Personal finance

Over the last few weeks, Financial Finesse coaches have written about the START™ method as featured in Liz Davidson’s book Money Strong: Your Guide to a Life Free of Financial Worries : Setting yourself up for financial success , Tackling financial stress , Advancing toward your goals , and Role modeling financial success . With each step, you can progress from financially suffering to struggling to planning and finally to optimizing. Once you’ve achieved a certain level of financial security and wellbeing, the next and final step in the START™ framework is to Thrive by living your purpose.

So what exactly does that mean? It doesn’t mean that you’ll never worry about money again. (As someone who works with people at all income levels, I can tell you that no matter how much you have, there will unfortunately almost always be some financial stressors.) However, it does mean that you have the financial freedom to bounce back from those stressors and toward the most important thing money can buy: the ability to live your purpose.

Davidson describes your purpose as your “True North” that can guide you to meaning that transcends your own wants and needs. That doesn’t mean it’s all about self-sacrifice though. Your purpose should ultimately give you your greatest sense of fulfillment and life satisfaction.

Sounds amazing, right? So how do you find your passion? Davidson suggests looking for the intersection of what you love, what the world needs, what you can be paid for, and what you are good at. (Fortunately, the last three tend to overlap a lot.)

Let’s start with what you love. You may want to think back to your childhood and what gave you true happiness before you were burdened by the expectations that society placed on you. Don’t just think about the stuff that gave you momentary pleasure like watching TV or playing video games (as fun as they have been). Instead, focus on those things which gave you enduring joy.

There’s a good chance they have a couple of things in common. The first is that they probably gave you a sense of accomplishment, especially by making a difference and having a positive impact on others. The second is that they likely put you in a state of “flow” where you can easily lose track of time doing something that feels practically effortless.

Once you’ve identified where all those intersect, take no more than 30 minutes to try to define your purpose into a single sentence and write it down. For example, mine might be that “my purpose is to help people make better decisions to improve their wellbeing.” It doesn’t have to be perfect (no one even has to see it but you) and it will likely evolve over time with new experiences.

The final and most difficult step is to translate your purpose into real action. Davidson cites a model by Kevin Clark, the Director of Strategic Growth Initiatives for Marketing, Communications, and Partnerships at Intuit INTU . It begins with a “foundation layer” of your personal belief system, your personal principles and values, and your personal commitment to living your purpose. You can then track your progress in the “activation layer” of activating your purpose within yourself, your family and friends, your career, and your community. Finally, “the purpose layer” is your actual purpose.

I’ll use myself as an example. One way I try to live my purpose is by promoting financial wellness. I strive to role model good financial behaviors in my own life, help family and friends with their finances, coach individuals, facilitate group workshops about personal finance in my career, and write articles like this about personal finance for the greater community.

Of course, all of that would be harder if I were struggling financially and focused on just trying to make ends meet.

That’s why the other steps in the START™ process are at least as important. Don’t downplay the importance of identifying your purpose though. It can provide you with the motivation you need to achieve all the other steps. In doing so, your purpose can fuel your financial success just as much as your financial success can fuel your passion.

EVERY three seconds a child in the developing world dies needlessly – moved by that heartbreaking statistic, Katy Perrett decided to sponsor a child in Ghana.

Katy, 30, a trainee GP who lives in Clapham, London with her husband, Ed, 32, gives £18 a month to World Vision. She signed a Gift Aid declaration so that tax can be reclaimed to boost her donation.

She says: “I have sponsored Daniel for three years. I was born and grew up in Nigeria, so I saw some of the poverty there.

“Sponsorship seemed more personal that just handing over a lump sum. I signed the Gift Aid Declaration so World Vision could get the tax back.”

World Vision and Action Aid both sponsor children. World Vision sponsorship costs £18 a month, and Action Aid’s scheme is £15.

Contact World Vision on www.worldvision.org.uk or 0800 50 10 10. Call Action Aid on 01460 238000 or visit www.actionaid.org.uk

There are many financial planning considerations before, during, and after a divorce. A key part of the process from a financial standpoint is dividing the assets. Generally, couples split the value of their assets 50-50 (though not always). But that doesn’t mean the actual assets are just split down the middle, and some assets are much more favorable from a tax perspective than others.

Once the divorce is finalized, a crucial (but often overlooked) part of the process is updating estate documents and beneficiary designations. Here are some key considerations when financial planning for a divorce.

