Time to File the FAFSA!

Contributed by: Kali Hassinger, CFP®, CSRIC™

Just as parents and students are getting back into the groove of another school year, it's already time to start thinking ahead! The Free Application for Federal Student Aid, better known as the FAFSA, opened for the 2023-2024 school year on October 1. The form helps determine financial aid eligibility for both current and prospective students. Although this is a federal application, it may also be used to apply for many state loans, grants, and scholarship programs.

A New Format

This is the first year a new, shortened version of the FAFSA is being released. The number of questions has been reduced from 108 to 36! Applicants will also be asked to select their role when completing the application. The options are parent, student, or preparer. The Asset Protection Allowance (APA) amount has been effectively reduced to zero, meaning that parental or student assets will be considered more heavily when completing the FAFSA. However, this isn't a shock as the APA has steadily been reduced over time, drifting from $21,400 in 2009 for a single-parent home to $2,500 in 2021 and now officially hitting zero. 

The sooner, the better!

A large portion of available funds is distributed on a first-come, first-served basis, so the earlier you file the FAFSA, the more money is available for loans and grants. While you have until June 30, 2023, to file the FAFSA for the 2023-2024 school year, most state and school deadlines differ. It doesn't matter whether a school has accepted a student at the time of filing. You'll need to elect at least one college to receive the application information, but you can add multiple schools in which you may be interested.

What information do I use?

For the 2023-2024 school year, the FAFSA will use 2021 tax return information. For dependent students, you will need financial information for at least one parent. If your parents are married and/or living together, income and assets for both will be considered. If the parents are divorced and living separately, the custodial parent's information will be reported (whomever the child lives with the majority of the time).

Regardless of the parent's marital status or the student's dependent or independent status, be prepared with W-2s, financial account information, and a 2021 tax return. Even if you don't think you'll qualify for aid, it's important to file the application. Some schools will only consider students for scholarships if they have filed the FAFSA.

Bigger Changes on the Horizon

This October's FAFSA changes were supposed to be more far-reaching than simply a shortened format. In June of 2022, however, it was announced that the rollout of several other changes would be delayed until the 2024-2025 school year (release date of October 2023) to allow more time for technology updates. These changes should provide increased access to Pell Grants (provided to those with exceptional financial need) and reduce the portion of parental or student income expected to pay for school costs.

Kali Hassinger, CFP®, CSRIC™ is a Financial Planning Manager and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® She has more than a decade of financial planning and insurance industry experience.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Kali Hassinger, CFP®, CSRIC® and not necessarily those of Raymond James.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Center for Financial Planning, Inc. Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.

Caregivers Try to Balance it All

Contributed by: Sandra Adams, CFP®

The month of September is host to a slew of recognition for caregivers: World Alzheimer’s Day, National Daughter’s Day, Intergeneration Month, and Self-Care Awareness Month.

According to the National Institute on Aging, there are an estimated 11 million unpaid family caregivers in the United States for patients with dementia, including the most prominent form of the disease, which is Alzheimer’s disease. More than one in four Alzheimer’s and dementia caregivers are “sandwich generation” caregivers —they are caring for someone with dementia AND caring for a child or grandchild at the same time. And according to the Alzheimer’s Association, over two-thirds of caregivers are women with nearly 50% looking after at least one parent or parent-in-law. The need for self-care for these family caregivers – often women and often working – is real.

We would all love to believe that, given the opportunity, we would embrace serving as a caregiver for our loved ones — that we would treat the opportunity as “a gift.” In the book Working Daughter: A Guide to Caring for Your Aging Parents While Making a Living, by Liz O’Donnell, the author says:,

Caregiving didn’t feel like a gift to me. It felt like a burden—a burden I didn’t want and one that I wasn’t prepared to handle. I had no warning, no training, and no support. I didn’t realize how many other people I knew were also caring for sick and/or elderly parents. No one in my circle of friends or coworkers was talking about it. As a working mother, I had so many people and resources to draw on for help and advice about everything from how to get a child to sleep to how to balance parenting and career. As a working daughter, I felt alone. And among the few people I knew who were family caregivers, no one was complaining about it. Just me. They must all agree it’s a gift, I thought to myself. I am a horrible, selfish person for thinking it’s a burden.

