We hope you’re enjoying financial literacy month!

Along with budgeting, another important aspect involved in mastering financial literacy is investing. According to Merriam-Webster, investing is the process of committing your money in order to earn a financial return. Investing is an important step to take toward cultivating your financial future.

Before investing, it’s important to assess your goals and timeline. Ask yourself the following questions: why am I investing and are my goals short-term or long-term? Assessing your investing goals and whether those goals are short-term or long-term is important because there are risks involved in investing. For someone with short-term goals, it’s important to invest in less risky options such as bonds. However, a long-term investor with a higher risk tolerance may choose to invest in riskier options such as stocks.

After assessing your risk tolerance, the next step is to open an investment account. If you’re a full-time employee and your employer has a 401(k) plan, this would be a great place to start because most employers match the contributions of their employees up to a certain percentage. As of 2022, the max amount that can be contributed to a 401(k) plan is $20,500. If you’re not an employee, your employer doesn’t give you the option to invest in a 401(k) plan, or you have maxed out your 401(k) plan for the year, you can open a Roth IRA account. As of 2022, the max amount that can be contributed to a Roth IRA account is $6,000. However, something to note is that the max contribution amount for each of these investment accounts increases for investors 50 and older.

Another important aspect to consider when beginning your investing journey is diversification. A common saying in the investing world is “don’t put all your eggs in one basket.” Diversifying your investments reduces your risk. A good way to diversify is by investing in mutual funds and exchange-traded funds (ETFs). Investing in mutual funds and EFTs is also more affordable than investing in individual stocks and bonds.

In conclusion, along with budgeting, investing is an important part of financial literacy. Investing can be a major step toward cultivating your financial future!

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Before your consultation with your CPA, it’s important to think about the specific questions you would like to ask them! Your family at Fola Financial put together a list of 14 questions to help you get started! Reference the image below, or click to download the PDF for your records!

Click To Download!

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Hey FOLA Fam,

Welcome to FOLA Financial Literacy Month!

To kick off financial literacy month, we wanted to talk about one of the most important concepts in the personal finance community, budgeting. When it comes to budgeting, like most things, there isn’t a one size fits all technique. Personal finance is exactly what it says it is, personal. Therefore, it is important for those embarking on a personal finance journey to find the budgeting method that works best for them. In the personal finance community, there are four main budgeting techniques used by most people within the community: envelope system, 50/30/20, zero-based, and pay-yourself-first.

Envelope System

The envelope system of budgeting is a form of budgeting that focuses on the use of cash. You set up envelopes for each of your spending categories. For example, you would have a different envelope for groceries, gas, rent, utilities, etc. In each envelope, you would have the amount of cash you have budgeted for the respective category. Once the cash in the envelope is gone, you have no more to spend for that category until your next pay period or the next month, whichever you prefer. Most people in the finance community use the envelope system for categories they tend to overspend in, such as entertainment.

50/30/20

50/30/20 is the budgeting technique that states you should allocate 50% of your income to your needs, 30% to saving/investing, and 20% to wants. However, those in the personal finance community who use this technique of budgeting adjust the percentage categories to fit their lifestyle. For example, instead of using 50/30/20, you might decide to allocate 70% of your income to your needs, 20% to saving/investing, and 10% to your wants.

Zero-Based

When using zero-based budgeting, you give all of your income for the pay period or month a job.\Whatever amount of income you receive will be allocated to something to the point where when you are done budgeting, there is nothing leftover. This is a great budgeting technique for beginners who start their personal finance journey not knowing where their money goes. With this technique, you will know where every dollar you make is going.

Pay-Yourself-First

The pay-yourself-first budgeting technique’s main purpose is for you to allocate money to your savings, debt, or investing before you start paying your bills for the month. Once you pay yourself first and pay your bills for that period, the rest of your income can be used for whatever you want. Along with zero-based budgeting, this technique is one that is widely used by beginners within the personal finance community.

Start your April off with a bang by taking the FOLA pledge and joining us for FOLA Financial Literacy Month! To begin your personal finance journey, explore each of these budgeting techniques and find the one that works best for you and that will propel you into financial health.

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Hey Fola Fam!

We are thrilled to highlight Maya Portorreal’s feature on CNBC Make It! Maya is a valued Fola Financial client, and we are always excited to celebrate her success! Check out her interview and be sure to support her yourself by shopping Kitten Co Jewelry 🙂

The post Client Spotlight: Maya Portorreal on CNBC Make It appeared first on Fola Financial LLC.

Form 1099 filings are due for any person or business to whom you have paid the following during the year:

• At least $10 in royalties (see the instructions for box 2) or broker payments in lieu of dividends or tax-exempt interest (see the instructions for box 8).
• At least $600 in:
  • Rents (box 1);
  • Prizes and awards (box 3);
  • Other income payments (box 3);
  • Generally, the cash paid from a notional principal contract to an individual, partnership, or estate (box 3);
  • Any fishing boat proceeds (box 5);
  • Medical and health care payments (box 6);
  • Crop insurance proceeds (box 9);
  • Payments to an attorney (box 10) (see Payments to attorneys, later);
  • Section 409A deferrals (box 12); or
  • Nonqualified deferred compensation (box 14).

The 1099-MISC Form is due  by Friday, January 31, 2022. 

Please note that if you do not issue 1099’s timely you will be at risk of incurring penalties and fees.

Fola Financial has a quick 3 step process to help you get your 1099 forms filed and delivered to your contractors on time!

Step 1: Complete the 1099 Intake form

Step 2: Complete & Submit the Fola Founder’s Contractor Worksheet Spreadsheet Sent to you

Step 3: We will E-File your 1099’s & E-Deliver it to your Contractors for you

Remember, the deadline to file is January 31st, 2022! Don’t delay and click below to get started!

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The IRS has specific requirements for individuals to qualify for the home office deduction. Let’s review some of them below:

• The home office deduction is only available to qualifying self-employed people.
• You must use your home “regularly and exclusively” for business during the tax year.

Here is a quick chart from the IRS that helps guide you to see if you may qualify for the deduction:

If you are able to meet these requirements, you may be able to deduct part of the cost of your home expenses. Identifying which expenses you can include can be a bit challenging, so it’s always recommended that you review your proposed deductions with at CPA to make sure that you are maximizing your opportunity to claim your business expenses.

For many people who are now working remotely, this deduction will not apply to them because the work that they are doing is as an employee.

However, if you are currently an employee that is considering transitioning to a more independent option such as becoming an independent contractor, or starting a business in your spare time, you may have opportunities to deduct other expenses that are related to your business operation.

Whichever category you qualify for, it’s always important and beneficial to create a tax plan ahead of tax season, and to review that plan during the year to make sure that you are sticking with it!

Fola Financial is here to help you create a plan to meet your personal and professional goals, and evaluate how you can reduce your tax liability and maximize your deduction whether you file taxes as an employee or a business owner.

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