Money Talk with Skyler Fleming: How Family Conversations Shield You from Financial Under-Preparedness

Andrew Van Alstyne had the privilege to be featured on the
Money Talk with Skyler Fleming Podcast.

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Andrew discusses the importance of family conversations in financial planning. Andrew also shares his insights on how open discussions can prevent financial under-preparedness. He also talks about the role of including all family members in wealth management, the benefits of inter-generational wealth transfers, and how to overcome the tension of talking about money in families with difficult financial histories.

Click the Links Below to Watch or Listen to the Full Episode:

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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Sales Gravy Podcast Feature: Personal Finance Strategies for Sales Professionals

Ben Lex had the privilege to be featured on the Sales Gravy Podcast.

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Ben discusses the importance of personal financial well-being for sales professionals and how to improve their current circumstances with their variable income.

Click Below to Watch or Listen to the Full Episode:

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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Route 664 Podcast Feature: Wealth Planning

Andrew Van Alstyne had the privilege to be featured on the Route 664 Podcast.

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Andrew discusses the significance that proper financial planning can have on multi-generational wealth and the importance of doing thorough, comprehensive financial reviews.

Click the Links Below to Watch or Listen to the Full Episode:

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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MarketWatch Feature: Before your teen starts a summer job, have ‘the talk’ about taxes

Ben Lex was recently featured in a MarketWatch article titled “Before your teen starts a summer job, have ‘the talk’ about taxes”.

In it, he dives into ways to teach your kids about personal finance. Check out Ben’s insights - they’re golden nuggets for teaching your kids the foundations of personal finance.

Financial Freedom and Wealth Trailblazers Podcast Feature: Financial Guidance and Planning

Andrew Van Alstyne had the privilege to be featured on the Financial Freedom and Wealth Trailblazers Podcast.

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Andrew discusses the importance of finding an advisor that aligns with your needs and who understands your relationship with money. He also discusses the significance that proper financial planning can have on multi-generational wealth.

Click the Links Below to Watch or Listen to the Full Episode:

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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How Much Should You Invest for Retirement?

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When it comes to investing, we all have to start somewhere. It can be easy to look for a set number or percentage of income to invest and stick with it. While that may be the simple approach, I believe more needs to be considered when choosing an amount to invest continually. With that being said, this should not be so complicated; it takes forever to figure out. While investing will look different for everyone, there are some helpful guidelines to establish what investing should look like for you.

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The Importance of Investing

We must first establish why you should invest in the first place before diving into how to invest. Investing gives you the advantage of putting your money into a vehicle designed to grow wealth. This is the classic case of risk vs reward. You could leave your money in a savings account but will get minimal growth, if any. The alternative is investing some of that money into the stock market strategically to take advantage of a multiple percentage return.

When investing, it is crucial to know your goals with that money. This could be anything from saving for vacation to retirement planning and anything in between. Knowing what you are investing for is one piece of the puzzle. The second piece to consider is the timeline of your investment. If you are investing money that you plan to use for a vacation six months from now, your strategy will look significantly different than the money you invest towards your retirement, which is 20 years away. The final consideration is the risk you are comfortable taking with your investment. The timeline plays a role in this, but a personal component needs to be considered and talked through with a financial advisor.

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How Much To Invest

When it comes to establishing the amount you are investing, it again depends on multiple factors. You must take into consideration the end goal as well as your own capacity to invest. The overarching recommendation is to invest 15%-25% of your income toward retirement. While this can be a helpful target to shoot for, this amount could be too little with the end goal. Instead of picking an arbitrary amount, I suggest doing a retirement expense inventory. Doing this will allow you to get a goal that is tailored to your cost of living and retirement expectations. This takes into account life expectancy, healthcare costs, and expected retirement lifestyle. From here, you can reverse solve to find a proper investment target using a compound interest calculator. Keep in mind that this target is going to move on you throughout your life. What makes sense at 30 years old will be different at 40 years old because you’ve gained more clarity on the components used to establish your target.

As great as it would be for everyone to understand their retirement expenses, it can often be challenging to project. What about someone with significant student loans who can't swing 15% of their income to retirement? This is where capacity comes into play. The above scenario is the goal, but it may not be feasible for your current financial situation. If that describes you, then the mentality you should have is to start small but start now. You will be better off by investing a little bit each month and building the habit of investing, as opposed to waiting until your circumstances are perfect to start. I recommend you find an amount that works with your budget and commit to investing that amount for a year. By doing this, you have built the habit of investing and allowed your money to start working through compounding interest.

