Leveraging LinkedIn: Expert Tips and Personal Experiences

 

As I wrote in an earlier post about entrepreneurship during a pandemic, paying attention to social media can really pay off in making or solidifying valuable career contacts and obtaining job assignments. For people interested in making professional connections, LinkedIn is “the” place to be. No personal vacation photos here. It is all about business and is a “digital resume” for people to learn about your skills and past job experiences.

 

After a decade of scarcely paying attention to my LinkedIn account because I was happy at Rutgers University and constrained by state outside employment rules, I started posting regular LinkedIn content for the first time ever when I became a full-time entrepreneur in January 2020. This resulted in dozens of “people are watching you”  and “You appeared in “X” number of searches” notifications from LinkedIn, inquiries about my work, and projects with five new clients over the past 18 months.

 

According to a recent Next Gen Personal Finance (NGPF) webinar, LinkedIn is the most widely-used information search channel for job recruitment efforts (77%) followed by Facebook (63%). It has 738 million global users, 14 million job postings, and 3 people hired every minute via LinkedIn connections. It is estimated that up to 40% of employers may not interview you at all if they cannot find your LinkedIn profile.

 

LinkedIn allows people to “stand out from the crowd” and share information well beyond what is found in a standard paper resume. For example, photographs of professional achievements and links to websites, webinars, podcasts, blog posts, TED talks, and newspaper, magazine, radio and television interviews. Digital links to deliverables also show potential contacts or employers that you are both tech savvy and accomplished.

 

Below are five key things to know about using LinkedIn:

 

¨      Image is Everything- Three key parts to a LinkedIn user’s profile are 1. a professional high resolution head shot photo that is cropped appropriately to fit within a circle frame, 2. an eye-catching headline of up to 120 characters (this goes right under a person’s photo and name and is the first thing that people read), and 3. A well-written summary profile under the “About” section. The profile should succinctly describe an account holder’s skill set and accomplishments. A professional-looking background banner photo is also recommended.

 

¨      Connection Numbers Matter- According to an article that I read during the NGPF webinar, the more connections that someone has on LinkedIn (this is the professional equivalent to having Friends on Facebook and Followers on Twitter), the more likely you are to be found by colleagues, job recruiters, and people interested in your work. The “holy grail” is to have a notation of 500+ connections, which the maximum number that LinkedIn reports. Having 500+ connections indicates to others that you are a “serious player.”

 

¨      Connections Themselves Matter- The best connection requests come from people you know professionally or have worked with. Unless you have had “issues” in the past, this is an easy ask. The worst connection requests are “cold calls” from people you do not know who do not explain who they are, what they do, how they know you (e.g., from an article that you published), and why they want to connect with you. Generally speaking, seek out the former and avoid the later, especially if there is a “sales pitch” within their connection request.

 

¨      Customize Your LinkedIn URL- Experts recommend doing this so you are more easily searchable. The process is very easy. Simply click on “Edit public profile and URL” to the right of the header photo. You will be prompted to enter a customized URL that cannot include spaces, symbols, or special characters. If your URL is “taken,” you will be prompted to retry with a new name. Instead of a URL with random numbers, my new URL includes my name and company name (see https://www.linkedin.com/in/barbaraoneillmoneytalk/).

 

¨      Post Content Regularly- The article that I cited above suggests posting on LinkedIn at least 3 times per week. This includes sharing content by writing articles as well as engaging with other LinkedIn users through likes, comments, and shares. The objective is to be visible, add value by providing useful resources to your connections, and create an impression that you are an active and productive professional. In addition, follow cues from LinkedIn to keep adding details to your profile until you achieve an “All Star” rating.

 

2021 Charitable Gift Planning Opportunities

 

2020 tax season officially ended with the extended May 17 tax filing date so it is now time to turn our attention to 2021 taxes that will be due on or around April 15, 2022.  One way that people frequently do income tax planning is through charitable contributions. In addition to tax benefits, people recently came face-to-face with their mortality risk due to COVID-19, resulting in interest by many in increased philanthropy according to development professionals.

