Whether that is the media not showing women in those roles or societal messaging that has been internalized or gender bias. It does not have to be that way.

While it takes time for society to change, to wake up to the resources it is losing by down playing women’s talent and abilities; YOU can change faster.  Education is gender neutral. Knowledge does not care  – it is just knowledge. Investments do not care. Let’s make everyone informed financial consumers, one class at a time.  Whether that class is negotiating a salary, saving for financial goals, or analyzing mutual funds.  Learn, grow and change- be a financial powerhouse!

Increasing Cash Flow: Investment Accounts

With the pandemic has come job loss for many people and now cash flow has become incredibly important. While there are ways to increase gross and net income, there are also some adjustments that can be made to your non-retirement investment portfolio.

Here are a few things you may want to consider right now to increase your cash flow:

  1. Take dividends and interest as cash. In a non-retirement account, many investors have these funds automatically reinvest, which increases basis and drives up the number of shares of the stock or mutual fund.  However, tax is still paid on interest and dividends in the year they are received, reinvested or not. By taking these as cash, the investor is increasing their cash holdings which is a good thing if cash is needed. This decision can always be reversed later to reinvest.
  2. Take mutual fund distributions as cash. Like dividends and interest, the investor pays tax in the year received and many people choose to automatically reinvest. Distributions normally come out in December for mutual funds. They are the embedded capital gain within the fund that has occurred during the year when the fund management has sold holdings higher than what they bought.
  3. Harvest some tax losses now rather than later in the year. Not only will this boost cash holdings, it also allows the taxpayer to use the losses against gains for tax purposes or against earned income.  If boosting cash holdings is not the goal, this strategy allows the investor to buy another holding that may increase value in the future.
  4. If a Certificate of Deposit is approaching maturity, this may not be the time to automatically renew it for another term of time.  Interest rates have dropped in the last three months and it may not be a wise financial decision to get another CD, especially if cash is needed.

Although the adage is “buy low, sell high;” your current situation may require you to rethink what is right for you. The above suggestions may help you through these tough economic times. Remember you can always reverse any account changes you make at a later date, when you are feeling more comfortable with cash on hand.

Taking Money Inventory in Times of Crisis

It is times like now when taking inventory of your financial life is a good idea. Knowing where you stand will help you immensely when planning your next steps. There are five simple things are important to know when a cash flow crisis may be coming (or is already here).

Income- Both Gross (what you make before taxes and retirement plan contributions) and your Net (what you get in the hand or bank account).

Expenses- Knowing what you spend will help you take control and make smart decisions. Tracking using an app on your smart phone or having your bank tell you what you spend are both good starts. Writing it down yourself (electronically or on paper) will give you a better handle on the money going out.

Balance Sheet– Write down what you own (assets) and what you owe (liabilities). The result is your net worth. Separate your liquid assets such as bank accounts, brokerage accounts, cash value in life insurance from your illiquid assets as your home and retirement accounts. This will allow you to see the assets you can easily access if you need ready cash. Your net worth statement is a snapshot of how things stand now. It is very helpful to update your balance sheet annually.

Bills– You may forget these when you track your expenses. These are the ones that are automatically paid from your bank account or on your credit card. These bills are from companies that can be called in a cash flow crisis to ask for lower and/or deferred payments or even cancel if you no longer need or use the service.

Credit Report– You can get a free credit report every 12 months from Experian, TransUnion and Equifax. That means you can get a report every four months. This will help you know where you stand on your accounts. It may also show if there is any identity theft.

In addition to these, many of our classes talk about having an emergency reserve fund and it is now that the importance of having these funds shines. We recommend having 3 – 6 months of expenses saved in a savings account or equivalent. Now could be the time to use that rainy day fund.

There are many other resources, challenges, and ways of coping in times of a cash flow crisis. Managing Money in Times of Crisis is our great new class that addresses concerns and gives participants solid steps to move forward when cash flow becomes the biggest financial roadblock.

Unemployment and CARES Act

The unemployment rate in the US has soared due to COVID-19. Your employer has been paying unemployment insurance (UI) to the state (based on where the business is located) on wages paid to employees. It is this state fund that is used to pay unemployment benefits.

