Financial Checklist

Financial Checklist: First Job

June 3, 2021 By Jacki Liautaud

Congratulations! You’ve gotten your first job. Here are some things to keep in mind.

First of all, congratulations! Getting a job is not easy. Creating a resume, interviewing, applications, and more.

Now, let’s get down to business. There are a few things to be prepared for as you start your new job.

Paycheck Withholdings. You probably know this already, but your salary or hourly wage will not actually be the amount that gets deposited into your checking account. The difference between your wage (say, $10 per hour to make it simple) and the amount that goes into your paycheck, is due to expenses that are “withheld” from your pay before you receive the pay. Here are some examples using that $10 an hour wage:
- Federal taxes. Depending on your income and how you complete your paperwork, your employer pays a portion of federal income taxes on your behalf. As an example, let’s say this is 12%, or $1.20.
- State taxes. If your state has income taxes, you’ll probably have a portion of your wage withheld for state taxes. In Illinois, we have a flat 4.95% tax. So let’s say $0.495.
- Health insurance. Does your employer offer health insurance? Your share of health insurance premiums will also be withheld. Typically this is a specific amount per month based on health insurance coverage you elect. Let’s say it’s $400 per month (note that this varies widely so this is just an example), or about $0.25 per hour (40 hours x 4 weeks = 160 hours x $10 = $1600 monthly wage. $400/$1600 = $0.25 per hour). $0.25
- Retirement contributions. Does your employer offer a retirement plan? You may have the option to contribute to that plan which is another type of withholding. See the employee benefits below for details.
- So in this example, we have total withholding of $1.20 + $0.495 + $0.25 = $1.945
- Meaning that you as the employee will receive $8.06 in pay for every hour you work.
Budgeting. Many times, new employees are excited by the pay they will receive but don’t realize what other expenses come along with being an employee, including transportation to/from work, clothing (uniform cleaning, professional clothes, dry cleaning, etc.), and more. Check out budgeting tips here.
Employee Benefits. Your employer may offer different benefits which you should evaluate carefully. If you choose not to participate in the benefits your employer offers, you may be leaving money on the table because often employers will subsidize a portion of the cost. Here are some examples of employee benefits:
- Health Insurance. Can be very costly, and depending on the type of employer and state specific regulations, employers often must pay for a portion of their employee’s health insurance, such as 25% of the cost. So it can be less expensive to get health insurance through your employer than on the marketplace.
- Retirement Plan. These plans come with a variety of names/numbers, like 401k, 403b, 457b. They are all ways for you as an employee to set aside money from your paycheck now, for your future later. Many times, employers also contribute on your behalf. They may contribute an automatic 3% of your paycheck whether you participate or not. Or their contribution level may vary based on whether you also contribute. Check with your employer on what their policy is. Talk to your financial professional about your situation and whether you should participate – these plans can be some of the best ways of saving towards retirement.
- Group Life Insurance and/or Group Disability Insurance. Many times an employer will offer life insurance valued at a set amount like $25,000 or one time your annual salary. In addition you can often add additional insurance onto this that you pay for, called supplemental insurance. Again, check with your financial professional on what levels of participation might make sense for you.
Open Enrollment. Open enrollment is the time your employer gives for you to elect your benefits for the year. Usually this occurs at a set time every year, and often runs for about 2 weeks, at which time you must have selected your level of participation. For some of the benefits I mention above, like your retirement plan, you may be able to adjust your participation levels throughout the year. But for other benefits like health or life insurance, you typically can’t adjust your participation except for the open enrollment time. When you are a new employee, you have a period of “open enrollment” right when you first start. Talk to your employer about what your open enrollment period is, and ask them for help in understanding the benefits you have to choose from if you don’t know what they are.

These are just a few of the practical considerations to keep in mind when starting your first job. And again, congratulations! You’re starting an exciting period of life as you develop your professional life!

Every situation is different, so please talk to the financial professionals in your life before making decisions about how to handle your first job.

Let’s get started talking about your goals!

