Comparison: The Thief of Joy & a Monster Without Context

Comparison: The Thief of Joy and a Monster Without Context

Two of the most helpful financial tools out there might just be:

  • A pair of earplugs
  • A set of blinders

Hear me out… 

The Thief of Financial Joy

The idea that “comparison is the thief of joy” deeply resonates when it comes to how a lot of us think about money and wealth, especially in a world that grows more connected by the minute. All we have to do is open our phone, and almost instantly we’re likely to be reading about or looking at someone else’s beautiful life, thinking “wow, they have got it made in the shade”. 

We all do it to some degree. I like to think I’ve gotten better at recognizing and limiting it with age. Nevertheless, it’s dangerously easy to stack ourselves up against everyone else we encounter. There must be something evolutionary about mentally calculating whether we have the leg up on another person or vice versa. And we come to all sorts of conclusions based on a long list of information we subconsciously gather… What car does she drive? Where does he shop? What kind of house do they live in? How do they travel? And on and on… 

There’s a Lot of Bull💩 Out There

But the truth we all know, and simply need to be regularly reminded of, is that things are not always what they seem. The grass is, in fact, NOT always greener on the other person’s side of the fence. Maybe now more than ever, in our influencer age, there’s a lot of B.S. and heavy smoke screens out there. Virtually everyone is trying to present themselves in a very curated way.

Comparison + a Lack of Context = Monster

Sometimes we might have the whole picture and can make a fair assessment of what’s being presented. Where comparison can really send the mind spiralling, though, is when we don’t have the full story. Lack of context can unfortunately open the door for one’s imagination to fill in the blanks.

A client recently shared a story with me that highlighted just how this can play out…

An Unimaginable Loss

During our meeting, she told me about a conversation she’d had with an acquaintance a while back, in which he disclosed that he’d “LOST $250,000 in an investment account”. While the guy revealed this information rather calmly, my client was floored by the thought of this staggering and sudden loss in wealth.

And she brought this up with me because it was influencing how she felt about her own investment strategy… Fueling a growing nervousness about the stock market. In her mind, there’s NO WAY she could stomach losing $250,000. The idea left her terrified.

So I asked two questions:

➡️ How much total money did this other person have?

➡️ What was he invested in?

(There was also a 3rd question: How do you know he was even telling the truth?)

Of course, her conversation partner didn’t fill her in on any additional information… She didn’t have the full picture. So her mind defaulted to filling in the blanks with her personal financial situation – a perfectly natural thing to do. She thought, “Given my own financial circumstances, how could I deal with losing $250,000???”

We don’t know the reality. But it could very well be that his liquid net worth was north of $12.5M, and he was referring to a time he lost 2% or less (an objectively minimal drop). Or maybe he experienced that decline purely in a highly volatile stock (whereas this client is only invested in well-diversified portfolios). In any case, he doesn’t share all the same data points and goals as our client. 

There are a couple lessons here:

1️⃣ CONTEXT is KEY… One small detail can be misleading. But if you have the whole picture, it might be a different story altogether. Don’t take everything you hear at face value.

2️⃣ FOCUS on YOUR plan… Your situation is highly unique. Don’t apply someone else’s experience (alleged or true) to yours. Tune out the noise. Put blinders on.

There’s enough emotion that comes with watching the movements in the market – though there are things you can do to prepare for and handle them. Avoid making it even more challenging by taking these two lessons to heart.

Real Wealth is Not Usually Loud – It’s Quiet and Boring

The bite of comparison can hurt us in several different ways. The example above made it difficult for our client to view her investment strategy through the appropriate lens – one that made sense specifically in her case. 

Another way we may succumb to the challenges of comparison is when we have all these influencers flaunting their supposed riches and sharing the “secrets” of how they amassed their fortunes. It can look enticing and make us feel like we’ve really missed the boat. But in many of those instances, they’re saying what they think will get clicks and followers, not necessarily the truth. So don’t let it get to you.

The Millionaire Next Door paints a detailed portrait of what many people with wealth actually look like. The book tells us that, for the most part, they’re hidden in plain sight. Generally, people who do have money aren’t the ones trying to prove it to the world. Instead, they wear normal clothes, drive older cars, and live lives that mostly seem outwardly modest. While it was originally published almost 30 years ago now, I believe the theme of the book tends to hold true today. Those who are living loud, flashy, extravagant lifestyles very well may be rolling in more debt than dough.

Today, the more modern term might be the “Stealthy Wealthy”. 

Remember this if you start to fall into the financial comparison trap…

  • Just because someone seems to have money, or presents themselves a certain way – it doesn’t make it the case.
  • No, you’re likely not missing out on a “secret strategy to build wealth fast!”
  • Those who do have meaningful wealth are probably pretty boring about how they deal with it, and built it in the first place.
  • The only person worth judging yourself against is… you.
  • Keep your mental energy strictly on your own goals and situation.
  • Don’t listen to the limited information you may gather about someone else’s financial situation and try applying it to your life.
  • Do listen to a professional who understands your entire picture (AKA a trusted, fiduciary financial planner).

Don’t let comparison rob you of your joy, especially if you don’t have all the context. Keep that monster at bay and turn away. 

With that, I’m out – gotta go talk to Mike about Upbeat Wealth branded earplugs…

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Fiduciary, fee-only, Certified Financial Planner, Eddy Jurgielewicz

Eddy Jurgielewicz, CFP® is a Partner and Lead Financial Planner at Upbeat Wealth, a fee-only firm based in New Orleans and serving clients virtually across the country. He specializes in providing straightforward financial guidance to ambitious young families as they navigate life’s many milestones.

Do you have questions about what we shared in this post, or anything else in general? Feel free to schedule a free consultation or drop us a line!

Sign up for our newsletter (at the bottom of this page) to stay up to speed on our Upbeat Insight.

Disclaimer: All content in this article is provided for educational, general information, and illustration purposes only. None of the information is intended as investment, tax, accounting, or legal advice. Nor is it a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult with a financial planner, accountant, and/or legal professional for advice on your specific situation. Read our full disclaimer here.

RSUs: A Guide to Decision-Making and Taxes

RSUs: A Guide to Decision-Making & Taxes

RSUs are an increasingly familiar form of equity compensation these days. When handled well, they can be a true boon to your financial plan – expediting progress toward major goals and having the potential to change your life for the better. 

In our work, we’ve had the fortune of seeing this play out in a variety of scenarios, allowing clients to:

  • Quickly pay down debts
  • Pay for an international vacation
  • Max out tax-advantaged retirement accounts
  • Top off the down payment for that dream home
  • Purchase an engagement ring and pay for the wedding
  • … and more!

But to experience the optimal impact with RSUs, a few things are absolutely necessary. You need to:

  1. Understand what they are
  2. Have a framework for deciding what you’ll do with them
  3. Proactively prepare for the tax implications

And that’s exactly what we’ll cover here. So top off that cup of coffee and strap in!

PART 1: WHAT ARE RSUs?

An Overview

Restricted Stock Units (RSUs) are batches of stock in the company you work for. They are given (“granted” or “awarded”) to you over an established period of time, before which they are… restricted! RSUs are typically found at public companies and are ultimately a form of incentive compensation. Instead of the employer saying, “We’ll pay you more cash via your paycheck,” they’re saying, “We’ll give you some shares of our company stock and then you decide what you want to do with them”.