 

Only about 10% of taxpayers benefit from itemizing income tax deductions such as medical expenses, property taxes, and charitable contributions. For the other ~ 90%, taking the standard deduction saves more on taxes than itemizing. In 2021, the standard deduction is $12,550 for single tax filers and $25,100 for married couples filing jointly. Coupled with the $10,000 cap on state (income) and local (property) taxes (a.k.a., SALT) under the 2017 Tax Cuts and Jobs Act (TCJA), these are “high hurdles” to exceed, especially the standard deduction amount for couples.

 

So who still benefits from itemizing deductions?

o   People with high unreimbursed medical and dental expenses that exceed 7.5% of adjusted gross income (AGI)

o   Victims of a federally-declared disaster with an adjusted unreimbursed loss greater than 10% of AGI

o   Homeowners with high mortgage interest payments and/or home equity loan debt to buy/build/improve a home

o   Donors who make high charitable contributions, often in combination with their SALT tax write-offs

 

Of these four itemized deduction opportunities, the first two are associated with health issues and property losses and the third is likely associated with high property tax bills that cannot be fully deducted under the TCJA and/or high home maintenance costs. Charitable contributions, on the other hand, have been found in research studies, to be associated with positive things including lower blood pressure, less depression, lower stress levels, and increased self-esteem.

 

Tax benefits for charitable contributions exist both for donors who take the standard deduction and those who benefit from itemizing. For those who do not itemize, there is an “above-the-line” deduction (i.e., a deduction from gross income before calculating AGI) of $300 for single taxpayers and $600 for married couples filing jointly as a result of the second COVID-19 relief law (a.k.a., the “second stimulus”) signed into law in December 2020.

 

It is important to note that the $300/$600 tax write-offs apply to cash donations only and not to property donations such as items donated to a thrift shop. Since tax write-offs are limited, it may be useful to prioritize, budget for, and keep track of 2021 charitable donations using this Charitable Giving Budget Worksheet from Rutgers Cooperative Extension.

 

For those who benefit from itemizing, there is a special rule in place for 2021 to spur COVID-related contributions: a temporary suspension of the normal 60% of AGI cap on charitable deductions. In 2021, donors can deduct up to 100% of their AGI in contributions to qualified charities. However, the penalty for fraudulent overstatement of deductible donations also increased from 20% to 50% of the underpayment. Excess donations above 100% of AGI can be carried forward for 5 years, but the enhanced 100% of AGI annual deduction limit goes away after 2021.

 

People can make charitable gifts while they are alive or upon their death through bequests in a will or trust and beneficiary designations in life insurance policies and retirement savings accounts. There are five primary ways that people make tax-advantaged charitable gifts during their lifetime:

o   “Bunch up” several years of itemized deductions, including expenses for elective medical procedures, SALT taxes, and charitable donations, into one tax year to exceed the standard deduction amount and benefit from itemizing.

 

o   Make qualified charitable contributions (QCDs) directly from a traditional IRA to a charity after age 70 ½ to satisfy required minimum distribution (RMD) rules and remove the withdrawn amount from taxable income in later life.

 

o   Donate appreciated securities (e.g., stock or mutual fund shares) to a charity to avoid capital gains tax and to deduct the fair market value of the donated asset up to the IRS annual limit.

 

o   Set up a donor advised fund (DAF) with an investment company custodian, contribute tax-deductible cash or investments to the DAF, set up an asset allocation, and recommend grants to qualified U.S. charities as desired.

 

o   Set up a charitable trust with the advice and assistance of an attorney and retitle assets in the trust name. The tax deduction is based on the value of the stream of income to the charity. Two common types of trusts for charitable donations that vary as to when charities receive funds are charitable lead trusts and charitable remainder trusts.