The reality is that what Liz expresses is not unique. According to a 2017 CNBC report, of the millions of family caregivers out there, almost 60% (58% to be exact), classified the burden of caregiving to be high or moderate. For those caregivers also working and/or raising young families, the percentage is likely to be higher. That feeling of “burden” is likely to lead to stress and feelings of guilt (guilt for feeling the job is a burden and guilt that you are not doing your best at any of your jobs).

Caregivers, for the most part, keep their feelings isolated. They don’t want others to see that they don’t appreciate the opportunity they have to spend this time caring for their loved ones. As a result, they suffer in silence and don’t reach out for help — for themselves or for the resources they need. They may miss out on resources available in the community to provide relief (adult day programs, volunteer programs through local senior programs, Area Agency on Aging programs, Meal Programs, transportation programs, caregiver support programs, etc.). If the caregiver is afraid to admit they need help, they may never know of the programs available to provide relief and assistance.

In addition to bringing awareness to caregiver-specific emotional and psychological struggles, September is the perfect time to bring attention to the financial planning issues that surround caregivers and how these can be addressed.

According to AARP, family caregivers spend an average of 24.4 hours caring for their loved ones in addition to their other responsibilities. For working caregivers, especially women, this means making accommodations to their work to meet the demands of their caregiving roles:

• Requesting a less demanding job 

• Taking unpaid leave 

• Giving up working entirely 

• Taking early retirement

As a result of work accommodations, the result of future wages, according to the AARP Policy Institute (2018) is $324,044 in future wages for women and $283,716 in future wages for men. In addition to wages, health insurance, retirement savings, pension benefits, and Social Security benefits are lost to those who cut back or stop work due to caregiving duties. For those who were on an advanced career track, losing upward momentum by having to slow down or stop work can have a significant impact on future advancement AND wages. And for women, who are typically already behind men in earnings, slowing down or stopping work due to a caregiving role can put them even farther behind their male counterparts. Compound that with the fact that women will potentially live longer, and live longer alone (be widowed), and they’re in a “no win” situation.

Action steps for working women who are also caregivers:

•  Plan ahead as much as possible before the caregiving duties begin. Make sure those you will be caring for have a solid financial and care plan and that as many resources as possible are put in place in advance. 

• Work with your employer to see what arrangements can be made for flexible schedules, paid leave, etc., in order to keep you employed while being able to accommodate your caregiving duties with the least disruption to all areas of your life.

• Make sure you utilize all of your resources, including other family members, caregiver support, and self-care.

• Work with your own financial adviser to plan for the possibility of caregiver duties and consider what different scenarios might look like for your own plan. Look out for your own financial security, as well as for your loved one’s caregiving needs.

Caregivers have a big challenge. They try to do it all and do it all flawlessly — which might not be possible. Create a balanced life where everyone is safe and futures are secure. Planning ahead as much as possible is key to making this happen. Don’t try to do it alone!

Sandra Adams, CFP®, is a Partner and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® and holds a CeFT™ designation. She specializes in Elder Care Financial Planning and serves as a trusted source for national publications, including The Wall Street Journal, Research Magazine, and Journal of Financial Planning.

Securities are offered through Raymond James Financial Services, Inc. Member FINRA/SIPC. Investment advisory services offered through Center for Financial Planning, Inc. Center for Financial Planning, Inc., is not a registered broker/dealer and is independent of Raymond James Financial Services.

Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Any opinions are those of Sandra D. Adams, and not necessarily those of Raymond James.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete the CFP Board’s initial and ongoing certification requirements.

Three Tax-Savvy Charitable Giving Strategies

Contributed by: Lauren Adams, CFA®, CFP®

Lauren Adams, CFA®, CFP®, is a Partner, CERTIFIED FINANCIAL PLANNER™ professional, and Director of Operations at Center for Financial Planning, Inc.® She works with clients and their families to achieve their financial planning goals.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Lauren Adams, CFA®, CFP® and not necessarily those of Raymond James. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Raymond James Financial Services Advisors, Inc.

Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.

The Inflation Reduction Act of 2022

Contributed by: Kali Hassinger, CFP®, CSRIC™

In Mid-August, The Inflation Reduction Act was signed into law. This law includes several clean-energy tax incentives, provides additional funding for the IRS, extends Affordable Care Act subsidies, implements a minimum corporate tax, and, for the first time, gives Medicare the power to negotiate prescription costs. Although there is doubt whether these provisions will reduce the current historically high inflation rates, the law provides support that is viewed as a breakthrough in climate-related policy.  

