As the year comes to a close, it’s easy to get swept up in the holidays and forget key financial to-dos that could make a huge impact on your taxes, retirement, and financial confidence. In this episode of Wise Money, we’re giving you a comprehensive year-end financial planning checklist covering all six areas of your financial life to make sure you finish strong and start the new year on a solid financial footing.
Season 11, Episode 16
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Transcript:
It’s time for Wise Money with Korhorn Financial Group with certified financial planners Kevin Korhorn, Mike Bernard, and Josh Gregory.
Segment 1: Welcome to another episode of the Wise Money Show with Korhorn Financial Group, where every week we’re helping you take your next wise step in your financial life. Thanks for being here, friends. My name is Mike Bernard. I’m your host. I’m also one of the certified financial planners on the program. And with me in the KFG studios, my business partners and fellow CFPs, Kevin Korhorn and Josh Gregory. As the year winds down, it’s easy to get swept up in the holidays and forget the financial to-dos that could make a huge impact on your tax, retirement, and just overall financial life. This week, we’re going to give you the comprehensive year-end financial checklist covering all six areas of your financial life to help make sure you finish strong and start the new year on a solid financial footing. That’s right. Swept along, Josh. I’m just struck by that phrase because that is what it feels like. I don’t know, maybe I’m unique, but you know, every it seems like every day or every weekend there’s a party, you got to go to this and all that. And and oftent times, um, yeah, your your financial to-do list sort of gets on the back burner or you ignore it or forget it, and we’re going to help bring it to the forefront and just tell you what you need to do so you can take action and move on and enjoy the holidays. If you have a question for the program, we’d love to hear from you. You can call or text us 574222000. That’s 5742222000 online. Wisemoneyshow.com is where you can find us. Reach out to us and send questions that way. And then all over social media, wherever you’re at, we are there as well. Search the WiseMoney Show. Yep. I kind of want to deny it, but you can’t. It’s December. We have this fight every year. When When does Christmas season begin? And my family is trying to win me over that as soon as Halloween is done, it’s Christmas season. And I’m pretty I think the commercials have caught wind of that. Um I completely disagree. I think Christmas season starts December. December 1st. Okay. Let’s enjoy the fall and let’s have a good Thanksgiving. December 1st. Christmas time. Interesting. You guys with me? I I’m fine with that. Or maybe Black Friday. Maybe I could be convinced Black Friday, but it’s a rounding error. Yeah. Not November 1st. Yeah. Not November 1st. Come on. For me, Christmas season begins when we sing um Oh Holy Night at church. Oh gosh. With and I have tears in my eyes. Yeah. Yeah. Uh I don’t know what that song like just triggers it for me. It is officially Christmas season. And then you just said the phrase, Josh, because on November 1st, I heard a commercial where they’re they’re singing that song. It’s officially Christmas. And I almost want to throw up. My family was loving it and I I couldn’t stand it. All right. Anyway, so it’s a joyful season and it’s a time of of being with family, being with loved ones, um giving gifts and and and um and showing appreciation and just traditions and all that sort of stuff. H finances can take a backseat. In fact, it’s it’s an expensive season. So, here’s what we’re going to do. We’re going to even the prayer before getting uh the show launched today was to help inform you so that you can take action and so that you can take action and then enjoy the season. Okay. So, we’re going to walk through the six areas of all of our financial lives. Your financial life, my financial life, Kevin, Josh, Warren Buffett has six areas, his financial life, it’s the same. We’re going to walk through the six areas. Some of them there are some a lot of year-end items that you need to have on your checklist. Others not as jam-packed. We’re going to walk around the six areas, help you have the right financial checklist to take care of this uh this December before the end of the year. Sound good? Great. Yeah. All right. First area of your financial life, my financial life, everyone’s financial life is your present financial position. This is where you’re looking at if you were a business, this would be your balance sheet and your income statement. As an individual, it’s either balance sheet or net worth. not to not for a boastful reason, but you’re sort of categorizing your assets, laying them out, and what’s the purpose of each and how much is where. And then same with liabilities. Okay? So, you’ve got your balance sheet or net worth, but then you’ve also have your your cash flow analysis or your budget or whatever you want to call it. That’s present financial position. What needs to be attended to there? You know, when we talk about cash flow, we are big fans around here about setting up a budget, but then also having your bank accounts in support of that budget. having three bank accounts in place and each one having its own specific purpose. Your your first bank account is your um immediate spending account. It’s where you do all of your monthly bills, the the stuff that comes through like clockwork. But it’s the delayed spending bucket number two that maybe you need to be dialing into right now and looking at more closely. This is where you manage your