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Financial Advice

How to Set Your Financial Goals for 2022

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When is a good time to set financial goals? The time is now; in December, when one year is ending a new year is on the horizon. This is the best time to set a few financial goals for the New Year. 

So, after the holidays, before you get caught up in work, school, and other busy parts of your life, you can meet with your financial advisor. They can review your current plan and make recommendations. 

Before you meet with them, there are several things you can do to improve our financial outlook for 2022 and beyond:

  1. Set short-term goals: In planning for the coming year, it is best to look at the short-term. You will not accomplish your retirement goals in one year. Make goals that you can accomplish in a few months. 
  2. Create an emergency fund: Hopefully, you will not have some type of emergency and need an emergency fund. An emergency can present itself in a multitude of unexpected ways; it may be medical, unemployment, or automobile related. Ideally, a good emergency fund has 3-6 months of money to pay the bills. This may seem impossible. However, you can start saving a small percentage of your paycheck by placing it into a bank account which you do not touch unless the emergency occurs. (Use this emergency fund calculator to figure out how much to save.) Over time, an emergency fund will accumulate and help you and your family if an emergency occurs.   
  3. Retirement savings: Even though there is Social Security, you may still want to enroll in a retirement savings plan. If your employer supports a 401(3) (k), you should consider signing up for it. Your employer may pay matching funds toward it. If you are self-employed, see your financial advisor for information on the array of retirement accounts that you can enroll in. 
  4. Pay off high-interest debt: Credit card debt and interest are a savings killer. Make it a goal to pay them off as soon as possible and cut up cards that are not needed. Begin with the debt that has the largest percentage of interest and whittle it down. Once you have erased your credit card debt, it will be surprised as to how much money you have available each month.
  5. Set a budget: This is the last point and, perhaps, the most difficult. Setting a family budget can be agonizing. It calls for discipline and restraint. So, to make it easier, create a spreadsheet with income and expenses. This budget will help you track your spending and saving. It is essential as you check off your goals and make progress. 

Setting financial goals can be daunting. But with these financial planning suggestions. They can be accomplished with resolve and hard work. Start now and get on the road to financial freedom. 

A.K. Burton has licensed and experienced financial advisors on staff. If you have questions concerning your financial goals, call us at (301) 365-1974 for a consultation. We serve the Bethesda, Rockville, and Montgomery County, MD area. 

Financial Advisor

Five Reasons to Hire a Financial Advisor in 2020

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2020 is almost here and you have a million things that you plan to do in the New Year. From starting a new business to getting out of debt to buying a car to sending a child to college, you and your family have plans. 

Then, there are plans that may happen whether you plan them or not: employment change, aging, inheritance, and other events out of your control. So, let’s talk about how these life events give you reasons to hire a financial advisor in 2020:

  1. Inheritance: The unfortunate death of a family member may bring an inheritance. That money and/or property may be substantial. You may have questions on whether it should be invested, taxes owed, (if any), or how it should be distributed or sold. An inheritance can be both a blessing and a burden. Your financial and tax advisor can advise you on using the inheritance to pay down debts, invest in IRAs or other investment vehicles, and other ways to work toward achieving personal and business investment goals. 
  2. Family planning: On the reverse, you may be planning to have children or there may be a pregnancy now. How do you financially plan for that? A child may cost around $234,000*** to raise during their eighteen years at home. Then there is college! Your financial advisor can give you guidance on how to save money for that child, even before they are born, and how that money can be used for a college education years later. Your tax advisor can discuss any tax benefits from these decisions.  
  3. Retirement: Many people hope to retire and enjoy their later years. Some people reach retirement age (65-70) and cannot stop working for financial reasons. However, even if you are in middle-age, it’s not too late to plan now. Your financial advisor can help you make smart retirement investments and plan your social security and estate. 
  4. Remarriage or divorce: Getting remarried or divorced brings on new life challenges. Do you and your new spouse have investments to cover your goals? Do you need to plan a new financial and investment strategy? How do you plan to pay your taxes in the coming years? How do you file your taxes in the coming years? Do you have a plan for Medicare and social security? If you divorce, how do you plan to pay child support or use child support? There are several crucial areas that a financial and tax advisor can direct you to make wise decisions.
  5. Selling or buying a home: You may be planning to purchase a bigger home or a smaller home based on your family needs (full nest or empty nest). How much do you need for a down payment? How much can you afford to pay as a mortgage payment? If you are selling, how much should you use to buy a new home from that sale? Will the gain from the sale of your home be taxable? A tax advisor can help you make the best decision for you.   