• Energy and Climate Change Investments: Tax credits for individuals are extended to households that invest in energy-efficient home improvements. The credit is equal to 30% of the amount paid or up to $1,200/year for these improvements (an increase from the previous 10% rate). A $7,500 clean vehicle credit will be available for those who purchase a vehicle assembled in North America. The credit is allowed for cars with an MSRP of $55,000 or less and vans, SUVs, and trucks with an MSRP of $80,000 or less. (Before you run out and buy an electric car for the tax credit, make sure it qualifies. A list provided by the U.S. Department of Energy can be found here.)

• IRS Funding: Reports of the IRS being underfunded and backed up has been heard for several years. The Inflation Reduction Act provides billions of dollars to the IRS over the next ten years to increase their workforce, update technology, and hopefully work through the accumulated backlog. 

• Affordable Care Act Subsidies: The Inflation Reduction Act extended the premium tax credits for those enrolled in an Affordable Care Act insurance plan and whose income is up to 400% above the poverty line through 2025.  

• Minimum Corporate Tax: The Act introduces a new corporate alternative minimum tax (AMT) on companies with income of more than $100 million per year. The 15% tax will be applied to excess income over a corporation’s AMT foreign tax credit for the year. 

• Stock Buyback Excise Tax: In 2023, companies who purchase more than $1 million of their stock in a share repurchase program will be subject to a 1% excise tax.

• Medicare Costs: The Inflation Reduction Act hopes to reduce out-of-pocket drug-related Medicare expenses by capping the annual limit. The out-of-pocket costs will be reduced to $4,000/year or less in 2024 and are set to be reduced again to $2,000/year in 2025. It requires the government to negotiate with drug manufacturers to lower prices, and it requires drug companies to pay Medicare in rebates if the cost of a drug increases at a rate higher than inflation. 

The list above is not exhaustive and does not include several other corporate clean-energy provisions, additional expanded Medicare benefits (insulin cost cap and free vaccinations), and, ultimately, hopes to reduce carbon emissions by 40% over the next eight years. 

Kali Hassinger, CFP®, CSRIC™ is a Financial Planning Manager and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® She has more than a decade of financial planning and insurance industry experience.

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Kali Hassinger, CFP®, CSRIC™ and not necessarily those of Raymond James. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Center for Financial Planning, Inc. Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.

Summer 2022 Economics Summarized in 5 Charts

Contributed by: Angela Palacios, CFP®, AIF®

Is inflation transitory again? Transitory was struck from the Federal Reserve's language after inflation didn't dwindle for a few months. But depending on your definition of short and long-term, it could still be viewed as transitory. Headline inflation was lower than expected for July, and most of the reduction came from energy. You can see the breakdown by month below.

Source: JP Morgan Weekly market update, BLS, FactSet

Unemployment hits a multi-decade low. This equates to difficulty in the hiring process for firms. Job openings are declining, but there are still two job openings for each unemployed person.

Source: Raymond James Weekly Headings

Source: U.S Department of Labor, J.P. Morgan Asset Management. *JOLTS job openings from February 1974 to November 2000 are J.P. Morgan Asset Management estimates.  J.P. Morgan Guide to the Markets – July 31, 2022.

Mortgage rates spiked and are coming back down, helping the affordability of buying a home again.

Source: Raymond James Weekly Headings

Yield curve inversion continues to steepen. There's much focus on the yield curve as it's usually an early signal for the economy slipping into recession (although technically, this definition has already been met with two negative quarters of GDP). This spells trouble for banks as they have to pay higher interest rates on short-term customer deposits like Certificate of Deposits but earn less on mortgages, for example. This money-losing gap can prompt banks to tighten up on lending.  

Angela Palacios, CFP®, AIF®, is a partner and Director of Investments at Center for Financial Planning, Inc.® She chairs The Center Investment Committee and pens a quarterly Investment Commentary.

The information contained in this letter does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Angela Palacios, CFP®, AIF® and not necessarily those of Raymond James. Expression of opinion are as of this date and are subject to change without notice. There is no guarantee that these statement, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Individual investor’s results will vary. Past performance does not guarantee future results. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Rebalancing a non-retirement account could be a taxable event that may increase your tax liability.

