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Buffs and Debuffs From Having A Child

Buffs and Debuffs From Having A Child: Ian covers the financial planner's take on clients adding a kid. What sort of buffs and debuffs does he notice when parents have their first child? How do you assess if it's the right move for you?

Worksheet:

Transcript:

What's up Internet? Welcome to Nerd Finance. I'm Ian Bloom, your resident financial life planner and huge nerd. In today's episode, we are going to be kind of continuing from last week because last week we talked about growing your adventuring party by adding a certified public accountant or a CPA to your party. Well, CPA's are useful, but what if you want a new player entirely to join the party, a child? What do financial planners think about that and what are the financial side trade-offs?

Well, to start off with, let's start with the high notes because it's always good to start on a high note. Children bring a lot of meaning and joy into people's lives. Just ask a recent parent, they are overjoyed and elated, although they are often tired as well. So having a child can bring a meaningfulness buff to your life. It will give you some more motivation and make you want to spend more time with the child. It also gives you a tax credit, which is a small financial incentive that the government puts out of about $2,000 a year that you will get back on your taxes.

Now the debuffs that a child provides to the party start with the upkeep. Frankly, early on diapers and food costs a little bit extra, but as the child grows up there will be other expenses that you will have to cover for them like school trips and daycare and other things like that. So just make sure that you are prepared for those additional upkeep expenses. Make sure that there is room in the budget so that you can handle this debuff without it knocking the party on its back.

The other debuff that it applies to the household from a financial perspective is having a child means that they're going to be some aspirational expenses that you would likely like to provide for the child. These are things like education, so college, or on the other side of the fence, maybe a life start fund regardless of whether the child wants to go to college. So things like a home down payment, buying the first car or an amount of money to start a business with, if that's what the child desires.

So these aren't necessarily debuffs from the perspective that they provide less meaning or take away the motivation of the party, but they are debuffs in the sense that they place additional financial strain and additional tax so to speak on the party's resources. So just make sure that when you're having a child you are prepared for this additional upkeep and aspirational expenses.

In summary, having a child can be a very meaningful thing and is often a goal of many parties. Bringing new players into the game means that the game continues to be played and it also provides a level of fulfillment to the original party members. Anytime you raise a new player and get them past level five it feels really good because then you get to start seeing them act like a full-on player. But in addition to that, there is a small tax credit that you get as a benefit for having a child.

Finally on the debuff side we have added upkeep, which is an additional expense, and we have aspirational expenses like providing for college and helping the child start their life. But all that being said, I haven't provided specific numbers for those things so I will include a worksheet in the description below that kind of uses some of the numbers that I've worked with clients.

I hope that this video was both helpful and maybe a little funny to you to hear me describe children as new players. If you did like the video, like, comment, subscribe, and also head over to my website, openworldfp.com to check out my firm and some of the services that we offer. Thanks so much. Have a wonderful day.

Party Expansion: When Should I Hire a CPA?

Party Expansion: When Should I Hire a CPA?: Ian answers a question he often gets from friends and clients alike "Should I Hire a CPA?" Certified Public Accountants can be very helpful professionals to add to your party. So, when should you hire one?

Transcript:

What's up Internet? Welcome to Nerd Finance. My name's Ian Bloom. I'm your resident financial life planner and huge nerd. In today's episode we are going to be talking about growing your adventuring party by doing one particular thing, which is hiring a CPA. When does the CPA work for you? How do you decide when you need one? And those sorts of things.

So the reason that I wanted to cover this topic today is simply that it's tax season. We're in the middle of February at the time of this recording and I've been asked by a couple of people "When should I switch off of TurboTax and start handing this over to a professional?" Growing your adventuring party by hiring a CPA is something that you really have to decide on a cost-benefit basis. You see, they are professional and will make your life easier, but you have to make sure that spending the money is useful for you.

So here are a couple of things to consider when hiring a CPA. The first is what is the complexity of the items that I am trying to get taken care of? Because as it turns out, if you're just getting regular W2 income, have no investment income so you're just an employee. Not to knock it, it's simple, but the tax return side of it is probably easily handled by TurboTax at that point and might even be able to be filed for free. And I use TurboTax as a stand-in for all the tax preparation software that you can use out there. So complexity is the first thing. You want to make sure that you have something that the CPA would be able to work hard on for you. Like rental properties, stop compensation, 10-99 income or owning your own business. All of these things provide ample space for a CPA to do some meaningful tax planning for you.