A New Year is a “clean slate” in some ways. The new year gives you the opportunity to make major financial decisions you didn’t make or were unable to make in 2019. Consult your financial advisor and let them guide you toward smart investing for now and the future. 

A.K. Burton, PC, has experienced tax advisors on staff who can help you plan for the tax consequences of these important financial decisions. Don’t wait. If you have a big life change, it’s time to reach out and call (301) 365-1974 for a consultation. We serve the Bethesda, Rockville and Montgomery County. MD area. ***See the report here.

Financial Advice, Financial Advisor

Financial Advisor: Five Year-End Retirement Planning Strategies

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This is the time of the year when most people are thinking of the holidays and what presents they may be buying for their friends and family. Few people are thinking about retirement planning and that is understandable. Amidst all the turkey, football and naps, you are tempted to take time off from all the work hubbub. 

Yet, the Thanksgiving and Christmas holidays are the perfect times to begin retirement planning. The business year is ending. The tax year is ending. If there was a time to start a retirement investment portfolio, it’s now!

So, here a few retirement planning strategies your financial advisor may tell you:

  1. Charitable contributions: At this time of year, donations to non-profits are at a yearly high. People feel driven to donate to causes such as homeless shelters, food banks, disease research, and other charitable organizations. So, they can do a QCD or Qualified Charitable Distribution. It is complicated but basically works like this: People with IRAs subject to a required minimum distribution have not yet taken it for the year, they can then use the qualified charitable distribution (QCD) provision. Thus, they can make their contributions directly from their IRA. It is then counted toward the RMD and be excluded from income. Thus it creates a tax deduction in addition to the standard deduction. It applies only to IRAs, not to plans, and only IRA owners or beneficiaries who are at least 701/2 qualify. Donor-advised funds and private foundations are not eligible. No gifts can be accepted, either. This must be done by December 31, 2019. 
  2. Roth IRA Conversions: Since 2018, conversions cannot be reversed. Now, they are permanent and the tax is due after funds are converted. Roth conversions qualify for this year if the funds are converted from the IRA or plan by year’s end. There are a lot of things to keep in mind here such as Social Security taxability, Medicare Part B/D premium increases, financial aid and other considerations. Please consult with your financial advisor on this strategy. 
  3. Split inherited IRAs by December 31: If the owner of the IRA died last year and had a number of named beneficiaries, those beneficiaries can use their life expectancy for calculating required minimum distributions. The IRAs are split into separate shares before the year is over following the IRA owner’s death. 
  4. Pay off debt: If you can pay more on your mortgage payments and pay it off early, you can then pay more money into your IRA. Pay off credit cards, car loans, and balloon loans. 
  5. Plan where you will live when you retire: Every state is ranked on which is best or worst to retire in. You choose where you want to live and then calculate how much you will need to retire and begin investing now to do that. There are a number of websites such as www.moneywise.com which rank the states as to which is most retirement-friendly and how much income you need to make to live “comfortably.” 

There are a number of other financial moves you can make before the end of the year. So, the best step to take? Consult your financial advisor. They can help you to make the smart moves NOW, before the holidays and the year-end. 

Enjoy time with your family and friends. Those memories are priceless. But, retirement isn’t. So, call your financial advisor today and take those first or additional steps that will make your retirement better and smarter. 

A.K. Burton, PC, has experienced financial advisors who can advise you on retirement planning, no matter what your occupation or age. Call us at (301) 365-1974 for a consultation. Our accounting firm serves the Bethesda, Rockville, and Montgomery County, Maryland areas.   

Financial Advisor

Financial Advisor 101: Vacation Budgeting

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It’s almost summer but vacation season really begins now: Memorial Day Weekend.

The grills come out. The bags are packed. The beach hotels are full. The gas tank is filled. Everyone is in vacation mode. The next three months will have millions of Americans spending billions of dollars taking time away from work.