With the passage of the Coronavirus Aid, Relief and Economic Security (CARES) Act at the end of March, the Federal government has extended the limits, increased the amount and expanded who is eligible.

Unemployment benefits have, in the past, had a limit of six months (26 weeks) pay out for most states The Federal government has guaranteed an additional 13 weeks, bringing the total time that benefits are available to 39 weeks.

The benefit is paid on a weekly basis and many states have waived the work-search requirements and waiting period. That does not mean that benefits are instant and automatic, but that once approved, the payment will be retroactive to the first week of unemployment. 

The amount each person receives weekly is based on their wage, with each state having their own maximum. The CARES Act includes adding $600 per week of federal money to the benefit, for a maximum of four months.

The new law also expands who is eligible to receive unemployment benefits. Self-employed, contractors and gig economy workers who are not able to work due to COVID-19 are now included with those who can collect.

Here is something you may not know: Unemployment benefits are taxable. Benefits are a replacement of income and are taxed at both the state (if applicable) and federal level. You have the option of having tax withheld on your benefits.  After the end of the tax year, the state that paid you the unemployment benefits should send Form 1099-G, Certain Government Payments.

If you have become unemployed or someone you know has, apply for unemployment benefits as soon as possible. Visit your states unemployment website to start the process. 

Your Finances and COVID-19

Be kind to yourself. As stock markets mirror the changing economics brought about by COVID-19, it is important for you to take some deep breaths, remember your financial goals and be kind to yourself. If you are anxious and nervous about your investments and savings, that is natural. Your portfolio was designed for you and although it might feel like a natural response to sell everything, that is an irrational response.

To help see things from a different perspective, if you compare your balance from 12/31/2018 to what it was on Friday, 3/13/2020 it’s not as great a loss as you think if you look at the long-term picture.  Yes, 2019 was a stellar year for the stock market, which makes current losses seem sharp, but in the big picture, you’ve lost about one years’ worth of gains.

In order for you to take more control there are some financial “duties” that can be done.

Here is a list of things that you might consider:

  1. Educate yourself about your current investments
  2. Use an online retirement calculator to see if you need to make any adjustments
  3. Research and reach out to a local financial planner to advise you
  4. Ensure your emergency reserve has enough savings to get you through three months
  5. Start tracking your expenses to gain the knowledge on how much will be in your emergency reserve
  6. Develop a plan for your financial goals and revisit as needed to remind yourself on why you are invested
  7. Consider making a small adjustment to your portfolio (no more than 5 – 10% change) if you feel strongly that action is needed
  8. Confirm and update the beneficiaries on your investment and bank accounts
  9. Take online financial education classes to become a more informed financial consumer

We all know that selling in a down market is highly discouraged, after all the saying is “buy low, sell high.” Now is not the time to sell low.

It is the time to take some action around your finances while you are thinking about them and have some space to do so.  Be kind to yourself and others around you.

Here at Financial Knowledge we support you in your quest to become more educated around finances and investments. We understand that this can be a tough time and are here to help you navigate these unsettling times.

Let us know what you are doing to take care of you and your finances and how we can be a partner on the journey.

FICO Credit Score

Fair Isaac Company, the corporation behind the formula for your credit score, recently announced it is updating its scoring system.  This is good news for those with good FICO credit scores now and not so good news for those with less than stellar FICO scores.  The new system is expected to roll out this summer, so it gives you some time to improve your score.

The most heavily weighted areas for both the current formula and the updated one are:

1. On-time payments

2. Utilization 

Let’s now look at some ways to improve your score in these two categories.

Chronically paying late means a drop in your credit score. Pay late once for one credit card bill, not so much. But paying late on a regular basis is going to mean a low credit score and additional late charges. Once the new FICO system kicks in, your credit score will drop even more dramatically. If you have the funds to pay your bills but seem unable to get to them on time, put as many as you can on automatic payment plans so that you DO NOT miss the payment due date.

If you are struggling to pay your credit card bills on time because of a lack on funds, take a hard look at your expenses and make some decisions on what expenses to cut out or cut back on. For example, decide if you need Netflix, Hulu, Amazon Prime and cable TV, or will one service be enough?

