What’s Your Money Mindset

Understanding your motivators can help you better control your wealth journey.

Sensible about dollars and cents? More carefree than careful? Planner or play-it-by-ear? Your money personality affects more than just your portfolio, it likely affects your relationships, too – with your spouse, your siblings and your children. Money means different things to different people, and it’s vital to have a conversation about your spending, investing and saving habits so that you and your family will be on the same page.

According to financial psychologist Dr. Brad Klontz, “We have beliefs clunking around in our heads, and for many of us, they’ve been passed down from our parents.” But if we take the time to dig into our partners’ attitudes as well as our own, we may be able to better appreciate what drives financial deci­sions, recognize roadblocks and make meaningful progress toward our shared goals.

While there are a few broad stereotypes, only you, your family and your advisor will truly understand your motivations. You may not fit squarely into any of these boxes, but you may recognize a few of your own traits or those of your loved ones somewhere in the mix.

The rookie

You’re thrifty and idealistic – and you’re likely saddled with student debt as you try to launch a rewarding career. You’re optimistic and hope to align your personal and professional lives with the values you hold dear. You’re not likely to be a big spender, but when you do spend, it’s on memory-making experiences like vacations.

Bottom line: You’re just starting out and might fear an unpredictable market. While understanding your risk tolerance is essential to investing well, remember that you need some risk to grow wealth. Fortunately, you’ve got time on your side as well as the power of compounding. Use both to your advantage.

The forward thinker

You’re a little older with an established career. You’re buying houses, having children, aiming for that corner office. You’re busy and earning more than ever, but most of your money may already be spoken for, earmarked for retirement or a child’s education. You’ve got more money than time, and varying priorities com­pete for attention.

Bottom line: It’s a struggle to find time to dig into your invest­ments and manage everyday expenses as well as your emergency savings. You prefer to delegate some of those decisions to an advisor, offering input along the way.

The influencer

You work hard and play harder. You’re always hustling so you can enjoy the finer things in life. You drive a nice car, carry the latest phone and eat Instagram-worthy meals. For you, your self-worth is tied to your net worth. You believe there’s no such thing as too much money, and you splurge regularly.

Bottom line: For you, a budget may not seem exciting, but it’s a way of holding up a mirror to overspending and staving off debt. You may not enjoy sharing control over financial decisions with someone else, but a trusted source can serve as a guardrail to get you closer to your long-term goals.

The ostrich

An ostrich sticks its head in the proverbial sand and avoids thinking about money. You’re not quite sure how much you have, what you spend or what you owe. And you may feel overwhelmed when it comes to financial details.

Bottom line: Ignoring your finances could mean missing out on an employer’s 401(k) match or not understanding your household expenses should you ever need to take over. If you find money management complicated or cumbersome, rely on your advisor and automate other aspects, like bill paying or contributing to your 401(k).

The stockpiler

You watch every penny, prioritizing saving and frugality. The goal is to have more money than you need, which gives you a feeling of safety and con­trol. You may also feel uncomfortable talking about money, even with those closest to you. If you’re tired of worrying about money, you may want to assign more of the daily details to your advisor, who can shoulder some of the responsibility.

Bottom line: Saving is a wonderful habit, but if you sock most of your money away in cash and conservative investments, you may be too risk averse. Strike a balance to help you reach your short- and long-term financial goals and enjoy the journey.

The scout

The scout is well-prepared for the long haul. You see money as a tool and are willing to use it to achieve your goals. You understand that not everything will go your way, but you’re cautiously optimistic that a long-term plan will eventually get you where you want to go – no matter what is happening in the headlines.

Bottom line: You manage money with both your head and your heart, relying on expert advice when you need it. Be sure to build a trustworthy team of professionals, including an accountant and estate planning attorney, to ensure you maintain balance in all aspects of your financial life.

Planning for your financial future, like climbing a mountain, is a journey that each of us approaches a little differently depending on what we hope to achieve, our time horizon and our willingness to take on risk at that particular moment. The one thing we all have in common is the need for a guide to help us forge a path to prosperity.

