••• July 2019 Issue  •••

Having “The Talk” With Your Kids (the Money Talk)


Every year on the Fourth of July, the Tahoe neighborhood where my vacation rental is located has a little parade. Kids decorate their bikes, pull pets in wagons, and try to twirl a baton and walk at the same time while adults sit on lawn chairs and clap as they go by. It’s straight out of a Norman Rockwell painting—just with a few more tattoos.


I’m all for continuing traditions like these that are good fun for children. But I hate seeing harmful things passed on just because “that’s the way we’ve always done it.”


As a financial advisor—and a father—it upsets me to see so many parents unwilling (or is it unable?) to talk to their kids about money. After all, it’s something that’s going to be a major factor in their lives, whether they have it or not.


Let’s set our children up for success by teaching them money lessons early and often. Here’s what I suggest for kids of all ages…


Make It Tangible for Little Ones


I give my twins an allowance—$1 for every year of age—to help them get used to handling their own money. I mix it up each month and give them six $1 bills, 24 quarters, 60 dimes, 120 nickels or any combination to start teaching basic math skills. Each child has three buckets that they decorated, one for “me today” money, one for “me tomorrow” and the third for “charity/other people.”


Today funds can be spent whenever on whatever. The tomorrow bucket teaches them how to save for bigger items. If they want a deluxe Lego set, for example, they have to save up for it. This instills the idea of delayed gratification and working toward a “long-term” goal. The third bucket is about teaching compassion and the pleasure of doing something nice for others. I let them decide where this money goes, whether that’s adopting a whale, tithing at church or giving the money to a homeless person.


The boys also get to decide how much of their allowance to put into each bucket, which changes depending on their goals. The idea is to give them real, understandable lessons about how to divvy up a finite amount of money to get what they want.


Teach Pre-Teens the Value of Time


Once kids are capable of doing more to help around the house, it’s time to encourage good work habits. In addition to allowance chores, you can offer the opportunity to earn more from additional work. For “extras” such as washing the car or doing yard work or laundry, pay your child an hourly wage. Have them keep track of the hours they work and their earnings for a quick math lesson. This also teaches them the value of their time and what it takes to earn spending money.


Show Teens How to Make Money Work for Them


As your kids age, get them to:


• Take charge of money spent on them. Giving your teen access to all the money you give them on top of their allowance for clothing, entertainment, eating out and more helps them learn about responsibility and budgeting. They’ll inevitably make some mistakes and poor choices, but at this stage they should be small and easy to correct, while the memory of the error can keep them from making costly mistakes in the future.


• Open bank accounts. Having your teen deal with a financial institution (vs. a decorated bucket) makes them feel more grown up and gets them used to the banking world. If they open a checking account, have them keep the register to get used to funds in/funds out. Once they are 18, a credit card or car loan can help establish credit in their name. And if they are gainfully employed, have them open a Roth IRA and show them how saving even a little early on can have an enormous impact on the money they have later in life.


• Buy stock in something of interest. Buying a few shares of a company or brand they care about encourages them to track the market’s ups and downs, understand how good or bad news impacts the share’s price and introduces your teen to the world of investing. The goal here isn’t necessarily the smartest investment, it’s getting your kids excited and engaged.


Teaching your kids how to handle money responsibly is a great way to prepare them for adulting. Plus, it might just prevent them from boomeranging back into your house after college!


The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. Brio does not provide tax or legal advice, and nothing contained in these materials should be taken as such. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional.


Brio Financial Group is a registered investment adviser. SEC Registration does not constitute an endorsement of Brio by the SEC nor does it indicate that Brio has attained a particular level of skill or ability. Advisory services are only offered to clients or prospective clients where Brio Financial Group and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Brio Financial Group unless a client service agreement is in place.


••• June 2019 Issue  •••


Don’t Let Money Come Between You and Your  Partner


It’s Gay Pride month again, the time when our wonderful City is festooned with lovely rainbow flags. This always makes me happy—and not just because I get to use the fun word festooned. Gay Pride reminds me of how far we have come as a community.