Vesting

RSUs create a nice carrot at the end of a stick in that you have to stay with your employer long enough if you want to realize the benefit. Upon being awarded a grant, the shares aren’t yours right then and there – bummer. Rather, they’re restricted up until a point at which “vesting” begins. Vesting refers to when you will actually start receiving ownership of the stock units (we’ll look at a sample schedule shortly).

In the event you do leave the company or are terminated, you typically won’t receive the remaining number of unvested RSUs. But you will keep the shares that have already vested before that time.

Review the paperwork

If you receive RSUs as equity compensation, then all the nuts and bolts of the award will be spelled out in a grant letter – which is provided by HR. This will provide the specifics on the number of shares to be awarded, the vesting schedule, what happens to unvested shares upon departure from the company, plus tons of fun jargon and legalese. It’s critically important to review this information so that you can be crystal clear on what to expect.

A Vesting Schedule Example

Let’s say Darrow is awarded a grant of 10,000 shares in his company, The Rising Industries, on January 1st, 2025. The vesting schedule is over 4 years with a 1-year cliff, and shares will then vest quarterly after 1 year. This would look as follows:

RSU - Vesting Schedule Example

~ Jargon Break ~

A “cliff” is very common and means the vesting date for the first chunk of shares is delayed until after a specified period of time, typically 1 year. Then, the remaining shares will often vest more frequently from there (such as monthly or quarterly). In Darrow’s case above, no shares were vested at all until after a full year.

PART 2: DECISION-MAKING

Alright, now that you understand what RSUs are, it’s time to think about how you’re going to utilize this resource… Once they vest, it’s game time, and there are 2 things you can do upon gaining ownership of the company stock. Ideally, there’s already a strategy in place before this happens to help them support your goals as effectively and seamlessly as possible.

A Mental Framework for RSUs

It’s perfectly normal for people to get analysis paralysis with RSUs and hesitate when the time comes for a decision. To get the gears turning in the right direction and guide your thought process, I suggest asking yourself the question: 

“What would I do if my employer gave me a cash bonus for this amount (the dollar value of the vesting shares)?”…

Your 2 Options at Vest

Hold onto the shares...

  • Once the stock vests, you can choose to keep them as is – maintain the shares in your company stock. Doing this is essentially saying, “If I were given this value in a lump sum of cash, I’d turn around and use the entire check to buy stock in my company.” 
  • It’s worth emphasizing here that inaction with RSUs is still an active decision in regards to your financial plan.
  • Even if you plan to sell the shares at a later date, you’ve now taken the bet on your company and will ride the movement of the stock price for better or worse.

Sell the shares right away...

  • Alternatively, you could sell the shares at the earliest opportunity. Going this route opens up the conversation for using that cash for some other purpose within your greater financial plan – be it adding funds to savings, investing those dollars in a diversified portfolio, paying down debt, etc.

Again, RSUs are simply a type of compensation in the form of equity. The employer is committing to paying you with company stock in place of cash. As such, it should be thought about in the same vein – as if you were receiving a cash bonus for the amount of vesting shares. This mindset can simplify the process of evaluating what the next steps would be after receiving shares. 

I find that very few people are quick to say they’d want to invest all that money back into their company stock. Instead, most prefer to find another – more practical – use for those resources. 

You Should Definitely Consider Selling the Shares at Vest if ANY of the Following Apply:

You…

  • Have high-interest debt balances
  • Are still short of an adequate Emergency Fund target balance
  • Have major unfunded short-term cash needs within the next 1-3 years (think: house down payment or repair, car replacement, etc.)
  • Could use the income to contribute to tax-advantaged retirement accounts that your normal cash flow otherwise wouldn’t allow for
  • Are not comfortable with higher levels of risk in your investment portfolio
  • Are still working to get on track with your long-term financial independence goal
  • Would miss that money if it went to $0
  • Already have sizeable exposure to your company stock through other means

It May Be OK to Consider Holding Onto the Shares at Vest if All of the following apply:

You…

  • Have adequate cash buckets in place
  • Are already on schedule for meeting all your short and long-term financial goals
  • Are comfortable with, and have capacity for higher levels of investment risk
  • Wouldn’t miss the money if the share price went to $0
  • Understand and are ok with the potential for paying income tax on a value you may never realize

A mix of the two options is possible as well… It doesn’t have to be all or nothing. If you understand the pros/cons and how the decision will affect your specific situation, you may choose to sell some of the shares and hold onto a portion, as long as you still check all of the boxes in the second list above.  

The Risk of Accumulating Too Much Company Stock

Concentration is a helpful tactic when your spouse is giving you a list of things to pick up at the store. But concentration can be quite risky when it comes to your investment portfolio.

Without paying much attention, you could accidentally amass a rather large amount of stock in your company thanks to RSUs. Some questions worth asking yourself if you realize this has happened are:

  • Are you willing to tie your list of future financial goals directly to the success of your company stock price?
  • What would be the impact on your plans if the value of your shares were to suddenly go to zero?

If you find yourself in a position where you’ve already vested a lot of RSUs over the years and they’re still sitting there, it is worth reflecting on your tolerance and capacity for investment risk – then putting together a tax-mindful strategy to diversify out of your highly concentrated company stock over time. 

Trading and Blackout Windows

Many companies have certain times of the year when you CAN and CANNOT sell your company stock, due to rules around insider trading. It’s not uncommon for the vesting of RSUs to coincide with a blackout window, during which you’re prohibited from selling any shares. If this happens to be the case for you and your plan is to sell the RSUs at vest, it requires an extra step. 

You should take note of when your trading window will open back up and mark it on your calendar so that you’ll remember to go back in and sell at the earliest permissible time. Forgetting to do this could result in accidentally holding the shares longer than you may have wanted.

Don’t Forget About What Comes Next!

If you do sell the shares at vest, there will still be planning to follow! That cash will need to be deployed into your financial framework… Make sure you take the next step to direct the proceeds into their new home within your plan.

PART 3: TAXES

Now for everyone’s favorite part! No matter what you do (or don’t do) with the RSUs after they vest, there are going to be tax impacts.

Income Tax Treatment of RSUs

The main thing to know is that the market value for a set of RSUs (# of shares x stock price) is added to your annual income on the day that they vest. This means that the value of the vesting shares is taxed at ordinary federal and state income tax rates right away – even if the shares aren’t immediately sold. Applicable Social Security, Medicare, and Medicare surcharge taxes are owed as well. To drive it home… this is the case whether you hold onto the shares or sell them.

Withholding Rates

It is normal for employers to withhold income taxes owed on RSUs for you. They do this by selling some of the shares on your behalf upon vesting, using the proceeds to pay the tax. There are default rates (for “supplemental income”) that are used to determine how much is withheld, as follows:

Federal...

  • Taxes are withheld at a rate of 22%. If you earn over $1 million, the default rate is 37%.

States...

  • Have their own set flat rates for supplemental income that are applied to RSUs. For example, California’s rate is 10.23% and some states – like Louisiana – have no supplemental withholding rate even though there is a state income tax.

FICA...

  • Tax rates are the same as your other income.

This gets “fun” because your actual income tax rate almost certainly differs from the default withholding rate, meaning we come across plenty of situations where taxes are some combination of over- and/or under-withheld for federal and/or state. Behind deciding whether to hold or sell RSUs at vest, this is one of the most common things that trips up clients out there. The withholding discrepancy goes unnoticed, and then April delivers a big surprise…

In all cases, proactive tax planning throughout the year comes in clutch to manage this and avoid those unexpected shocks to the bank account courtesy of the IRS and your home state.