The Center: A Crain’s Detroit Cool Place to Work for Sixth Year

Contributed by: Center for Financial Planning, Inc.®

We’re happy to announce The Center has been awarded Crain’s 2022 Cool Places to Work* in Michigan for the sixth consecutive year!  Crain’s Cool Places to Work was designed to identify, recognize, and honor the best places of employment in Michigan. The 2022 Cool Places to Work in Michigan list is made up of 100 companies in three size categories: small (15-49 employees), medium (50-249) and large (250+). Companies from across the state entered the two-part process to determine the Cool Places to Work in Michigan. The first part consisted of evaluating each nominated company’s workplace policies, practices, and demographics, and the second part consisted of an employee survey to measure the employee experience. The combined scores determined the final rankings.

THE CENTER WAY

The Center team has spoken, and it’s evident we’re all proud of benefits like professional development, education reimbursement, workplace committees, and social events. Our fun culture is developed over ping-pong tournaments, chili cook-offs, and volunteer work.

TEAMWORK DURING A PANDEMIC

“We are especially proud of how we’re managing the curveball 2020 threw us. When COVID-19 hit, we transitioned to working remotely and formed a response committee tasked with making the office a safe place to return to,” said Lauren Adams, CFA®, CFP®.

Managing office culture remotely comes with its difficulties, but none were significant enough to break the incredible community our office has developed.  We’ve started a book club to keep engaged and even brought in a little competition with our stock education bracket-style game, Market Madness and health challenges throughout the pandemic.  The health challenges helped keep the COVID 15lbs at bay.

Ultimately, The Center is a cool place to work because each team member contributes to a caring and positive workplace.

This ranking is not based in anyway on the individual's abilities in regards to providing investment advice or management. This ranking is not indicative of advisor’s future performance, is not an endorsement, and may not be representative of individual clients' experience. Raymond James is not affiliated with Crain’s.

Student Loan Forgiveness Announced

Contributed by: Kali Hassinger, CFP®, CSRIC™

On Wednesday, August 24th, President Biden announced a highly anticipated plan to forgive a portion of student loan debt for approximately 43 million borrowers. He also extended the pandemic-driven student loan repayment freeze through the end of the year.

For single taxpayers making less than $125,000/year and Joint or head of household taxpayers making less than $250,000/year, $10,000 of their current student loan balance will be forgiven. For those with Pell Grant debt who meet these income requirements, $20,000 will be forgiven. Pell Grants were given to students with "exceptional financial need." The annual amount of this type of grant awarded is capped at $6,895 for the 2022-2023 school year, and the limit has historically been lower with slight increases each year.

Regardless of the loan type, the amount forgiven will be tax-free. However, whether eligibility will be phased out based on income or a cliff (meaning income $1 over the limits would eliminate eligibility) is unclear.

Loans taken out after June 30th, 2022, will not qualify for this relief. However, current college students who are still considered dependents will be eligible for forgiveness based on their parent's income.

Details on how to apply for forgiveness are still pending, with the understanding that an application will be available before the December 31st repayment freeze ending date. The need to submit an application and certify income will likely be required. Those repaying their student loans through an income-driven repayment plan must certify income yearly. There's also the possibility that some portion of loans will automatically be forgiven if the Department of Education has current and relevant income data. We expect that additional and more detailed guidance will be released in the coming weeks.

Kali Hassinger, CFP®, CSRIC™ is a Financial Planning Manager and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® She has more than a decade of financial planning and insurance industry experience.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Kali Hassinger, CFP®, CSRIC® and not necessarily those of Raymond James.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Center for Financial Planning, Inc. Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.

The History of Labor Day

Contributed by: Kelsey Arvai, MBA

We celebrate Labor Day to recognize the contribution and achievements of American workers. It unofficially marks the end of summer and is traditionally observed on the first Monday in September.

The history of Labor Day is somewhat grim. At the height of the Industrial Revolution, in the late 1800s, the average American worked 12-hour days and seven days a week to scrape together a decent living. To emphasize the dire working and living conditions, children as young as five or six worked in mills, factories, and mines across the country.