As a financial advisor who has specialized in serving LGBTQ clients for nearly 20 years, I’ve been privileged to have a front-row seat for the way changing laws and greater acceptance benefit same-sex couples. But one thing that hasn’t changed is how hard it is for couples (or throuples) to talk about money.


For some reason, money is a bit of a taboo subject. People will share every detail of their love life with friends, but not what they earn, spend, save or, heaven forbid, what they owe. So I guess it’s not all that surprising that years of being closeted about finances makes people reluctant to open up even to their partners.


But remember, when it comes to handling money together, you are sharing something with someone you love. You should be able to be open about what you want, hear what they want and prioritize your relationship over money.


It also might be helpful to view yourselves as a threesome—a “you,” a “me” and an “us.” Acknowledging that you’re an individual and part of a unit at the same time can help you manage your money to the benefit of everyone. Say only one of you enjoys traveling. If your money plans only cover joint goals, obviously that won’t be one of them. But if your plans take into account what all three of you want, you’ll likely be much happier.


Here are a few other suggestions on how to get you and your partner(s) on the same page about money.


Be Honest With Each Other


This might seem glaringly obvious, but hiding purchases and debts from your partner is not only bad for your relationship, it also makes it difficult to get a true picture of your finances.


Let each other know about any baggage or bad habits you have, as well as how you feel about money and why. For example, one partner may save every cent because they were raised by a single mom who constantly struggled to make ends meet. The other partner may have lost a close friend in high school, so spending like there’s no tomorrow is their financial philosophy. Understanding each other’s point of view can help you develop a solution that works for the two of you.


Pool Your Money Together Into Joint and Individual Accounts


This builds off my 1+1=3 philosophy and is one of the most successful strategies I get my clients to use. The idea is to take all the money you earn as a couple, deduct what you need each month for living expenses, then split the leftover amount between partners to spend however they wish. For example, if you bring in $10k a month and need $8k to live on, you deposit the $8k into a joint account and $1k each in your individual accounts.


I can’t tell you how many issues this helps solve. First off, it allows for some autonomy as your partner gets no say in how you choose to use your “individual” money. Spenders can go to town with theirs, while savers can squirrel away their portion. It also gets rid of power dynamics when one partner makes significantly more than the other.


Develop Financial Goals Together


If you both agree on how much you should spend and how much to save, you’re more likely to stick with the plan. You can each write down what you want your money to accomplish, then compare the two lists and see where you agree and where you need to make compromises.


Make a Monthly Date to Review Your Finances


Who says a candlelit dinner and credit card bill don’t go together? Make it fun to review your previous month’s expenses. Celebrate if you stayed on budget. And if you went over budget, well, someone might need to get spanked.


The more honestly and often you and your partner talk about money, the fewer fights you’ll likely have caused by misunderstandings or resentment. And having a happier, healthier relationship seems like a perfect way to celebrate Gay Pride.


••• May 2019 Issue  •••


Act Now to Reduce Your 2019 Tax Bill



Cartoonists often depict unpleasant shock by drawing the character with their eyes comically popping out of their face. That image keeps coming to mind when I hear many people’s reaction to their tax bill this year.


Well, at least now you know what you’re dealing with. And some of the new laws can actually work in your favor.


So let’s look at some ways to keep steam from blowing out of your ears over 2019’s taxes.


Put Your Money in the Right Savings Bucket


Where your assets are located can have a big impact on your taxes. Whenever possible, consider maxing out contributions to retirement accounts, including employer-provided plans—such as 401(k), 403(b), 457(b) and other deferred compensations plans—as well as personal retirement accounts, such as IRAs. These can help reduce your taxable income.


Investing in municipal bonds is another great tax reducer. “Munis” are issued by state and local governments to fund public works projects. Considered a safe investment, their rate of return is relatively low.


