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.

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.