Most workers faced unsafe working conditions with insufficient access to fresh air, sanitary facilities, and break time. Because of this, labor unions first appeared in the late 18th century. Workers began organizing strikes and rallies to protest poor conditions and compel employers to renegotiate hours and pay. On September 5, 1882, 10,000 workers took unpaid time off to march from City Hall to Union Square in New York City, holding the first Labor Day parade in US history.

The “workingmen’s holiday” caught on in other industrial cities, and many states passed legislation recognizing it. Congress legalized the holiday 12 years after workers in Chicago went on strike to protest wage cuts and the firing of union representatives.

We can thank our labor leaders for the fact that we get to enjoy weekends off, a 40-hour work week, sick days, and paid time off. Thousands of Americans have marched, protested, and participated in strikes to create fairer, more equitable labor laws and workplaces – and still do today. So kick back, relax, and enjoy your long weekend!

Kelsey Arvai, MBA is an Associate Financial Planner at Center for Financial Planning, Inc.® She facilitates back office functions for clients.

What to Expect Going Forward - The Economy and Your Investments

Contributed by: Nicholas Boguth, CFA®

At the beginning of the month, RJ released some market commentary with the striking line…

"While inflation fears remain high, it is likely that we are past peak inflation and the largest interest rate increases are behind us."

This year has been riddled with reasons to worry about the economy and your investments, but some encouraging data has been released that may provide some optimism. Jobs surprised on the upside early in August, the stock market has bounced off of its lows, personal consumption remains high, and we've seen gas prices come down to provide relief at the pumps.  

RJ ends the commentary with some more encouragement…

"We likely have more weakness to endure, but Joey Madere, senior portfolio strategist, Equity Portfolio & Technical Strategy, says investors can expect positive returns over the next 12 months and beyond, given the view that economic weakness should be relatively mild and inflation will moderate. Long-term investors should anticipate an eventual rally on the other side of this weak trend and take advantage of potential buying opportunities. Bear markets go down 20% to 35% on average, but bull markets average roughly 150% returns.

While volatility feels uncomfortable, experience suggests that adaptability and a cool head will help weather any market environment and position for the future.”

It's been a rough year for most asset classes YTD. Still, the pain and uncertainty also provide opportunity as bond yields increase and stock valuations decrease, suggesting higher expected returns going forward. We're continually monitoring the changing environment and are happy to answer any questions you may have about how it all affects or doesn't affect your overall financial plan. 

Nicholas Boguth, CFA® is a Portfolio Manager at Center for Financial Planning, Inc.® He performs investment research and assists with the management of client portfolios.

This market commentary is provided for information purposes only and is not a complete description of the securities, markets, or developments referred to in this material. Any opinions are those of Nick Boguth, CFA® and not necessarily those of Raymond James. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance does not guarantee future results. Diversification and asset allocation do not ensure a profit or protect against a loss.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Center for Financial Planning, Inc. Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.

5 Tips to Keep in Mind for Financial Awareness Day

Contributed by: Kali Hassinger, CFP®, CSRIC™

Sunday, August 14th, marks National Financial Awareness Day. For many, unless you decide to focus on finances at some point in your life or you're already working with a professional, you may be left unsure whether you're making the right decisions and progressing toward financial independence. The good news is that a few steps can be taken to help you get on a sound financial path. 

Tip #1: Make a budget. And stick to it.

This is one of the most challenging steps for many to accomplish. There are things we need to pay for like housing, food, insurance, gas, and utility bills, and then there are unessential, discretionary items like clothes, concerts, and going out for dinner and drinks. Therefore, it's important to track your spending. How much of your overall budget goes toward the essentials each month? How much are discretionary or lifestyle expenses? If there are areas within the discretionary bucket that can be reduced and could ultimately be allocated toward additional savings, commit to making that adjustment. Budgeting is the foundation of getting ahead financially and progressing toward your goals.

It's also a good idea to look at your net income. Subtract out your fixed and essential expenses, and then allocate the leftover money towards savings goals and discretionary spending. Consider an online budgeting tool or app to help you achieve this.

Tip #2: Save.

Sure this seems obvious, but it's common to feel unsure of how much to save and whether you're saving enough. Saving depends on your age and the amount you've accumulated so far. It also depends on how much you plan to spend in retirement or what your upcoming financial goals require. If your employer has a retirement plan in place, it's important to contribute at least enough to take advantage of the employer match.

