Some employees have remained in the same area and worked from home during the pandemic. Others moved to different cities while they continued to work for the same organizations. In many cases, salary remained the same whether employees stayed in the area or not. This may change for some people. According to the The Washington Post, “…an October surveyby advisory firm Willis Towers Watson found that 26 percent of respondents said they would base compensation on location for remote workers.” In other words, if you moved to an area with a lower cost of living your employer may lower your salary.
There is no need to panic. The respondents to that survey do not represent all companies. Some employers may take a different approach. Employees who have moved to areas with a lower cost of living may find that they are not getting the kind of raises they could have expected had they not moved. And one expert commented that people who are getting paid less after they move still have the option to look for other jobs.
That is another interesting development. Employees are able to work remotely across the nation so employers will be looking nationwide for talent. You won’t be just competing with people who are nearby but with workers all over the country.
It is always good to be informed of what the salary range is for your type of work so you know if what is being offered measures up. You have to consider the benefits being offered as well. And remote workers also need to be aware of what kind of costs they will be responsible for such as internet service. While employers may reduce overhead and office space, remote employees are picking up the slack because they need to have their own office supplies and pay for their own electricity.
If you are someone who has received or will receive a stimulus check from the federal government, you may be concerned that you will need to pay taxes on those funds in the future. Kiplinger.com addresses that and a few other related tax issues in “Is Your Stimulus Check Taxable?”
Although we are taxed on income, there are no taxes on the stimulus checks because “As it turns out, your stimulus check isn’t “income” after all, according to the law. Instead, it’s simply an advance payment of a tax credit. And tax credits aren’t taxable income.” This is something that a lot of people do not realize.
Those who were unaware that the stimulus checks are actually an advance on a tax credit may also be surprised to see that there is a line related to the stimulus checks on their 2020 federal income tax return. There will be a line that is labeled “Recovery rebate credit” on the 2020 from for federal income tax. Think carefully because “The tax credit is based on what you put down on your 2020 tax return.” There could be a difference between the tax credit and the amount of stimulus money you received if you didn’t file a return on 2018 or 2019. There could also be a difference between the numbers if you had a major change in life circumstances between 2019 and 2020. But don’t worry. If your tax credit is higher than all of the stimulus money you received, you will pay less in taxes. And if you received more stimulus money than you were supposed to, the government will let you hold onto the difference.
In the rush to see the end of 2020, you might be tempted to forget this past year and move on. But it might be helpful to look back on how you saved and spent. While your spending may have decreased on things like travel, you may have spent more on hobbies or ordering food. Some people will find that they were disciplined about saving. Others may find that they ordered a lot more online because they were in the house more often. Thinking about how you helped and hindered your financial goals will be useful as you plan for the year to come.
There is still time to “donate to charity.”
Financial experts give this advice each year as December 31 gets closer and if you haven’t donated anything, this is the time to do it, if you can. This is especial true as 2020 winds up because “…you can also get a tax break — even if you don’t itemize your taxes. The CARES Act allows those who take the standard deduction to claim up to $300 in charitable contribution deductions.”
You can “prepare for bills to restart.”
If you were able to take advantage of the parts of the CARES Act that allowed you to postpone a student loan or withdraw from a retirement account without penalty, plan for payments in the new year. You will need to start paying your student loan again. And look into your options for how you’ll repay money withdrawn from a retirement account. In some cases, you will have three years to pay the money back but you don’t want to forget that it is owed for three years.
MSN.com adds, “PNC also calculates how much it would cost if you bought each of the items every time they’re repeated in the song.
That would put you back $105,561.80!!!”
For a number of items, the cost has not changed this last year. The items on the 2020 list that have the same price as they did in 2019 include the partridge in the pear tree, four calling birds, and eights maids-a-milking, and seven swans-a-swimming. Although the swan price stayed the same and the price of six geese-a-laying went up by 35% and is now $570, the swans cost way more than the geese. At $13,125, the swans are the priciest gift on the list.
It is fun to imagine what it would cost to give “The 12 Days of Christmas” gifts in today’s dollars. It is sobering to think about how all of the music and performance-related gifts would be hard to give since entertainment venues are closed and you’re not likely to invite numerous strangers to perform in your home. In this very tough year, it is also useful to contemplate value. Cost is a price that is set for you but value can be your perspective on how much a gift means to you. Think about what you value and what you want to give. And, depending on what you get, you can try to see the value in it whether it suits your taste of not. Many people are facing financial difficulty this year so they will not be in a position to give.
We wish you happy, healthy, and safe holiday season this year.
Are you the financial planner for your family? If you have singlehandedly taken on the responsibility for your family finances, consider that you don’t have to go it alone. In fact, you may find that things are easier when you share the load. You can still play to your strengths and do the work that you do well but you don’t have to be the only one who works on financial planning for your family. You may be surprised at the helpful ideas your family member may have. It is also easier to get the rest of the family on board with cost-saving efforts if they were part of the decision-making process.