non-monthly expenses. the um the expenditures that pop up less um frequently, maybe even sporadically, maybe even just annually. And Christmas time or the holiday season is often one of the very best examples of this where you do all of the spending in a short amount of time in a certain category, but then you begin saving up for the next year’s spending right away. And uh unfortunately, a lot of people get to the holiday season and they don’t have a budget in place. They don’t have their game plan. They haven’t saved ahead for the spending that they’re going to do. And unfortunately, it’s the credit card companies that often have the backup plan for you. And so, you spend the next month or two or three kind of digging out of a hole. And what if right now coming out of this tax or out of sorry, out of this holiday season, you had a game plan in mind for next year already. Your budget and your delayed spending account is one of the mechanisms that makes that possible. If you’ve been working this three bank account system, then likely you’ve got either money set aside for your Christmas spending, maybe even Christmas events and dinners and all that sort of stuff. If not, you might be feeling some stress right now. The opposite of joy. And that was our first Christmas as a married couple. We got married on December 2nd. Uh Christmas, turns out every year is on the 25th. And I’ll tell you, those three weeks were very stressful cuz I I don’t love to spend money. and I really didn’t like to and we had none of it. And um Cindy just loved getting everyone gifts and and everything’s great. And um it we were almost done like one month in to the marriage. It was and and so in January it was like I don’t want to do this. And I’m I am s a sappy sort of Christmas. I just love the season. And so we that was when it was the wakeup call of nope, we are doing the three bank account system and we are starting to save in January. how much what’s the Christmas budget? And Cindy said, “How about a budget range?” And I said, “That works. It’s compromised, honey.” Um, and we we divided that by 12. We started saving that every single month. And on November 1st, I’m contradicting myself a little bit. That’s when we pull the dollars out of that Christmas section of the delayed spending. And uh, right now, it used to be cash. Now it’s just use that to pay off Amazon. Um but uh but yeah, I mean it is it’s the quintessential example of why you need a delayed spending account. Christmas only comes up once a year. And is it a financial stress or is it a financial like just ah yeah non-event. Yeah. I like the end of the year because I don’t know what it is but it gets us focusing on okay what do I need to do to finish up this past year and put myself in a good position to get a a start on the next year. If a leader’s job is to define reality, especially in your present financial position, you want to define reality. And I think about that and we’re a lot of us when you look at just the culture um that our economy works on consumer spending. And I would look at my three bank account system and if I don’t have my all three of my bank accounts sufficiently funded, I would I would define that as the reality and say, “Hey, family, depending on where you are, we we don’t have the resources to allocate towards gifts this year.” Now, that’s in some families that’s a huge deal because they’re used to getting gifts and gifts are a big part of how people express love and other things. So, if that’s the case and you’re going to not do that, you’d have to come up with some creative uh things that you could do with the family that didn’t cost any money. My favorite thing to do is when people say, “Oh, well, I’ve got to do this and it cost all this money.” I would say, “Okay, you have to you have to achieve the same effect, but you can’t spend any money.” Now, solve that problem. And it’s amazing how people do that. You can put in chat GPT. How do I start some Christmas family traditions with my family? Yeah. That don’t cost me any money. Love that. And get some great ideas. And I’m not s So, and again, some people gifts is a big deal. When I was growing up, if you got uh three new pairs of underwear, a Matchbox car, and an orange, you like that was an amazing Christmas. Love it. And it’s different now because the because again the problem now is what do you who is that person in your life that doesn’t really have what they want. So if everyone has what they want, it’s kind of hard to even shop for people anymore. Yep. Yep. Man, I I don’t know. I’m loving what you were saying there and just separating the holidays from just always spending money. Does it have to be a financial hit to the family? That kind of thing. rethinking and being more creative. You know, we have not defined what that third bank account system is. I don’t think it’s it’s an emergency fund. And if you don’t have the right emergency fund in place and you know, you you don’t have a game plan for the holidays. The risk is that you start putting yourself in a very vulnerable place to start the new year. You don’t want to be spending it digging out of a hole or having to play defense. Let’s get the right safety net in place so that next year you can really crank on those those big-time goals. It’s going to sound super cheesy, but give yourself the gift of financial confidence next year by how you manage your cash flow in the three bank account system during this holiday season, setting yourself up for success for next year. All right, what are the other action items that need to be on your financial checklist this time of year? We’ve got that and more coming up on the Wise Money Show with Korhorn Financial Group.