Over utilization of your credit also drops down your FICO credit score. This is when you are using more than 50% of your approved credit limit.  It is better to have below 50% on all cards than to be maxed out some credit (cards) and have no charges on others. It has been suggested that having your usage below 30% is best. Work towards lowering your utilization percentages and your score will improve.

It is always a good time to improve your credit score and now is the best time to get started before the new FICO scoring system is in place. Work on creating smart habits now and watch your score increase in the future!

New W-4 for 2020!

Starting in 2020 a new W-4 Employee’s Withholding Certificate is required for new employees. A W-4 is the paperwork required for payroll services to inform what percentage of your pay to be withheld for taxes. This form is a requirement and when filled out correctly, it means that when you file taxes for that year, you generally owe very little in taxes or get a small refund.

For a single income household, with or without children, this form can be a breeze. However, if you have more than one job and/or your spouse also works, it becomes a little complicated.  The IRS acknowledges that if there is more than one income in the household, then current withholding tax may be inaccurate. 

There are two extra income options – two incomes and three plus incomes. There are three handy dandy charts and using the one for your tax status, choose the intersection of the highest and the lowest income and use that number on the form. The amount withheld for taxes will be most accurate using this form if you and your spouse fill out the new W-4 for all your jobs and claim dependents on the W-4 for the highest paying job.

In addition, everyone gets a chance to have a little more or a little less withheld, using the Adjustments at bottom of the W-4. This is for income that does not have tax withheld and if you take more than the standard deduction when filing your taxes.

If this is all too overwhelming, there is another choice when filling out the W-4. Go to IRS website for the W-4 at  If you go this route, have your last paystub in hand.  It will walk you through the steps and turn red when you miss one. The results of the estimator will tell you if you will owe taxes or get a refund at tax season. Brilliant!

Financial Knowledge for Millennials

We have moved on from talking about Baby Boomers (born 1946 – 1964) and their needs in the workplace to talking about Millennials (born 1981 to 1996 generally) – those who became adults in the early part of this century. Millennials are now the driving force in the working world and their needs are different from their counterparts before them.

Millennials are now the driving force in the working world and their needs are different from their counterparts before them.

Many of them have large student loans and are less likely to become homeowners at an early age. Most feel that they are not making enough money at their jobs, so are unable to save. Although society has been great about teaching them how to spend money and get into debt, it has done millennials a disservice by not teaching them how to manage money, pay down debt, or save and invest for the future.

Millennials are now looking to their employers to provide more than just a paycheck. Along with flexible working hours, technology to facilitate working remotely, top employers are also adding financial wellness to their benefit offerings. Financial wellness includes access to resources and education.

Financial Knowledge provides comprehensive, conflict-free financial education to employees. With over 50 classes to choose from and a variety of delivery options (on-site, online or pre-recorded) we have something for just about everyone. have over 50 classes, offered either in person, as online live webinars or as recorded classes. Each course includes a workbook, covering the topic extensively. Classes can be tailored to include company specific information such as retirement plans, stock plans or HealthSaving Accounts.

Our clients, top employers, offer Financial Knowledge classes to ensure that their employees understand their personal finances so that they can manage their money with confidence.

Contact us today to discuss how we can help you to attract, sustain and grow your millennial workforce.

Fundamentals of 401(k)

Congratulations. You have just landed your first job with great benefits including a 401(k) plan. And you know nothing about it. Most plans have a few things that are specific to the employer, however all plans follow the same basic structure.

A company (employer) must sponsor the plan. Employees only have access to contribute to a 401(k) plan if their employer has chosen to offer one.

Here are nine fundamentals for all 401(k) plans.

1. A 401(k) is a deferred compensation retirement plan. The employee is choosing to have some of their earnings withheld and contributed into the retirement plan.

2. A company (employer) must sponsor the plan. Employees only have access to contribute to a 401(k) plan if their employer has chosen to offer one. The company uses a financial services firm to hold the investments.

3. Employees have their own account. These are in their own name, never a joint account.

4. 401(k) contributions by employees are taken out of their paycheck. There is no option to give the financial firm an extra payment during the year. It is all through payroll.

5. Funds contributed by the employee are immediately available, though not to withdrawal without penalties and perhaps taxes.

6. Employers do not have to contribute into the plan. Some employers “match” employee’s contribution by putting a limited amount into employees’ accounts. It is not always available when an employee leaves the company as there may be a time frame before it is fully vested.

