Skip to main content
search
Jul 01
Love0

How Businesses Can Identify and Increase Efficiency with Managerial Accounting

By Blog, General Business News

How Businesses Can Identify and Increase Efficiency with Managerial AccountingManagerial accounting is a form of internal reporting that helps business owners and others involved in the organization’s decision making. It looks at individual processes and products to see how they are functioning via practical data points. This is done in hopes of applying data analysis to improve the business’ operational efficiency.

It is important to keep in mind the intended audience and data structure with regard to managerial accounting versus financial accounting. While managerial accountants analyze information, it is not subject to GAAP requirements; however, financial accountants must present company information according to GAAP standards – and such information is often intended for external consumers like investors or lenders.

Measuring Inventory Levels

One way that businesses turn to managerial accounting is through scrutinizing their inventory turnover. Companies that analyze how often they have sold and replenished their inventory over a measured time period can make better decisions about their inventory cycle (production, buying new input materials, marketing, and pricing). Managerial accounting professionals help businesses identify carrying costs of inventory. It’s expressed as follows:

Inventory Turnover = Cost of Goods Sold (COGS) / Average Value of Inventory

Higher ratios usually indicate greater company sales. Lower sales generally indicate there are problems with product or service demand.

Monitoring Outstanding Accounts Receivables

Analyzing accounts receivable can provide beneficial insights on a business’ bottom line. An accounts receivables (AR) aging report categorizes AR invoices based on how long they have been outstanding. The report can categorize how late payables are (30 days or less, 31-60 days, 61-90 days and so on). Based on the results, companies can look at historical data, along with projected sales, to figure out how much they need to allocate for uncollectable accounts. Companies also can proactively reduce credit limits, determine when it’s time to stop doing business with a customer/client, and send unpaid bills to collection.

Price Variance Considerations

When a business looks at price variance, the first step is to take the final price paid for each unit, then subtract the unit’s standard cost from the former figure. The resulting figure is multiplied by however many units were actually bought. It’s a way for managerial accountants to determine the difference, either a positive variance (increased costs above the standard price) or a negative variance (decreased costs relative to the standard price), between the cost planned and the cost at time of purchase.  

The formula is expressed as follows:

Price Variance = (Actual Price – Standard Price) x Actual Quantity

If a business is planning to make a purchase for their next fiscal year, it may want only 5,000 widgets that cost $10 per widget. The business gets a bulk discount of $1 per widget, bringing it down to $9 per widget. However, when the time to purchase the 5,000 widgets comes along, it realizes it only needs to purchase 3,500 widgets. At the quantity of 3,500 widgets, the business won’t receive the bulk discount, reverting the cost back to $10 per widget, creating a variance of $1 per unit or widget.

Using the formula, it could be expressed as follows:

Price Variance = ($10 – $9) x 3,500 = $1 x 3,500 = $3,500. Since circumstances changed at the business between their initial planning and ultimate purchase time-frame, the price variance resulted in $3,500.

While managerial accounting has many different tools for analysis, the one common thread is that regardless of the tool used, managerial accountants help businesses find higher levels of operational efficiency.

Jul 01
Love0

New Personal Finance Provisions in the 2.0 Secure Act

By Blog, Financial Planning

New Personal Finance Provisions in the 2.0 Secure ActThe Continuing Appropriations Act, enacted at the end of 2022, included several provisions that impact retirement plans going forward. Specifically, the legislation enacts SECURE 2.0, an updated version of the Setting Every Community Up for Retirement Enhancement Act of 2019. The following provisions are financial planning considerations that affect individuals.

Increases Catch-up Contributions

Beginning in 2024, catch-up contributions to employer retirement plans made by employees who earn more than $145,000 a year (regularly adjusted for inflation) must be classified as after-tax Roth contributions. This is necessary for eligible plans to retain their tax-favored status.

Starting in 2025, catch-up contributions for participants ages 60 to 63 will increase from $7,500 to $10,000 per year for contributors in most qualified retirement plans. Beginning in 2026, the new catch-up contribution will be indexed to inflation.

Allows Employer Contributions to Roth 401(k)

Employers are now able to make post-tax contributions to a Roth option in an employee’s 401(k) plan. Employers also may open a Roth account option in SIMPLE and SEP IRA plans for employees.

Expands Emergency Distributions from Retirement Accounts

Starting in 2024, there will be a new exception to the rule for early withdrawals from qualified retirement accounts. Distributions used for unforeseeable events, such as a personal or family emergency, will not be subject to the 10 percent early withdrawal penalty. However, the rule applies to only one distribution per year and only up to $1,000. The plan member has the option to repay the distribution within three years. Absent full repayment, no further emergency withdrawals may occur during those three years.