Speaking of billions of dollars, you don’t have to spend a ton of money on your vacation if you plan it right. In fact, using tried and true methods, you can budget your time away and have it paid off, even before you leave.

Here are some financial tips to save on your vacation:

  1. Get a Travel Card from your bank: Every major bank has a card that you can use for vacation. You can transfer funds to it and take it with you. If it is lost or stolen, you just report it and it will be canceled. You won’t lose money. Plus, it keeps you honest. If you have $1,000 on it, you will try to keep within that number when vacationing.
  2. Stay at a vacation rental of Air BNB: Hotels typically hike their rates during the summer so you could spend $250-$450 a night at a resort or middle-class hotel, depending on the location. That means you could spend upwards of $1,500 for six nights at a hotel. That could be a budget buster. Instead, load the VRBO app at www.vrbo.com. Using this app, you can find vacation rentals which are in people’s homes and spend, instead, around $75 per night. A huge difference in savings!    
  3. Flight prediction apps: We all know there are better and cheaper days and times to fly. (Tuesdays and Wednesdays, typically.) You could spend $850 on a roundtrip flight to San Francisco that leaves on Friday or save money and leave on a Tuesday but spend only $375. Load the Hopper app (www.hopper.com) to your smartphone and save. This flight prediction app gives you the best days and times to fly. It also tells you when flight fees go up or down. Once you see the cheapest ticket, you buy it. It is simple and saves you a lot of time, too.
  4. Eat where the locals eat: Of course the tourist trap restaurants will be pricy. They have a captive audience who is looking for convenience. Instead, find out where the locals eat. Go to Yelp (www.yelp.com) and Chowhound (www.chowhound.com) to see the restaurants locals like. Also, ask for recommendations from people you meet.
  5. Meet with your financial advisor before you leave: Your licensed and experienced financial advisor can help you budget and also make money-saving recommendations.

Here at A.K. Burton, PC we wish you a summer vacation for the books! Contact us at (301) 365-1974 or info@cpa-maryland.com. We serve the Bethesda, MD area.    

Client Management

Why Hire a Financial Advisor?

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We all try to do things on our own and, sometimes, we accomplish what we want to do.

After all, the internet is a limitless vault of information. You can find out how to self-treat a medical condition, cook a complicated meal or teach a difficult concept to your children. The resources we have now were not even a dream barely a decade ago.

man with his head in his hand - purple effect

However, even the internet has its limits. You can’t do surgery or play outdoors or hug your spouse through the internet. Thankfully, we still need other humans for certain activity.

It is also that way with financial advice. You can look up any financial advice you want on the internet, join a financial Facebook group or subscribe to a newsletter. They may help you with current trends or personal experiences, yet, they cannot give you full, unbiased advice that you need for your financial situation.

In fact, they may even give you the wrong advice which could cost you dearly.

Furthermore, financial advisors are not that expensive. According to www.NerdWallet.com, the average financial advisor costs between $1,000 and $3,000. That is a paltry amount compared to the losses you could experience.

Sometimes, you need to meet with someone who can analyze your finances, hear your goals and give you a plan for the present and future. Here are three reasons you should consult an experienced financial advisor:

  1. Your financial future is too important: The market place has seen enormous highs and lows in the past ten years. The United States economy went through a long, damaging recession. People who had their investments in trendy products lost thousands even millions of dollars. Also, people who didn’t plan for a downturn at all suffered greatly and may still be recovering. We see clients who may have invested based on what they heard about on television or read on an internet forum or website. Unfortunately, their finances were damaged deeply. You and your family can be protected by realizing that investing, budgeting and accounting, whether personal or business, need the advice of a trained and experienced financial counselor. Smart financial decisions made now may positively affect you and your family or business for years to come.
  2. An impartial third party is needed: Sometimes when we are deep into something we don’t see potential issues or future problems. It’s like the old cliché: “You can’t see the forest for the trees.” Finances are a common example of partiality. You have a spending routine which seems normal but when examined by a financial advisor, it could be costing you, dearly. An impartial, experienced financial advisor will spot the excesses, missteps, and dangers ahead for you and steer you in the best direction. If you’re lucky, you may get affirmation that you are also doing some things right. The bottom line is this: We all need direction and a financial advisor works with you to make a plan that’s best for you.
  3. Dealing with money is a pain: “I hate dealing with money and I need you to do it for me!” That is a popular refrain from clients. Payroll, budgets, taxes, accounting, bookkeeping, inventory…the list seems endless and to many, too time-taking and tedious to do on a regular basis. They become frustrated and angered from dealing with it. A financial advisor can either recommend an accountant or they may have a license to do it for you. If you have a busy life and have no desire to do it, hire a financial advisor to do it for you. They love this stuff and can take it off your hands.