Break 1: Hello YouTube. Thanks for being here. This is the Wise Money Show. What you’re watching right now is our weekly 1-hour talk show that airs right here on this channel, 10:00 a.m. Eastern time every Saturday morning and also on podcast at the same time and also on a couple local radio stations at the same time as well, which is why the content’s broken up the way that it is and we’ve got segments and breaks and it is long form. It’s a talk show. So, occasionally we get some comments of oh that you guys just have a lot of banter and this is a talk show. Yeah, I’m I mean yeah, but all designed to help you take your next Y step in your financial life. And if this is too long for you, we’ve got next wise videos. We’ve got reels and shorts and everything right here on this channel. Uh almost 2,000 videos by now. So, if there’s a financial concept that you want to learn more about or you’re interested in maybe applying, we’ve got content right here for you. So, make sure you hit that subscribe button, turn on notifications, if uh and if you like the content, like the content. We appreciate it. All right, bonus question. Let’s get a let’s go quick here. First one. I should have had it teed up if I’m saying we’re going quick. Yeah, no kidding. Uh, what’s one financial lesson that you hope your kids or your grandkids never forget? Man, these are heavy questions for a quick speedy round. You have one? I don’t know. I When I think about that, I if I could transmit a value to my children, I would say, you know, money is important. It’s like oxygen. You need it to live. But money is not what is important in life. Mhm. And so we were just talking about that uh in this first segment and you know I pull up on chat GPT you know what fun family traditions could could I create uh that don’t cost any money and it said okay at Christmas camp out one night in December move sleeping bags in the living room and camp under the tree lights no phones just stories and hot cocoa and these are these are the things that stick to your ribs. Yeah. Right. Not the not the Tell tell me if the kids remember that in 5 years or 10 years. Absolutely they will. That’s what they’ll remember. I would say uh and I will too cuz I’ll still be trying to catch up on that sleep that I just it needs to be pitch black in order for me to get anything. What’s one financial lesson you hope your kids or grandkids never forget? I would say um give, save, spend. Yeah. Society, it’s the opposite, right? We’ve talked about this before. It wasn’t even our original idea. I think Andy Stanley maybe came up with that originally. Great communicator. But most people it is um taxes, debt, spend, maybe save. Really no room for for giving. And it so I would just just reorient. Give, save, spend. And that’s right. Don’t pay your taxes or just kidding. You got to mix that stuff in too. I I don’t want to go like ultra spiritual here or anything, but I feel like there’s always a warning that we all need to remember that for a lot of people, money is like God’s number one competition for our hearts, you know, like it it is so easy for that to turn into an idol. Either the money or the stuff or the pursuit or the worry or whatever. And I don’t know, I want my kids to know that money is a tool and it can bless people. It can, you know, help have a great life, but it is not the pursuit. Yeah. So, yep. Anyway, all right. Here we go. Second segment. We’ll get hit protection planning quickly and get into some tax stuff. Here we go. What should you What should Here we go. Let’s restart. That’s a good question, Mike. Yeah, that is. Yeah. All right, here we go.
Segment 2: What should be on your financial checklist? Your to-do list this holiday season. Most people, you’ve got a lot of a lot on the list. Buy for this person, get the turkey, all that sort of stuff. What should you What should be on your financial checklist? We’re helping with that right now. This is the Wise Money Show with Korhorn Financial Group. Thanks for being here. My name is Mike Bernard with me in the KFG studios, Kevin Korhorn and Josh Gregory. Stay up to date on all Wise Money content. Find us online, wismoneyshow.com. and then all over social media. Wherever you’re at, we are there as well. Search the Wise Money Show. Walking through all six areas of your financial life, my financial life, everyone’s financial life. There’s six areas to them. And just sharing what are the urgent items, right? There’s a lot of important items on there, but you get to this time of year. And there’s a few urgent ones that you really should attend to by the end of the year. And it’s harder to focus on those during all the craziness and chaos this time of year. So, we hit present financial position. And if there’s any more guys, we can hit it. But mostly, it’s budget. And I I don’t I don’t even want to say that word. It’s three bank account system. This is the freedom. This is the freedom where you aren’t obsessing about finances and oh, we’ve got to get a gift for this person or that person that, you know, stocking stuffers that wasn’t in the budget sort of thing. And instead, you’ve you’ve saved up in advance. You’ve got the cash right there and you just enjoy the holiday season. And if that’s not your experience this year, it is time. That’s that’s the sign. Get started on a three bank account system so that next year you’ve got peace. Okay, protection planning. Not a ton of urgent items to do with protection planning other than make sure that you’re calibrated for your health insurance for next year. Yeah, for a lot of people depending on how your employer uh whether they offer group health insurance, that sort of thing. You come to this time of year, maybe we’re winding that down in your company, but you have an open enrollment period where you get to make some fresh decisions on the upcoming year. How are you going to structure your insurance? Some employers will have multiple options for you to select from. Uh when it comes to your health insurance, you get to decide whether or not you’re going to add dental and eye care and do you increase any life insurance there. All of that falls under the heading of protection planning. And this really is just how are you going to manage risk in your financial life? because the hope is that you are working hard and you are building towards goals and you’re checking them off and and just feeling the progress in your life. But what happens when the unfortunate events occur that can send you backwards um or or kind of spiraling downward instead of upward? And that’s where transferring risk to an insurance company so that if you were injured and couldn’t work for some period of time, do you have the right income coming in? if you had a major health concern, do you have the protection in place so that you’re not eating those entire uh medical bills all on your own? And then, you know, god forbid a tragedy struck and someone passed away prematurely. Is the family protected is the point. And I I personally feel like it’s always a good time to be dialing into your protection