The provision also waives the withdrawal penalty on any amount for individuals certified by a physician to have a terminal illness.

Increases Age for Required Minimum Distributions (RMD)

Starting in 2023, the age that triggers required minimum distributions (and their requisite income tax liability) from qualified retirement accounts increases from 72 to 73. Starting in 2033, the trigger age raises to 75. The RMD rule apples to 401(k), 403(b) and 457(b) plans). Also, starting in 2024, Roth 401(k) accounts will no longer require RMDs.

Reduces Excise Tax on Noncompliant RMDs

If an investor is required to start taking minimum distributions and does not take out the required amount in a single year, he is subject to a tax on the amount not distributed. The tax used to be 50 percent, but starting in 2023 it was reduced to 25 percent. Moreover, if the account owner corrects course and takes the full distribution within a certain window of time, the tax may be further reduced to only 10 percent.

Allows Emergency Savings Accounts

Starting in 2024, the legislation permits employers to offer an emergency savings account option within its retirement plan. The following provisions apply:

  • Employee contributions are made with after-tax income
  • There is an annual cap of $2,500
  • Participants may make at least one withdrawal per month
  • Up to four withdrawals per year are not subject to fees
  • Emergency savings may be held in an interest bearing cash-equivalent account
  • Employers may match contributions, but those must be deposited to the participant’s retirement plan investment, not the emergency savings account
  • The emergency account is portable when the participant leaves the employer and can be rolled into a Roth defined contribution plan or IRA

Permits Employer Match for Student Loan Payments

Presently – through 2025 – employers may contribute up to $5,250 (tax-free) a year toward worker student loan payments. Starting next year, employers have the option to classify those loan payments as contributions to the company retirement plan, such as a 401(k). This allows workers with student loans the opportunity to pay down that debt with their own income and still receive an employer match toward their retirement plan – so they don’t have to choose one or the other.

Jul 01
Love0

6 Ways to Travel on a Budget

By Blog, Tip of the Month

6 Ways to Travel on a BudgetThe thrill of summer travel is always invigorating, but the prices to get there can be a real bummer. But not to fear. We’re here with some smart tips that will help you navigate in this price jungle and have a wonderful, memory-filled getaway.

Plan Way Ahead

Even though you can sometimes find great deals at the last minute, if you can wrap your head around thinking in advance about your vacay (especially if you’re buying long-haul flights), it’ll pay off. For instance, if you’re traveling to Europe or Asia, you’ll find that buying your tickets early not only provides significant savings, but also gives you a jump start on exploring other aspects of your trip, like hotels and excursions. Some helpful sites for comparing prices are Expedia, Kayak and Priceline. Check these when planning so you can snag the best deals.

Be Flexible

Do you have to travel in July? What about August? Are the fall and December holidays out of the question? If you aren’t stuck on a certain time of year, you’ll realize some significant savings. Also, must you leave town on a Friday? What about a Tuesday or Thursday? Choosing to fly on weekdays can dramatically change the price of your ticket. Plus, flights can be less crowded.

Create a budget – and Stick To It

While this is a challenge, it’s not impossible. That’s why it’s important to think about where you want to go. For example, San Francisco and New York City might be a little on the pricey side. Another thing to consider is how long you want to be away. If you’re thinking about a two-week long vacation, you might want to be a little stricter with how much you spend each day. That said, don’t be too strict! The whole idea of a holiday escape is to kick back and dive into the culture of a new place.

Choose a Budget-Friendly Destination

As mentioned above, choosing a vacation destination that won’t break the bank is a strategic way to cut costs. Southeast Asia and South America are great places to start. If you’ve decided you must go to Europe, you might want to stay away from the Scandinavian countries. Although they’re crazy beautiful, they have some of the highest cost of living index scores. One way to get ahead of what you might spend is to check out cost of living sites, where you’ll find current stats, estimates, and calculations of how much you might spend each day.

Don’t Overpack

While it’s probably irresistible to overpack (I want to have choices!), if you can travel light, you’ll save on bag fees big time. Even better, if you can limit what you’re taking to just a carry-on, you’ll really avoid those pesky charges, plus it’ll give you the ability to breeze on and off the plane in no time. In terms of what you bring, this also requires some forethought. While packing multiple bathing suits and shorts (if you’re going somewhere tropical) is fun, these fashionable items might be taking the place of necessary gear like a raincoat, a warm hoodie or even a sweater. So take a breath, think through your days and get packing – judiciously, that is.