Filling the Tax Gap

If we project an under-withholding because the default supplemental rate is insufficient, we work closely with our clients on a plan to cover the difference. This can be done in one of a handful of ways:

  • Ask your payroll department if they can change the withholding rate specifically on your RSUs to a custom percentage (not all employers will facilitate this)
  • Adjust your W-4 to have more money withheld from your regular paychecks
  • Pay estimated quarterly taxes
  • Set funds aside in a dedicated high-yield savings account to pay the lump sum tax bill in April (as long as we’re not worried about falling short of safe harbor thresholds)

If you’re going to “try this at home”, the IRS has a tax withholding estimator you can use to get an idea of what your federal situation may look like. It will finish by giving you suggested guidance on updating your W-4.

Capital Gains Tax

But wait, there’s more!

At the time that RSUs vest – if the shares are not all immediately sold – it starts the clock and sets the cost basis for any shares that may be sold at a later date. From this point forward, the vested RSU is treated like any other stock that’s purchased under usual circumstances, meaning that any growth or loss beyond that point will receive the appropriate long-term/short-term capital gain/loss treatment.

~ Jargon Break ~

“Cost Basis” is what the IRS considers the amount you paid for an asset (in this case, the stock). They need to know this because if you later sell an asset, you will be taxed on any growth you realize. When you eventually sell the stock, the “gain” or “loss” is determined relative to that “cost basis”. In the case of RSUs, you are NOT purchasing the stock. Nonetheless, the IRS will use the value of the company stock on the day it vests as the “cost basis” to assess any taxes on growth from that point if you choose to hold onto it (or to record any losses).

Key takeaway: There is no tax benefit to holding onto RSUs after they vest.

RSUs - Tax Table

Another Common Mistake – Misreporting Cost Basis on Your Tax Return

In addition to withholding snafus, the most frequent tax-related mistake we see with RSUs is the incorrect reporting of cost basis on tax returns. Let’s break down what I mean here by bringing back our friend, Darrow, of The Rising Industries…

Let’s say that Darrow vested $10,000 worth of RSUs this year and immediately sold them all. As we now know, his “cost basis” would be $10,000 → the value of his shares in The Rising Industries at the time of vest. 

Regarding his taxes on these RSUs...

  • $10,000 was added to his “ordinary income” for the year, meaning he’ll pay regular federal and state income taxes on that amount just like the rest of his earnings.
  • Because he sold them all right away, there are no capital gains/losses to factor in.

Where this gets tricky...

  • It is up to YOU, the taxpayer, to properly report the “cost basis” of the vested RSUs on your tax return.
  • The custodian (investment company that facilitates your RSUs) will provide you a tax form called a 1099-B, which gives information on stock sales you made. And because they aim to make your life difficult, the cost basis on this document will probably show as $0…Which is incorrect!
  • Now, if you were to write $0 as the cost basis for your RSUs when completing the tax return, this would create a DOUBLE tax situation → you would pay ordinary income tax on the $10,000 that vested PLUS capital gains taxes on the difference between $0 (supposed cost basis) and $10,000 (amount you sold them for).

So, how do you fix this...?

  • Your custodian (E*Trade, Fidelity, etc.) will also make a document called a “Supplemental Information” sheet available. MAKE SURE TO GET THIS.
  • This document will list out the correct cost basis information for your RSUs. You’ll need to use this to properly report it on your tax return to avoid the potential double taxation.

If you made it to this point, I applaud you. That was a doozy… But hopefully you’re leaving with more than you started with! 

As with all types of equity compensation, the right understanding and coordination can make RSUs a game-changer for you. Ensure you have a working strategy in place to optimize them for your unique goals!

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Fiduciary, fee-only, Certified Financial Planner, Eddy Jurgielewicz

Eddy Jurgielewicz, CFP® is a Partner and Lead Financial Planner at Upbeat Wealth, a fee-only firm based in New Orleans and serving clients virtually across the country. He specializes in providing straightforward financial guidance to ambitious young families as they navigate life’s many milestones.

Do you have questions about what we shared in this post, or anything else in general? Feel free to schedule a free consultation or drop us a line!

Sign up for our newsletter (at the bottom of this page) to stay up to speed on our Upbeat Insight.

Disclaimer: All content in this article is provided for educational, general information, and illustration purposes only. None of the information is intended as investment, tax, accounting, or legal advice. Nor is it a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult with a financial planner, accountant, and/or legal professional for advice on your specific situation. Read our full disclaimer here.

How to Take Control of Your Cash Flow

How to take control of your cash flow

I believe the venerable Wu-Tang Clan hit the target when they posited that “cash rules everything around me”. It’s a simple yet profound fact of the modern world we live in, largely applicable to those in all walks of life. Equally important, in my mind (though not as likely to serve as the foundation of an iconic hip-hop track), is that ruling your cash flow is one of the single most impactful steps to making progress towards financial goals.

Having the right system in place delivers real peace of mind and points you more directly towards what you hope to accomplish. Meanwhile, if no effort is made to intentionally manage the flow of dollars through your day-to-day life, you’re likely feeling the stress and holding yourself back.

So that’s what we’ll work through here: some strategies on how to take – and maintain – control of your cash flow. Because once you get that money, you still gotta know what to do with the dollar, dollar bills, y’all.

Who Needs to Take Control of Their Cash Flow?

Well, everyone!

The needs and reasons may be different person-to-person, but everyone stands to benefit from being in greater command of their cash flow.

It is not just for those who…

  • Are running a deficit each month
  • Are working to get out of debt
  • Need to build up their savings
  • Feel stressed when thinking about their income vs. expenses

It is also valuable for those who…

  • Have a high income
  • Are already saving at a strong rate
  • Are on pace to meet their financial goals

By the way, controlling your cash flow doesn’t have to mean meticulously tracking every single dollar that passes through your accounts – though that might be the right move for certain people. And it’s also not strictly synonymous with saving or investing more. In some cases, it may even entail spending more in certain areas of your life. It really boils down being in tune with how money is generally moving and directing your available resources in a way that aligns with your intentions.

Where to Begin

Awareness is always the first step.

You have to run a thorough diagnostic to understand if there are any issues, and what exactly they are, before you start considering how to fix them. Don’t think there’s anything wrong? There might not be! But even highly profitable companies conduct financial audits. Regardless of how you feel about your current situation, this is a must.

To get the best picture of what your current cash flow looks like, I recommend reviewing at least the last three months. The most accurate approach is to pull up the statements for all your credit cards and bank accounts. Once you have them:

  1. Go through each one line by line, categorizing every expense and savings contribution (a simple spreadsheet can make this easy). Examples of these categories might be:
    • Utilities
    • Restaurants
    • Gas (vehicle)
    • Subscritptions
    • Hobbies
    • Emergency Fund Contributions
    • etc…
  2. Add up the total amount in each category per month and then average them out. 

This will give you a usable figure for how much you’re currently spending and saving on a monthly basis in different areas. Of course, spending on certain things (such as eating out or gas for your car) will fluctuate. But getting a working average is perfectly fine. 

When people take the time to go through this exercise, I almost always notice the same results:

  • They find the awareness gained from this process very powerful, often learning things they didn’t know or finally facing head on something they tried to ignore.
    • “Ok, I didn’t realize I was spending that much on Amazon.”
  • It becomes immediately clear where adjustments can be made.
    • “I know I can definitely rely on Uber Eats less and still be ok.”
  • If needed, people are generally more prepared to act on any changes.
    • “Let’s go!”

