To better control the distribution of wealth
“Trusts are a fantastic way to control the distribution of wealth in the event of incapacitation or death. Trusts are flexible in design and allow the grantor to specify how and when certain assets will be distributed to beneficiaries. This can be exceptionally helpful if the beneficiaries aren't able to make responsible decisions, as in the case of minors or children who require special care.” — ,

To keep your assets out of probate
“Probate can take years and is public and costly. A general rule of thumb is to assume that about 10% of your gross value will be used to cover the cost of those exact assets going through probate. That monetary value alone is a great tangible reason why people should have a trust — not to mention the emotional intangible value-add a trust comes with.” — ,

To ensure you make the decisions
“Trusts are about trust. Who do you trust more than you to distribute, direct and protect your assets if you become incapacitated or pass away? Surely not your state. You want to avoid costly, public probate and maintain privacy and control for a tax-efficient and transfer-effective handling of your affairs for restful peace.” — ,

Kiplinger Advisor Collective is the premier criteria-based professional organization for personal finance advisors, managers, and executives.

To minimize estate tax and provide asset protection
“First, trusts help you avoid the cost, time delays and public nature and disclosure associated with probate. Second, depending on the state that you live in, they can protect assets from recovery for governmental benefits paid during the deceased's lifetime. A trust may help minimize estate tax, and a trust can also provide asset protection and allow family valuables to continue into the next generation.” — ,

To make things easier on your beneficiaries
“Depending on your state of residence, establishing a trust and transferring the title of your assets to the trust might be the only way to avoid your heirs having to go through long and expensive probate before they have access to any holdings. A trust can also help (but not necessarily solve) the issue of ensuring your assets go where you want, to whom you want and when you want.” — ,

To obtain peace of mind
“People establish trusts for privacy, asset protection and to avoid probate. Probate can be an expensive and time-consuming process. Trusts can also protect your beneficiaries in the event of illness, disability or death. In other words, trusts can provide peace of mind, which is priceless.” — ,

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Plan for aging (perhaps beyond your spouse)
“The biggest challenge I see is that most of my female clients aren't planning for the later years in life as well as they should be. Most are not really thinking about how women usually live longer than men. They need to plan for that lifestyle change — physically, mentally and financially. Those who are single need to do the same thing but from a different perspective.” — ,

Take an active, vested interest in your finances
“I believe that women of all ages, stages and income levels should take a more active role in financial planning. As women feel more informed and included in financial decision-making, they develop more confidence about personal finance. Increased confidence builds empowerment and resilience.” — ,

Kiplinger Advisor Collective is the premier criteria-based professional organization for personal finance advisors, managers, and executives.

Learn more about managing and maintaining your largest asset
“The financial and physical aspects of managing, maintaining and improving a home, your largest asset and biggest expense, can often be intimidating. Start researching by using search engines, , DIY blogs and other self-service resources. This builds your knowledge base and increases your confidence level when engaging with contractors or financial service providers before you buy.” — ,

Master the 'rules' of the game
“Having conversed with numerous women on the subject, I’ve noticed a prevailing theme emerges: fear and overwhelm. Personal finances may appear daunting, yet the truth is, it's not complex; it just consists of several moving parts. Similar to chess, mastering the game's rules is key to participation. Women naturally embody the role of household CFOs, so it's not about feeling daunted by numbers but rather comprehending how all elements work together to achieve your goals. Therefore, my suggestion is to understand your goals, acquire knowledge and acquaint yourself with financial jargon. Once these foundations are established, work toward your goals in small but actionable steps.” — ,

Take control of your future (and don’t leave it to chance)
“Many women are not involved in the financial planning process in their marriage. The simple fact is that all marriages will come to an end — either through divorce or death. It's absolutely crucial to be involved in the financial planning now so you'll know how to meet your needs in the future. Leaving your finances up to chance is not a sound financial plan.” — ,

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Talk to them about how money works
“Talk to your kids about money from a very early age. If you don't, they won't understand how money works and how to manage wants vs needs. This is good for you and them! If they understand how money works, they are less likely to ask for expensive things — and when they do, they won't continue to pester you if you say ‘no.’” — ,