So you may not get rich, but the amount you invest will be exempt from federal taxes. In many cases, such as if you live in the state issuing the bond, your state and local taxes may be exempt too. So a bond paying 1.5% for example, may yield closer to 2% with this tax benefit. Then there’s the cherry on top, which is that interest income is generally tax-exempt. It’s about as close to a tax-free investment as you can get. (My lawyer wants me to remind you that there are exceptions that you should consider before investing.)


Other types of investments that can help reduce your taxable income include annuities, Health Savings Accounts (HSAs) and 529s for education.


And if you are self-employed, you have a lot of acronyms you can choose among to fund your retirement and save on taxes at the same time. Options include Solo 401(k)s, SEP IRAs, Simple IRAs, and Traditional and Roth IRAs.


Turn Your Hobby Into a Side Hustle


Speaking of self-employed, some of the new laws make this highly attractive. I’m not talking about quitting your current job and putting everything you have into that thing you’ve always dreamed about. Just something small that you can do to earn extra money. Or not. Let me explain.


Say your hobby is photography. You decide to start a business putting your work on notecards and selling them on Etsy. Think of all the things your new business needs. Perhaps a new camera—that really expensive one you’ve always wanted—a special printer, card stock, ink and more. And promoting your new venture might require business cards and ads. These are now business expenses, which you may be able to write off.


So if you spend $5,000 for supplies and earn $9,000, great. You get to deduct eligible expenses and make a couple of thousand dollars extra. But what if that’s reversed and you spend $9,000, but only earn $5,000? Good news: Losses can be written off too!


But wait, it gets even better. Because Section 199A of the new tax code means you might be able to write off 20% of your qualified income from this new business. Now that’s a tax cut!


Rent Out a Room


Here’s more good news: Rental property is one of those businesses that might qualify for Section 199A. So if you have a second home, think about making it a vacation rental. Or lease a spare room in your house to a traveling nurse who wants a short-term rental. Better yet, rent out your whole flat during OracleWorld or Dreamforce.


Give to Charity


My last tax-reduction tip is to be smart about your charitable giving. That might mean bunching all your charitable donations into one tax year to get you over the standard deduction. Or reducing your taxable income by setting up a Charitable Remainder Trust—an irrevocable trust that can pay you income and give the assets left after you’re gone to your charity(s). And for anyone over 70½ taking required minimum distributions, if you give part of that away as a qualified charitable distribution, your donation amount won’t count as taxable income.


As always, you should consult with a tax professional when implementing any of these strategies to make sure they work for you. But with a little planning and creativity, next year’s tax return can be less eye-popping and more ear-to-ear grin-inducing.


••• April 2019 Issue  •••

Spring Clean Your Portfolio



Spring cleaning isn’t just for closets and cobwebs. Your investment portfolio could probably use a little refreshing as well, especially if you haven’t aired it out in some time.


Yeah right, you may be thinking. I’ll fit that in after I schedule a root canal, clean the gutters and give the cat a bath.


May I suggest that you turn that thinking around a bit? You’ve likely worked hard for the money you save and invest, and want to use it to finance your dreams. But investments that don’t align with your goals may not move you closer to them. Or may slow your progress versus what you could achieve with the right mix. Isn’t getting what you really want in life worth an hour or so of your time to do a little portfolio tidying up?


If yes, then ask yourself these questions:


Am I On Track?


Have your goals changed from the last time you reviewed your portfolio? Marriage, divorce, birth and death—not to mention changing careers, moving, health issues or any number of other factors—can have a profound impact on what you want or need your money to do.


Determine the purpose of each investment. Retirement, vacations, household expenses, a condo in the desert. Is what you own still relevant, still moving you toward your goals? Are you putting the right amounts in the right accounts? Remember to also bear in mind your timeframe for achieving each dream.


Also look at if your mix of assets is right for you today. Do you have a diverse choice of investment vehicles, such as bonds that perform well in bear markets and stocks that soar when things turn bullish? You want to be prepared for whatever the market sends your way.


Is My Investment Strategy Tax Efficient?