planning. It needs to be a regular reoccurring event for you to just revisit it and make sure that what you chose previously still makes sense. And I just I got to tell you, a lot of people they have more time around the holidays. You might be taking time away from work. Um and I I realize that thinking about life insurance around the holidays is not what most people want to do, but if you have the time, sit down and just, you know, devote some attention to this stuff before the end of the year. Even though there’s no deadline telling you you got to do it right now. You’re saying that you don’t think about life insurance when you’re watching the Christmas Carol. All these ghosts coming to you and like what what could happen, what did happen. Get some life insurance. You’ll feel better. Okay. Uh what about Well, no. And and just with life insurance, the most amazing thing is when we’re talking to folks and I’ll say, “Hey, okay, the life insurance you have in place, you you put it in place 12 years ago. Is your financial life the same as it was 12 years ago?” Right? And the answer is almost always no. It’s dramatically different. Well, what has changed? Well, we’ve had four more kids. Well, do you need more life insurance to fund your unfunded goals? Or what has changed? Well, all our kids are through college now, and we needed to preund that. We don’t we won’t need that for that. And our retirement is ahead of pace. Well, then do you need as much as you have? Are you self-insured? Are you moving towards that? So, this is this is where I like the idea. Josh, you’re right. There’s no deadline. There’s a deadline to get your taxes filed and you have to have insurance in place if you live in a house or or drive a car. There’s no deadline for life insurance. Yeah. So, I I would uh self-impose those deadlines and tell that to someone who can hold you accountable. And so, open enrollment, Medicare open enrollment’s ending right now. And so, hopefully you met with your health insurance expert and you made a great decision. You’ve got clarity and confidence for this next year. And if you don’t, I I mean, set your calendar for next year, October 15 to December 7. You can even schedule the appointment right now. We we will help you with that. Um, we want you to have that confidence. If you’re on uh if you’re on healthcare.gov, you’ve still got a little bit of time to select your plan for to for it to be effective on one of uh of 2026. You’ve got until December or excuse me, yeah, December 15 to set that in place. You still have more time to pick a healthcare.gov plan. It just won’t be effective January 1, right? You have until January 15th. And the confusing thing is most It’s all confusing, actually. Well, it is. Most folks think, well, I can just sign up for Obamacare anytime I want. And you can’t. If you don’t get it done during open enrollment, which ends January 15th, you can’t you can’t just hop in unless you’ve got a qualifying event. Right. Right. Right. Right. Okay. So, that’s that’s protection planning. The big kind of financial checklist, to-do list this time of year is really in the third area, which is tax planning. Some tax planning. So, Josh, this is where I I might argue with you a little bit. People don’t want to think about life insurance and protection planning all year. Uh they really want to think about taxes all year. Just kidding. Two terrible topics, by the way. Uh but but tax planning, that creative side is is I don’t know. I’m a geek, so I enjoy it more. But right now, you’re running out of time for some yearend tax planning strategy. So you got maybe one or two paychecks left. We got a few weeks until 1231. What’s what’s on the tax planning checklist? Well, this doesn’t have anything to do with paycheck necessarily, but um you know, giving is something that may be on your mind. Maybe you’ve been um considering giving to a certain charity or you just have a tradition around the holidays. It’s common that as we get to the end of a calendar year, a lot of charitable organizations, they’re struggling to meet budget and they may be making requests of people. Did you have a game plan throughout the year for your giving? And are you on pace for it? You know, are you are you ahead of pace? Do you want to kind of shore up or reach some of those giving goals? Getting those tucked in before the end of the year could have an impact on your tax. And so, we consider it to be um, you know, part of a year-end checklist just simply because it may have an influence on how this year’s tax return shakes out for you. Here’s uh an oldie but a goodie that’s coming back. state tax estimate. If you pay state taxes and you think, yeah, I don’t know, it could be close, might owe a little bit on the state because of, you know, interest or dividends or business income, rental income, something like that. Um, and you believe you’re going to itemize the increase in the state and local tax cap, deduction or deduction cap, whatever it is, part of your itemized deduction. They raised that limit. There used to be no limit and then there’s been a $10,000 limit and now it’s a $40,000 limit. So if you think you’re you could itemize and you also think, yeah, probably going to owe some state taxes, you’ve got until January 15 to pay those, but if you pay them in this calendar year, it counts towards that state and local tax. The salt uh deduction that you get on your item ice could help you get a bigger deduction this year. And that $40,000 is based on your income. Yes. So, yeah, that that is something I I think there we’ve we’ve talked about a couple of particular giving strategies. So, I if you’re giving, one thing that we would encourage you to do is get your donor advised fund funded before the end of the year. Mhm. And there there are some other particular ideas like in Indiana, you’ve got the state credit. So if you’re single, you can give a $100 and get a $50 credit. You can give 200 for a married couple, get a $100 credit to a Indiana university to an Indiana university. And then you can give to a scholarship granting organization and get a 50% credit. What about the two biggies? We we we’ve got to sneak those in. required minimum distribution. That has to do that. It has to be done, especially if you’ve inherited a uh an an IRA pre-tax account from someone that Oh my goodness, these rules are so confusing. Someone that passed away after 11 one of 2020 and they had already passed their required beginning date, meaning they were already taking required minimum distributions. This is the year, 2025, that’s the year where it’s official. You have to start taking a required minimum distribution from that account. So whether you are age 73 or above and you need to take an RMD for your accounts or from an inherited account, you’ve got until 1231 otherwise penalties come. And then Roth conversions, you’ve got a deadline there as well, but we’re going to pick that topic back up as well as what other tax items need to be done by year end. That more coming up on the Wise Money Show with Korhorn Financial Group.