Schedule a Call

Financial Checklist: Expecting a New Child

May 21, 2021 By Jacki Liautaud

Expecting a new child in your family, through birth or adoption? Here are some things to keep in mind.

First of all, congratulations! The decision to add to your family is exciting and filled with hope. I’m thrilled for you and your family.

Now, let’s get down to business. Having a child, whether it’s your first, second, or fourth, comes along with a lot of financial responsibility. After all, you’ll be responsible for providing for that child at least until they’re 18! According to the USDA (link opens in new tab), it costs over $233,000 to raise a child born in 2015 until they are 18. That doesn’t even count the cost of college. That cost translates to $12,980 annually for a middle income family, according to the site.

Are you a new parent, expecting a baby, or planning to adopt? Here are some financial considerations.

Get your estate in order. Do you and your partner/spouse have a will and estate plan? That usually comes along with a will for each of you, along with (potentially) a trust that specifies how you’d like children to be cared for, as well as powers of attorney for healthcare and financial decisions. This last one is important especially for a woman giving birth. Now that you’ve got a dependent, you need to make sure that you’re able to make decisions about how your estate is settled and the dependent is cared for, instead of the state making those decisions for you which happens without a will. Talk to an estate planning attorney in your area to get started. Read more about estate planning for everyone here.
Life Insurance. Do you and your partner have a life insurance need, and sufficient coverage for that need? Term life insurance can be an affordable way of protecting income in the untimely event of a partner’s death. And while your considering life insurance, look at your disability insurance coverage too. Pregnant women can qualify for life insurance, sometimes without a physical exam. Talk to your life insurance agent for details.
(Financial) Birth Plan. If you’re awaiting your child’s birth, you may have already started creating a birth plan. But do you know how much the birth could cost? Call your health insurance company and ask them what coverage you have, and what you might expect to pay out of pocket. Costs for a birth can range widely, depending on where the birth takes place, type of delivery, and whether there are complications for the mother or the baby. Here’s an article that provides some details (link opens in new tab). Talk to your provider about the costs to get an idea of all the possibilities. And work on saving up the cash you might need to pay for these bills so they aren’t an unwelcome surprise.
Are you adopting? There are many ways to add to your family through adoption, and costs vary widely among the options. Adopting an older child through the foster system, for example, will have a very different cost than adopting a newborn through a private placement. Costs also vary widely by state. Here’s an article (link opens in new tab) from the New York Times about three different family’s adoption journeys.
Parental Leave. Check with your company to find out what maternal and paternal leave benefits they offer. This varies widely by company so make sure you know what your benefits are. If the leave is unpaid, this means you’ll need to adjust your budget to accommodate the period of time when your family may not have its typical income. Save money now to prepare for that time. Here are some budgeting ideas that might help.
Day Care vs Nanny vs Stay-at-home-parent. What are your plans for childcare after the baby is born and parental leave benefits are depleted? Will one of you stay home with the baby for a period of time? Would day care or nanny be better for your situation. Talk to friends or coworkers with children in your area to find out what they do and get ideas. Then start researching. Day care and nanny costs vary widely by geographic area and by the type of service you want. In any case, there will be a financial impact to your family, so be sure to weigh all the costs and associated benefits before making a decision.
Tax Credits. How will this new bundle of joy impact your family’s taxes? Even if your child was born on December 31 at 11:59 pm, you may be able to claim the child as a dependent on your taxes. If your child has been born in or earlier than 2021, there may be special advance tax credits that impact your situation. Talk to your tax professional for details.
Saving for College. It’s not too early to start saving for college! You can open a 529 college savings account and save monthly, letting your money grow over the 18 years it will take for your child to reach college. Read more here.

These are just a few of the practical considerations I talk to my clients about when they are planning for a child, or have a newborn.

Every situation is different, so please talk to the financial professionals in your life before making decisions about how to handle the financial aspects of your new bundle of joy.

Let’s get started talking about your goals!