Money and divorce

This article solely focuses on some of the general financial planning aspects of divorce and is not personal legal, tax, accounting, or financial advice.

When getting a divorce, it’s important to assemble your team of professionals. During the divorce, your attorney is the star quarterback. You’ll also want to consider engaging a financial advisor, tax advisor, and estate planning attorney too.

Asset division is one of the major financial components of a divorce. But even getting a complete list of the assets can be challenging.

Jared Spinelli, a divorce attorney and Partner at Rubin and Rudman in Boston, MA explains, “It is more common than many people realize that during a divorce we find out that one (or both!) parties had a secret bank account, or secret credit card, that the other spouse did not know about. Initial, mandatory financial discovery rules require us to exchange three full years of bank statements when a divorce process begins and that is tremendously helpful for savvy attorneys (or forensic experts) to review for unexpected financial surprises.”

Finding large cash withdrawals on bank statements or that someone is stashing money inside a payment app like Venmo is also routine, he said.

Dividing assets in divorce

During the asset division process, a financial advisor can help advise you and your attorney on what assets would be most favorable to retain after the divorce. The tax implications of different assets vary significantly. During a negotiation, the attorney can prioritize assets with the highest projected after-tax value.

How different assets are taxed matters a lot during asset division

Money in retirement accounts will be fully taxable as regular income (unless in a Roth account when funds can be tax-free when holding periods are met).

In contrast, investments in a brokerage account are only taxable above the cost basis. Essentially, the cost basis is the original purchase price of the stock, bond, mutual fund, or ETF. What’s more, investments in a brokerage account are taxed at favorable long-term capital gains tax rates when sold. It’s even possible to select specific tax lots within one holding!

Cash assets have no tax implications.

So all else equal, after the divorce, cash and investments in a brokerage account will have a greater value after-tax compared to (non-Roth) retirement accounts.

Tax considerations when dividing the marital home in a divorce are also important. Assuming you both lived in the house at least two of the last five years, you’re likely eligible to exclude up to $500,000 of the gain from your taxable income (assuming you file taxes jointly the year of the sale). That’s a $100,000 savings if you’re in the 20% tax bracket for capital gains! The exclusion for eligible single filers is half the amount.

Asset division strategies and considerations

A lot goes into creating the right asset division strategy for your joint money during a divorce. Your individual circumstances and goals should drive the process. Here are several common key points to consider.

What do you want your life to look like after the divorce? Splitting up your assets and property during a divorce may seem like it’s only about dollars and cents, but it shouldn’t be. In determining what you want to keep, consider how that asset fits into how you’re envisioning your post-divorce life. Do you envision being happy staying in the marital home? Who gets the pets? What investments best suit your risk profile and goals? How much liquidity (e.g. cash) do you need to fund your fresh start? Work with your fiduciary financial advisor on projections to better understand the income you’ll need to maintain your current lifestyle.

Liquidity and cash flow needs. A key factor to consider is the liquidity of the assets being split. Real estate isn’t liquid until sold, so you’ll need to make sure you can cover expenses with other assets. Excluding any transfer as part of the division, withdrawals from retirement accounts are generally subject to penalties if taken before age 59 1/2. Future benefits like Social Security or a pension won’t help you pay your bills right after the divorce.

Retirement accounts: IRAs vs 401(k)s. To split a workplace retirement plan like a 401(k), 403(b), or a pension plan, a court-issued document called a qualified domestic relations order (QDRO) is required. The attorney must prepare the QDRO, it isn’t a standard form, and can add time and expense to the process. In contrast, transferring or splitting an IRA is a standard process at the major financial institutions. Sometimes, it’s advantageous to have the 401(k) account owner keep that asset and equalize the division with funds in an IRA. This isn’t the only consideration when dividing retirement accounts, but something to be aware of.

Mortgages. When real estate ownership changes hands during a divorce, the former owner can’t remain on the mortgage. To keep the property after the divorce, you’ll have to pay off the mortgage or refinance into a new loan in your name. This requires totally new underwriting based on your credit and post-divorce assets and income. So it’s really important to make sure you’ll qualify on your own. And keep in mind, the monthly payment will increase if refinancing into a higher rate.

Stock options/equity compensation. There are many factors to consider when dividing stock options in a divorce. The first is what portion of the equity compensation is a marital asset to begin with (more on that later).