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Where to Invest

Now that you have established your goals and an amount of money to invest, you can consider what investment vehicle you want to use. If this is new territory for you, read my article “The Order of Operations for Retirement Savings.” This can give you a baseline of where to begin with investing.

All the pieces we have discussed up to this point will influence the strategy you choose for investing. At the end of the day, diversification is one of the most essential components of retirement investing. You’ve heard the phrase, “Don’t put all your eggs in one basket,” which holds true when investing. The stock market is volatile and should be approached with a well-thought-out strategy. Diversify your investment across multiple asset classes such as stocks, bonds, real estate, etc. This will help you have a robust strategy when the market is up and protect you from downsides when the market is down.

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Adjust and Review

I’ve mentioned it once, but it deserves to be revisited. The amount you contribute to retirement savings will be a moving target. It will change as you get closer to retirement, have income fluctuations, and gain clarity on your financial goals. This change is not something to shy away from. It creates the opportunity to revisit this topic regularly. If you work with a financial advisor, this conversation should be part of a standard cadence between you and them. Having a plan is important, but understanding how that plan should flex over time is equally important.

Keep in mind that these are general guidelines around investing toward retirement. As I mentioned, everybody has a different situation and should consult a financial advisor to help consider all factors of your financial picture. If I can leave you with any piece of advice, it is that the best time to start investing was yesterday. The second best time is today.

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References

https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator

https://smartasset.com/investing/how-much-money-to-invest-in-stocks-per-paycheck

Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. The information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Yahoo! Finance Feature: Transitioning Into Retirement: A 2024 Financial Checklist→

Andrew Van Alstyne had the privilege to be featured in Yahoo! Finance to talk to readers about the preparing for retirement in 2024.

Andrew discusses a systematized checklist that can be utilized in the years leading up to, and then through, retirement.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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Financial Planning Feature: American's Top 5 Financial Regrets of 2023→

Andrew Van Alstyne had the privilege to be featured in Financial Planning to talk to readers about the financial regrets of 2023.

Andrew discusses how one of the biggest missed opportunities was missing out on higher yield savings accounts and how inflationary risk is all too often under valued for the impact in can have on the real rate of return of an investment.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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Yahoo! Finance Feature: 13 Key Signs You’ll Always Be Middle Class→

Andrew Van Alstyne had the privilege to be featured in Yahoo! Finance to talk to readers about the behaviors keeping them middle class.

Andrew discusses how certain financial habits are keeping high-income earners from elevating their socioeconomic position.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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Yahoo! Finance Feature: How Much the Average Florida Retiree Should Have in Their Savings Account→

Andrew Van Alstyne had the privilege to be featured in Yahoo! Finance to talk to readers about the factors to consider if you want to retire to the sunshine state.

Andrew discusses the benefits to consider when retiring to a state without income tax as well as strategies that can be applied more broadly.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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GoBankingRates Feature: Net Worth for Baby Boomers: How To Tell Whether You’re Poor, Middle Class, Upper Middle Class or Rich→

Andrew Van Alstyne had the privilege to be featured in GoBankingRates to talk to readers about gaining clarity on the blurred lines between classes in America.

Andrew discusses the differentiating factors in each wealth segment, and how to properly manage your assets based on the one you’re in.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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The Order of Operations for Retirement Savings

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One of the most common questions people ask me is how to determine the best way to save for retirement. It’s a fair question because there is no one-size-fits-all retirement saving and investing approach. Each person’s unique financial situation can impact how they save for retirement. So, before we jump into a general recommendation for the order of operations in retirement savings, consult a financial advisor-–like myself-–to discuss your individual financial considerations that can influence your retirement outlook.

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Step 1: Work-Based Retirement Plan

Employer retirement plans, such as 401k, 403b, or 457, are often the best and simplest way to begin retirement savings. Not all plans are created equal, depending on your employer, but these plans contain some significant benefits worth taking advantage of.

Minimal Barrier to Entry

Employer-sponsored retirement plans typically have low to no barriers to entry. In most cases, employees are auto-enrolled in the company plan, with some employers requiring a small contribution from each employee. If not automatically enrolled, opting into the plan is often as simple as filling out a few forms. 

Matching Incentive

One widely recognized benefit of employer plans is the associated company match. While not mandatory for all employers, a company match is becoming a common addition to benefits packages. I like to call this “free money”. By contributing a percentage of your paycheck, your employer agrees to match your contribution up to a specified limit. For example, “Employer agrees to match 50% of employee’s contribution up to 6%”. This means that if you contribute 6% of your paycheck, your employer will add an additional 3% to your contribution. This is a key reason why work-based retirement plans are so effective.