7. There is a limited choice of investments for most 401(k) plans. The employer coordinates with the financial services firm to provide a range of investments, typically mutual funds.

8. The IRS sets the employee contribution limits, not the employer. For 2019 it is $19,000. For those aged 50 and older, the contribution limit is $25,000. The projected 2020 contribution limit is $19,500 and $26,000 for older employees.

9. The company match amount is not included in the contribution limits set by the IRS. It is in addition to the employee limits. So, now that you have a basic understanding, sign up, save every paycheck and invest wisely.

Now that you know the basics, go ahead and get started now. You will thank your future self later!

Money Doesn’t Care

Money doesn’t care about your gender, it doesn’t care about your country of origin, it doesn’t care if your hair is curly, straight, purple, or even if you have hair. Money doesn’t care if you drink flavored coffee, soda, Boba tea or fizzy water. It just doesn’t care.

Money can be viewed as a reflection of our insecurities and uncertainties on how to deal with it. Since it doesn’t care, why should it hold us back?

Why are we reiterating that money is indifferent? Because money makes us feel so strongly, it is hard to separate the concept of money with our feelings behind it. Money can be viewed as a reflection of our insecurities and uncertainties on how to deal with it. Since it doesn’t care, why should it hold us back?

One of the most important things to lessen our anxiety about money is to learn about it. Fight the insecurities head-on by being proactive—take a class, go online and look up terms you don’t understand, explore your brokerage site and do your own research.

Although money doesn’t care, you should. Money will be with you throughout your whole life –coloring your decisions on all of life’s major turning points. And the more you know about taking care of money, the more informed your decisions will be.

Here at Financial Knowledge we understand the relationship and effect money can have on us. That’s why our certified instructors offer unbiased, comprehensive, approachable education on money and all its intricacies.

Our goal is not to tell you about the hottest stocks sure to make you rich. Money is not the goal. Managing it and making it work for you is. So even though money doesn’t care, we do.

Just say NO! A guide to having a stress-free holiday season.

We have few unlimited resources in our lives, one important one is love. On the flip side, we have some limited resources as well – money and time.

By saying NO to events, you are also saying no to spending money on food and gifts that are not where you want to allocate your hard-earned cash and give you no joy.

Let’s talk about how to be mindful about your time which will relieve stress around money. The holidays are touted as a magical time to spend with friends and family. Is it really? Throughout the year, most of us choose the people who are special to us and spend time with them. In November and December, it may feel to many of us as though we are forced to spend time with those who we only see at the end of the year, don’t have a connection with and are just acquaintances.

This season, remember it is okay to say no to some events. It will be more of a polite “I can’t make it this year,” conversation, and there is no need to explain yourself. Whether it is the community social, the parent’s neighbor’s Christmas eve revelry or the yoga teacher’s soiree; if these are “not your people,” politely decline. Spend that time with your people who give you energy or use that time for yourself to recharge alone at home or in the outdoors. If you are struggling with this concept, it often helps to make a list of the people you want to spend time with.

By saying NO to events that don’t have meaning to you, you are also saying no to spending money on food and gifts that are not where you want to allocate your hard-earned cash and give you no joy.

The next step may be saying NO to events that you may noramally host. Maybe not the event itself, but does every adult need a gift from every other adult? Start changing the family rules to the Secret Santa and then the maybe on to the White Elephant Exchange. If giving to family and friends brings you joy, then carry on. Remember that to others it may be an emotional and financial burden so you could be the exception.

It may also be time to move a large family dinner such as Thanksgiving or Christmas away from one house with one family doing all the work to a new system of the tradition of pot-luck where everyone can pitch in both financially and with the work involved.

Having friends and family visiting does not mean painting the guest bedroom or buying new towels every year; it means making them feel welcomed, comfortable and at home.

If you have guests, let them know where breakfast items are stored and what time the household eats. Set boundaries that are manageable to everyone. Shoes off inside is acceptable to all as an example.

There are many more things you can do to stay stress free during the holiday season. In fact, Financial Knowledge offers a class dedicated to this topic.

Make this the start of saying NO at the holidays so you can say YES to the people and events you love.