 

What to do? Some financial experts advise making large contributions in 2021 to take advantage of the 100% of AGI limit. Others recommend waiting to see if higher tax rates go into effect in the future, especially for high net worth taxpayers. As always, consider your personal financial situation and reach out to a financial or legal advisor, if needed.

Miscellaneous Insights From Recent Webinars-Part 3

 

As I mentioned in two previous posts, I love learning new things and often attend webinars and podcasts to gain knowledge and/or continuing education credits for my CFP® and AFC® as well as to connect virtually with others. Below, in no particular order and on a variety of topics, are nine financial “nuggets” that I heard recently:

 

¨       Older Adult Concerns- Surveys indicate the following health and financial issues weigh heavily on the minds of older adults: outliving savings, physical and mental well-being, health care costs, taxes, inflation, interest rates, market volatility, longevity, and cognitive decline. Research also reveals knowledge gaps. For example, people think $250,000 is a lot of savings and don’t realize how little income it translates into on an annual basis (about $10,000 per year). Those with fewer assets and less education have more retirement knowledge gaps.

 

¨       Technology Pros and Cons- Tech tools provide many benefits including virtual connections, “always on” resources, and streamlined Q&A experiences such as calculating monthly payments on a loan or the amount of savings needed for retirement. A downside is that people often have very granular, personal “how to” questions and technology cannot usually provide that personalized a response. At this point, a financial advisor can be very helpful.

¨       Encouraging Meta-Analysis Results- A meta-analysis (i.e., a study of existing evidence) published in 2020 examined the causal effects of financial education programs by reviewing 76 randomized experiments published in top tier journals with a total sample size of over 160,000. Financial education was found to be, not only effective, but cost-effective, with positive effects on both financial knowledge and “downstream financial behaviors” (i.e., financial actions that people take in the future like saving money and repaying debt).

¨       The Importance of Trust- Guilt and shame sometimes result inadvertently from financial education programs. Teachers should proactively try to never make their students feel like they (or their parents) “messed up.” Instead, create a “safe space” and start where people are to take them where they want to go with information that is relatable to their life experience. Everyone needs to aspire to things in life and financial education can help “level the playing field.” It really comes down to trust which, research studies show, can positively affect retirement plan participation and savings rates.

¨       Credit Histories Change- A person’s credit history is not permanent. It can change. There are hundreds of different credit scores that are proprietary to different lenders. The most common (FICO) score scale ranges from 300 to 850. The Experian “Boost” service allows consumers to add positive information to their credit history about payments to utilities (e.g., gas, electric, water) and streaming services to raise their credit score.

¨       Small Successes Add Up- Start chopping away at big goals with an hour a week or 10 minutes a day of positive action. Use a whiteboard or “to do” list to stay on track. Keep “plugging away.” Small triumphs provide practice and perseverance to reach goals and also build grit and motivation. There are two types of financial goals: 1. Small repetitive things that people do daily and 2. Big, lofty goals from which people work backwards to develop action steps. Financial empowerment cannot be taught. It has to be experienced as a result of small successes.

¨       Layoffs Can Have Benefits- As a result of COVID-19-related layoffs, some people have created new career paths and given themselves permission to “take the plunge” to do something new, even if their paycheck is initially smaller than it was before. If you continue to do work in a field that you love, you can bring all of your past career skills and networking contacts with you. Leveraging relationships and obtaining certification credentials are two keys to success.

¨       Possibilities Foster Action- Decisions that people make in life are all about how they see the possibility of things. Seeing is believing. Belief drives action. Doing things (action) makes a difference. There are two finite resources that people cannot make more of: land and time. People need to take action during ~40 years of earning to finance ~30 years of living. Wealth is built by investing over time, preferably via payroll deduction and other automated methods (e.g., checking to saving transfers). One webinar presented advised “Set it, forget it, and you won’t regret it.”