Find a System to Manage and Track Your Cash Flow

Having a reliable framework and a continuous feedback loop (that works for you) helps you get more organized and then stay in control.

If your financial status quo has some cracks in it, it’s worth looking for tools to make your life easier. There is no shortage of apps out there designed for tracking your cash flow. A couple that I regularly hear success stories about are:

Additionally, a variety of different budgeting “approaches” exist. The right one for you depends on your needs and your style. A few of them include:

At Upbeat Wealth, we like to steer the households we work with into a “Flow-Based Budgeting” system. We first learned about this method from a presentation given by Natalie Taylor and have incorporated our own flavor. At a very high level, here’s how it works:

  • To start, all income gets deposited into a single primary checking account (a “source” account, if you will).
  • Then, you break down your spending into three categories: 
    • Fixed Expenses are anything that does not change (or stay about the same) month-to-month, such as mortgage, insurances, gym membership, phone bill, monthly investing/saving, etc.
    • Flex Expenses are those that do vary on a monthly basis, including things like groceries, self care, entertainment, etc.
    • Non-Monthly Expenses are things that might get paid quarterly, every six months, or simply come up irregularly. Examples include travel, insurances, property taxes, etc.
  • After you lay out all of the “fixed” and “non-monthly” expenses + savings, it becomes clear how much is available to go towards the “flex” category of spending. This creates a natural guardrail in your budget. Whatever that leftover amount is, that’s what is free to go to these expenses each month. You can even break it up into a weekly figure to monitor it more closely.
  • The “source” checking account feeds everything:
    • All “fixed expenses” are pulled out of here, ideally via auto-pay. 
    • Automated transfers are established to fund the “non-monthly” account. If you total the annual expense for all the non-monthlies, divide that by 12 and transfer that here each month.
    • Finally, you can set up weekly transfers to the “flex” account to cover those. For some this is likely a category of spending that goes on a credit card. If so, you’ll want to keep that weekly card balance within the set limit and pay it off at the end of each week.

Free up Some Cash Flow by Targeting the Low-Hanging Fruit

There are almost always some easy places to win back cash flow.

Did you watch the Severance season 2 finale and know you won’t be opening Apple TV again until the 3rd one comes out? Cut that bill. If there are any subscriptions or memberships that you’re not actually using (or can easily live without), maybe it’s time to unsubscribe. A few bucks here and there add up. Mike writes more about our 3-step guide to evaluating your memberships and subscriptions in another post.

When’s the last time you shopped your auto or homeowners insurance? These types of coverages (and other property & casualty lines) are worth reviewing at least every few years. If it’s been a while, you very well may be able to lock in a better rate for the same coverage with another carrier. 

Clarify Your Purpose and Any Trade-Offs

If change is necessary, zero in on your motivation to reinforce your efforts.

What is your specific goal in wanting to improve your cash flow management? It’s one thing to say you want greater control. There’s going to be much more friction if you’re crystal clear on why. Maybe you want to…

  • Shrink that high-interest debt balance a lot faster
  • Finally build up to a full Emergency Fund
  • Save up for an international trip later in the year
  • Treat you and your partner to more fun date nights
  • Get closer to maxing out a retirement account
  • Save for a house down payment
  • Etc…

Whatever it is, put that purpose at the front of your mind. Without it, it will be hard to maintain motivation because any changes you have to make are going to involve very real trade-offs. Maybe putting more money towards saving for a much-needed new car will require spending less on eating out. If so, spelling it out like this might lead to better results than simply telling yourself that you’re going to restaurants too much and need to cut back. 

  • Lame: “We spend too much money at restaurants and have to cook from home more now.”

  • Cool: “By cooking from home a little more, I’ll be able to put $500 more per month towards the next car my growing family needs and drastically speed up the purchase timeline.”

Make the effort to define what things are most important for your money to go towards and why. Similarly, identify the things that aren’t as important for you to be directing resources towards.

Keep it Realistic and Celebrate Small Wins

Take it one step at a time.

If you’re normally spending $400 per month on food delivery services, it may not work very well if you immediately try pulling this down to $100 each month. Incremental steps over time will help you ease into change and keep with it. So maybe you’d target spending $100 less each month until you arrive at your goal of $100. 

Are you focused on growing a bucket of savings for a major expense like a house down payment? Maybe you have a pile of credit card debt, and it’s tough to fathom getting past it. Financial obstacles like these could easily take several months or even years to overcome. A seemingly long road ahead can be daunting. Along the way, focus on smaller targets, acknowledging and celebrating in some way each time your balance for the down payment grows by another $10,000, or you pay off another one of the credit card balances. A lot of the big milestones we work towards involve major dedication. So help keep yourself on track by recognizing the smaller wins as you progress.

AUTOMATE, AUTOMATE, AUTOMATE

Remove as much thinking as possible. Automate savings and debt payments.

The less manual an action is, the more likely it is to occur. If you determine that you’re able to save or invest a certain dollar amount each month, go ahead and set up automatic contributions into those accounts. The same can be done with debt payments. You can set your credit card balance to autopay and even automate extra payments to any type of liability for those you’re working to aggressively pay down.

Automating gets you out of your own way. It also helps with the practice of “save first, spend second”. By ensuring your goals are being met first, it frees you up to spend what’s left over without any guilt.

Consider Setting the Credit Card Aside

If spending or credit card balances are getting hard to rein in, switch to strictly using the debit card.

By exclusively swiping your debit card, you can only spend what you have in the bank. It forces you to think a bit more before any purchase. On the other hand – with credit cards – it doesn’t matter how hard we tell ourselves otherwise, they simply don’t feel as real. And don’t worry about the points. The cash back and those miles are no good if chasing them ends up costing you more in the long run. It doesn’t have to be a permanent change, but it’s a sure way to curb spending. 

Be Mindful of Lifestyle Creep

Take a proactive stance when income increases.

As your income goes up over time, continue to keep your focus on what is most important to you and your family. It’s ok if that means spending more money on certain things – as long as your other priorities are met too. You worked hard for it, why not put more towards travel, treating the kids, or whatever else brings you joy?

At the same time, a jump in pay is a wonderful opportunity to enhance progress towards goals. So when this happens, take a pause. Revisit your financial plan. See if you can identify tangible ways to put those new dollars to work in a way that supports your goals. If nothing else, consider initially saving at least half of the increase. Be thoughtful with what spending areas get the other half of the increase. One thing is almost certain – if you’re not intentional with it, the new income will find a way to disappear.

In closing, I can’t overstate the benefits of ruling your cash flow. While it may not make a good hip-hop hook, it is most definitely the foundation of a healthy financial plan.

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Fiduciary, fee-only, Certified Financial Planner, Eddy Jurgielewicz

Eddy Jurgielewicz, CFP® is a Partner and Lead Financial Planner at Upbeat Wealth, a fee-only firm based in New Orleans and serving clients virtually across the country. He specializes in providing straightforward financial guidance to ambitious young families as they navigate life’s many milestones.

Do you have questions about what we shared in this post, or anything else in general? Feel free to schedule a free consultation or drop us a line!

Sign up for our newsletter (at the bottom of this page) to stay up to speed on our Upbeat Insight.

