Is It Time to Declare Your Financial Independence? Oppenheimer & Co. Inc. No matter how much finding a job with a higher , working an A Member of The Poindexter Group money you have or which extra job, or working part-time in . life stage you're in, And a job is just one source of income. If you're David Casso, CFP®, CTFA becoming financially resourceful and able to put in extra hours, you Associate Director - independent starts with a may also be able to generate regular income in 711 Louisiana Street dream. Your dream might other ways — for example, renting out a garage Suite 1500 be to finally pay off the apartment or starting a side . Houston, TX 77002 mountain of you've Spend wisely. Look for opportunities to reduce accumulated, or to stop your spending without affecting your quality of 713-650-2056 relying on someone else for financial support. [email protected] life. For the biggest impact, focus on reducing Or perhaps your dream is to retire early so you your largest — for example, housing, http://fa.opco.com/poindextergroup/ can spend more time with your family, travel the food, and transportation. Practicing mindful world, or open your own business. Financial spending can also help you free up more independence, however you define it, is money to save. Before you buy something freedom from the financial obstacles that are nonessential, think about how important it is to keeping you from living life on your own terms. you and what value it brings to your life so that Envision the future you don't end up with a garage or attic filled with regrettable purchases. If you were to become financially independent, what would change? Would you spend your Save aggressively. Set a wealth accumulation time differently? Live in another place? What goal and then prioritize saving. Of course, if you would you own? Would you work part-time? have a substantial amount of debt, saving may Ultimately, you want to define how you choose be somewhat curtailed until that debt is paid off. to live your life. It's your dream, so there's no Take simple steps such as choosing wrong answer. investments that match your goals and time frame, and paying yourself first by automatically Work at it investing as much as possible in a retirement Unless you're already wealthy, you may have savings plan. Time is an important ally in the had moments when winning the lottery seemed quest for financial independence, so start like the only way to become financially secure. saving as early as possible and build your nest But your path to financial independence isn't egg over time. (Note that all investing involves likely to start at your local convenience store's risk, including the possible loss of principal, and lottery counter. there is no guarantee that any Though there are many ways to become strategy will be successful.) financially independent, most of them require Keep going hard work. And retaining wealth isn't Make adjustments. Life changes. Unexpected necessarily easy, because wealth may not last bills come up. Some years will be tougher if spending isn't kept in check. As income rises, financially than others. Expect to make some lifestyle is a real concern. Becoming — adjustments to your plan along the way, and remaining — financially independent especially if you have a long-term time frame, requires diligently balancing earning, spending, July 2019 but keep going. and saving. Why Not Do It Now? New Research on Track your progress. Celebrate both small Procrastination Earn more, spend wisely, and save milestones and big victories. Seeing the Managing Your Money in a Gig Economy aggressively progress you're making will help you stay Have you checked your tax withholding Earn more. The bigger the gap between your motivated as you pursue your dream of lately? income and expenses, the quicker it will be to financial independence. become financially independent, no matter what Do I need to pay estimated tax? your goal is. The more you can earn, the more you can potentially save. This might mean

Page 1 of 4 See disclaimer on final page Why Not Do It Now? New Research on Procrastination Do you have a tendency to push off important Tips for procrastinators tasks? Do you do things at the last minute, or Here are a few suggestions that may help maybe not do them at all? If so, you're not overcome a tendency to procrastinate. alone. About one in five adults is a chronic procrastinator.1 Consider the triggers. One researcher found that people are more likely to procrastinate if a Procrastination can be frustrating in the short task is characterized by one or more of these term for even the simplest tasks. But it can seven triggers: boring, frustrating, difficult, have far-reaching effects on important activities ambiguous, unstructured, not intrinsically and decisions such as completing work rewarding, or lacking in personal meaning.5 projects, obtaining medical treatment, and You might try to identify the triggers that are saving for retirement. Recent research offers holding you back and take steps to address insights that may be helpful if you or someone those specific problems. For example, if a task you know has a tendency to procrastinate. Advantage of an Early Start seems too difficult, ambiguous, or unstructured, Saving for retirement may be a Blame the brain you could break it down into smaller, more low priority when you're young, A study using brain scans found that the definite, and manageable tasks. especially if you're earning a amygdala, the almond-shaped structure in the Meet your resistance. If you don't want to low salary. But starting early temporal lobe of the brain that processes work on a task for an hour, determine how long can make a big difference, as you can see in the emotions (including fear), was larger in chronic you are willing to work on it. Can you work on it accompanying chart. procrastinators, and there were weaker for 30 minutes? What about 15? If you don't connections between the amygdala and a part want to do it today, what day would be better? This hypothetical example of mathematical compounding is of the brain called the dorsal anterior cingulate List the costs and benefits. For big projects, used for illustrative purposes cortex (DACC). The