At a March 2017 CA$HCOUR$E, Mary MacAusland, CPA, Ph.D., Sr. Lecturer, School of Hotel Administration, covered aspects of both tax preparation and tax planning to help you better understand the U.S. internal revenue code, how to reduce your tax liability, and how to find answers to specific questions you may have. 

• Purpose of Taxes: Taxes are a way to make sure that every person with an income pays the government their appropriate share and the burden is on you to understand, interpret, and report accurately.  
• Do not listen to “tax advice” from friends and associates who are not paid tax advisors. Each taxpayer has a unique set of circumstances, and a tax professional will need to understand all aspects of your situation (i.e., filing status, residency, gross income, etc.) before offering sound advice.
• The tax code is socially constructed, which allows the government to impose financial incentives and penalties. For example, there are currently deductions for home ownership, retirement savings, and some allowances for education. Recently, a penalty was added for those without health insurance. Given these incentives and penalties, taxpayers should take the time to fully understand the options available to them, and the tax implications for each, so that you can make decisions that provide the maximum benefit.
• Tax planning is important and should be completed as part of your tax preparation each year. If you are receiving a refund and/or paying additional taxes with your return, you should review your W-4 allowances or quarterly payments.
• Keep all records and receipts for everything that is related to taxes. And, respond swiftly to any inquiries made to you by the IRS.    
• As a way to learn more about taxes consider purchasing a tax software program, as they are inexpensive and easy to use. Programs such as Turbo Tax guide taxpayers through each item of income and deductions, and users need to simply input the information from their tax documents (i.e., W-2, 1099, 1098, 1095, etc.).

From the GPWomeN-PCCW Speaker Series November 1, 2018 with Cornell alumna and PCCW member Beth Prudence, CFP®.

1. Women have more challenges to making and saving money. Women are more likely to take a break from work for caregiving (both children and elderly parents), meaning that women miss more years of earning/saving and receive less from social security because they have less years of service. Women also continue to earn less on average than their male counterparts. However, on average, women live longer than men and therefore will require more savings.
2. Making more money doesn’t always mean you are richer. Making more money can result in more spending.
3. We have an emotional relationship with money and we need to invest time in working on this relationship too. This includes educating yourself, understanding the difference between wants and needs, making decisions based on facts and data, setting and tracking goals, and having honest conversations about money.
4. Save now, not later. Understand the time value of money and compounding interest. If you save the same amount of money starting at 25 rather than 40, you will earn exponentially more money.
5. Everyone will likely make mistakes at some time.  Forgive yourself by accepting that you made a mistake, owning it, and learning from it so you don’t make that mistake again. The best thing we can do is to make the best decision that we can at the time.

From the February 14, 2019 talk with Emily Roberts, Ph.D.

• Make financial goals specific, measurable, attainable, relevant, and time-bound.
• Your brain (math/logic) and gut (personal disposition) both hold opinions about your money. When in disagreement, you must decide which to weigh more heavily.
• Budgeting software that you need to know: Mint, You Need a Budget, Mvelopes, Every Dollar, GoodBudget, Pocket Expense.
• Building an emergency fund of a few months of expenses should be a high priority.
• Passive investing or index investing is the most effective, least expensive, and most time efficient manner of investing. Learn more on the Personal Finance for Ph.D.s website.
• Invest inside an IRA if you have/your household has taxable compensation (i.e., W-2 income with respect to grad student pay). The Roth IRA is favorable for lower income earners.
• Popular debt repayment methods include the debt snowball (prioritized by the lowest payoff balance) and debt avalanche (prioritized by the highest interest rate).

Further resources available from Dr. Roberts:

• Personal Finance for Ph.D.s
• Email Course: Investing for Early-Career Ph.D.s
• 2018 Tax Center
• Workshop: How to Prepare Your Grad Student Tax Return (and Understand It, Too!)
• Workshop: Quarterly Estimated Tax for Fellowship Recipients

When it comes to managing personal finances, there isn’t one right answer, according to Alternatives Federal Credit Union Community Programs Manager Brendan Wilbur, CCUFC, CUDE. The trick is to identify your personal money habits and financial goals and to plan from there. During individual counseling sessions offered in April 2019, Wilbur discussed money managing and more.

After speaking with interested graduate students, he offered five top tips to help anyone looking to better manage their personal finances:

• Tip 1: Make your goals “SMART”. SMART goals are specific, measurable, attainable, relevant, and time-based. Being able to define short- or long-term financial goals and break them down into smaller parts makes them feel more achievable.
• Tip 2: Don’t spend more. When yearly earnings increase, people often also increase their spending habits, but making more does not have to equal spending more. The money you save can be used toward an emergency fund, a down payment on a house, or other big life events.
• Tip 3: Be prepared. Expect unexpected expenses and put money aside into an emergency fund. Cars break down, pets need vet visits, and holidays often mean spending money on gifts. Having a fund for these purchases decreases stress when these expenses occur.
• Tip 4: Don’t invest in things you don’t understand. People feel they need to start investing but often do so without fully understanding the difference between bonds, stocks, or mutual funds. If you’re interested in investing, read about your options or speak with a financial counselor.
• Tip 5: Acknowledge that “there’s not one way to manage money”. Keeping a budget might work for one person, but it might not work for you. Find a method for managing your money that works for you and stick with it, even if it might not work for others you know.

Many financial resources are publicly available, but Wilbur advises only taking advice from places you trust. Wilbur’s list of trusted resources include:

• Classes and workshops at Alternatives Credit Union
• Clark Howard
• Nerd Wallet

Additionally, students are encouraged to reach out to Wilbur directly with any questions at bwilbur@alternatives.org or 607-216-3445.

To kick off the GPWomeN-PCCW Speaker Series in Spring 2020, a jam-packed room of eager students welcomed Beth Prudence back to campus to speak on investing fundamentals for the February 11 seminar. While emphasizing that “it depends” is often the answer to financial queries, she guided the audience through essential investing strategies. “You have the gift of time”, she declared. “Use it!”

Key Takeaways:

1. Time is money. You can’t buy more time.
   • Start investing now! Mutual funds (pool of money invested in stocks, bonds, alternatives) are a good start–naturally diversified.

2. Success requires patience, fortitude, and a strategy.

• • Take action! IRAs: Roth vs Traditional: “If you take one thing away from this talk, let it be that you should have a Roth IRA.”
    • Roth IRA: you don’t receive a tax break now, your IRA grows without taxation, tax-free growth without taxation during withdrawal at retirement
    • Traditional IRA: tax deduction for initial contribution, grows without taxes, withdrawal at retirement will be taxed in whatever tax bracket you are in at that time
    • Convert Traditional to Roth? It is a taxable event, but if you are in a low tax bracket and have time to let money grow, could be a good idea.

3. Diversity provides better risk mitigation (especially important to spread out risk as you get older and have more money). Spread money across four assets: cash (i.e., savings account, CDs, money market), fixed income (i.e., bonds), equities (i.e., stocks), and alternatives (i.e., precious metals, hedge funds).
   • Take action! Have time? Invest in stocks. The stock market has outperformed any other type of investment (long-term).

Many thanks to Beth Prudence, for taking the time to speak with students, to the women of GPWomeN for orchestrating the event, and to their president, Demi Perry, for assembling the tips and takeaways.