Disclaimer: All content in this article is provided for educational, general information, and illustration purposes only. None of the information is intended as investment, tax, accounting, or legal advice. Nor is it a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult with a financial planner, accountant, and/or legal professional for advice on your specific situation. Read our full disclaimer here.

Boost Your Charitable Giving Strategy

Give Your Charitable Giving Strategy a Boost

Are you planning on donating to a charitable organization this year?

 

If so, you may be able to take advantage of some helpful tax strategies – in addition to supporting your desired cause.

So You Want to Give to Charity… What Gives?

At Upbeat Wealth, we love working with households that prioritize giving. Many families we serve are eager to put some of their resources into action for the community. This, alone, is awesome. Goals like this excite us as planners and motivate us to do what we do. So before we move on, I want to be clear that the way we view it, the primary goal of giving should be to provide those resources to an effort that’s important to you. The benefit is in doing good. Full stop.

Now, there is a potential secondary benefit to charitable giving, which we’ll discuss here. It’s an afterthought—a cherry on top—but not the leading reason we believe people should make donations. As with many things in our world, it has to do with… taxes!

The IRS’ Gift to You

The added available benefit (secondary to lending that neighborly hand to those in need) comes in the form of a tax deduction.

Bear in mind that a tax deduction is something that reduces the portion of your income which is subject to tax. The idea here is that it then reduces the amount of taxes you would pay for the year. This is different from a tax credit.

By giving money to a charity, the IRS lets you take a deduction against your income for the value of what you give in that tax year, up to a certain limit. 

A very important qualifying detail here is that this advantageous deductibility factor only really enters the conversation if it will help you itemize at a level over the standard deduction threshold (whether alone or combined with other itemized deductions). The standard deduction in 2025 is $15,750 for individuals and $31,500 for those filing MFJ. So, as an example… If you’re a married couple who is making charitable contributions this year and this helps get your itemized deductions above $31,500, then you’re probably in a spot to capture this extra tax perk.

A couple rules

  1. Currently, if you give cash, you’re able to deduct your gift amount up to 60% of your AGI for the year. If you donate an investment, that limit is 30% of AGI.
  2. Additionally, you need to make sure the organization qualifies for tax-deductible charitable contributions. It must be a US-based 501(c)(3).  The IRS provides a tool for checking this.

But Wait, There’s More!

Of all the ways one can donate, cash and invested securities are the two most common methods we see. A “cash” contribution is your classic check written to the name of the organization or maybe you enter your credit card information on their website. Alternatively, someone can choose to donate an investment they own – such as stocks, mutual funds, or ETFs.

If your charitable giving goal is enough to allow for a beneficial deduction, then we’ll want to consider some further possible tax strategies (that’s right, there’s more!) – one of those being whether it makes more sense to give investment assets instead of cash.

Give Your Giving a Bigger Boost

Now here’s the kicker for donating that investment… When you do so, you are not selling the investment yourself. You give it away and then the nonprofit sells it. Therefore, you don’t have to worry about paying any taxes on the gains. Under normal circumstances, you have to pay “long-term capital gains” taxes on the growth of an investment when you sell it (assuming it was held for over 1 year). For many people we work with, the tax rate is either 15% or 20%. Because of this, you’re increasing your gift vs. selling the stock and donating the after-tax proceeds.

Additionally, you’re able to take a tax deduction for the full fair market value of the asset on the day that you donate it (up to an annual limit of 30% of your AGI). Let’s take a closer look at this with an example…

An Example

When Naomi was 23 years old, she inherited a taxable account from her grandfather consisting of a single stock. Her cost basis upon receiving the stock was $1,000 (the fair market value at that time). She’s now 33 years old and still owns the stock, which has jumped in value to $20,000. 

Charitable Giving Scenario

Naomi is single, earning an income of $300,000. She’s in the 35% federal tax bracket and has a 15% rate for long-term capital gains + is subject to the 3.8% net investment income tax. She has also decided to begin donating $20,000/year to her favorite local nonprofit, which she could comfortably do from cash flow if she wanted. 

She wants to determine the most optimal way to make her donation this year.

naomi checks the key boxes for us to consider some enhanced tax strategies...

☑️ She plans to donate to a qualified 501(c)(3c).

☑️ Her intended giving level will get her to an itemized deduction amount ($20,000) that is more than what her standard deduction would be ($15,750).

☑️ She has a “long-term” asset in a taxable account. 

☑️ The investment has appreciated in value.

As such, we’ll want to explore the opportunity of donating her stock instead of cash.

Charitable Giving - Giving Strategy

it makes a lot of sense to donate her stock to the nonprofit instead of cash

In doing so…

  • She provides the intended level of financial support to charity.
  • She avoids paying capital gains taxes on the stock that she donates.
  • She won’t have to worry about dealing with capital gains taxes on this investment at some point in the future (which she may have to if she continues to hold onto it).
  • She can take a $20,000 itemized deduction for the gift on her taxes (the full fair market value of the stock on the date she donated it).
  • Since she already has the free cash flow available, she can then use that money to buy into a diversified investment portfolio that helps support her greater financial plan – essentially replacing the investment value of the donated stock. This new investment will have a substantially higher cost basis than the gifted stock ($20,000 vs. $1,000) – which can help reduce potential capital gains taxes down the road.

Donating the stock is the ONLY strategy that allows her to be certain of paying $0 in taxes on the disposition of the stock and get a full $20,000 deduction in the current year. 

Some Common Situations Where This Can Make a Lot of Sense…

Other examples of scenarios in which you may find yourself with a similar opportunity include:

  • You purchased an investment yourself several years ago. It’s been sitting around but doesn’t entirely fit in with your current investment strategy.
  • You have accumulated vested RSUs or exercised stock options that haven’t been sold yet.
  • Someone gifted you stock, or another investment in the past.
  • A parent or other family member opened and funded a custodial account (UTMA/UGMA) for you when you were younger. You’re now the full legal owner of the account several years later.
  • You are overly concentrated with a certain investment inside of your taxable portfolio.
  • You have an old mutual fund with relatively high expenses.
  • Maybe you just have some nice gains in your diversified portfolio and want to take them off the table in a tax-efficient way.

So You’ll Donate Investments – But How Do You Even Do the Thing?

Directly to the organization...

In some cases, you may be able to arrange to send your stock or other investments directly from the custodian that holds your account. Not all charitable organizations are set up to receive your stock, mutual fund, or other investment. So you’ll want to check that first. If they are, it will involve some paperwork and coordination between them and your investment custodian.

donor-advised fund...

The Donor-Advised Fund presents a flexible way to facilitate your giving strategy. It is a type of investment account that is facilitated by a 501(c)(3) public charity – you will recognize them as independent flavors of major custodians, such as…

… to name a few. When you contribute cash or investments to a DAF, you are literally giving money to a charitable organization at that point, thus allowing you to take a deduction for the DAF contribution in that tax year. However, you’re able to manage the assets inside the DAF as you see fit. This gives you the chance to grow your eventual impact even further. Additionally, you’re not taxed on any gains inside the account. Be aware that – if your investments do increase – that doesn’t impact your tax deductibility. The tax deduction is simply based on the value of what you put into the DAF on the date you do so. Then, you can choose to make grants from the DAF to your organization(s) of choice at any point down the road. These grants don’t need to occur in the same year you contributed to the DAF. 