¨       Portfolio Pointers- Investors should review their asset allocation and investment holdings periodically as many people “collect accounts” over time. Another key thing to review is “asset location” (i.e., the types of accounts- taxable and tax-deferred- where money is placed). Tax-loss harvesting can be used to strategically take losses to reduce taxable capital gains. Be careful not to run afoul of the “wash sale rule,” however, to assure the IRS that you are not just moving money around. Take-away: you cannot buy a substantially identical security 30 days before or after taking a capital loss.

Financial Education: Benefits and Best Practices

 

Last week wrapped up Financial Literacy Month (FLM) 2021. Each April, financial education advocates promote this nationally recognized campaign to increase awareness of the need for financial education for youth and adults in grades K-12 and at colleges and in workplaces. Financial education is an essential skill that people need to fully participate in society and a recent meta-analysis of existing studies indicates it is both effective and cost-effective.

 

Hundreds of FLM events (podcasts, webinars, virtual conferences) were held nationally last month and I participated virtually in about a dozen of them. Below are eight take-aways from the FLM events that I attended:

 

¨      Financial Independence is Powerful- Financial education can be life changing. It can empower people to save and invest to ultimately achieve financial independence . When people are financially independent, the world is a better place. They don’t live an accident or illness or paycheck away from financial ruin. Financial education also provides people with hope for a better future and a path forward to achieve their personal goals.

 

¨      Budgeting is Key- While there is no “one size fits all” approach to managing money, everyone needs some type of budget, whether it is hand-written or prepared using a computer or app. Budgeting is especially important as a result of COVID-19 as income and expenses might have changed. For example, many people have been spending less on gas due to reduced commuting and more on utilities by working/schooling at home.

¨      Financial Education is Foundational- High-quality programs teach foundational knowledge and practical applications. Financial education is not a panacea, but it is a key resource to draw upon throughout life. Financial columnist Beverly Herzog noted that financial literacy is “like reading a map so you know how to get somewhere. If you know your destination, looking at a map (OK, Waze) helps you avoid making wrong turns.”

¨      Trust is the Key to Success- Financial educators need to show their target audiences that they care about them and listen to their stories. Other keys to success are candor, simple language, transparency, and very granular “how to” information with a series of process steps. People also need to know that “all hope is not lost” with respect to their finances. For example, any small amount of savings is better than not starting to save at all.

¨      FinTech is Complimentary- Financial technology (fin tech) is a compliment for financial education programs-not a substitute. People still crave personalized financial information and a human being to ask questions to. Lack of financial expertise is consequential and accounts for about a third of wealth inequality according to research. Both financial education and fin tech can help people make better life decisions.

¨      There are Many Positive Impacts- Participants in a recent #creditchat (Twitter chat) noted the following results from increased financial literacy: financial success and independence, better life choices, awareness of tools and resources for decision-making, closing wealth gaps between demographic groups, opening people’s eyes to alternative ways to manage money than what they have experienced so far, and a better future.

¨      There are Significant Obstacles- Access is a big issue. According to research by Next Gen Personal Finance (NGPF), only 1 in 9 high school students receive financial education and even less in schools with a “majority minority” student population. Other obstacles include school budgets, lack of state personal finance course requirements, and language barriers. Fortunately, free curricula and teacher professional development are addressing some of these issues.

¨      Doing Nothing Has Significant Costs- Negative impacts from lack of financial expertise include forgone savings and investment opportunities, high-cost debt, higher prices than necessary paid for goods and services, and dashed expectations. That said, financial education is not a panacea and it is sometimes “oversold.” It cannot fix structural and historical barriers to financial success that prevent consumers from making good choices. For that, policymakers and financial institutions must create better choices for people to make.

CNBC senior personal finance correspondent Sharon Epperson noted on a NGPF podcast that there has been an increase in students saying “we want financial education.” They are vocal, well-spoken, organized, and want to be financially secure. We owe it to all American youth to prepare them for a financially successful future. Every child needs a chance and financial education can help level the playing field, especially in underserved communities.