The next thing that you'll want to consider when looking at growing your party by hiring a CPA is simply would it be worthwhile for you? You see, hopefully, viewer, you are starting to get up there in the working world. People's incomes do tend to go up the more that they work, as long as they ask for promotions and look for new jobs, and those sorts of things. So as your income continues to rise, one of the things that you might ask yourself is "Is it worth it for me to spend money to get time back?" These are things that people typically ask when they're thinking about hiring somebody to clean their house or to cook for them or using one of those home chef type things. And all of those are good things to do to get time back. But a CPA is another one that can do that for you. Plus at higher incomes, they might be able to help you with some sorts of tax planning tips like contributing to IRAs and stuff to reduce your tax burden.

So CPAs can be very, very helpful in this regard. They will take one of the most annoying annual tasks off your plate and make sure that you have it taken care of to your liking. So in summary, hiring a CPA is not necessarily for everyone. Spending that 500 plus dollars on a professional isn't always the right answer, but it probably will be the right answer if you have a high level of complexity in your tax return with things like stock compensation, business income, or 1099 income like a contractor. The other reason that you might want to hire a CPA is if you feel like you want that time back in your life. $500 is a small price to pay if you're getting paid $500 an hour, for instance, to offload your tax return.

So I hope that this video was helpful for you. If you like the video, like, comment, subscribe, those sorts of things. But also feel free to check out my website openworldfp.com in order to learn more about the firm and how we can help you have a wonderful day.

What can 7 Wonders teach us?

7 Wonders is an awesome board game that features a drafting mechanic and a race to build the most dominant civilization. The victory points can come from structures, military, science, or even building out your Wonder! But, there's a hidden lesson in this game about finance. What can 7 Wonders teach us about money?

Transcript:

What's up, Internet? My name's Ian Bloom. Welcome to Nerd Finance. I'm your resident financial life planner and huge nerd! In today's episode, we are going to be talking about a board game, 7 Wonders. 7 Wonders is an interesting board game to bring up because, well, like all other board games, it has a hidden lesson in it. In this game, you are building your ideal civilization and starting to accrue victory points, which are essentially influence on the world. Victory points in 7 Wonders come from spending resources and building structures or objectives that will convey certain resources or benefits to your civilization. There are cards that are used to accomplish this. It is a drafting game where you get to pick a card out of each pack and pass it onto your neighbor. The different types of cards, starting with brown, are resource cards and then move on to things like science, merchants and eventually civilian structures that are incredibly beneficial to your society.

Now, the interesting thing about 7 Wonders is that while it has an economic system, there are also ways to work around it and almost never use gold. Gold allows you to buy resources from your neighbors and to accomplish certain things within your civilization like purchasing certain cards, but it does not prove to be mandatory throughout the game. And this is a lesson that I think 7 Wonders can teach us very well. You see, planning, financial planning or otherwise, is not about the money and neither is life. Money is a tool that you may need in order to accomplish the things that you want in life, but ultimately you get to decide your path. So the amount of money that somebody needs is entirely individual to them. Finances are not the purpose, but they are one of the best tools to get you closer to your purpose.

Ultimately, the other thing that 7 Wonders teaches us is that you need an infrastructure set around yourself to win the game. The people who win a game of 7 Wonders are people who have committed to a strategy and built out all of the architecture for that strategy, whether that be science or civilian structures or merchants or just building out your wonder, and it's similar in life. If you're going to accomplish something of meaning, you have to set up an infrastructure around yourself, whether that is building a business like I've done, or just simply having the social networks and support systems set up around yourself to accomplish these things.

Finally, financial infrastructure is a good thing to have in place in order to ensure that the resource of gold in 7 Wonders or money in real life is able to be provided to fit your goals. So there's my summary. In essence, 7 Wonders teaches us that life is not about money, it's about the things that money can help you do, and that in order to accomplish longterm goals, you do need to set up some sort of infrastructure around yourself to make those possible. If you enjoyed this video, like, comment, subscribe, those sorts of things. And if you find that this video leaves you wanting to learn more about my services or my firm, please head over to OpenWorldFP.com. Thanks so much for watching. Have a nice day.

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