Charitable Giving - The Donor-Advised Fund

you might consider a donor-advised fund if:

  • Your organization(s) of choice do not readily accept direct gifts of invested assets. If you donate the asset to the DAF, you can take a deduction for the full FMV on the date of the contribution. Then, the DAF can sell the investment (no tax impact on you) and send a check to your selected charity.
  • You’re ready to take the tax deduction but want to give the cash/investment more opportunity for growth before ultimately granting it to the designated organization.
  • You want greater flexibility on when and how you distribute grants.
  • You want to streamline a bigger-picture philanthropic strategy.

Things to be aware of with donor-advised funds:

  • Some have minimum initial contribution requirements
  • They may have a minimum grant amount
  • They are likely to have administrative fees (0.6% is typical)

If You Plan to Donate an Investment, Avoid Doing The Following

  • Donating an investment that has lost value.
    • It’s better to sell the investment first, take the deduction for the capital loss, and then donate the cash to charity.
  • Donating an appreciated investment you’ve held for a year or less.
    • It’s possible to donate an investment you’ve held for a year or less (at a “short-term capital gain”), but you’re not able to take a tax deduction for the full FMV. Instead, you can only deduct the cost basis (what you paid) minus what you would have owed in taxes for the gain on the investment.
    • Remember that donating an appreciated long-term asset allows you to deduct the full FMV at the time of the gift.

Ask Yourself These Questions to Determine if Donating an Investment is Worth Exploring

    1. Are you already donating to charity, or are you planning to do so this year?
    2. Do you have any long-term (held longer than 1 year) investments in a taxable account?
    3. Have those investments appreciated in value?
    4. Will your charitable contributions plus other deductions put you in a place to itemize over the standard deduction?
    5. Extra Credit: Do you have the available cash flow to replace the investment(s) donated from your brokerage account? 
      • This one is not necessarily a must but can be a nice element.
      • It could be in the form of monthly cash flow, bonus pay, vesting RSUs, etc. 

If you answer “yes” to at least #s 1-4, it’s worth looking into how this strategy fits into your greater plan.

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Fiduciary, fee-only, Certified Financial Planner, Eddy Jurgielewicz

Eddy Jurgielewicz, CFP® is a Partner and Lead Financial Planner at Upbeat Wealth, a fee-only firm based in New Orleans and serving clients virtually across the country. He specializes in providing straightforward financial guidance to ambitious young families as they navigate life’s many milestones.

Do you have questions about what we shared in this post, or anything else in general? Feel free to schedule a free consultation or drop us a line!

Sign up for our newsletter (at the bottom of this page) to stay up to speed on our Upbeat Insight.

Disclaimer: All content in this article is provided for educational, general information, and illustration purposes only. None of the information is intended as investment, tax, accounting, or legal advice. Nor is it a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult with a financial planner, accountant, and/or legal professional for advice on your specific situation. Read our full disclaimer here.

Our Journey of Comingling Finances Before Getting Married

comingling finances, marriage, financial planning

What does a financial planner reflect on in the final days before getting married??? 

Finances.

Ok. Sure – a couple of other things too… But it’s up there. It’s who I am.

Money + Romance = What You Make It

We’ve all heard some version of the statistic about money being a common cause of divorce… Whatever the real percentage may be, or the specific money-related issue that tips the scale – I knew I didn’t want to be in that number. So as I count down the final hours before my wedding, I find myself thinking back on the journey my partner and I have taken to navigate the financial waters together. 

While I wouldn’t say it was the first thought that came to mind after she said “yes” (I was mostly consumed by relief that I got the answer I’d been hoping for and somehow managed to string together adequately coherent words), it wasn’t too long after our proposal that I started to think about how Christina and I would begin tackling finances together. I’ve been part of too many conversations with spouses who were already years into their marriage and still dealing with the heavy burden of misaligned thoughts on money. I’ve seen up close the strain it can have on a relationship when matters aren’t properly addressed early on. For me, it was critical to tackle this head-on in my own romantic partnership – so that the two of us were in control, rather than the other way around.

Now let’s lay some things out there before we get into it…

  • It’s not a given that finances will be a point of distress for all couples. It may naturally work for some. But it will definitely be a matter worth giving time and attention to for most.
  • People are not likely to fully change how they think about or interact with money. They will continue to have their own unique habits and mindsets that stick with them. But couples can learn how to work positively together despite such differences.
  • Before any couple can begin to work through financial matters together, they MUST first work to understand the other person’s money story… Their influential memories, their emotions, any anxieties or convictions, and so on.
  • Any level of judgment will make the conversations exponentially more difficult. Money is already a topic that requires substantial vulnerability for some individuals. It will never help to feel as though someone is looking down on how they handle or think about things.

More on Why I Felt This Was Important

It’s probably no surprise, but money stuff comes fairly easy to me – it’s what I do and talk about all day every day in my professional life. That’s not the case for my fiancée. She’s a psychiatrist who would rather think about most other things besides money. And while she’s a hell of a lot smarter than me, it’s just not something she enjoys devoting a lot of mental space to. Now I know that I’m going to spend the rest of my life with her and I hope it’s a long, happy one! But if I’m suddenly not around one day or lack the mental capacity, I would like Christina to feel confident enough to manage important financial affairs independently. 

I’ve seen a similar dynamic in plenty of other couples too. Quite often, one partner is the “chief financial officer” of the household and makes the majority of the decisions. While I’m not opposed to a spouse taking on this role, I do believe it’s highly beneficial for the other person to at least understand what’s being done and why. Further, they should be invited to provide their input – if nothing else, given the opportunity to say, “It’s up to you”.

So it was ultimately a two-part goal… 

  1. Learn how to weave healthy joint financial decision-making and expectations into our relationship early on.
  2. Ensure that both of us understand, have the chance to be a part of, and can comfortably handle the most important money matters.

Where Did Each of Us Come From?

Our socioeconomic backgrounds are quite different. I’m the son of a teacher and a carpenter, whereas she’s the daughter of a cardiologist and a mother who raised her and her five siblings full-time. I went to public school, she went to private. I carried the financial responsibility of my education and she had a college fund to take care of that. I say this simply to help illustrate that we had very unique interactions with money from a young age. As a result, we now have stark differences in how we approach financial matters as adults. I tend to stress over expenses and consider a cost for far too long while Christina generally has no issues in that department. I’m naturally more of a saver. She’s more of a spender. Neither is right, neither is wrong – we’re just different.

All that to say… if WE can figure it out, YOU can too!

What’s Our Account Setup?

Joint finances account setup for couples

Some couples go all in on doing everything jointly. Others keep it fully separate. For us, we have things that we do together and shared hopes for the future. As individuals, we have our own preferences and unique goals. Our framework is structured to allow for money movement in both arenas. 

For things we do together and use together, we’ll typically pay for those out of a shared account. For those things we do independent of the other, they come out of personal accounts. That way we can avoid any potential judgment on how the other spends their money. As long as we’re both putting the right amounts towards the things we need and want together (both for fun and necessary goals), we’re each free to spend our other personal dollars how we want.

Taking it Beyond the Accounts

The train can’t stop at simply setting up joint accounts. Opening a savings account together won’t automatically create magical money harmony. And in my mind – this is the MOST important aspect of the journey to comingle finances… It’s the process of having meaningful conversations about how to handle financial decisions together, about how you each interact with money individually, and what your future financial goals are – both those that are personal and shared. As I referenced earlier, conversations were also important to help share my financial acumen with Christina – so that she’d better understand the value of having appropriate cash savings in place, how to optimize various tax-advantaged accounts, where and why a brokerage account makes sense, even how to place trades, and so on…

I have to say, it was an especially proud partner/financial planner moment when Christina first told me she’d maxed out her Roth IRA and invested the money (without me doing it with her)!