Schedule a Call

Financial Checklist: Receiving An Inheritance

April 29, 2021 By Jacki Liautaud

Receiving an inheritance? Here are some things to keep in mind.

Over the past year, throughout the Covid-19 pandemic, our country has experienced a significant amount of deaths. According to the Johns Hopkins Covid-19 case tracker (link opens in new tab), as of April 2021 the US has experienced over 573,000 deaths from Covid. Those people leave behind loved ones who mourn their loss. And also, some of them leave behind assets that will be passed along to their loved ones through an inheritance.

Have you recently received an inheritance? Here are some things to consider.

Liquid vs Illiquid. Are the assets liquid, or illiquid? Liquid assets typically are assets with a ready market for being turned into cash. This means, accounts that already hold cash, like a bank account, or accounts that hold stock investments like a brokerage account or a retirement account. Illiquid assets are things like a home, a car, or a set of collectible baseball cards – these things must be sold in order to get the cash value from them, and finding a buyer might take some time. If you inherit a house, for example, you’ll need to decide whether to sell it or keep it (rent it out or move in?). If you want to sell it, you’ll have to figure out what to do with all the items inside the home (an option could be to have an estate sale and donate the remainder to charity) including those items that may have sentimental or actual value. You’ll also need to hire a realtor and make any repairs necessary to sell. During the time it takes for the home to sell, remember to keep up the curb appeal by mowing the lawn, cleaning the gutters, and paying the utilities – all of which could take away from any profits you earn from the sale.
Are you inheriting any retirement accounts? If you will be inheriting money in an IRA, whether a Roth or traditional retirement account, and your loved one passed away in 2020 or later, this account may be subject to inherited IRA rules that require all funds in the account to be withdrawn within 10 years of the date of death of the original owner, according to the SECURE Act (link opens in new tab). This is different from how the rules used to work, so be sure you understand how your account will be impacted.
Are you inheriting any assets that have appreciated in value? If so, you may be able to benefit from the step-up in cost basis that occurs with death of the original owner. This might sound like a complicated thing, so let’s discuss. Say your grandmother bought $100 worth of Apple at the original public offering on December 12, 1980 for $22 a share, so she owned 4.54 original shares. Over time, the stock has split so that when she died after its most recent split August 28, 2020, she owned 1,016 shares. Let’s say Grandma died on December 1, 2020, when the stock was worth $122.72 according to bigcharts.com. When she died, her original $100 investment was now worth $124,683.52. Normally, if you sell a stock that has appreciated in value, you owe taxes on the gain. In this case, however, upon Grandma’s death the shares receive a step up in basis which means that for you, it is as if the shares were bought at $124,683.52. So when you sell, you will only pay taxes on the gain above $124,683.52. It’s important to be aware of this so that you can prepare for any potential tax liability you might have when you sell the shares. Consult with your tax professional. This is not intended as tax or investment advice.
What do you plan to do with the inheritance? Now that you’ve received the inheritance, what is the best way to use it? How does it fit within your overall financial picture? Should you use it to pay down debt, like credit cards, student loans or a home equity line of credit? Put it aside for your future needs, like retirement? Use it as a down payment on a real estate purchase? Spend it on a new car or a fabulous vacation? These are all great questions that don’t have one simple answer. Talk to your financial advisor about the best option for you.
Do you have an estate plan of your own? Now that you’ve been through the experience of the death of a loved one, you can probably see the value in having a plan for yourself, in the event of your death. Having a will and estate plan in place can be an act of love towards those you care about, since you will have expressed your wishes clearly in your plan. Read more about estate planning for everyone here.

These are just a few of the practical considerations I talk to my clients about when they have received an inheritance.

One other aspect to these considerations: the death of a loved one can come with a large amount of emotion. Let yourself process that emotion in a healthy manner. And remember that it’s likely your loved one would have wanted you to put your inheritance to its highest and best use. It’s up to you to figure out what that highest and best use is for you.

Every situation is different, so please talk to the financial professionals in your life before making decisions about how to handle your inheritance.

Let’s get started talking about your goals!

Schedule a Call