Automatic Deduction

The final distinction of these employer plans is that your contributions come directly from your paycheck before you receive it. This makes the process of saving for retirement very simple and automated. Automatic deduction enables you to save for retirement before recognizing that money as income.

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Step 2: Emergency Fund

I know what you’re thinking—having an emergency fund has nothing to do with retirement savings. While it doesn’t directly count as retirement savings, it’s a necessary step in the equation. To fund your retirement, you need to ensure that your current financial situation is under control. The control starts with having a safety net in place. An emergency fund allows you to manage your current financial picture before addressing your future financial picture. By establishing an emergency fund, you can stay on track with your retirement goals when unexpected expenses arise rather than halting retirement contributions to cover unforeseen costs. Once you’re contributing to your work-based retirement plan and have an emergency fund established, we can move on to other retirement savings accounts.

Step 3: Individual Retirement Accounts

Individual Retirement Accounts (IRAs) are often the next step in retirement savings. These accounts are separate from employer plans but still hold numerous benefits. There are two main types of IRAs, each effective depending on individual financial considerations. While this won’t be a deep dive into these accounts, here is a quick overview of their function and benefits.

Traditional IRA

A traditional IRA is a pre-tax retirement account. Contributions are made pre-tax, resulting in a current-year tax deduction. The money invested in the account grows and is taxed at an ordinary income rate when withdrawn. This is often referred to as tax-deferred, meaning that you defer your taxes until withdrawal.

Roth IRA

A Roth IRA is considered a post-tax retirement account. Contributions happen after taxes are taken out of your income. Since you pay taxes upfront, that money grows tax-free. Regardless of your tax bracket at withdrawal, you won’t have to pay taxes on the money in your account, assuming you follow proper withdrawal guidelines.

Which One?

This is where a professional comes in handy. Many individuals benefit from utilizing both IRAs at different points in their careers, often dictated by their current income. In most cases, ask yourself, “What is my current tax bracket compared to my retirement tax bracket?” If your current tax bracket is higher than your projected retirement bracket, it might make sense to contribute to a traditional IRA over a Roth. But a Roth could be the most efficient option if your current tax bracket is lower than your projected retirement tax bracket. The maximum contribution for an individual in 2024 is $7,000 for those under 50 years of age and $8,000 for those 50 and above.

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Step 4: Health Savings Account

Health Savings Accounts (HSAs) are great financial tools for some individuals. An HSA is primarily a form of health insurance an employer could offer. It’s a high-deductible plan that allows you to put money into an account for qualified medical expenses. HSAs often have an employer contribution attached. Due to the high deductible, these plans are great for healthy individuals with lower medical needs.

There’s a point where an HSA can secondarily be used as a retirement savings account in addition to its primary use as a health insurance plan. This is when you have unused money in the plan to be invested. This allows you to utilize the “triple-tax advantage” of using an HSA as an investment vehicle. Contributions are tax-deductible, while the earnings and withdrawals are tax-free when used for medical expenses. After the age of 65, withdrawals can be taken from your HSA account for non-medical expenses and taxed like a traditional IRA. For many individuals, the HSA functions as a great tool for wealth accumulation after maxing out your IRA.

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Step 5: Taxable Account

The final piece of the puzzle for retirement savings is a taxable account or brokerage account. This account does not offer the same tax benefits as the previously mentioned accounts, which is why it is last on the list. Contributions to these accounts occur after taxes, and the growth or income produced each year counts towards your taxable income for the year. With that being said, the benefit of this account is that you can contribute and withdraw as you please. Because the money is likely invested, it may take a few days to sell and withdraw, but there is no age limit to take the money out. What you lose in tax benefit, you gain in liquidity.

These accounts have multiple purposes but are commonly used to create a “bridge account” for retirement. Because work-based retirement plans, IRAs, and HSAs all require you to be a certain age before making withdrawals, you can use a taxable account to save and invest money if you decide you want to retire early. This account functions as the “bridge” to fund your life from when you retire until you start collecting Social Security or retirement account distributions.

As I mentioned at the start, this is not a blanket approach to retirement savings for everyone. While the structure may work for some, it is important to talk with an investment professional to consider how your income, retirement plan, and goals will impact your strategy. What’s universal about this information is that everyone can contribute to retirement savings in multiple ways to ensure their financial picture is on track.