How Did We Do This?

Money Dates! 

I hear you… it doesn’t sound all that romantic to discuss finances on a date. But here’s the thing: I believe it is much easier to talk money at an agreed-upon and preset time when both parties are expecting it, rather than randomly when one person may be caught off guard. It’s helpful to protect the time too, or it may never happen. It’s easy to put things off if they’re not on our calendars. Further, making it a date can hopefully create a more enjoyable environment. Pour a glass of wine, crack open a beer, go to your favorite dinner spot… do something to set those positive vibes. Finally, limit the time. If one or both of you aren’t all that excited to have this kind of conversation at first, knowing that it will only go on for a short chunk of time might make it more agreeable. 

Our approach? We decided to have one 30-minute Money Date one Sunday per month.

It’s worth mentioning that this was a very helpful method in our relationship. Part of why Christina doesn’t like to talk or think about money is that it can easily make her anxious to do so. Again, I have no issue talking about it. By putting these short time blocks on our calendar, she was way more receptive to the conversation – it was never a surprise and she knew it wouldn’t go longer than a half hour (we even cut the first few down to 15 minutes). 

I want to be clear: I’m not saying this has to be the ONLY time you and your partner discuss finances. But it may be the easiest and most productive way to do so while giving it the prioritization it deserves.

The Result

As with other areas of our relationship, the work is never done. Nonetheless, I’m happy to report that – after about a year and a half – I feel great about where we are. There aren’t any issues or doubts about what our shared and individual financial expectations are. Money has not been a source of contention for us. And don’t just take my word for it! I did ask Christina what her feedback on our Money Dates and overall journey has been. She expressed that, while she was very hesitant at first and really didn’t want to have “talks about money”, it’s been extremely helpful. Now she’s far more open to discussing finances rather than pushing the topic aside. 

So forget about that statistic! For us, money will be something we… 

  • Work on together
  • Have clear expectations on
  • Understand and are comfortable managing
  • Discuss openly and honestly in a healthy way
  • Agree on for big picture planning and household goals – even though we may interact with it differently in certain aspects of our lives
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Fiduciary, fee-only, Certified Financial Planner, Eddy Jurgielewicz

Eddy Jurgielewicz, CFP® is a Partner and Lead Financial Planner at Upbeat Wealth, a fee-only firm based in New Orleans and serving clients virtually across the country. He specializes in providing straightforward financial guidance to ambitious young families as they navigate life’s many milestones.

Do you have questions about what we shared in this post, or anything else in general? Feel free to schedule a free consultation or drop us a line!

Sign up for our newsletter (at the bottom of this page) to stay up to speed on our Upbeat Insight.

Disclaimer: All content in this article is provided for educational, general information, and illustration purposes only. None of the information is intended as investment, tax, accounting, or legal advice. Nor is it a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult with a financial planner, accountant, and/or legal professional for advice on your specific situation. Read our full disclaimer here.

The Importance of Open Enrollment Season for Families

open enrollment, workplace benefits, 401k, group insurance

The leaves are changing. Store shelves are overflowing with Halloween candy and holiday decorations. Pumpkin spice lattes and sweaters have made their annual comeback… This can all mean only one thing: Open Enrollment Season is upon us!

That’s right, nothing spells Fall like the chance to adjust your family’s health insurance plan.

In all seriousness, Open Enrollment is an important time of year – something worth paying close attention to. But, with the general craziness of the season in which the window typically falls, it can be an easy thing to push aside. Or it may be something that feels unnecessary if you’ve been at your employer for multiple years already and you believe everything is “set”. 

So I want to share some important considerations and a handful of reasons why it’s a good idea for everyone to perk up during Open Enrollment.

First off, be prepared

First and foremost, you’ll make things easier for yourself if you know ahead of time exactly when your job’s Open Enrollment period begins. The majority of employers do this sometime during October or November, but the exact start date and how long the window lasts can vary. There are also some companies that may conduct theirs at another time during the year. In any case – if you’re not already positive – check with HR to see when your Open Enrollment will take place. Take note and mark your calendar so that you can more readily take action. Many windows may last only a couple of weeks, so it can quickly fly by if you’re not anticipating it.

Coordination is key

For dual-income households, the stakes are higher. It’s especially important to coordinate across BOTH benefits packages to be sure you’re making the most (and saving the most) of what’s available. Having kids in the picture only ups the ante even further. Naturally, your enrollment windows may not overlap, making it even more necessary to be prepared and proactive. 

This coordination for families is most consequential when figuring out health insurance – and we may do a deep dive in a separate post. For now, here are some big considerations (assuming both spouses have benefit plans through their employers):

  • There are essentially 3 ways you could slice it:
    • Put the whole family on one partner’s health insurance
      • Sometimes there may be a clear winner with one partner having far superior health insurance options, at a better cost too. Some employers may have a long list of plans to choose from, while others don’t.
      • Although this is usually the easiest to keep track of – managing one plan for the whole family – it is not always the least expensive. 
    • Split it up – for example, one partner could go with individual coverage and the other partner covers themselves along with any kids
      • Companies tend to cover more of their own employee’s premium than they do for a spouse on the same plan. If both partners have employers who take on a large chunk of the cost, it could be much cheaper to go with separate coverages.
      • This can also make sense if one partner requires a lot of healthcare attention throughout the year. They may be better off going with a more robust low-deductible PPO plan while the other partner and the kids get covered under a high deductible health plan – if they are generally healthy.
    • Dual coverage – this means both partners enroll in separate plans that each cover everyone
      • Given that everyone is covered by two plans, it’s going to be the most costly structure. And it’s important to realize this does NOT mean you have twice the coverage. What it does mean is that you’ll have two levels of insurance – a primary and a secondary. As such, the secondary plan may cover costs that the primary plan doesn’t – though coverage will never exceed 100% of healthcare costs.
      • This method also requires you to take extra steps in coordinating your benefits, which is time consuming and sometimes complicated to navigate.
  • When determining the most optimal setup, we look at multiple factors:
    • What are the associated costs? → Premiums, deductibles, out-of-pocket maximums, copays, and coinsurance
    • Will you be able to access your preferred providers in network?
    • What are the specific medical needs of each family member?
    • Are you anticipating any major medical expenses in the coming year such as a surgery or pregnancy?
    • If available, is one plan structure more beneficial for your needs over another (HMO vs. PPO vs. POS)?
    • Can you benefit from an FSA or HSA (via a high deductible plan)?

Reasons to pay close attention at Open Enrollment time

You started the job this year and in the flurry of onboarding didn’t fully get your benefits squared away

If you started at a new employer this year, you already had the opportunity to select benefits as part of the onboarding process. But with how stressful and dizzying it can be to get going with a whole new job, it’s very possible to miss or overlook something concerning benefits. Open Enrollment presents a time to go back through and ensure everything is set up in the most optimal way. 

Your family experienced a big life change and you missed the special enrollment period for the qualifying life change

Did you get married? Did you welcome a new child? Did your spouse go through a job change? Maybe you registered as a domestic partner – like me this year! (CA allows this, but not all states do)?