Jared Spinelli explains, “An initial review is to determine what interests have already vested and/or what ‘may’ vest subject to a vesting schedule and other attained benchmarks. Perhaps the most equitable result is to treat already vested stock as a marital asset subject to division and any future vesting interests as income for purposes of support (although it does not need to be done this way). It’s so incredibly important to find a knowledgeable, experienced domestic relations attorney familiar with complex compensation structures so that they can work with everyone involved to determine the most appropriate treatment of stock compensation or equity ownership.”

He warns, “If the case cannot settle, the challenge then becomes how to most clearly explain the complex compensation so that a judge understands and rules correctly.”

Even if all sides agree on the shares to include in the marital assets, valuation can be a challenge if the company is private. Further, most stock plan documents prohibit the transfer of equity compensation which poses hurdles for a swift division. Neutralizing the tax impact is particularly important for the equity-holder. Exercises/sales (or in the case of restricted stock units, vesting) is taxable to them personally.

It’s all about marital assets

The divorce attorneys must agree on what assets are part of the marital asset pool. States have different laws about what constitutes a marital asset. The biggest difference is between community property states (like California) and separate property states (like Massachusetts). Other key relevant factors include when the asset was acquired and whether you have a prenuptial or postnuptial agreement . How assets are titled (in which spouse’s name) might be irrelevant.

What happens to an inheritance during a divorce?

Is a current or future inheritance subject to division during a divorce? Maybe. Most often, an inheritance received before marriage is that person’s separate property.

Spinelli says “If there’s no prenuptial agreement, a party’s potential to inherit from someone in the future, post-divorce, is at least a consideration that warrants a discussion during the divorce process. Initially, that centers around whether and to what extent the potential (or inevitability) to inherit is a mere expectancy or more of a guarantee. Even so, the lawyers and/or the judge can be creative in electing how it would be most equitable to consider a potential inheritance in the overall division of assets quandary.”

Of course, there are many other aspects of inheritance and divorce to consider and discuss with your attorney, but it should be on your radar.

Key financial planning moves after the divorce

The divorce may be over, but there’s still some work left to fully transition and protect your finances. Here’s a checklist of post-divorce financial planning moves.

• Update retirement plan beneficiary designations. The retirement accounts in your own name will likely need to be updated to reflect your new beneficiary wishes. Typically, couples name their spouse the primary beneficiary. But after a divorce, ex-spouses seldom want the other to get that money. Changing your beneficiary designations is the only way to ensure that happens. Estate planning is an important part of this, especially if you have young children, so consider setting up a trust.
• Changing – and tracking – life insurance beneficiary designations. Again, you’ll want to make sure all of your life insurance policies reflect your wishes and the terms of the divorce agreement. With minor children, it’s not uncommon for divorce agreements to require one/both parties to keep a certain amount of life insurance for a specific period. It could be 20 years or more until you can drop the policy or change the beneficiary. It’s up to you (perhaps with the help of your advisor) to track it.
• Get a new estate plan . After a divorce, you’ll want an attorney to help you redo your estate plan. This is a really important step. An estate plan includes wills, trust documents , your wishes for the disposition of tangible assets, and so on. Within these documents, you name people to key appointments: executor, trustee/co-trustee/successor trustee, power of attorney, healthcare proxy, guardian for minor children, etc. After the divorce, you likely want to change the appointments you made while married. States have different estate tax laws, so if you plan to relocate, you’ll need an attorney in that area.

Financial planning before, during, and after a divorce

Getting your trusted team of advisors in place to help you navigate a divorce is critical to getting through it. There are numerous complex and emotional issues to endure, so you’ll want a strong team around you. Especially for high-net-worth divorces, it gets increasingly complex.

When one spouse manages the family finances, the other may feel overwhelmed when the marriage ends. But you don’t have to do it alone! A fiduciary advisor can help you understand your assets, talk about investing without the need for jargon, and importantly, help you build a financial plan for your next chapter.

Buying pre-loved goods is a growing trend, especially among Gen-Zers, who make up over 40 percent of all vintage buyers. The secondhand clothing market’s value has risen from about $96 billion in 2021 to over $141 billion in 2023, and based on current trends, it’s estimated to reach over $218 billion by 2026.

While buying second-hand items is good for the environment and helps give a second life to items that are still in good condition, you can also be lucky enough to find good quality designer pieces at bargain prices that are worth a fortune.