Being tax smart can keep Uncle Sam from dipping deeper into your pocket. A combination of tax-advantaged investments (e.g., Roth and Traditional 401(k)s and IRAs), tax-efficient investments (e.g., index mutual funds and ETFs), tax-exempt bonds (e.g., municipal and U.S. Savings bonds) and taxable accounts give you great flexibility in when you pay taxes and how much you pay.


There are also strategies—such as tax-loss harvesting which uses gains to offset losses—that can reduce your tax burden. (See next month’s Money Matters for some tax-smart tips.)


If you’re at that stage of life where you’re drawing down on your savings, set up a tax-savvy withdrawal strategy. This could mean depleting taxable accounts first, then tax-deferred accounts and finally tax-free investments, such as Roth IRAs.


Do I Have Adequate Protection?


No, this is not about condoms or PrEP. It’s about making sure unforeseen circumstances don’t ruin everything you’ve been working for.


If you still have many years left to work and couldn’t get by without your salary, disability insurance might be very important. Or maybe you’re financially independent and don’t need this coverage any more.


Has your family grown? You might need more (or some) life insurance. Or if you’re older, you may not need any or as much coverage. That money may be better spent on a health or long-term care policy.


Here again, it’s critical to consider your current goals and timeframes when reviewing your safeguards.


Is My Estate In Order?


Tax and estate laws are always changing, as are your assets and the people you want to protect. Make sure your will, healthcare proxy, power of attorney, living trust and other documents still reflect your wishes.


And by all means, update your beneficiaries for all official documents and investment accounts. I can’t tell you how many clients I’ve saved from leaving their retirement accounts, homes and more to an ex they haven’t spoken to in years.


This Spring, make a date with yourself to clean up your portfolio. Toss any investments that no longer suit your goals and find new ones that are a better fit for who you are today and where you want to go tomorrow.


Or just hire a financial professional to do it all for you. Maybe I should have started with that point.


••• March 2019 Issue  •••

A Quick Review of Tax Changes That Could Impact You



Remember that scene in Gone With the Wind where Scarlett O’Hara says, “I can’t think about that right now. If I do, I’ll go crazy. I’ll think about that tomorrow.”


That may have been your reaction when the new tax bill passed in late 2017. Why think about all the changes and how they were going to impact your tax bill until you had to?


Well, now you have to. The new laws are kicking in for your 2018 taxes. So fluff up your petticoat, tie your bonnet and pinch your cheeks while I take you on a quick tour of the most important changes.


The first thing you’ll notice is the 1040 form itself. There is now just one form for everyone. Forms 1040-A and 1040-EZ have been eliminated to get rid of any confusion about which one to use. While not quite the postcard we were promised, the new 1040 is much shorter.


Unfortunately, everything that was removed from the form itself is now on six schedules. While there are people who will be able to file just the 1040, there are also many who will have to file one or more schedules.


Part of the impetus behind the shorter form is that tax filing will be greatly simplified when fewer people have to itemize. To make that happen, Congress nearly doubled the standard deduction. Married-filing-jointly taxpayers get a $24,000 standard deduction, up from $13,000, and individual filers go from $6,500 to $12,000.


Terrific. Except the personal exemption has been completely eliminated. The personal exemption was over $4,000 in 2017. And you could subtract that amount for yourself and each of your dependents, making this loss painful for large families.


But wait! The Child Tax Credit has doubled to $2,000 per dependent child under age 17. Also starting in 2018 is a new $500 credit for dependents that don’t meet the Child Tax Credit criteria, such as elderly relatives or children older than 17.


Now to the change with significant impact in California—the cap on the State and Local Tax (SALT) deduction. People who itemize used to get an unlimited deduction for their state individual income, sales and property taxes. In fact, the SALT deduction was one of the main reasons for itemizing.


Under the new law, the deduction is limited to $10,000. Here in the Bay Area, that may not even cover the first property tax payment for some homeowners. And if you have multiple properties, sorry, you’re still limited to that 10k. Same story if you’re married. The SALT deduction is $10,000 if you file jointly or $5,000 each if you file individually. Which really amounts to a marriage penalty since two unmarried taxpayers get an aggregate of $20,000 to write off.