Break 2: Okay, deep thoughtprovoking question number two. What’s one investing principle that never goes out of style? I feel like the saying going out of style has gone out of style. Personally, we should come up with something better than that. One investing principle, investment principle, I would say dollar cost averaging. What were you going to say? Uh, say 15%. Towards retirement and having that be the goal. So, I actually just did a video about that and shared that. Um Kevin told me that I think when I was still interning and it just seared into my brain like okay let’s go we’re going to do this and um I don’t know it’s been 22 years hasn’t gone out of style. I still like that still feels like a high bar but achievable bar and one that you should be striving towards. Mhm. Yes. And that helps you with the Bernard paradox. Just like when you if you work out this morning, you’re you’re actually for me, my willpower to say no to the food that I shouldn’t eat is stronger than the mornings that I don’t work out because uh James Clear, you’ve casted a vote. You’ve casted votes by working out this morning that see, you’re a healthy person. You’re a disciplined person. Yeah. I there’s all kinds of different ones. I just think the this this idea that it’s different this time it’s it it is not um that that that’s something most folks periodically are going to have to tell themselves it’s not different this time but AI and but look at what you know these tech companies are doing or look at what these energy companies are doing or this it’s not different this time I need a strategy And one of the most important financial decisions I’m going to make in my entire life is my asset allocation. That’s right. That’s right. Okay. Here we go. Likely a lot more tax planning. Maybe most of this segment. It’s third segment. So I mean the other three there’s not as many action items. So it doesn’t need to be balanced evenly distributed. Here we go.
Segment 3: Is this the year that you finally do a Roth conversion? You’ve heard us talk about it at nauseium for years. Does it finally make sense for you because of maybe changing tax laws or changes in your financial situation? Or maybe is this the year that you say, “Nah, I I I can’t do it, but I’m going to get prepared and do it next year.” We’re helping with that right now. This is the Wise Money Show with Korhorn Financial Group. Thanks for being here. My name is Mike Bernard. With me in the KFG studios, Kevin Korhorn and Josh Gregory. Every episode of the Wise Money Show is on podcast. Wherever you listen, just search the Wise Money Show. Subscribe to it there. rate the program there as well. We appreciate it. Working through all six areas of your financial life, talking about what are the urgent year-end action items that you need to take in each of those areas to build out your year-end 2025 financial planning checklist. We’re into tax planning, which has a disproportionate uh amount of year-end uh opportunities. And the one that we left off on was the Roth conversion. This is a 1231 deadline. and and it can be confusing because funding an IRA, funding a Roth IRA, you’ve got until April 15. Not with the Roth conversion. Well, Roth conversion is something that we talk about a lot on the show because it feels like it’s always a strategy that you need to be considering and we always consider it in the context of a tax projection. And you know, it’s late in the season. So my hope would be that you already have a tax projection in place and you already worked with your certified financial planner to personalize what are the opportunities that exist for you in your unique situation. You know ever since what July 4th is that when the one big beautiful bill was passed uh everybody’s tax could be affected by this bill but do you know how yours will be and what you could be taking advantage of? Yes, a Roth conversion might be on the table this year and you had ruled it out in years past. To me, making sure that your tax projection work is on the calendar, you are doing it, you know, regularly, just faithfully to decide whether or not things like a Roth conversion, moving money from an IRA to a Roth IRA and paying the tax on that maneuver, does it make sense for you this year? It’s got to be done before December 31st. Is this one that you parlay with the first idea? Get that donor adise fund open and make a contribution in doing that and you know with the other salt cap changes. Oh, now you’re going to itemize. Your deductions are going to be bigger. That opens the window to do a Roth conversion. That’s where that that’s where having an official game plan, that tax projection makes a ton of sense. Yeah. You know, I I met with a client uh earlier this week who told me she’s getting married and uh we had a certain agenda in mind and we were going to be talking about uh maybe harvesting some gains in her portfolio. But the news that next year could be very different from a tax uh perspective. It caused us to kind of pause or recalculate, recalibrate um how much selling we might do within her portfolio because next year uh she’ll be filing a joint return and we may have bigger uh tax brackets to play with that that sort of thing. So to to me again I’m going back to tax um projection work. What is it that makes sense for you to get done yet this year? It might be selling some taxable investments to harvest some gains or the opposite, harvest some losses as well. But, uh, looking within your portfolio, are there any opportunistic moves that you could be doing before the year is up because of your tax? Yeah. So, I I have a couple things. One is if I have individual stocks in a nonirra account, I’m looking at the ones that have gains. I’m pushing those into my donor advised funds and and and selling those in my donor advised fund because once it gets in there, I don’t pay tax on that gain. And then if I still want that stock, if I want to own equity in that company, I take my cash position and I reby that. So if I’ve got something that I paid $5 a share for