Chandler West, a 29-year-old woman from Charlotte, North Carolina, who runs her own vintage clothing shop on Etsy, almost didn’t notice the fortune she had come into when she purchased a 1920s French Art Deco evening bag, from famous luxury jeweler Cartier , for just $1, not knowing what it was, and subsequently sold it for several thousand dollars.

She told Newsweek : “I had no idea [how much it was worth]! I thought it was worth more than the dollar I spent, but I did not realize how valuable it was until I started researching it about a year after buying it.”

‘I Knew It Was Worth More Than $1, and I Liked It!’

While purchasing items for her vintage clothing store, at an online auction-style estate sale in November 2021, West noticed a very old-looking bag that had no bids on it, and not knowing what it was worth, she was able to buy it for just one dollar.

Although she’s never been particularly interested in designer bags —at least the modern ones—when she saw the bag at the auction, in that one unclear photo, West saw some potential and decided to go for it. For a whole year, the bag that ended up selling for $7,500 sat untouched in a pile of clothes waiting to be discovered.

In a video recounting her experience, she said: “I just thought it looked old, I was like I don’t know when that’s from but it looks old, like older than just vintage, like antique level old, so I know it’s worth more than one dollar, and it’s pretty and I liked it so I bought it.”

I Thought It Was Fake Until I Took It to Be Checked

When she first pulled the bag out of the closet in November 2022, West had no idea whose it was or how much it was worth, and intent on finding its origins she started researching it.

The bag didn’t have any evident clues, besides being a dirty 100-year-old bag overall in excellent condition. She told Newsweek : “There was a small chip in the enamel on the clasp, but no other real flaws. I believe the auction house cleaned it up a bit, but there really weren’t any major repairs to be done.”

She explained in her videos that the antique bag didn’t have any labels or indications of where and when it could be from, and initially she was only able to figure out that the blue stones on the clasp were actually real.

“I was able to figure out from googling and stuff that it was probably real lapis lazuli, this blue stone, so I started thinking if that’s real, does that mean those diamonds are real? But I wasn’t thinking it really would be.”

After her discovery, she decided to join a group of antique lovers on Facebook and ask them for some help, and that’s when she received a shocking answer.

“It’s an art deco Cartier evening bag from the 1920s. The silk jacquard fabric of the bag is inspired by 17th-century Safavid textiles. They were very popular for evening bags in France in the 1920s. I was able to learn about it with the help of a fashion historian named Adnan Ege Kutay, who I met in a Facebook group,” Se said.

She was doubtful it was going to be an actual Cartier, and the fact that it didn’t have a label inside didn’t help, but things changed when she noticed the clasp.

“I don’t know why I hadn’t checked the clasp before but I’m not really a jewelry person, I’m a clothes person so looking for a signature on metal hadn’t crossed my mind, but when I looked here’s what I saw,” she said in her video, before proceeding to show the Cartier mark on it.

The day after, she took it to a jeweler to get it checked, and he confirmed to her that the clasp had real lapis lazuli as well as 12 real small diamonds, and that the Cartier branding on it seemed authentic. However, he couldn’t tell her exactly how much the bag was worth because its value did not only depend on the materials and stones it featured. Its brand and the fact it was over a hundred years old added to it.

West had bought the bag with the intention of selling it in her Etsy vintage clothing shop, but upon her jeweler’s suggestion, she decided to check estate auctions instead.

“I do sometimes keep vintage pieces that I originally source as inventory if I really fall in love with them. In this case, though, I was not really tempted to do that because as beautiful as the bag is, I knew the large amount of money I would get for selling it would bring me a lot more joy than keeping it would,” she said.

After checking a few auction houses she ended up choosing one that had already sold similar pieces to hers, and had told her, to her surprise, that the bag could be worth around $3,000 to $4,000.

She said: “As for how long the process took, it was pretty speedy. It was late November or early December 2022 when I discovered that the bag was made by Cartier. At that time, I realized I’d be able to make more by selling it at auction than by trying to sell it on Etsy. I got in contact with Rago Auctions in December 2022 and it was sold in their February 2023 auction. So just a couple of months!”

After initially buying the bag for just $1, West was able to make a huge profit out of it. While the auction opened at $2,000, offers kept coming in, and it ended up selling for an astonishing $7,500.

“There are fees for both the buyer and the seller,” she added: “the buyer pays 26 percent buyer’s premium on top of the hammer price, so the final amount they paid was $9,450. I paid 12 percent commission, so the amount of money I receive after all that is $6,600.”