Teach and get them involved in decisions
“Parenthood is an extraordinary journey filled with countless responsibilities, and among the most crucial is securing your child’s financial future. Opening a 529 plan as a new parent can strategically help fund your child's education with tax advantages. If higher education isn't their path, unused 529 funds can now be rolled into a Roth IRA for early retirement savings. Remember to also discuss responsible money habits early, maybe using an allowance or savings jars to teach saving and encourage goal-setting. Involve them in financial decisions and, when they’re a teen, consider building their credit score by adding them to your credit lines or giving them a low-limit credit card to learn credit management.” — ,

Kiplinger Advisor Collective is the premier criteria-based professional organization for personal finance advisors, managers, and executives.

Set them up with life insurance coverage
“I would recommend ensuring your child has a life insurance policy in place as early as possible. Life insurance is a financial building block. Yes, you can overfund them and create tax-free wealth opportunities in the future, but I'm talking about basic life insurance without all the fancy bells and whistles. Get them covered, start the practice of financial security and build on it moving forward.” — ,

Examine your own relationship with money
“Our beliefs about money are heavily influenced by our upbringing. One of the best things you can do for your child is to examine your own relationship with money. You have the opportunity to break generational patterns and avoid passing on unhelpful or limiting money beliefs. Cultivating a healthy money mindset and learning money management skills will allow you to lead by example for your child.” — ,

Invest in their finances and their self-worth
“Immediately begin investing in compounding assets. The two most essential are self-worth and financial investments. The first asset compounds their human capital, creating value for society and for themself that increases their income over their life's course. The latter allows two decades more time to compound financial education and returns. Both set a course toward better wealth and well-being.” — ,

Open an education savings account
“Establishing a dedicated education savings account, such as a 529 plan, is a great action parents can take to ensure their child gets off on the right financial foot. A 529 plan will help alleviate the rising cost of college tuition while also providing numerous state and federal tax advantages. Parents can also use this college savings tool to teach the importance of financial responsibility.” — ,

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Neglecting to balance safe and risky investments
“A common wealth-building mistake is neglecting to balance safe and risky investments. I advise diversifying your portfolio and staying informed about market trends to adapt your investment strategies accordingly, thus managing risks while pursuing growth opportunities.” — ,

Reacting emotionally to market fluctuations
“When it comes to building wealth, many investors make the mistake of reacting emotionally to market fluctuations. They tend to sell off investments during a downturn out of fear, or invest heavily in a 'hot' sector without sufficient research due to greed. Emotional decisions can lead to buying high and selling low, the opposite of a sound investment strategy and detrimental to building wealth.” — ,

Failing to build a solid financial foundation
“Don’t make the mistake of not building on a solid financial foundation. Make sure you know how to manage your money well. It’s counterproductive if you’re regularly overspending, paying high interest on debt or don’t have any savings. Learning to be proactive and intentional with your finances helps you clearly understand where your money is going and maximize your wealth-building goals.” — ,

Kiplinger Advisor Collective is the premier criteria-based professional organization for personal finance advisors, managers, and executives.

Misunderstanding the concept of 'buy low, sell high'
“Understanding the basics of when and how to leverage your money can ensure you avoid many major pitfalls when accumulating wealth. The concept of buying low and selling high is often very difficult to grasp. When everyone wants something you have, the emotional response is to hold on to it, not let it go.” — ,

Neglecting to identify your wealth-building savings rate
“People often make the mistake of not identifying their wealth-building savings rate. Questions around your well-being help you identify the amount that will make you feel secure and fulfill your 'enough' that helps you create your aspirational life. You now have high motivation to fund your savings rate fully. If you don't dig deep on your well-being, you don't unlock a wealth-building strategy.” — ,

Mixing up short-term savings and long-term investing
“People may not understand the difference between short-term savings and long-term investing. In other words, people need to balance the need for short-term liquidity with long-term growth. Investors may not realize that they will experience short-term market fluctuations with their long-term investments. Time in the market is more important than trying to time the market.” — ,