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References

https://www.bogleheads.org/wiki/Prioritizing_investments

https://www.bogleheads.org/wiki/Health_savings_account

https://thecollegeinvestor.com/1493/order-operations-funding-retirement/

Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. The information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Yahoo! Finance Feature: Six Ways to Mitigate a Sudden Job Loss→

Andrew Van Alstyne had the privilege to be featured in Yahoo! Finance to talk to readers about the importance of being prepared at all times for the possibility of a job loss.

Andrew discusses why it is important to have a dedicated emergency fund along with tax efficient ways of further upskilling and educating oneself.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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What is a Backdoor Roth IRA?

If you're a high earner, you might have come across the term "Backdoor Roth" - it's often hailed as a strategy to outmaneuver heavy tax burdens imposed by Uncle Sam. Yet, despite its popularity in conversation, it remains largely misunderstood. Let's delve into a clear explanation, one that's easy to digest.

So, what exactly is a backdoor Roth?

It's a tactic used by high earners to contribute to a Roth IRA, even when their income surpasses the limits set by the IRS for direct contributions.

Here's how it typically works:

1. Make a Nondeductible Traditional IRA Contribution.

2. Convert to a Roth IRA: After contributing to the traditional IRA, you convert it to a Roth IRA. This conversion, crucially, is allowed regardless of your income level.

3. Tax Implications: Because the original IRA contribution was made post-tax, there are generally no tax implications from the conversion.

4. Things to Consider: Before proceeding with a backdoor Roth IRA, it's important to understand the pro-rata rule. This rule can impact the tax treatment of the conversion if you have other traditional IRAs with pre-tax contributions.

For years, there have been discussions in Congress and the presidency about closing this perceived tax loophole. Therefore, a backdoor Roth may not always be an option. It's wise to determine sooner rather than later whether you can participate in this strategy and how to do so effectively.

 Fiduciary Financial Advisors is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

Protect Your Financial Life

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Protection can have various meanings in the financial industry, and there are several ways to safeguard your income, family, and financial future. While this isn’t an exhaustive list of strategies, it outlines some crucial topics to help you establish proper protection across all facets of your life.

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Protect Your Income

Money Management

Knowing your monthly cash flow is one of the most important aspects of protecting your income. This knowledge allows you to be intentional with your spending. Additionally, having an emergency fund will enable you to be proactive when unexpected expenses arise, keeping you on track instead of starting over.

Life Insurance

I typically recommend that most people have a term life insurance policy. Those who are married and, even more importantly, have kids can leverage an inexpensive term life policy as protection against unforeseen events. These policies range from 10 to 30 years and help bridge the gap while dependents are in the house, giving you added peace of mind.

Disability Insurance

Disability insurance isn't for everyone, but it is worth considering. Many employers offer it for free or at a low cost. This can be a great way to protect your income in case of bodily injury. You will first need to assess your ability to find work in the event of disability. From there, you need to weigh the cost of disability insurance against your confidence in finding other work.

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Protect Your Family

Health Insurance

Health insurance is essential, but choosing the proper plan is where the cost savings come into play. It is crucial to analyze all plans that you qualify for and understand which plan will offer the most significant value based on your family's needs. When open enrollment or a qualifying life event comes around, analyze your coverage and select the right plan for the following year.

Estate Planning

Estate planning primarily refers to having a will or trust in place. This helps to protect your accumulated assets for your family. While estate planning can be complicated for some, working with a good estate planning attorney can help you figure out the best path forward. For those with children, the estate plan becomes increasingly more critical.

Lifestyle Creep

Establishing family priorities can be an essential way to protect from income loss due to lifestyle creep. Lifestyle creep means that your lifestyle costs increase along with your income. Once established, this is more challenging to reverse. It often presents as a higher mortgage or a more expensive car payment. Establishing family priorities can be the key to preventing lost income due to lifestyle creep.

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Protect Your Future

Calculated Risk

Protecting your financial picture involves not only your current financial situation but also your future. Investing is a crucial piece of your financial puzzle, but it must be calculated and intentional. I elaborate on this topic in my article, “A Beginner’s Guide to Investing.” If you are unsure how to be intentional about your investing, reach out to a fiduciary financial advisor, like myself, for assistance.

Don’t Leave Money On the Table

This can present in two primary ways. The first was already discussed and is your company's free or extremely low-cost insurance options. These are great programs, so take advantage of them when you can. The other way I see this often happening is by not getting the employer match on a retirement plan. Most employers will offer a match of 3% or more, which is essentially free money. Don’t miss out on these great employee benefits.