amygdala warns of such as saving for retirement, make a list of all only and does not represent potential dangers, and the DACC processes the negative ways not making progress could the performance of any specific information from the amygdala and decides affect your life and all the positive outcomes if 2 investment. It assumes a what action a body will take. you were to achieve your objectives. Imagine monthly deferral of salary and monthly compounding of According to the researchers, procrastinators yourself succeeding. earnings. Fees, expenses, and may feel more anxiety about the potential Take the plunge. Although a big project may taxes were not considered and negative effects of an action and be less able to seem daunting, getting a start — any start — could would reduce the performance filter out interfering emotions and distractions. reduce the anxiety. This might be just a small shown if they were included. The good news is that it is possible to shrink first step: a list, a phone call, an email, or some Actual results will vary. the amygdala and improve brain connectivity Internet research. For a written project, you 3 through mindfulness meditation exercises. might start with a rough draft, knowing you can What's important to you? polish and improve it later. Another recent study found that people were Forgive yourself. If you've postponed a task, less likely to procrastinate about tasks that they don't waste time feeling guilty. In most cases, personally considered important and were "better late than never" really does apply! within their own control, as opposed to tasks 1 Frontiers in Psychology, July 5, 2018 that were assigned to them and/or controlled by 2-3 others. This is probably not surprising, but it BBC News, August 26, 2018 suggests that procrastination may not be a 4 Psychology Today, January 9, 2018 "weakness" but rather a result of personal 5 Harvard Business Review, October 4, 2017 values and choices.4

Page 2 of 4, see disclaimer on final page Managing Your Money in a Gig Economy According to the Bureau of Labor Statistics, having trouble keeping on track with your 16.5 million people rely on contingent or , consider ways to cut back on spending alternative work arrangements for their or find additional sources of income to make up income.1 Often referred to as the "gig for any shortfalls. economy," these nontraditional or contingent Consider your health insurance options work arrangements include independent contractors, on-call and temp agency workers, Unfortunately, as a contingent worker you don't and those who sign up for on-demand labor have access to an employer-sponsored health through smartphone apps. plan. However, you do have health insurance options. If you are a recent college graduate If you are a contingent worker, you need to pay and still on your parents' health insurance plan, close attention to your finances in order to you usually can stay on until you turn 26. If you make up for any gaps in earnings that may are no longer on your parents' plan, you may be occur between jobs. In addition, you'll have to eligible for a government-sponsored health As a contingent worker, you plan ahead for health-care costs, taxes, and may be eligible for a number plan, or you can purchase your own plan saving for retirement, since you will have to of tax deductions (e.g., through the federal or state-based Health shoulder these expenses on your own. The start-up expenses, mileage), Insurance Marketplace. For more information, following are some tips for managing your so be sure to keep good visit healthcare.gov. records. If you have multiple money in a gig economy. gig jobs, consider using a Plan ahead for taxes log to keep track of your Prepare for slower periods between income and work expenses. jobs In a traditional work arrangement, employers typically withhold taxes from employees' While establishing a cash reserve is an integral paychecks. As a self-employed worker, you'll part of any financial strategy, it is especially have to plan ahead for federal and possibly important for contingent workers. You'll want to state taxes so you don't end up with a large bill set aside enough money to cover unexpected during tax time. The IRS requires self-employed expenses and large bills that may come due individuals to make quarterly estimated income during slower months between jobs. A good tax payments, so make sure you set enough strategy is to make it a habit to deposit a money aside each time you get paid to go portion of your income in your cash reserve. toward your tax payments. Because Make sure you maintain good contingency income fluctuates from month to month, the IRS allows you to make unequal Even a robust cash reserve might not be able quarterly payments. In addition, you'll be to weather a significant downturn in responsible for paying a self- tax, contingency work. That's why it's important for so you need to account for that as well. For contingent workers to have access to credit to more information, visit the IRS website at help them get through leaner times. Make sure irs.gov. that you maintain a good history by avoiding late payments on existing and paying off Don't forget about retirement your balances whenever possible. While being self-employed has benefits, it also Come up with a budget...and stick to it comes with tough challenges. In particular, a lack of structured benefits, such as an Because your income flow fluctuates, you'll employer-sponsored retirement plan, can lead need to come up with a budget a bit differently contingency workers to end up sacrificing their than someone with a regular income. Your first retirement savings. And even though anyone step should be to determine your monthly with earned income can set up an IRA, the expenses. If it helps, you can break them down contribution limits are relatively low — $6,000 in into two types of expenses: fixed and 2019 ($7,000 if age 50 or older). discretionary. Fixed expenses are expenses that will not change from month to month, such Fortunately, there are some options that may as housing, transportation, and student allow you to make larger retirement payments. Discretionary expenses are contributions. Consider contributing to a solo or expenses that are more of a "want" than a individual 401(k) plan (up to $56,000 in 2019, "need," such as dining out or going on a not counting catch-up contributions for those vacation. Once you come up with a number, age 50 and over) or a SEP IRA (25% of your you should determine how much income you net earnings, up to $56,000 in 2019). need to keep up with all of your expenses. 1 U.S. Bureau of Labor Statistics, Contingent and For a contingent worker, it's especially Alternative Arrangements Summary, June 2018 important to stick to your budget and keep your discretionary expenses under control. If you are