There are several “qualifying events” that come with the ability to update employee benefits outside of the traditional Open Enrollment window. It’s important to know this and do what you can to make changes as soon as possible during this “special” enrollment period. However, those life changes that qualify also happen to be rather big things… So your mind may be elsewhere as you try to simply focus on that epic wedding and honeymoon, caring for a brand new baby, or whatever it may be. If the craziness of life does what it tends to do, just make sure to get your benefits properly structured when the regular Open Enrollment comes around.

Is now the time to switch to that HDHP/HSA winning combo?

In some cases, you might not have been aware that you had access to a High Deductible Health Plan (HDHP) and the Health Savings Account it comes with. Or this could be the first time your company has offered it. Either way, Open Enrollment is a prime time to consider the benefits of this plan. 

It’s worth doing a thorough analysis and stacking a HDHP up against the other health insurance options. Examine the differences – the premiums, deductibles, out-of-pocket maximums, co-pays, co-insurance, and what’s covered vs. what’s not. Understand that to get the most out of a HDHP, it involves actually contributing to the HSA it comes with. Assess what the impact of the tax savings would do for you and consider the plausibility of maxing it out. Your employer may even contribute some funds to the HSA on your behalf – I’ve seen rather generous cases out there. Often, going the HDHP route and maxing out the HSA will yield better results compared to other health insurance coverage options. 

Let’s look at a case where the switch makes a lot of sense. In the following example, a family has been enrolled under one spouse’s low deductible PPO plan up to this point. They are all generally healthy and don’t expect any extra medical expenses in the coming year. With the current plan, their basic total annual outflow is $20,400 (the monthly premium multiplied by 12). For 2025, they are considering the switch to a HDHP so that they can contribute to an HSA. In that scenario, their annual premium cost would be $13,452. They also have the ability to max out the family HSA with $8,550 in contributions. Since they’re squarely in the 32% Federal tax bracket, they can benefit from tax savings of up to $2,736. As such, their total basic net outflow for the HDHP plus maxing out the HSA is $19,266. 

So, they get the health insurance plan for the family AND they direct $8,550 into a highly tax-advantaged investment vehicle to benefit them down the road.

Key Assumptions

  • Federal Tax Bracket: 32%
  • 2025 HSA Family Contribution Limit: $8,550

PPO Total Annual Outflow

  • Total Premiums: $1,700 x 12 = $20,400

HDHP w/ maxing out HSA Total Annual Outflow

  • Total Premiums: $1,121 x 12 = $13,452
  • Federal Tax Savings of HSA Contribution: $8,550 x 32% = $2,736
  • Total Premiums PLUS Net HSA Contributions: $13,452 + $8,550 – $2,736 = $19,266

Remember: HSA contributions = tax savings + potential for long-term investment growth (in addition to having these pre-tax dollars available for medical expenses if needed). The amount saved in taxes should absolutely be factored in when comparing the total cost of your various health insurance plans.

Are you optimizing your employer-provided life and disability insurance?

Life and disability insurance are often offered in two flavors: basic and voluntary (or some variation of these). For life insurance, the base amount is typically something like $50,000 or an amount equivalent to your annual salary and is sometimes paid for by the employer. However, they may make it relatively easy to get additional voluntary or supplemental coverage if needed – at a cost to you. On the disability insurance side, many companies will provide and pay for coverage that replaces around 50-60% of an employee’s income. In plenty of circumstances, this percentage will be capped at a monthly dollar amount (for example, the policy may replace 60% of an employee’s salary up to $5,000). In these instances, the actual amount of income replacement for higher earners ends up being less than that 50-60% mark. Some employers will then allow you to secure more disability insurance coverage on top of the base amount – again, at a cost to you.

Here’s how we think about the employer life insurance:

  • Beyond whatever is given to you for free, we favor getting any additional needed coverage through a personal policy for two main reasons:
    • If you’re relatively healthy, it will probably cost less over the long term than employee-paid group coverage through your employer.
    • The policy is yours – it doesn’t stay with your employer if you leave as is often the case with those group policies.
  • If needed, voluntary group coverage through your employer CAN be worth going for if you’re someone with certain health issues that may make it difficult to qualify for life insurance.
    • Employer life insurance usually comes with an easier qualification process (underwriting) compared to the much more comprehensive medical questionnaire/exam involved with personal policies.

And here’s our take on the employer disability insurance:

  • You should have 60% of your income protected by disability insurance. If the basic employer coverage doesn’t fully take care of this, supplemental coverage will be necessary.
  • To fill any gap, voluntary supplemental disability coverage through an employer policy is typically more cost-effective than getting it privately. However, the employer policy is often limited in its actual definition of “disability”, making it less likely to pay out in certain situations. 
  • For some, this will be fine and is the recommended route to get fully covered – especially given the lower cost.
  • If you’re in a more specialized field (such as a surgeon), we recommend getting disability coverage with a personal policy – that way it’s totally customized to your specific needs and is portable (goes with you if you switch jobs).

Is there a legal benefit available to help you cost-effectively get estate documents in place?

Estate planning anyone?? If you’re in need of a will and other important estate documents, take a close look at your benefits package. Some employers offer rather cost-effective paths to getting these important documents secured. Since this isn’t as familiar as a 401k or health insurance, I’ve seen many situations where someone didn’t realize this was on the table for them.

Good reminder to double-check beneficiaries

Speaking of estate planning, Open Enrollment is a good time to confirm all of your beneficiaries are listed as intended. Specifically, you’ll want to check on your workplace retirement plan and life insurance. We recommend having a secondary level of beneficiary(ies) in addition to primary.

Are you paying for benefits you don't actually need? (those unnecessary insurances)

I’ve come across multiple instances where someone cast a wide net with their initial enrollment and checked the box for everything. They said, “I’ll have one of everything.” While this is more favorable than signing up for zero benefits, it’s probably not the most optimal setup for you. There are certainly offerings that aren’t necessary for everyone. Reviewing these and trimming any unneeded benefits can help to save money with each paycheck. 

There might be new benefits being offered (or some that are going away)

Employers can change things up from year to year in the form of new offerings or eliminating certain options. As this has a direct impact on your household, it’s important to be aware of such adjustments and update your benefits accordingly.  

Benefit packages are getting more creative

Did you get a new furry friend this year? You might have pet insurance available to you.

Are you hoping to grow your family? Some companies are even offering IVF benefits.

More and more, employers are providing “lifestyle” type benefits to help retain their talent. This could include valuable perks like reimbursements for gym memberships, professional development support, financial wellness assistance, and so on.

Get the Most Benefit from Your Benefits

Here’s what to do:

  • Confirm your enrollment period start and end date
  • Mark your calendar
  • Review the benefits at the start of the window (or earlier), to give yourself time for any adjustments
  • Coordinate with your spouse’s benefits
  • Check with your financial planner to be sure it all makes the most sense
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Fiduciary, fee-only, Certified Financial Planner, Eddy Jurgielewicz

Eddy Jurgielewicz, CFP® is a Partner and Lead Financial Planner at Upbeat Wealth, a fee-only firm based in New Orleans and serving clients virtually across the country. He specializes in providing straightforward financial guidance to ambitious young families as they navigate life’s many milestones.

Do you have questions about what we shared in this post, or anything else in general? Feel free to schedule a free consultation or drop us a line!

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Disclaimer: All content in this article is provided for educational, general information, and illustration purposes only. None of the information is intended as investment, tax, accounting, or legal advice. Nor is it a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult with a financial planner, accountant, and/or legal professional for advice on your specific situation. Read our full disclaimer here.