Renting rather than owning
“Homeowners have a 40 times higher than renters. Renting is a pure expense for the rest of your life. Homeownership is buying an asset that historically appreciates in value over time. Of course, the location, the type of home, the price point, the mortgage rates and the overall cost to be a homeowner is paramount to consider in maximizing the appreciation opportunity and minimizing risk.” — ,

Assuming you can handle more risk than you can
“People tend to think they can tolerate or handle more risk or fluctuations in their accounts than they actually can. People will tend to say they are more aggressive than they really are to try to reach high returns. A person really needs to understand how much they are willing to lose before gaining anything. This helps frame a better understanding of risk and their tolerance to it.” — ,

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The now vs later mentality

Your lifestyle can affect your future finances in ways beyond simple spending. If you regularly engage in , for example, you are statistically likely to spend less on health care costs as you age. Bottom line, always consider how your actions may affect your finances down the line.

Kiplinger Advisor Collective is the premier criteria-based professional organization for personal finance advisors, managers, and executives.

Is it better to adjust your lifestyle or your earnings?

For example, you might be the type of person who values time with family above all else. If that’s the case, there are a few ways to increase that within your lifestyle. One option might be early retirement, which typically requires a lot of work time and savvy financial decisions earlier in life. Alternatively, you might avoid careers that require long hours or extensive travel, which sometimes eliminates certain high-paying career paths. So if you end up deciding to trade time for money, you’ll need to adjust your spending to support that decision.

However, it’s essential to recognize that there are always alternatives and possibilities for change. This might involve further education to transition into a career with better work-life balance, or perhaps starting a side business that allows for more flexibility. It’s crucial to reassess your priorities every so often and be open to adjusting your plans to align with what truly matters most in life.

Striking the right balance

Like most things in life, there is give-and-take between lifestyle and finance. With careful planning, budgeting and ongoing assessment, you can ensure you have enough wealth to live the life you want.

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Cash reserves

Cash reserves are the best option for funding any project. The opportunity cost of lost interest earned will almost always be less than the cost of financing a purchase. However, you must determine if raiding your cash reserves puts you below the recommended threshold to cover any emergency funding needs: loss of job, medical issues, etc. As a rule of thumb, I recommend maintaining six months of expenses in liquid assets.

Investments

These have similar, though usually higher, opportunity costs as using cash reserves. Before you look at this category to fund projects, you also need to consider the tax implications of liquidating an investment. You may also be able to use your investments as collateral to obtain a lower interest rate than a personal loan.

Kiplinger Advisor Collective is the premier criteria-based professional organization for personal finance advisors, managers, and executives.

A home equity line of credit

A 401(k) loan

A 401(k) loan can be attractive because the interest rate is usually lower than other financing sources. However, careful consideration should be given as to the impact on the growth of your retirement assets and that the purchase is not beyond your current means. This may be a good option if you pay back the loan in a reasonable amount of time.

No-interest or low-interest credit card offers

A word of caution when financing any project: Financing should never be used to help you live above your means. It should always be used judiciously and never without considering the impacts on your financial future.

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Can I afford the high fees and the risk to my family?
“Can I afford the high fees associated with these types of mortgages? Will my family potentially lose the house upon my death when they need it? If the answer to the first question is ‘no’ and the second ‘yes,’ then be very careful before going down this path. Reverse mortgages can tempt people with upfront payments that you ultimately will have to pay back.” — ,

Is this the right house for aging in place?
“Everyone wants to age in place, but before determining if a reverse mortgage is an appropriate option, it is important to think about whether this is the right house for aging in place. A reverse mortgage or home equity conversion mortgage can help individuals and couples use their home to stay in their home, but it is important to consider other factors, such as maintenance and upkeep.” — ,

Kiplinger Advisor Collective is the premier criteria-based professional organization for personal finance advisors, managers, and executives.