and it’s at $50 a share, I push that in and I reby. And you say, “But I’m rebying at $50 a share.” Yep. But I already held it at $50 a share, so it’s not um it all I did was improve my position that I go I would go I want to go back to that Roth IRA thing. Uh Michael Paul Roth Bernard because when I think about that a lot of times, um people are not thinking multi-generationally. They’re thinking about what what do what is what do I do? What? What? They They’re like an Amish horse and they’ve got the blinders on and they’re looking straight down the road, which that’s good. That keeps the horses on the road. It doesn’t scare them when there’s a dog coming out after them or a semi-truck going by. But I would say open up your aperture and see more because a lot of the folks that were dealing meeting with some folks last night, they’ve got a generation above them in their 90s. they’ve got a generation below them in their 40s and all there’s there’s a lot of tax planning. So don’t consider, hey, these are this is my money and I’m going to pay some taxes. I want to figure out how to pay the least amount of taxes. I would say yes, that’s right. But figure out how the family multi-generations can pay the least amount of taxes over the lifetime of the family. And that planning is different. And when I ask them how it’s going and what kind of tax planning advice they get, they’re kind of specialized in in the industry that they’re in. So they work with a certain tax preparer, but they’re like, “Well, we Yeah, our tax preparer doesn’t call us back. Um, you know, it it takes about No, it it just takes about 3 weeks to get a call back.” Yeah. And so it was, you know, that was a that was a wakeup call to me to say, okay, that’s why you have to have service standards. That’s why you have to have a team serving clients. I mean, there’s all kinds of Yeah. Uh Okay. So, there’s a couple others with when it comes to deadlines that you’ve got to take action on in your taxes before the end of the year. You got maybe one paycheck left, maybe two. If you’re paid every single week, you’ve got a you’ve got a few HSA contributions through payroll. You can make an HSA contribution, health savings account contribution all the way up until April 15 and make sure that if you want it to be for the previous year, you state that. Sometimes people just assume that uh that you know it’s well of course it’s the bank can read your mind. The bank or or if you’re doing an online transfer, oh well of course I intend to have this be for last year. No, actually when you do an online contribution to the HSA, most companies do not have a spot where you select what year. Yeah. It’s presumed to be the year that you did the transfer the contribution. So that’s one reason why sneak your HSA contributions in this calendar year so you avoid that mess and confusion. But the other thing is you get an extra tax benefit if you make those HSA contributions through your paycheck. Not only does it save you federal and state tax as a deduction there, but it avoids FICA tax as well. And so maybe you’ve got a paycheck or two left and you want to say, “Well, I know I’ve got a surgery coming up or I know I want to fund that HSA a little bit more for next year and goose up that contribution by the end of the year.” As long as you’re not more than a 2% owner, yep, of the company. And if you hear this and you say, “Hey, I’m not going to be able to get it done through payroll. I’ll just go down to the bank.” Um, it you have to be really clear with the bank what you’re doing. And hey, I I’m I’m making a deposit. This goes into my HSA and then for what year. Yeah. Because we’ve had folks that have gone down to the, you know, they’ve been told you got you need to make an HSA contribution. they go down to the bank, make a deposit without realizing, hey, and I would tell you it if you if you’re accumulating dollars in your HSA, it shouldn’t be in the bank. Just uh it it should be invested. Uh you know, your idea, Mike, of um kind of gooseing up your last paycheck or two of the year. Some people might reject that idea just because it’s the holidays and they want the biggest possible take-home pay that they can have to cover Christmas gifts or something like that. And and that’s all fine. You can only have so much impact at this late hour anyway when you’re contributing out of a paycheck, but it’s not too early to be thinking about next year as well, right? If now is when you have the time, it’s on your mind, you realize that I’m coming up short on my HSA contribution or I had intended to contribute more to my 401k this year, I need to increase those savings. So, that’s not going to have a lot of impact here in this current year, but you are setting yourself up to maybe get the right amount saved, get a little bit more saved next year, and that also will benefit your overall financial life. Yeah. And then the last idea that we have to share and then we’ll need to move on. And this one actually stands on the third area and on the fourth area we’re going to get get into that’s investment planning. But that is same concept. You’ve got you know just a couple paychecks left to potentially increase your 401k contribution. And if you have dollars that you want to get into the 401k the only way that you can contribute them is through your paycheck. And so you could increase your contribution a little bit right now to either hit that maximum or hit that catch-up contribution or shift some dollars that maybe you have sitting somewhere else. Increase your contribution out of your paycheck. Your paycheck goes down, it goes into the 401k. You pull the dollars out of the other source and you just did a two-step and got those dollars into your tax shelter. Set that up through payroll as well. You’ve got a little bit of a window to do that. Now, like I said, that’s a bridge into the fourth area of your financial life, investment planning. Anything on that financial to-do list? We’ve got that more coming up on the Wise Money Show with Korhorn Financial Group.
