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2. The Three Enemies of Financial Stewardship (Part 2)
The episode on "Stewardship" is the second part of a series focusing on the challenges that make responsible financial management difficult. We discuss the three worst stewards of our money: the Government, American culture, and ourselves.
The first opponent is the Government, which is notoriously fiscally irresponsible. With the national debt approaching $37 trillion, the government is essentially operating on a "high interest credit card". This lack of stewardship mandates that individuals take control of their future tax burden. Specifically, the episode highlights that due to historically low tax rates (a result of the 2017 Tax Cuts and Jobs Act), clients have a crucial window to systematically convert tax-deferred accounts (like 401ks and IRAs) to tax-free Roth accounts before anticipated future tax increases occur.
The second challenge is American culture, which constantly markets to consumers, destroying long-term fiscal outlooks. The focus is on combating planned obsolescence (products, like smartphones and appliances, designed to break quickly) and perceived obsolescence (being told something is old when it still works). The solution involves discipline, avoiding lifestyle creep, and consciously choosing to purchase high-quality items that prove cheaper in the long run.
The final challenge is Ourselves, stemming from a lack of financial education and the inherent human desire to spend now. To overcome this, the fundamental step is creating a budget and tracking expenses, because "you can't improve what you don't track". The ultimate goal of good stewardship is to maximize the potential of every dollar and utilize a holistic approach to planning to achieve peace of mind.
Learn the key ages that you need to be prepared for and maximize in retirement by getting out free guide to retirement ages at
http://www.ClientsExcel.com/ages
Roth Disclosure:
Please remember that converting an employer plan account to a Roth IRA is a
taxable event. Increased taxable income from the Roth IRA conversion may have several consequences including (but not limited to) a need for additional tax withholding or estimated tax payments, the loss of certain tax deductions and credits, and higher taxes on Social Security benefits and higher Medicare premiums. Be sure to consult with a qualified tax advisor before making any decisions regarding your IRA.
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By David TreeceThe episode on "Stewardship" is the second part of a series focusing on the challenges that make responsible financial management difficult. We discuss the three worst stewards of our money: the Government, American culture, and ourselves.
The first opponent is the Government, which is notoriously fiscally irresponsible. With the national debt approaching $37 trillion, the government is essentially operating on a "high interest credit card". This lack of stewardship mandates that individuals take control of their future tax burden. Specifically, the episode highlights that due to historically low tax rates (a result of the 2017 Tax Cuts and Jobs Act), clients have a crucial window to systematically convert tax-deferred accounts (like 401ks and IRAs) to tax-free Roth accounts before anticipated future tax increases occur.
The second challenge is American culture, which constantly markets to consumers, destroying long-term fiscal outlooks. The focus is on combating planned obsolescence (products, like smartphones and appliances, designed to break quickly) and perceived obsolescence (being told something is old when it still works). The solution involves discipline, avoiding lifestyle creep, and consciously choosing to purchase high-quality items that prove cheaper in the long run.
The final challenge is Ourselves, stemming from a lack of financial education and the inherent human desire to spend now. To overcome this, the fundamental step is creating a budget and tracking expenses, because "you can't improve what you don't track". The ultimate goal of good stewardship is to maximize the potential of every dollar and utilize a holistic approach to planning to achieve peace of mind.
Learn the key ages that you need to be prepared for and maximize in retirement by getting out free guide to retirement ages at
http://www.ClientsExcel.com/ages
Roth Disclosure:
Please remember that converting an employer plan account to a Roth IRA is a
taxable event. Increased taxable income from the Roth IRA conversion may have several consequences including (but not limited to) a need for additional tax withholding or estimated tax payments, the loss of certain tax deductions and credits, and higher taxes on Social Security benefits and higher Medicare premiums. Be sure to consult with a qualified tax advisor before making any decisions regarding your IRA.