Wink Tax Services
IN THIS ISSUE . . .
What are you doing to ensure that you achieve your financial goals? Developing and following a written financial plan will give you a road map to help in the process:
Please call us at (800) 878-4036 if youíd like help with your financial plan. Together, we can work to help ensure that your financial objectives are reached.
While divorce is a painful time, emotionally, you mustnít forget that divorce will also have a significant impact on your finances. Many important financial decisions must be made during the divorce process and it is generally better to obtain financial advice before, rather than after, a settlement is made. Some of the items that will need to be evaluated include:
To determine whether you are making progress toward your financial goals, you need to assess your current financial situation. That involves preparing both a net worth statement and an analysis of how you are currently spending your income.
NET WORTH STATEMENT
A net worth statement lists all of your assets and liabilities, with the excess assets equaling your net worth. Be sure to list all assets, including vested balances in retirement plans and 401(k) plans, personal property, jewelry, and household furniture. Value assets at the amount you would obtain if you sold them now, not the amount you actually paid. You should prepare a net worth statement at least annually to measure the progress you have made during the year. When reviewing the statement, consider the following items:
ANALYSIS OF SPENDING
Even if you donít feel a need for a strict budget, itís still a good idea to analyze how you are spending your income. This analysis can help you determine how to reduce spending and increase savings.
First prepare a cash flow statement analyzing past income and expenditures to reveal your current spending patterns. List all your income for the past year as well as expenditures by category. Even if you havenít been keeping track of your expenditures, canceled checks, credit card receipts, and tax returns will provide much of the needed information. You may want to keep a journal of all expenditures for a month if you are unable to account for large sums of money.
Divide the expenditures between fixed and essential expenses (housing, insurance, taxes, saving, etc.), variable and essential expenses (food, medical care, utilities, etc.), and discretionary expenses (entertainment, clothing, travel, charitable contributions, etc.). Analyze the statement to see if there are items you can cut back on, allocating those sums to savings.
Next prepare a budget for future spending that incorporates your financial goals. Keep these points in mind:
Male conscious decisions about how you will spend your money, donít just assume that you will spend the same as last year.
Make the budget flexible. Nothing goes exactly as planned and your budget should be able to deal with emergencies.
Budget for large, once-a-year expenditures.
Donít try to be too precise. Everyone in the family should have a reasonable personal allowance that they can spend without accounting for it.
Compare your actual expenditures to your budget periodically to ensure that you stay on track.
Keep it short, simple, and easy to implement so that you donít dread the entire budget process.
These two tools can help you determine where you currently stand financially. Prepared annually, they can also help you measure your progress in achieving your financial goals. Please call if youíd like help analyzing or preparing your net worth statement and expenditure analysis.
While 37% of all households own stocks, either directly or through institutions, the top 5% of households own 77% of all equity holdings, which includes individual shares defined-contribution pension funds, IRAs, Keoghs, 401(k)s, and mutual funds. The bottom 80% of households own just 1.8% of all equities (Source: Business Week, April 22, 1996).
Stock ownership increases in households with more education. In 1990, 4.1% of stocks were owned by individuals with three years of high school or less, 20% by individuals with four years of high school, 28.2% by individuals with one to three years of college, and 47.7% by individuals with four or more years of college (Source: The Wall Street Journal, May 28, 1996).
Only 10% of shareholders make six or more trades in a year (Source: New York Stock Exchange, 1996).
It is estimated that assets in retirement accounts will increase from $3 trillion now to over $5 trillion by 2001. Currently, over half of all new contributions are being invested in stocks and equity mutual funds. (Source: Money, April 1996).
The volume on the New York Stock Exchange has doubled since 1992, while volume on the NASDAQ has doubled since 1993 (Source: Securities Industry Trends, November 22, 1996).
The U.S. equity market is now 43% of the worldís total capitalization compared to 61% in 1975 (Source: Securities Industry Trends, November 22, 1996).
After 7 years in our old office it was time to expand our horizons and move up in the world, well actually move 2 miles west to Crooks and 16 Mile, and up to the 3rd floor.
The real reason was to control costs, and rent is our largest single expense after personnel. We have not increased our fees in over 10 years and would like to hold the line as long as possible (maybe another 10 years). Second, the world has changed quite a bit over the 7 years we lived in the EMRC building. Back in 1990, we needed a lot of space for our library, but today over half of the library has moved onto tiny 51/2 inch CD/ROM disks and they contain twice the information we maintained in 1990.
So our new home is 1700 West Big Beaver, Suite 355, which is still in Troy and hopefully easier to reach (we are closer to I-75 and Big Beaver is 3 lanes each direction rather than 2).
While our location has changed, we have not, except maybe a little more efficient. Our 3 companies still offer a full and expanding menu of services.
Please feel free to stop on by and visit our new home (we are getting close to being unpacked) and soon we will have our virtual home up and running with home pages on the World Wide Web.
Ray, Derrick, Ed, Paulette, Jocelyn, Sue, and Gloria
Tax Disclaimer: To ensure compliance with IRS Rules, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein.
Copyright © 2017
Wink Tax Services / Wink Inc.