At least the source of the most common marriage penalty has now been virtually eliminated. With the new tax rates, Congress essentially doubled the income thresholds for single filers (except for the top two brackets), so married couples don’t face a higher tax bill unless they make over $400,000.


The last big change is the qualified business income deduction. This was added to help small businesses that didn’t benefit from the breaks given to large corporations under the new law. Owners of sole proprietorships, S corporations or partnerships may deduct up to 20% of the income their business earns. There are exceptions and limitations to this deduction (of course!) and the language isn’t crystal clear about certain points. So if you think you may qualify for this fabulous deduction, you may want to consult with a tax professional.


With all of these changes, it’s hard to know whether you’ve been helped or hurt by the new tax bill until you actually file. If you find yourself on the “hurt” side of the spectrum, it may be smart to talk to a financial professional about changes you can make to lower your tax burden for 2019. Because as Scarlett reminds us, tomorrow is another day.




••• February 2019 Issue  •••

How to Find True Love…With a Financial Advisor



Maybe it was the wild highs and lows of the stock market last year. Or a realization that you don’t have the time—or desire—to research investments and strategies on your own. It could be that you just inherited a boatload of money. (Call me!) Or you’re ready to make that thing that you’ve been talking about for years finally happen.


Whatever your motivation, hiring a professional to manage your money is a good decision. At a minimum, a financial advisor’s job is to help you save, invest and grow your money. But it’s so much more than that. A really good financial advisor is a coach and a cheerleader. The voice of reason. A trusted confidant. And a professional at managing money, of course.


A financial advisor is there to help you set and prioritize goals, and plan out the steps needed to achieve your dreams. As well as keep you disciplined when a year-end bonus slated for your retirement account threatens to become a spontaneous getaway to Puerto Vallarta.


A financial pro brings objectivity to decision-making that you likely can’t achieve on your own because, well, it’s your money. And your money means your retirement, or your kids’ education, or your own home or any number of other dreams you have. It’s natural to act emotionally about money, but that kind of thinking drives people to do things like sell when the market is tanking and buy when it’s on the upswing—the exact opposite of a sound strategy.


An advisor is there to steer you toward more rational decisions, helping you invest with a purpose and strategy in mind. They offer a wealth of knowledge that you can access as you work towards saving for your goals.


So how do you find an advisor who will become a trusted partner? A person to guide you through your most important decisions? To keep you from making costly mistakes when you’re buying a house, questioning whether you can afford surrogacy (or children at all), navigating a job loss or divorce, starting a business, deciding when to retire or any other major thing that happens in your life?


Start by asking friends, family and co-workers for recommendations—especially people whose stage of life or financial needs are similar to yours. Online searches and financial professional registries are other good sources. And check the background of anyone who makes your shortlist. BrokerCheck is a helpful site for that.


You may find an alphabet soup of designations after the person’s name. An important one is CFP, which stands for Certified Financial Planner. CFPs are licensed and regulated and must take ongoing education and ethics classes to maintain their certification.


Fiduciary is another thing to look for in your research because it means the advisor is legally obligated to act in your best interests.


Once you’re done swiping left or right through potential advisors, it’s time to actually meet. Most professionals offer a complimentary initial consultation to see if the two of you click. Be sure to ask lots of questions, including:

• Background, professional designations and years in business

• Services provided

• Investment philosophy

• Type of clients they specialize in

• How much contact they have with clients and how quickly they respond to them

• Who takes over during vacations or if the advisor is incapacitated

• How they handle complaints


Then there’s the big question: how much they charge. Fee-based advisors may be preferred over those that charge commissions, as the latter may be tempted to recommend investments that benefit them more than you. Fees can be charged hourly, for a specific service (such as creating a financial plan), or as a percentage of the assets the advisor manages for you. Be sure you understand and are comfortable with the cost structure.


In fact, make sure you’re comfortable with everything about the financial professional you decide to settle down with. Remember, this is someone you want to be able to trust with intimate details of your life. Take the time to find someone who really gets you, and the two of you can make beautiful money together for years to come.

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