Find Free Activities

Before you head out on your adventure, let your fingers do the walking over to your favorite search engine and get going. Search “free stuff to do” (or the like) at your intended destination. You’ll find things like free museums, parks, gardens, and festivals. Then let your feet do the walking! Getting outside, weather permitting, and strolling is one of the best ways to soak in a city.

When you can stay on budget and have a fabulous time with family and friends, you’ll not only come back with amazing memories, you’ll also return without a lot of debt. And that’s a fantastic feeling that will stick with you for a good while.

Sources

https://www.worldremit.com/en/blog/migration/tips-to-travel-on-a-budget/

Jul 01
Love0

What Actions Can Data-Breach Victims Take?

By Blog, What's New in Technology

What Actions Can Data-Breach Victims Take?Over the years, millions of individuals have been affected by data breaches, where their sensitive data is accessed by unauthorized cybercriminals or publicly exposed. A data breach can result in huge financial loss if stolen data is used to compromise consumer identity, which also can affect a credit score.

Unfortunately, there is a great number of people who don’t know what to do if affected by a breach. At the same time, there are those in the know who do nothing.

What is a Data Breach?

A data breach is a cyber security incident that exposes sensitive data such as names, contact details, bank details, Social Security numbers, etc.

Data breaches are the work of criminals who aim to obtain specific data. Criminals do this through various methods, including phishing attacks, malware attacks, targeted attacks, vulnerability exploits, and loss or theft of devices. However, data breaches are also a result of technical or human errors. For example, a misconfiguration error exposed the car location data of 2 million Toyota customers in Japan and overseas for 10 years; and the work of an insider led to Tesla’s massive data breach.

Unfortunately, data breach cases keep rising. May 2023 alone saw numerous breaches from different organizations, including healthcare organizations, education institutions, the transportation department and even tech giants.

For companies, the consequences of data breaches are reputation damage, loss of consumer trust, intellectual property theft, financial loss and fines due to failure to conform with data protection legislation. While cybercriminals mainly target organizations, individuals also experience identity theft and financial crimes. This especially happens when stolen data is sold on the dark web or publicly published.

What action can data-breach victims take?

Unfortunately, no one is immune from a data breach. However, victims can survive a breach with less disruption. Once a data breach has occurred, the U.S. breach notification law requires businesses or governments to notify those affected immediately after its discovery.

Although companies are responsible for securing customer data in their possession, customers also have a role to play in securing their data. Essential steps to take include:

  • Being aware of any site claiming to be a data breach check site.
    Such sites could ask for personal information or ask a victim to click a link to verify their details. Hackers also take advantage of a breach and pose as the affected company to lure victims into clicking malicious links, primarily through emails. A user must, therefore, first confirm that a breach happened. This can be in the news or on the affected company’s website.
  • Change passwords for accounts exposed.
    In most cases, affected companies will notify victims of their affected accounts, and their security team will provide instructions on how to stay safe. Such instructions include changing passwords on the breached site or any other account that uses similar login credentials.
  • Set up two-factor or multi-factor authentication (2FA/MFA).
    This extra security measure will require a one-time user code to log in to an account in addition to the login and password.
  • Notify the bank.
    If financial-related data was stolen, such as credit card information, the bank must be notified immediately to freeze the cards.
  • Credit freeze.
    Cybercriminals can use stolen data to open new accounts and take loans. To avoid a ruined credit score, individuals can request a credit freeze from major credit bureaus such as Experian, Equifax and TransUnion.
  • Monitor personal accounts for any unusual transactions.
    Although it depends on the type of data breach and exposed data, victims must look out for unauthorized transactions, including bank account transactions, medical bills, insurance claims and tax refund claims.
  • File a report with the Federal Trade Commission (FTC).
    If criminals have already used personal data, filing an identity theft report will serve as proof to clear one’s name or dispute a fraudulent transaction.
  • Practice cyber hygiene.
    These are practices that help individuals remain safe online. Aside from account security, consumers must use up-to-date software and operating systems, antivirus software, and avoid publishing too much personal information to minimize online footprints that fraudsters can easily access, such as on social media.

It is worth noting that data breaches are not detected immediately, which means that by the time users get notified, cybercriminals already have had access to the data for some time. And as technology advances, cybercriminals are taking advantage of new technologies such as generative AI for phishing attacks. This means that more data breaches may continue to be witnessed.