Break 3: All right, let me see if I can get a good one here. Okay, that dead air is music to people’s ears. Uh, all right. Here we go. Um, if someone’s income fluctuates throughout the year, if they don’t have a steady paycheck, should they pay their taxes differently? Should they or should they plan? Maybe we were just talking about tax planning ideas. Should they plan their taxes differently? Well, absolutely. Uh if if my income fluctuates throughout the year and I’m I it’s just me and I’m incorporated, I’m an S corp, maybe all of my salary should go towards funding my taxes and my retirement plan. So, that gets funded equally throughout the year out of payroll. And then I’ve got my three bank account system. So when the money es and flows, I’m making sure that my accounts are filled up to the extent that they need to be and I’m managing. And then you live on draws. Yeah. Interesting. You went right to business owner. I went to someone maybe maybe on commission or quarterly bonus. Those are the two groups, right, that often have lumpy income and the the sales folks that can have huge springs and then kind of a drought the rest of the year. Um depending on the patterns, you might be careful to not um overpay your taxes in the spring if you know it’s going to be lean the rest of the year because the the nice thing about the big commission checks are they sort of fund their own tax and often overfund their own tax. Um, most people that I work with at least that are big income, sales, lumpy income, that kind of thing, they often are in refund mode because those big commissions uh, you know, they just withhold so much on the the checks because it they it’s assumed the s the withholding system assumes that that’s your regular paycheck. When you get a a bonus of 30 grand, they just assume, all right, 23 more of these. and so they withhold like crazy and and yeah, so I absolutely think you need to plan your taxes differently. And I would say instead of a tune into your taxes in the spring and then a tax projection in the fall, this is a tax projection in the spring, update it in the summer and and and then update it in late fall. Yeah. like you need to have your hands on the res there more frequently checking in and that’s what we do with a lot of small business owners who from quarter to quarter they could be very profitable and then into a little bit of a loss and then back to profit again to to me that’s why you set up quarterly estimates that can follow the ups and the downs of your business and um you pay the amount that is based on the profits from that that uh quarter that you just ended But that requires frequent checking in and steady um planning throughout the year. Yeah. All right. Here we go. Four segment. Land on the plane. We’ve made it through half the investment planning. Yeah. But we’ve got to hit the others as well. So is we can do it. Yeah. I know. It’s should be should be good. Here we go.
Segment 4: Thanks for being here. This is the Wise Money Show with Korhorn Financial Group. My name is Mike Bernard. Here with me in the KFG studios, Kevin Korhorn and Josh Gregory. Every episode of the Wise Money Show, as well as a lot of other content, is on the Wise Money YouTube channel. Go to YouTube, check it out, search the Wise Money Show, subscribe to it there so you’re aware every time we drop new content, hitting notifications as well. And we’ve got not only this chalk show, but we’ve got lots of other content. Uh, nextep videos air all throughout the work week. We’ve got reels and shorts, all that sort of stuff right there as well. and get a lot of questions from fans of the show, which we’re going to be hitting next week. Just listener question. So, go to YouTube, search the Y20 show, subscribe to it there. We’re building your year-end financial checklist here for 2025. And tax planning took a a disproportionate amount of time, of course, because there’s a lot of deadlines that have 1231 as uh as as that requirement. the other half of your financial life. The fourth area, investment planning and then retirement planning and then estate planning. Guys, from an investment planning standpoint, anything urgent needs to be done where, hey, listen, be have this on your mind despite the holiday season. I Okay, so I got three accounts that need to be opened before the end of the year if they’re not already opened. So, I would open a 529 plan and the funding for the 529 plan can be up until April 15th of the following year, but it has to be opened and again, I’m assuming it’s going to be depend on your state and your state’s rules, whatever state you’re opening the 529 plan in. So, I’ I’d open the 529 plan. I’d open it and fund it if I can, but if I don’t have the funding, I just get it open. Uh, number two, I would open a single K if I’m a soul practitioner. Um, a lot of times, and I’ll hear this, oh, I talked to this person or that person and uh they said I should do a SE IRA, man. Compare the single K to the SE IRA. There’s there’s just Yeah. And I’m biased, but there’s no comparison. So, open that single K. That needs to be that needs to be funded at your tax filing deadline, including extensions. But the account needs to be opened. The account needs to be open this year, but I can fund it up until April 15, October 15th. Yeah. uh if I’m including my extensions. And then last but not least, and I’m probably stealing some of your thunder, Mikey B, but I would open the Roth IRA cuz if I don’t have a Roth IRA, I would open it and get it funded to start the 5-year clock ticking. There’s never a better time than today to get that stuff done. And if you need help with any of that, make sure you’re working with a planner. Make sure that planner is certified and they actually are a practitioner of the craft. Yeah, I I there’s not that’s those are great suggestions, Kevin. I I it’s hard to think of anything urgent within investment planning other than that. You know, those are sort of connected to tax planning. So, see like your your financial life is more connected than what you think. I think of two though. You know, one of our favorite habits or life hacks is to increase your 401k contribution 1% a year. And so, get ready to do that in January. And if you think, ah, I might forget, go ahead and do it right now. You’ll barely even tell. Um, but the other is, wow, has it been just a wild stretch in the stock market for the past three years. I’m just going to say it’s unusual. Yeah. and and not that oh the stock market goes up and it goes down and it’s this you know flat sort of um uh it no it’s like walking uphill while bouncing a yo-yo right so it goes