Tax Planning

Tax planning should be encompassed in multiple areas of your financial plan. You should optimize your tax efficiency through your withholdings, deductions, and investments. To do this, connect with your financial advisor and CPA to achieve the best outcome in all aspects of tax planning.

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References

https://www.guardianlife.com/insurance/income-protection-strategies

https://www.investopedia.com/articles/younginvestors/08/generation-y.asp

https://www.usbank.com/wealth-management/financial-perspectives/financial-planning/wealth-preservation.html

Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. The information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third-party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.

Yahoo! Finance Feature: Why Your Idea of Retirement May Be Wrong: And What You Can Do To Better Prepare→

Andrew Van Alstyne had the privilege to be featured in Yahoo! Finance to talk to readers about the importance of preparing for expenses in retirement.

Andrew discusses why retirees must plan on having similar, if not greater expenses in retirement to those they’re experiencing in their working years and how they can maximize their cash flow to support their financial independence.

Fiduciary Financial Advisors, LLC is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.

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How Much House Can I Afford with on a Sales Income?

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Buying a home can be a challenging process, even if everything goes smoothly. Throw a few complicating factors into the mix, and it doesn't get any easier. Being a sales professional can be one of those complicating factors when it comes to acquiring a home loan. I’ve experienced this both personally and professionally. Let me shed some light on the process of getting approved for a home loan and then give some guidelines on how much you can afford.

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Be Prepared

After getting your finances in order and deciding that the time is right to buy a house, you will need to connect with a mortgage lender to walk through the pre-approval process. A mortgage lender can help determine the best type of home loan based on your circumstances. At this stage, there is no harm in talking with multiple lenders to figure out which company can give you the best rate and provide the best client experience.

Mortgage lenders prefer to see 2 years' worth of tax returns from individuals with a steady income, but often give more flexibility due to the consistency of their income. For those with a variable income, it will most likely be a requirement to provide 2 years' worth of tax returns to even be considered for a loan. Having these forms ready ahead of time, can help you expedite the process.

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Don’t Get Caught Up in the Potential

When going through the pre-approval process, lenders will give you a conditional letter of approval for the highest amount that you’re able to borrow. In many cases, that amount will put you into a house that you cannot truly afford. You should have an idea of the monthly payment you are hoping to lock in, before beginning this process. If you haven’t done so yet, now is the time to run the numbers and settle on a payment that mathematically makes sense based on your income. A good mortgage professional can and should assist you in this process.

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How Much Can You Actually Afford?

How much house can you actually afford, then? There are different schools of thought on this topic, but I believe that your mortgage payment should be less than 25% of your gross monthly income. Keep in mind that this is a top-end number, and the lower your monthly payment, the more flexibility you give yourself down the road.

Now, with a variable income, 25% becomes a harder number to pinpoint. As mentioned in my post “How to Budget on a Sales Income”, if you have a salary component of your income, I would recommend using 25% of that number assuming you have a decent base pay. This will give you confidence that you can make your payment regardless of job performance. It can be easy to incorporate your commission into this amount, but I recommend against doing this as it exposes you to unnecessary risk.

For those working solely on commission, I recommend finding your number by averaging your income over the span of 3 years, or longer if possible. Using your commission structure can be a good element to incorporate as well. Not every year will be a down year, but my goal is to protect you if it is. Calculate your income if you were to hit 75% of your sales target and assume that to be your yearly income. Incorporate this into your 3-year average and take your 25% from that number. This creates a small buffer in your predictions for protection.

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Have Confidence

There will always be a small level of uncertainty when working in sales. Often, that works in your favor, allowing for more income flexibility, but it's also important to protect the downside. Once you’ve been pre-approved and decided on a monthly mortgage that you can afford and are comfortable with, move forward in the home-buying process with confidence.

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References

https://selling-guide.fanniemae.com/Underwriting-Borrowers/Income-Assessment/General-Income/Variable-Income-Stability-Continuity/1048717451/What-is-required-for-variable-income.htm

https://www.greatestlender.com/blog/18765/purchasing-a-home/how-to-qualify-for-a-mortgage-when-your-income-isnt-steady#:~:text=A%20longer%20employment%20history%20is,period%20and%20average%20it%20out.

Fiduciary Financial Advisors, LLC is a registered investment adviser and does not give legal or tax advice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. The information contained herein has been obtained from a third party source which is believed to be reliable but is subject to correction for error. Investments involve risk and are not guaranteed. Past performance is not a guarantee or representation of future results.