Page 3 of 4, see disclaimer on final page Oppenheimer & Co. Inc. Have you checked your tax withholding lately? A Member of The Poindexter If you were unpleasantly In general, you can claim various withholding Group surprised by the amount of tax allowances on the Form W-4 based on your tax David Casso, CFP®, CTFA you owed or the amount of filing status and the tax , itemized Associate Director - Investments your tax refund when you filed deductions (or any additional standard your 2018 tax return, it may be deduction for age or blindness), and 711 Louisiana Street time to check your withholding. adjustments to income that you expect to claim. Suite 1500 You might increase the tax withheld or claim Houston, TX 77002 It may also be time if there are changes in your life or financial situation that affect your tax fewer allowances if you have a large amount of 713-650-2056 liability. For example, have you recently nonwage income. (If you have a significant [email protected] married, divorced, had a child, purchased a amount of nonwage income, you might also http://fa.opco.com/poindextergroup/ new home, changed jobs, or had a change in consider making estimated tax payments using the amount of your taxable income not subject IRS Form 1040-ES.) The amount withheld can to withholding (e.g., capital gains)? also be adjusted to reflect that you have more The content herein should not be than one job at a time and whether you and construed as an offer to sell or the You can generally change the amount of your spouse both work. You might reduce the solicitation of an offer to buy any federal tax you have withheld from your amount of tax withheld by increasing the . The information enclosed paycheck by giving a new Form W-4 to your amount of allowances you claim (to the extent herewith has been obtained from employer. You can use a number of worksheets permissible) on the Form W-4. for the Form W-4 or the IRS Withholding outside sources and is not the You can claim exemption from withholding for product of Oppenheimer & Co. Inc. Calculator (available at irs.gov ) to help you plan your tax withholding strategy. the current year if: (1) for the prior year, you ("Oppenheimer") or its affiliates. were entitled to a refund of all federal income Oppenheimer has not verified the If changes reduce the number of allowances tax withheld because you had no tax liability; information and does not you are permitted to claim or your marital status and (2) for the current year, you expect a guarantee its accuracy or changes from married to single, you must give refund of all federal income tax withheld completeness. Additional your employer a new Form W-4 within 10 days. because you expect to have no tax liability. information is available upon You can generally submit a new Form W-4 request. Oppenheimer, nor any of whenever you wish to change your withholding its employees or affiliates, does not allowances for any other reason. provide legal or tax advice. However, your Oppenheimer Financial Advisor will work with Do I need to pay estimated tax? clients, their attorneys and their tax Taxpayers are required to pay gross income for the previous year was more professionals to help ensure all of most of their tax obligation than $150,000 ($75,000 if you were married their needs are met and properly during the year by having tax and filed a separate return for that year), you executed. Oppenheimer & Co. Inc. withheld from their paychecks must substitute 110% for 100% in general rule Transacts Business on all Principal or payments, or by (2)(b) above. Exchanges and is a member of making estimated tax payments. Estimated tax If all of your income is subject to withholding, SIPC. is the primary method used to pay tax on you probably don't need to pay estimated tax. If income that isn't subject to withholding. This you have taxes withheld by an employer, you typically includes income from self-employment, may be able to avoid having to make estimated , , and gain from the sale of tax payments, even on your nonwage income, . Estimated tax is used to pay both by increasing the amount withheld from your income tax and self-employment tax, as well as paycheck. other taxes reported on your income tax return. You can use Form 1040-ES and its worksheets Generally, you must pay federal estimated tax to figure your estimated tax. They can help you for the current year if: (1) you expect to owe at determine the amount you should pay for the least $1,000 in tax for the current year, and (2) year through withholding and estimated tax you expect your tax withholding and refundable payments to avoid paying a penalty. The year is tax credits to be less than the smaller of (a) divided into four payment periods. After you 90% of the tax on your tax return for the current have determined your total estimated tax for the year, or (b) 100% of the tax on your tax return year, you then determine how much you should for the previous year (your tax return for the pay by the due date of each payment period to previous year must cover 12 months). avoid a penalty for that period. If you don't pay There are special rules for farmers, fishermen, enough during any payment period, you may and certain high-income taxpayers. If at least owe a penalty even if you are due a refund two-thirds of your gross income is from farming when you file your tax return. or fishing, you can substitute 66-2/3% for 90% Withholding and estimated tax payments may in general rule (2)(a) above. If your adjusted also be required for state and local taxes.

Page 4 of 4 Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2019