Since Social Security benefits are often a substantial part of your cash flow during retirement, it’s important to understand how they can be impacted by marriage and divorce. Every relationship and financial situation is different, so it’s wise to be prepared to make well-informed decisions about your benefits.
Psychology and Investing
In a previous blog, The Psychology of Investing, we discussed how the concepts of loss aversion, recency bias, and selective memory can impact an investment strategy and tolerance for risk. None of us are immune to these potential psychological traps, so it’s important to be aware of the underlying feelings motivating our investment decisions. It’s a challenging but necessary exercise to separate our rational, analytical mind from our emotional response to the highs and lows of market fluctuations (and any other life circumstances we may be navigating at the time). In many ways, investing isn’t only about how the market behaves, but how we react to watching our wealth rise and fall as well. With this in mind, let’s further examine how our conscious and unconscious perceptions are intertwined with the choices we make for our investment portfolios.
High Earners and Health Savings Accounts
High earners are often looking for ways to strategically save on taxes while boosting their financial outlook. Health savings accounts (HSAs) are a great option for accomplishing this because they provide an uncommon three-point tax benefit: contributions reduce your taxable income, investments within the account grow tax-free, and, as long as you spend the funds on qualified medical expenses, the withdrawals are tax-free too. Additionally, HSAs have fewer restrictions and more benefits than flexible savings accounts (FSAs).
Teaching Your Preschooler About Money
Financial education may sound like a topic for adults, but it’s never too early to start teaching your preschooler about money and how to manage it. Day-to-day activities can easily be transformed into age-appropriate lessons that can lay the foundation for a lifetime of important knowledge and sound decision making. Money influences almost every part of our lives, from the food we eat to how we spend our time in retirement; for better or worse, it’s central to our life experience.
When it comes to children, research shows that they understand what money can be used for by the age of five. By age seven, many of their money habits will already be established. With this in mind, it’s a good idea to start teaching your child about money around 3-5 years of age, when they’re attending preschool and learning to count.
A Financial Checklist for a Single Parent
Parenthood comes with a lot of responsibility and that weight is amplified if you’re among the 23% of single parent homes in the U.S. As a single parent, managing your finances and getting to a point where you feel comfortable are important as you take care of yourself and your family. Though your budget may be smaller than those in two-income households, there are many things you can do now and going forward to set yourself up for success and protect your family’s future.