up and down but in an upward trajectory and yeah there’s just been a lot of upward trajectory and that could be a new dawn of AI and productivity it could still be the fumes of printing $6 trillion and that experiment know what’s going to happen there. Or it could mean just make sure you’re prepared for uh some volatility and some um some fluctuations in the market. So, this could be a great time to make sure you rebalance. Josh, I probably stole your thunder because I know you have a very disciplined structure to your investment planning. You only look at your investments once, maybe twice a year, twice a year. But that that doesn’t necessarily have to be at year end. For a lot of clients though, this is the time of year that es especially if they have many investments that are outside of retirement accounts in taxable types of of vehicles. Uh I mentioned it in a prior segment that this is often the time of year that we will go in and harvest some cash to replenish the pool of money that um is being kind of paid out to those retirees on a monthly basis. We kind of set it up um you know almost like a paycheck just every month they know they’ve got a certain amount that’s going to be landing in their bank account. Gives them peace of mind. It helps them with the discipline of just planning and and living the lifestyle that they’ve um kind of set for themselves. But periodically you got to find the opportunities when the market’s cooperating like is it a good time to be selling some investments? But then also, are you aware of what the tax ramifications will be of harvesting that cash also? And um this is the time of year uh to get it done while it’s in this calendar year maybe. Or maybe the opposite happens. You determine that actually we want to wait until January to sell because we’ll be in a new tax year and uh it’ll just fit better because of what’s going on in our overall income picture. Yeah. I mean, this this might not fit under the urgent, but if you’re uh a little OCD about your stuff if you have the money and you haven’t fully funded various um things that you can fund, I would fill up those buckets so that way your 1231 statements keep those contributions in this year. Now, you can fund it next year. The trick is if I if I fund some of it next year, is my tax preparer going to catch that? Yeah. And so I I like if you like things neat and clean and tidy, I would do that. And then to to your uh point, Mike, it feels like the stock market is a balloon and we just took about a big breath and exhaled $6 trillion into it. And so if if you should sell something before the end of the year in a taxable account, do that. but also as you’re looking at your investments, what am I going to need this money for? And if I’ve if I’ve had a great runup in my kids 529 plan and I’ve got a freshman starting next August, I probably should set some money on the sidelines and just take take it off the table and and not not leave it at risk any longer. All right, so two two more areas to hit here and and the last one’s can be a harder one. And so fifth area, retirement planning. And I would say if you’re planning to retire in this upcoming year, oh, there’s urgent stuff. Make sure you’re working with your CFP. Make sure that you’ve got your five factor retirement plan fully built out and that it all points to green. Like, hey, green means go. You are ready. You are on track. And then you’re building out that income plan. And if you don’t have that clarity on that income plan or where you stand, your competence rate with retirement, then that I mean maybe their urgency isn’t to build out that plan right now, but it’s at least to get the meeting scheduled right now. So, um so that would be on the retirement plan side, the estate planning side. Sometimes the holidays uh are hard and you might be facing a s a situation where you’ve got this holiday season is different because a family member is not around anymore or maybe has an illness. And all of these and I I know I I’m trying to sneak this in here so that we don’t end on a on a bad note, but this is reality. And financial planning is where real life and finances intersect. in real life is those traditions can sometimes feel differently when when family members uh pass pass away and that might be conjuring up some emo some emotions. You might still be dealing with a a mess and hopefully you’re not dealing with strife. Hopefully you’re not. But all of those could be signals to you to say, “Well, wait a second. Is your estate plan in order? Do you have the proper instructions, the proper setup?” and and and also if it’s a if it’s a a parent or someone that has an illness, you know, are is is theirs set up? And so encouraging taking those steps, whether it’s right now or getting the meeting scheduled, uh that would be in the sixth area, the estate planning. You know what, how often do people put a great estate plan in place? It is very thoughtful. It is heartfelt. it is generous to the people that they, you know, want to to benefit when they’re gone, but then they never tell them or they never express here are my wishes after I’m gone. Sometimes, and again, the holidays are meant to be a festive, fun, celebratory time, but it is a time of togetherness. And how often do you get everyone together? Beyond the holidays, is this your window of time to maybe take a somber moment and just share with the the family? Here’s what we’re thinking or here’s what the the estate plan is. Let’s have the family meeting, so to speak. Maybe the holidays are that venue for you. Yeah. Yeah. Hopefully these this list walking through all six areas of your financial life um brought something maybe that was maybe in the back of your mind maybe oh I need to get to that and maybe brought it into focus or or moved it up to in the in the on the priority list. Hopefully, you now have you’re equipped with a financial checklist to to check off and work through taking the right steps in your financial life so that you can not only thrive during this holiday season, but you’re also set up for a very successful 2026. Work with your certified financial planner on all of that. That’s all the time we have for today. On behalf of Josh Gregory, Kevin Korhorn, all of us at Korhorn Financial Group. Have a great weekend. We’ll see you next Saturday for the Wise Money Show with Korhorn Financial Group. Securities offered through Silver Oak Securities member FINRA/SIPC. Advisory services offered through KFG Wealth Management LLC. Join business as Korhorn Financial Group. KFG Wealth Management LLC and Silver Oak Securities Incorporated companies are unaffiliated.