However, users can help prevent future data breaches by using strong passwords, being cautious of phishing scams, and regularly monitoring financial accounts.

Jul 01
Love0

Raising the Debt Ceiling, Protecting Air Travel and Repealing the Iraq AUMF

By Blog, Congress at Work

Raising the Debt Ceiling, Protecting Air Travel and Repealing the Iraq AUMFFiscal Responsibility Act of 2023 (HR 3746) – This Act represents a compromise reached by House Republicans and President Biden. Republicans negotiated concessions in exchange for voting to raise the debt ceiling to maintain solvency of the federal government. These concessions included universal cuts to federal spending, the suspension of student loan repayments that began during the pandemic, additional work requirements for some Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF) recipients, and suspending the current $31.4 trillion debt ceiling until 2025.The bill was introduced by Rep. Patrick McHenry (R-NC) on May 29. The legislation was passed in the House on May 31, in the Senate on June 1, and signed into law on June 2 – just in time to avert the global financial crisis it would have triggered by June 5.

NOTAM Improvement Act of 2023 (HR 346) – This bill was introduced in the House by Rep. Pete Stauber (R-MN) on Jan. 12. This Act instructs the Federal Aviation Administration (FAA) to establish a federal NOTAM system (notice to air missions, as required by international or domestic law) as well as an accompanying task force. The task force is directed to evaluate existing regulations, policies, systems and international standards relating to NOTAMs; determine best practices; and make recommendations to improve the publication and delivery of NOTAM information. This bill passed in the House on Jan. 25, passed with changes in the Senate on May 9, finalized in the House on May 22 and was signed by the president on June 3.

A bill to amend the Tariff Act of 1930 to protect personally identifiable information, and for other purposes (S 758) – This bill would require the Treasury Department to removepersonal traveler information, such as Social Security and passport numbers, from transportation manifests before they become accessible to the public. The bipartisan bill was introduced by Sen. Steve Daines (R-MT) on March 9and passed in the Senate on the same day. It is presently under review in the House.

A bill to repeal the authorizations for use of military force against Iraq (S 316) – The purpose of this bipartisan bill is to repeal a decades-old AUMF (Authorization for Use of Military Force) against Iraq. This repeal restores Congress’ constitutional responsibility to undertake the traditional process for approving the use of military force. The bill was introduced on Feb. 9 by Sen. Tim Kaine (D-VA) and was co-sponsored by 31 Democrats, 12 Republicans and three Independents. The bill passed in the Senate on March 29 and is currently under consideration in the House.

Administrative False Claims Act of 2023 (S 659) – Introduced by Sen. Chuck Grassley (R-IA) on March 6, this bill would modify the current provisions of fraud committed against the federal government. The current maximum fraud claim is $150,000; the bill would raise that limit to $1 million, as well as enable the federal government to recoup expenses related to the investigation and prosecution of each case. The Senate passed the bill on March 30 before sending it to the House, where it awaits a vote.

Jun 01
Love0

End of Covid Emergency Declarations Put Work from Home Benefits at Risk

By Blog, Tax and Financial News

Work from Home Benefits at RiskThe end of the federal emergency declaration for Covid-19 came on May 11. As a result, there are various public health policy changes. For example, vaccines and treatments will remain available, but at-home tests may no longer be covered by insurance and national CDC data reporting is subject to change.

Administratively, there are also changes to regulatory measures temporarily put in place by the emergency status that will have tax consequences. As employers struggled during the pandemic, some even to meet payroll, issues around expense reimbursements, stipends and how these are considered fringe benefits or compensation came into light.

History of Section 139

Section 139 came into being over 20 years ago after the Sept. 11 terrorist attacks. Then President George W. Bush signed the Victims of Terrorism Tax Relief Act, which created Section 139, defining qualified disasters and providing a non-taxable status to relief payments. The emergency Covid declaration enabled Section 139 to apply under its time in existence.

Section 139

Consequently, employers were able to aid employees under the federally declared Covid-19 disaster by providing non-taxable benefits to employees while deducting 100 percent at the company level.

One of the typical principles of tax law is that in order for compensation, whether cash or in-kind, to not be taxable to the recipient, it cannot be deducted by the compensating party. This makes sense logically, as the IRS simply wants one side to pay taxes in the end. The disaster declaration allowed a sort of have your cake and eat it to the period when it came to certain employee benefits.

Impact on Benefits

So, Section 139 is the reason why some Covid-related payments never found their way onto a Form W-2. It meant that certain medical expense reimbursements such as testing and OTC treatments, dependent care expenses, and work-from-home expenses, including home office stipends, were treated as deductible for the employer providing them but still not taxable to the employee receiving them.