Do I need help paying for long-term care and other expenses?
“‘Do I have sufficient assets during retirement to pay for significant expenses such as long-term care expenses?’ If someone answers ‘no’ to this question, then that tells me that the person does not feel secure about their resources and being able to handle a significant expense. In most cases where someone does not have sufficient assets, the best solution could be using the equity in their home through a reverse mortgage.” — ,

Do I want my house to go to my kids or grandkids?
“One important question to ask yourself is how important it is that your house eventually goes to your kids or grandkids. If you want them to keep the house, or much of its value, then be very careful to accurately assess how much of your equity the reverse mortgage might consume, and include interest expense in this calculation. Establish a maximum, and don’t borrow beyond that point.” — ,

Can I actually explain what a reverse mortgage is?
“One great question to ask yourself to determine if a reverse mortgage is right for you is if you can actually explain what a reverse mortgage is to someone who doesn't know and actually have it make sense to them. If you can't do that, well, it's probably not right for you. You need to fully understand it before knowing if it's right for you or not.” — ,

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Whether they take a proactive approach
“Ask if the professional focuses on tax as a historical accounting of tax or takes a proactive tax planning approach. The biggest opportunities with tax happen when you are proactive and are working with a tax planning professional before and during the year. Frustration typically occurs when tax is an afterthought and a historical accounting of what happened.” — ,

Their expertise or specialization
“One crucial factor to consider is the tax professional's expertise and specialization in relation to your specific financial situation. This is vital because tax laws are complex and vary based on individual circumstances, such as business ownership, investments and more. A specialist in these areas can provide tailored advice, ensuring tax filings are accurate, efficient and optimized for potential benefits.” — ,

Kiplinger Advisor Collective is the premier criteria-based professional organization for personal finance advisors, managers, and executives.

The cost of quality service
“Be clear about what you’re looking for. If you’re looking for annual tax preparation, that’s one thing. If you’re looking for ongoing proactive planning and support, that’s another. While interviewing tax professionals, also be aware that, according to , fewer and fewer new CPAs are filling the ranks of those retiring. According to the study, 42% of firms are turning away work, and 62% are culling existing clients. Long story short: The cost of quality service is going up. If you enjoy working with your current tax professional, continue being courteous and prompt!” — ,

The specific type of tax professional and their credentials
“Be careful about who you let do your taxes, as you are entrusting that person with a lot of sensitive information, and they should act in your best interest. IRS Circular 230 practitioners, enrolled agents (EAs), CPAs and attorneys are all vetted by the IRS and have passed a competency test; however, EAs are the only ones who always specialize in tax matters. It pays to choose EAs — they speak tax.” — ,

Their policies on data and information safety
“It is important to be transparent about the type of service you want. For example, do you want tax preparation services or ongoing proactive tax planning? It is also important to ask questions regarding who will be handling your personal and sensitive information as well as the policies and procedures to keep client data safe and secure.” — ,

Whether they're taking a holistic view
“Be proactive in your approach. Hiring a tax planning adviser means they can help you make strategic decisions related to your investments, business transactions, retirement contributions and other financial activities. The goal of these decisions is a holistic approach designed to help you mitigate your tax liability throughout the year. When taxes come due, you should see a decrease in the taxes you owe.” — ,

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I believe that AI is going to play an important part in the successful implementation of ASC 842. All companies, whether big or small, public or private, have to implement this new accounting standard. A business might have thousands of leases that are required to operate on day-to-day operations, which means that manually converting each lease item is not a viable option. AI can convert these leases into right-of-use assets in just a fraction of a second.