Include your partner. If your family is you and a partner, it would be better for the two to you to meet with a Fee-Only financial planner together. So many couples realize the imbalance in their financial planning when the one of them who handles most of the money becomes incapacitated somehow. You don’t want to leave yourselves open to something like that. At a minimum, both partners need to know how to access all of the financial accounts. Even better if you and your partner sit down to discuss financial goals. You both need to have a clear idea of what you want for your financial future even if you both aren’t constantly keeping up with investments and accounts. If one of you is still doing more of the day-to-day administration, you can still meet to discuss your finances.
Include your children. In “How to make a family finance plan,” onefamily.com mentions the importance of involving your whole family in financial planning: “Work out as a family what you think you could save money on, and what you are hoping to be able to pay for in the future.” While adults do need to make major financial decisions, children can give their input.
Are you worried about how your investments are faring this year? We can’t say there is absolutely no reason to worry but what we can say is that you are not left with no recourse. You can find ways to worry less and strategize about how to make the most of the earnings you do have.
In “This Investment Trend Will Deliver a Profit Bonanza in 2021,” Forbes. com offers advice to investors who are preoccupied with the performance of their investment portfolios. People are justifiably concerned. Companies are going out of business. The economy has taken a hit from the pandemic that brought business as usual to a halt in some places. The writer imagines that people are thinking, “…our economy is still behind, so shouldn’t stocks be behind as well?” but reminds readers that “…stocks are forward looking—they’re not priced based on present earnings but future earnings growth.” The writer isn’t exactly saying there is nowhere to go but up since some stocks have not hit rock bottom; rather the idea is that there are industries that will rebound and others where value will increase as the world recovers from the effects of the pandemic.
The Motley Fool reminds readers who faced stock market losses this year that they can “…You can write off your losses to offset short-and long-term gains of the same type and then use the excess to reduce the other type of gains.” The article “Stock Market Loss in 2020? Don’t Worry—Losses Can Reduce Your Taxes” acknowledges that the frustration of these losses but suggested a “a smart way to profit from your pain.”
A Fee-Only financial planner can help you figure out how to recoup from investing losses and refine your financial goals if necessary so you can start the upcoming year with confidence.
The Kiplinger.com article “Estate Planning During the Pandemic” includes a scenario many of us want to avoid: a widow approached a financial planner with screenshots of texts her husband had sent from the hospital with information about investments and instructions. The husband passed away from COVID-related complications but one spouse not knowing enough to manage financial accounts is a common occurrence whether there is a pandemic or not. The financial planner says she worked with this client and later helped the woman create her own estate plan.
According to Kiplinger.com, these are the must-have documents to include in an estate plan:
Last will and testament
Durable power of attorney
Health care proxy
Digital assets inventory
A legal expert interviewed for the article offered this framework for an estate plan: think of it the way you do New Year’s resolutions. If you set resolutions each year, remember that you need to review your estate plan on a yearly basis. (And if you don’t set resolutions, you can still use the new year as a time for estate planning.) When the new year begins you can review changes in your life and finances from the past year to see what changes you need to make to your documents. If you find that nothing has changed, year and after year, the yearly review is still a good habit to continue. Plus, since digital assets are now included in estate planning you may need to review online accounts and passwords to make sure everything is up-to-date even if nothing else changes.
As we wrote in “Estate Planning in the Time of Corona,” there are ways to get your estate planning done or have changes made if you need to limit your contact with other people. These workarounds vary from state to state so do your research to find out what your state requires to ensure that your estate planning documents are legally executed.
Even with a pandemic putting a damper on big shopping events, people are still getting ready to spend this winter holiday season. Some may still be going out to big box stores or small independent stores, while others may be ready to shop at home using their computer or cellphone.
Every year we caution you not to overspend and this year is no different. If you are not too busy with food preparation before Thanksgiving, take the time to take an inventory of what you already have. This will not only keep you from buying more things you may not want or need; it will also remind you of how many items and resources are already at your fingertips. It is easy for us to forget how much we already have. And while there is something to be said for having duplicates for often used items, many of us are simply storing things we are not likely to use.
As far as gift giving goes, we know that people who are not going to see loved ones are more likely to send gifts. You may even feel like you want to spend more than you usually do because you cannot be there in person.
According to Kiplinger.com’s economic forecasts,” COVID-19 Surge Boosts E-commerce, Hurts In-store Sales and Restaurants.” That news may make you anxious or relaxed if you work in one of those areas. As a consumer we would caution you to consider how you spend if you have money to spare. If you have money to spend, consider spending it some of it with small, locally owned businesses that need more sales to stay afloat. You will be putting money directly into your local economy and improving the economic outlook right where you live. Count yourself fortunate if you can help a small business this holiday season.