Next steps

Level up your financial prowess by:

• Being honest about your financial tendencies and identifying habits
• Talking to your family about what your shared financial goals look like
• Speaking to your advisor to determine how you can achieve your dreams

Sources: ally.com; sofi.com; motleyfool.com; nerdwallet.com; investopedia.com; moneyharmony.com; empower.me; kiplinger.com; Raymond James research; University of Minnesota

All investments are subject to risk, including loss.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

Review Retirement Plan Contribution Limits for 2022

Consider using tax-advantaged accounts to help lower your tax bill.

Even in the wake of complex tax provisions, a key to lowering your tax bill is really quite simple: report lower taxable income.

Since few of us actually want to earn less, the next option to consider is to stash as much income as you can into tax-advantaged accounts. If you haven’t contributed the maximum amount to a qualified retirement plan at work, consider adding money while you can.

• Contribution limits for 401(k) and other retirement plans for the 2022 tax year are $20,500 or $27,000 if you’re 50 or older (2021: $19,500 and $26,000).
• Consider making additional salary deferrals if you are eligible to participate in an employer supplemental employee retirement plan (SERP). This will enable you to further maximize contributions to reduce your taxable income now and defer more compensation into later years when your tax rate may be lower.
• You can accumulate funds on a tax-deferred basis to pay for healthcare expenses through a health savings account (HSA) or flexible savings account (FSA). Your workplace may offer one, both or neither of these options, so check with your employer. HSA contribution maximums in 2022 are $3,650 for self-only and $7,300 for families, with an additional $1,000 catch-up contribution allowed for individuals age 55 or older (2021: $3,600 and $7,200). The limit for individual health FSA contributions remains $2,750 (note that dependent care FSAs have a higher cap of $10,500); employer contributions do not count toward this maximum.
• Once you maximize employer retirement plans, consider contributing to an IRA (still a $6,000/year limit, or $7,000 if you’re 50 or over). Traditional IRA contributions are tax deductible if your modified adjusted gross income is under $78,000 for individuals (phase-outs begin at $68,000) or $129,000 for joint filers (phase-outs begin at $109,000). You must establish a new IRA account by April 15, 2023, for 2022 contributions, and you have until then to make 2022 contributions to an IRA.
• If you work for yourself, consider contributing to a solo 401(k) retirement plan, SEP IRA or SIMPLE plan.

Your financial advisor can help develop a retirement account contribution strategy that’s tailored to your unique situation.

Please note, changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. While we are familiar with the tax provisions of the issues presented herein, Raymond James financial advisors do not render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional.

Contributions to a traditional IRA may be tax-deductible depending on the taxpayer’s income, tax-filing status and other factors. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

Financial resolutions for 2022

Start the new year right by reviewing and revamping your financial plan.

Instead of hauling out those familiar New Year’s resolutions about keeping a journal or drinking more water, how about focusing on your financial well-being? Here’s a set of resolutions that can help ensure your long-term financial confidence.

Update your beneficiaries

If you don’t correctly document your beneficiary designations, who gets what may be determined by federal or state law, or by the default plan document used in your retirement accounts. When did you last update your designations? Have life changes (divorce, remarriage, births, deaths, state of residence) occurred since then?

Update your beneficiary listings on wills, life insurance, annuities, IRAs, 401(k)s, qualified plans and anything else that’d affect your heirs. If you’ve named a trust, have any relevant tax laws changed? Have you provided for the possibility that your primary beneficiary may die before you? Does your plan address the simultaneous death of you and your spouse? An estate attorney can help walk you through these various scenarios.

Create flexible liquidity

Cash has inflation and opportunity tradeoffs, but a lack of access can cause greater problems if you find yourself needing to draw from your investments. Finding a balance in line with your life and goals is important to avoid disrupting your long-term plans.

The right liquidity strategy will be different for every investor and could incorporate cash reserves, cash alternatives, highly liquid securities, lines of credit, margin loans or even structured lending. Multiple institutions and account owners can be used to hold more than $250,000 with FDIC guarantees.

Evaluate your retirement progress

What changes are needed given your current lifestyle and the market environment? Don’t fixate solely on your assets’ value – instead, drill down into what types of securities you hold, your expected cash flows, your contingency plans, your assumed rate of return, inflation rates and how long you’re planning for. Retirement plans have many moving parts that must be monitored on an ongoing basis.

