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Money Matters @ Indagare in New York City

Our colleagues, wealth advisors Samantha Gorelick, CFP® and Elizabeth Caputo visited with NYC-based travel company Indagare this week, to answer questions from their team on anything money-related. Read on for some of the bullet points that Samantha and Elizabeth recommended.

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Budgeting

50-30-20 strategy for take-home pay

  • 50% for fixed expenses (i.e. rent, utilities, car payments)

  • 30% for flexible spending (i.e. clothing, holidays, eating out)

  • 20% for financial goals (i.e. emergency fund, debt, and savings)

    TIP: Don’t forget to include one-off and once-per-year expenses in your budget.

Reducing Debt

  • Know your interest rates! Always prioritize high interest debt first.

  • Learn if you have “good” debt (student loans) or “bad” debt (credit cards).

  • If your student loan interest rates are more than 6%, consider looking into refinance/ repayment/ forgiveness options.

  • Be mindful of your credit card use. If you cannot pay cash, ask yourself if this is a need or a want.

    TIP: A credit card is not a substitute for an emergency fund!

Retirement Planning

  • Many companies offer a 401K option, are you taking advantage of this?

  • The minimum deferral: 3% of your income is a good place to start. The maximum annual deferral is $18,500 (unless you’re age 50+, then it’s $24,500/year).

    Traditional or Roth IRAs are also options for retirement savings

Traditional IRA

  • Great for reducing your current taxable income.

  • However, the funds will be taxed at withdrawal based on whatever your future income tax rate is in retirement.

  • You may make contributions at any income level

  • Annual maximum contribution is $5,500 (unless you’re over age 50, then the max is $6,500)

Roth IRA

  • Contributions are post-tax, so they don’t reduce your current taxable income

  • Advantages are tax free growth AND withdrawals in retirement

  • Annual maximum contribution is $5,500 (unless you’re over age 50, then the max is $6,500)

  • Tax filing status single? You can contribute up to the max as long as your earned income is less than $120,000

  • Tax filing status married filing jointly? You’re eligible to contribute up to the max if your joint income is less than $189,000.

  • There are phase-out levels, ask us for more info!

Investing Questions

  • How much money do I have to invest?

  • What sort of return can I reasonably expect on my investment?

  • What is the timeline of my investment?

  • What goals am I investing for?

  • Know your fiduciary and ask about all fees.

David EdwardsHeron WealthComment