April client newsletter
As the calendar switches from March to April, we have already left winter behind and are moving into spring. As much as I love snow, I love the change from winter to spring. There is something about watching life return to creation that is awe inspiring. I love seeing the grass turn green, buds begin to grow on tree branches and the expectation of flowers on trees is almost like holding your breath and waiting for a single moment of beauty that you might miss if you blink.
For me spring also is the return of my daughter’s girl’s varsity soccer season which I am blessed to be entering into my second year as an assistant coach. I never thought that I would ever be a part of a soccer team (I am a football guy). If you would have asked me even 5 years ago if my family’s financial plan would have a place for coaching soccer I (and my family) would probably have thought that you were crazy. However, this is why the plan is not the ultimate end goal, it is a map to an ever changing landscape. This is where our Personal Statement of Financial Purpose (PSFP) becomes a guiding light. When we filter this opportunity through our PSFP we see that what wasn’t a goal 5 years ago now is a way to help us achieve our PSFP. Every step we take in life provides new opportunities and adventures that we may never have anticipated, but want to be prepared for. By being flexible and open to this idea of coaching soccer, my life has been blessed in ways I never could have imagined - the amazing men who I get to build a relationship with who are pouring their lives into these young women and each other, the incredible young women who love God, love each other and are learning to play with passion, and even for me to be learning a new sport and skills and so much more.
Are there surprising areas in your life or opportunities that may present themselves that you want to be prepared for. Let’s find a few minutes to have a conversation and look at where you are at and revisit your Personal Statement of Financial Purpose and make sure that what you are doing is helping you live this out. Maybe this is more time with your family, maybe it is travel, maybe a career change, maybe the opportunity for a missions trip, maybe just adding more flexibility to be generous with your time and resources. Whatever it is for you, let’s make sure that you have a good understanding of your current situation so that we can be prepared for future opportunities.
April Element Focus is……not really an Element but Income
What a great month to focus on income! As we prepare to, or already have, completed and submitted our tax returns, we now have a current and hopefully accurate understanding of what our income is. If you haven’t already done so, I would ask you to take your total gross income amount from form 1040 line 9 and update your income number in the Elements app.
Income is one of the driving factors of a majority of the elements that we use to diagnose financial health. This is the basis for analyzing your Burn Rate (BR), your Savings Rate (SR), your Debt Rate (DR) and your Tax Rate (TR), so having this number as accurate as possible is important.
Through this analysis, we will be looking at your overall withholding choices as well. When I received a copy of your tax return we will have a discussing around the amount of taxes owed and/or the refund received. We want to maximize your monthly cash flow by making sure that we are not withholding to much and receiving a large tax refund. However, we do not want to be in the position where a large tax bill (as a percentage of overall income) is due. Both of these scenarios can show a lack of planning and may indicate that we are not optimizing income as much as possible.
I will be reaching out to you as I review this information if there are changes and strategies that may be able to be implemented for this year to help maximize cash flow and/or minimize tax liability. If you have any questions or would like to talk through this sooner, please give me a call.
April Planning OpportunitiesOur planning focus for April goes along with our income focus because, well April is tax month whether we like it or not. So as we analyze income and prepare to file our tax returns, it is a good time to also review our retirement account contributions and strategies. There is not a one size fits all plan to planning for retirement so it is important that your personal strategy is aligned with your Personal Statement of Financial Purpose (PSFP). As you know, everything that we do starts with your PSFP and is driven by your PSFP.
As we evaluate your retirement (long term make work optional) savings strategy there are several key components that we want to look at. First does your savings strategy help you progress towards your PSFP. Next, we want to look at if there are opportunities offered by your employer that you may not be taking advantage of. Finally we want to review any tax savings opportunities that may be available either for the current year or future years by exploring current IRA contributions and potential Roth conversion opportunities.
Finding the most efficient way to balance current taxes and future taxes is an ongoing process that usually requires annual adjustments to make sure that we are maximizing current cash flow and preparing for future needs. This is also a changing regulatory environment as we await information on whether or not the current tax environment that we find ourselves in will be made permanent or if our government will let the Tax Cuts and Jobs Act sunset in 2026, or maybe they will replace it with something different.
Client Actions
April brings us to tax deadline. Yeah! All of that dreaded tax preparation and document organizing and worry or fear or anticipation of tax filing is now going to be behind most of us (unless you file an extension). Please make sure that you have your tax returns submitted by the deadline which is Tuesday, April 18. If you are planning on filing an extension and will owe taxes, please make sure that you are submitting your estimated amount owed with your extension paperwork.
April also brings us to our first credit report check of the year. We do this every 4 months through out the year so that you can stay on top of the information on your credit report. Along with this, I am monitoring any new account activity through our use of the Sora platform. Everyone should be set up on Sora at this point, but if you are not, please let me know and we can set up some time to make sure you are all set up. In order to pull your free credit report you need to go to www.annualcreditreport.com and log in to pull one of your three credit reports. You are allowed to pull one copy from each credit reporting agency every year so I recommend pulling one copy every 4 months. If you have any questions, please let me know and we can schedule some time to walk through this process.
I am looking forward to May when I will be meeting with you for our 1st Let’s Connect Meeting for the year. I love this time to touch base with you and to hear about what has been going on in your life, what you have accomplished over the past 6 months and where and what you want to next. I will be sending out an invitation with a link to my calendar in the next week or two if you would like to get a jump on finding a time that works best for you.
In the mean time, if you have any questions, concerns, or just need to touch base regarding where you are at, please do not hesitate to reach out.
Have an amazing April!