Many would suggest that you should always try to contribute the maximum amount allowed into your employer's retirement plans. When you consider current and future tax rates, timeline to retirement, and savings balances today, it gets more complicated. If you're later in your career and have accumulated a good balance, you may have the flexibility to reduce your savings rate and possibly your income. If you're behind and need to catch up, pushing yourself out of your comfort zone and saving aggressively may be necessary. If you're just venturing into the workforce, your income may be lower now than in the future. In this example, you may want to work in Roth IRA or 401k savings instead of tax-deferred vehicles. 

Saving rates are personal. Life is about balance and saving the amount right for you, your family, and your goals. 

Tip #3: Invest. 

But only take on the amount of risk that you can afford. Determining the appropriate blend of stock, bonds, and cash is essential to both growing and preserving wealth. In recent years of stock market growth, picking a lemon of an investment has been challenging. 2022, however, has reminded us of the importance of diversification and your overall allocation mix. If you have an investment strategy in place, now is not the time to abandon that plan. High inflation, rising interest rates, and international turmoil have created a volatile environment, but it can also create opportunities. If you have yet to invest, there's no better time than now to get a plan in place.  

If the idea of investing seems foreign, I suggest you review our Investor Basics blog series that our outstanding investment department provided a few years ago: 

• Stocks 101

• Bonds 101

• Drawdowns 101

Tip #4: Understand your credit score.

For a number that's so important to our ability to buy a home, purchase a car, or rent an apartment, credit scores can feel mysterious and sometimes frustrating. In reality, a formula is used to determine our credit score, and five main factors are considered. 

• 35% Payment History: Payment history is one of the most significant components of your credit score. Have you paid your bills in the past? Did you pay them on time?

• 30% Amounts Owed: Just owing money doesn't necessarily mean you are a high-risk borrower. However, having a high percentage of your available credit used will negatively affect your credit score.

• 15% Length of Credit History: Generally, having a longer credit history will increase your overall score (assuming other aspects look good). However, even people with a short credit history can still have a good score if they aren't maxing out their credit card and are paying bills on time.

• 10% New Credit Opened: Opening several lines of credit in a short period almost always adversely affects your score. The impact is even greater for people that don't have a long credit history. Opening multiple lines of credit is generally viewed as high-risk behavior.

• 10% Types of Credit You Have: A FICO score will consider retail account credit (i.e., Macy's card), installment loans, mortgage loans, and traditional credit cards (Visa/ MasterCard, etc.). So, having credit cards and installment loans with a good payment history will raise your credit score. 

It's important to manage your debt balance, only take out credit when necessary, and pay your bills on time. If you already have credit cards, student loans, and/or personal loans, try to pay off balances with higher interest rates to keep them from becoming unmanageable. Some people find it easier to pay off a smaller balance first, giving them a sense of progress and accomplishment. This is a more than acceptable start to proper debt management.

Tip #5: Work with a Professional.

There's no better time than now to build the foundation for financial security and independence. Working with a professional can help you answer questions and address the unknowns. By making smart decisions now, you're positioning yourself for future success. Use these helpful tips, and keep progressing toward the ultimate goal of a worry-free, financial future and retirement. 

Feel free to contact your team here at The Center with any questions. Take control now, and you'll rule your finances – not the other way around!

Kali Hassinger, CFP®, CSRIC™ is a Financial Planning Manager and CERTIFIED FINANCIAL PLANNER™ professional at Center for Financial Planning, Inc.® She has more than a decade of financial planning and insurance industry experience.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Kali Hassinger, CFP®, CSRIC™ and not necessarily those of Raymond James. 401(k) plans are long-term retirement savings vehicles. Withdrawal of pre-tax contributions and/or earnings will be subject to ordinary income tax and, if taken prior to age 59 1/2, may be subject to a 10% federal tax penalty. Roth IRA owners must be 59½ or older and have held the IRA for five years before tax-free withdrawals are permitted.

Securities offered through Raymond James Financial Services, Inc., member FINRA/SIPC. Investment advisory services are offered through Center for Financial Planning, Inc. Center for Financial Planning, Inc. is not a registered broker/dealer and is independent of Raymond James Financial Services.