Best practices for using AI in lease accounting

• Enhancing lease identification. The initial challenge in lease accounting is accurately identifying new lease acquisition dates, a task often complicated by the lack of explicit information in contracts. AI can assist in this process by analyzing communication and documentation from both internal and external sources to pinpoint these dates, reducing the manual effort required and increasing accuracy.
• Automating invoice reconciliation. AI can be trained to review lease invoices against lease schedules, ensuring monthly charges align with contractual obligations. This automation significantly reduces the time spent on manual reconciliations, though discrepancies identified by AI should be reviewed by humans to ensure accurate resolution.
• Interpreting terms and conditions. AI's ability to read and interpret complex lease terms — including price adjustments, renewal options and applicable incremental borrowing rates — transforms lease schedule creation. By extracting critical data points and applying the appropriate foreign currency rates based on lease terms, AI can not only streamline schedule creation but also enhance the accuracy of financial reporting.
• Including human oversight in AI-generated schedules. Despite AI's capabilities, human verification remains crucial. A "human in the loop" approach ensures that lease schedules generated by AI align with contractual realities and accounting standards, providing an essential layer of oversight for compliance and accuracy.

Kiplinger Advisor Collective is the premier criteria-based professional organization for personal finance advisors, managers, and executives.

Common missteps when using AI in lease accounting and how to avoid them

• Over-relying on AI. One common mistake is over-relying on AI without adequate human oversight. Ensure that your process incorporates regular checks by knowledgeable staff to validate AI's output, especially for complex lease agreements or unique scenarios that AI may not fully comprehend.
• Underestimating the importance of data quality. AI's performance is directly tied to the quality of the data it processes. Inaccurate or incomplete data can lead to erroneous outputs. Regular data audits and validations are essential to maintain the integrity of your lease accounting process.
• Neglecting training and updates. AI systems, like any software, require updates to stay effective. Failing to keep your AI system and team's knowledge up to date with the latest lease accounting standards and AI advancements can lead to compliance risks.

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Make time for learning
“The best thing you can do to ensure financial success is devote time to learning. Reading even just one book can put you ahead of most of the population. Find 30 minutes a day to learn about money, whether that means waking up early to read or listening to an audiobook on your commute. Start with these two books: Financial Freedom by Grant Sabatier and The Simple Path to Wealth by J.L. Collins.” — ,

Analyze why your money is where it is right now
“Take a deep, hard look at where your money is now and why it is there. This will give you a better perspective on what your relationship with money is and why you are in the financial position you are now in. Then, you can decide if this is the direction you want to go and determine what options you have available to you to change the situation.” — ,

Build up an emergency fund
“Creating an emergency fund is a great way to start building a more financially stable future. Life happens, and some things are out of our control. By creating an emergency fund early on, you can help alleviate any unforeseen financial costs in the future without having to borrow against your retirement nest egg. The result is a happier and healthier financial future.” — ,

Kiplinger Advisor Collective is the premier criteria-based professional organization for personal finance advisors, managers, and executives.

Start investing small amounts
“Start investing money. This is a fundamental mindset shift from consumption to creation, from spender to investor, from having nothing to having something. Investing allows your money to grow. It can lead to you lowering the amount of hours you need to work. And you can invest with a small amount. My advice: Start small, begin right now and stay consistent. Your future self will thank you.” — ,

Purchase a home
“You have to live somewhere, so you are either a renter or a homeowner. Homeowners have an overall that is 40 times that of renters. When, where and what home you buy is crucial, but renting for the rest of your life is a pure expense. Being a homeowner is buying an asset, and it provides a more stable future — just remember to financially manage all aspects of your home.” — ,

Get clear on your numbers
“Before you can know where to go, you have to know where you are. Gather your financial information and look at actual numbers rather than trying to do mental math or guessing.  Understanding the connection between your income, spending, debt and savings will help you prioritize, decide next steps and create a realistic plan.” — ,

Start contributing to your retirement
“Live under your means and pay yourself first. Take 10% of your net pay and save it until you have enough to live on for three months without pay. Then, invest in a retirement plan like an IRA or your company’s 401(k). Companies will match at least 3% of your pay if you contribute at least 3% or more. If you don’t do this, you're losing that additional 3% they would have matched, as well as the tax benefit.” — ,

Commit to doing better for yourself
“A single journey begins with one step. The most important step that anyone can take is to commit to doing better for themselves, so start saving and investing today. Consistency is key, and be certain to understand that you defer some consumption and spending today to ensure that you can continue to pursue your interests, hobbies and passions in the future.” — ,

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