Your investments today power your future tomorrow. How do you know what’s the best investment for you and your family? A licensed, experienced financial advisor can give you professional advice based on your unique finances. If you haven’t hired one, now is the time. Your family’s economic future is too important.

The financial advisors at A. K. Burton, PC of Bethesda, Maryland, can help your family and your business make smart financial decisions. We will listen and work with you. Call for an appointment at (301) 365-1974 or email us at info@cpamaryland.com.  

Financial Advice

Your Financial Advisor: Seven Reasons to be Thankful

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Thanksgiving is almost here. You’ve invited family, friends, and in-laws. The food is ready to go and it’s holiday time!

There are many reasons to be thankful: for good health, better employment, a new addition to the family, or just knowing you have made it through another year with challenges. You’re making it! Whether it’s been a great year or terrible year, we can always reflect on our lives and find something in which to be thankful.

financial advisor 3 AK Burton

During the holiday season, we are all so busy wrapped up in what we’ve got going on that we overlook many of the more subtle reasons to be thankful. Let’s take a moment and be thankful for the accountant or financial advisor for your business. Here are seven reasons be thankful:

  1. Help in setting up your business: Financial advisors are experts in small business start-ups. They have the knowledge and experience in applying for LLCs (or other legal designations), creating a business plan and giving budgeting advice.
  2. Small business regulation: No business owner wants to deal with federal, state and local regulations. They are time killers and extremely frustrating. Financial advisors can update you on current regulations, labor laws and OSHA requirements. Small business accountants can relieve you of the burdens of regulatory research. You will get the list and advice on any and all regulations affecting your small business.
  3. Auditing your business: Speaking of burdens, keeping track of your income and expenses can also be agonizing. You’d rather read “War and Peace” than personally audit your business books. It’s a common feeling and understandable. Accountants bring an unbiased eye to your books. They can audit them and give you a concise report. Plus they can help you head off any accounting dangers at the pass by correcting issues and getting you on the right track.
  4. Tax savings: The IRS is constantly changing tax laws. It can be confounding, even for accountants! However, it’s our job to be on top of all changes and to apply those changes to your tax returns. Financial advisors not only know the current tax laws, but they help you legally reduce your tax bill. They may be able to save you thousands of dollars. But even if it’s a few dollars, at least you aren’t paying it to the government! That is a win no matter how much you save.
  5. Correct tax payments: Taxes. They are a pain but they have to be paid. You want to make sure you pay the right amount on time. Whether you’re self-employed or unsure if you’ve withheld enough from your paycheck, we’ve got you covered. At A.K. Burton PC, our accountants review all your pertinent information and create estimated tax payments. These estimates tell you how much to pay and when.
  6. Offload the work: Any smart business owner who has employees or subcontractors, has to offload work in order to make money and accomplish business goals. You can’t do it all yourself. Hiring accountant who specializes on your business’ financial side, gives you time to focus on all the other tasks you can never seem to get to.
  7. Buying or selling your business: You may be investigating the purchase or merger of another business. It may take your business to the next level. There are many financial aspects to consider. Your financial advisor can take you through each step and work with your attorney in buying or merging the business.

Running a successful small business is both a joy and a pain. Our financial advisors at A.K. Burton, PC can eliminate some of that pain by meeting all of your small business needs. And for that, you can be thankful. This holiday season at A.K. Burton, PC, we are thankful for our clients and serving you. Happy Thanksgiving!

A.K. Burton, PC, which serves the Washington,D.C. and Bethesda, Md area, has experienced and licensed financial advisors who can help you make sense of your small business bookkeeping. Contact us at (301) 365-1974 for more information or email info@cpa-maryland.com.