dsmWealth: June 5, 2025

With your finances, it's high time for some spring cleaning
BY STEVE DINNEN

Now that summer’s here, it's a good time to finish up some financial spring cleaning. Feel free to put off sweeping out the garage another day (or week), set aside those screens and windows, and put some effort into your investments.

The folks at Gilbert & Cook, the financial planners in West Des Moines, put together a handy to-do list:

Review your tax return. Did you get a big refund? Or maybe you owed a lot more than you expected? You can easily adjust your paycheck withholding or estimated payments. Congress is not quite done debating the merits of its latest tax overhaul, the “One Big Beautiful Bill,” but it’s likely to become law this summer. And if it does, it will definitely influence your tax situation.

Organize and digitize your financial files. Everything is online nowadays. This might be a good time to change a password or two, for security’s sake. If you have paper documents, scan them, save them to the cloud and then shred them.

Clean up your accounts. If you’ve changed employers and have multiple retirement savings plans, you can consolidate them. You also don’t need more than a few credit cards, or bank accounts.

Check in on your budget. You surely have one. Does it still make sense? Food is not getting any cheaper these days, neither at the grocery store nor the restaurant. How has your budget worked year to date?

Revisit your financial goals. Are your savings on track? Maybe you need to boost or replenish your emergency fund. For instance, my house sports a large deck that recently required a surprisingly hefty bill for repairs.

Meet with your financial adviser. We’ve had a roller coaster ride through the stock market these past few months. There are signs that this volatility may continue, but an adviser can suggest ways to minimize the bumps and smooth things out.

Think forward. Has your child or grandchild gone off to college? This will change your money situation, which means your budget will change, possibly for a long time. You also might have some vacation expenses coming up. Gas prices are down and airfares seem pretty modest, but hotel prices are up.

If you’re decluttering your home, good for you. With a little time and effort you can declutter your financial life, too. The more you do now, the less you’ll have to do later.

Beware of stealthy costs in retirement
BY STEVE DINNEN

A recent issue of Kiplinger warns about the hidden costs of retirement, and rightfully so: A lot of expenses can chip away at our financial security as we try to live out those golden years.

Health care expenses top the list, though I’m not certain I totally agree with Kiplinger (which is usually a great source of advice). Don’t most of us have Medicare or private insurance to shoulder those expenses? You could run into trouble if you have a stroke, for instance, and are incapacitated to the point where you need assisted living. That’s expensive, and Medicare doesn’t cover room and board associated with assisted living. Long-term care insurance would be an option to relieve that potential problem. New expensive medicines can be stealthy, too.

Kiplinger also notes taxes. But really, your taxes are pretty predictable, especially when you’re in retirement and have a relatively steady, predictable income stream. The stealth attack from taxes has actually dropped in Iowa, as the state has eliminated taxes on retirement plan payouts as well as Social Security.

Inflation is a huge stealth attack. Historically, it averages 3% a year, which means that in 24 years, the price of whatever it is you want will double. But every now and then we have spikes. Prices rose 1.4% in 2020, 7% in 2021 and then 6.5% in 2022. Prices don’t retreat from there, but continue that upward 3% climb. That’s a real cost — and stealthy, too — and it can’t be avoided.

Do you know as much about personal finance as these savvy high schoolers?
BY BEN EISEN FOR THE WALL STREET JOURNAL

When people lament the state of financial education in America, they aren’t complaining about these kids.

More than 120 high schoolers competed in the National Personal Finance Challenge in Atlanta that ended Monday. It was run by the Council for Economic Education, which brought together the top four-person teams among some 18,000 state-level competitors. Scripps Ranch High School in San Diego took the top prize.

The final round asked the remaining four teams to supply short answers to 20 questions about everything from mortgage discount points to 401(k) matches. We turned a selection of them into multiple-choice questions.

Rowan Ward, a sophomore who was on last year’s winning team at Severn School in Severna Park, Maryland, offered this advice on answering the questions: “Go with your gut and think logically. What makes sense to you?”

1. What is the term given to the amount in an account that is separate from any earnings or interest that has accrued?
A. Balance
B. Debit
C. Principal
D. Credit

OK, that’s an easy one: It’s C. But they get harder. Good luck with the rest of the quiz.

Seven signs you’re getting rich (and don’t even know it)
BY PAIGE CERULLI FOR KIPLINGER

Building wealth can be a long, slow journey, and you might not always feel as if you’re making much progress.

But financial success isn’t necessarily defined by big milestones such as buying multiple homes or having a certain amount of money in a savings account.

A study published by Wealth-X found that around 68% of people with a net worth of $30 million or more are self-made — proof that wealth often comes from steady progress, not sudden windfalls.

Many smaller, less noticeable accomplishments can indicate your progress in building wealth. These seven signs indicate you’re secretly getting rich, even if you’re not aware of it.

1. You're prepared for emergencies

Financial emergencies are stressful, and many Americans can’t cover even smaller sudden financial demands. According to Empower research, nearly 37% of Americans can’t cover an emergency expense of more than $400.

Americans have a median emergency savings of $600, and 21% of Americans don’t have any emergency savings.

Building an emergency fund is a key first step toward financial security. It allows you to handle unexpected expenses without added stress or scrambling for extra cash. Financial experts recommend saving three to six months’ worth of living expenses to help weather such events as a job loss or major repairs with greater peace of mind.

Read the full article for six more practical tips.