Review your account titling

Haphazard account titling can create problems down the line. If one partner dies and an account is titled only in their name, those assets can’t be readily accessed by the survivor. The solution may be creating joint accounts, but it’s not always that simple. Titling has implications across a range of estate planning issues, as well as other situations such as Medicaid eligibility and borrowing power, too.

Develop a charitable strategy

Giving comes from the heart, but you can also do well when doing good. For example, consider whether or not it’d make sense to donate low-basis stocks in lieu of cash, or learn about establishing a donor advised fund to take an upfront deduction for contributions made over the next several years. Give, but do so with an eye toward reducing your tax liability.

Spark a family conversation

Sustaining the benefits of wealth for generations is nearly impossible without a mutual understanding among family members. Consider creating a family mission statement that outlines the shared vision for your wealth and legacy. This should include nonfinancial topics, too, like your values, expectations and important life lessons.

Digitize your record keeping

You likely receive emails, letters reports and updates from multiple accounts. Consider going paperless and centralizing important files in one place to reduce frustration and ensure easy access when needed. Your advisor may have access to secure storage tools that can help.

Invest with your values

Your portfolio should reflect what matters to you – and that can mean anything from avoiding particular industries to actively pursuing an ESG (environmental, social and governance) investing approach. So whether you want to promote the transition to clean energy, advocate for diversity and inclusion in the workplace, or support companies with strong data privacy practices, your portfolio can be tailored to reflect those priorities.

Check in with your advisor

Your advisor can offer specialized tools, impartiality and experience earned by dealing with many market cycles and client situations. Communicate openly about what’s happening in your life today and what may happen in the future. It’s difficult to manage what they aren’t aware of, so err on the side of over-communicating and establish a regular check-in schedule for the year ahead.

These suggestions are a helpful starting point, but no two long-term plans are identical – so reach out to your advisor for more specific guidance about progressing toward your goals in 2022.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

From the Desk of Dale Crossley and Evan Shear

We hope this email finds you and your loved ones safe and well. For our last 2021 edition of The Journey, you’ll find helpful articles on Medicare open enrollment, Social Security increases and a delicious chicken cacciatore recipe. We'd like to wrap up the year with last-minute tax and Required Minimum Distribution (RMD) reminders and a bit about the recently passed infrastructure bill. 

Before the year ends, it’s a good time to make sure that you’ve set yourself up properly from a tax standpoint for 2022. Check with us to see if you can benefit from tax-loss harvesting which is selling a losing investment to offset gains. It’s also important to pay attention if you’re at or near the next tax bracket. If so, we can discuss ways that you can reduce taxable income now as the year comes to an end. We also want to remind you of RMDs for 2021. Last year, there was a special RMD waiver due to the CARES Act, but that’s no longer the case. If you are 72 or older as of December 31, 2021, please remember to take your RMD by year-end to avoid a penalty (if you are turning 72 in 2021 and this is your first RMD, you have until April 1, 2022). To read about all these year-end strategies in detail, we've included Make Your Final Tax-Saving Moves Before Dec. 31 in our newsletter.

As we close out 2021, we also want to acknowledge the bipartisan Infrastructure Investment and Jobs Act Bill that just passed. The $1.2 trillion bill will fund the building and repairing of roads, bridges, railroads, and ports, as well as make broadband investments throughout the country. If the reconciliation budget comes through in December, which remains to be seen, building and infrastructure initiatives in America will be greater than experienced during the New Deal era. These projects will not begin overnight, so most effects on the economy and investments will be beyond 2022. 

The second part of the original bill supports social infrastructure such as healthcare, childcare and housing. The Build Back Better Act proposes an additional $1.2 trillion in spending totaling $3 trillion for both packages. Both sides are still not in agreement on this additional bill. As 2022 begins, we’ll be hearing much commentary on how these bills might influence the economy moving forward. To read more about these bills, we’re sharing the article America has an infrastructure bill. What happens next?

Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.

There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. All opinions are as of this date and are subject to change without notice. Past performance is not a guarantee of future results.