There was never any specific IRS guidance stipulating exactly which Covid-19 expenses qualify under Section 139. Instead, most employers looked at what benefits they would not have otherwise provided but for the COVID-19 pandemic and classified these as qualifying items.

The Big Problem

Using this logic of classifying benefits that would otherwise not exist, but for Covid-19, as the justification for their taxability under Section 139 put companies in a bind. If they want to continue these benefits, they have to be treated as taxable income to the employee, or the employer can no longer deduct them.

While some benefits, such as Covid-19 test reimbursements, are less of an issue, many employees have come to see others, such as home office stipends, as a normal benefit – especially in the context of the work-from-home (or at least partial) new normal. No longer receiving these benefits or having to pay taxes on them is going to cause a lot of consternation.

Conclusion

One thing is certain. The end of the emergency declaration is going to bring changes in the realm of employee benefits. While the easy solution could be to simply make these benefits taxable to employees, companies need to think about what and how they provide in the context of both tax compliance and employee engagement and retention.

Jun 01
Love0

Delving Into Forensic Accounting

By Blog, General Business News

What is Forensic AccountingAccording to a 2022 Allied Market Research report, the size of the global forensic accounting market is forecast to increase in value to $11.68 billion in 2031, up from its 2021 estimated value of $5.13 billion. Allied Market Research puts this compound annual growth rate at nearly 9 percent (8.8 percent). This same report found that the Covid-19 pandemic saw an uptick in the need for forensic accounting skilled professionals and approaches.

Forensic accounting is a specialization within the general accounting profession. Professionals in this specialized subset focus on allegations of financial fraud brought by individuals and businesses in the civil courts and government agencies in the criminal courts. Disputes can range from family members contesting assets and valuations of such assets in estate, business, or divorce proceedings. When it comes to proving criminal allegations, government agencies look to forensic accountants to investigate financial records for evidence of fraud in the quest to prove crimes such as securities fraud or identity theft.   

Forensic Accounting Methodology

According to the Journal of Accountancy and the Association of Certified Fraud Examiners (ACFE), CPAs and specifically forensic accountants can use Benford’s Law to begin the process of identifying potential fraud. Examples of data sets that forensic accountants can build and analyze come from income statements, expense reports, ledgers, balance sheets, invoice and inventory data, accounts payable, and accounts receivable. When analyzing the leading or first digit in a data set, forensic investigators can take the data set and look at how the leading digits are distributed against the percentages that Benford’s Law sets out.

According to the ACFE, in contrast to the common belief that digits occur in equal probability, Benford’s Law states that numbers starting with 1 as the first digit occurs with the highest frequency. Then each subsequent number 2 through 9 occurs with lower probability. According to Carnegie Mellon University, per Benford’s Law, 30.1 percent of a data set will be led by a 1. The digit 2 will be the first in a data set 17.6 percent of the time. For numbers 3 to 9, the likelihood of each respective number leading the data set should become less frequent.

The ACFE gives the example of a counting exercise to illustrate Benford’s Law. When counting to 25, only one of the 25 numbers would lead with a 3; seven numbers would lead with a 2; and there would be 11 leading numbers beginning with 1. Numbers generated by a computer would give equal weighted probability to 1 to 9 being the first or leading digit. If equally weighted numbers were in fact generated, the results would deviate from Benford’s Law. However, simply because Benford’s Law is not observed in the dataset analyzed, it doesn’t automatically mean fraud occurred. But it is a tool that helps forensic accountants investigate further and determine through additional means if fraud did, in fact, occur.

Similarly, the ACFE points out that if someone wants to commit a financial crime, they would generate invoices worth a lot. It would be a lot more effective for someone to pass off invoices of $800 or $900, versus smaller $100 or $200 amounts. While this would make better use of a criminal’s time, according to Benford’s Law, if a forensic accountant were to test a data set against a few hundred invoices, they might see an abnormal percentage of them with high leading numbers, prompting further investigation.

The Journal of Accountancy reminds readers that it’s important to keep in mind a few caveats. The more numbers available in the data set, the better. It can work with as few as 50 to 100 numbers, but more is always preferred. Another consideration, per the ACFE, is where the data comprising the data set originates. Using a sports analogy, if players are between 5 feet and 8 feet tall, it would make testing the data set against Benford’s Law impossible because there’s zero chance of numbers 1 through 4 and 8 or 9 showing up in a probability test. In these scenarios, Benford’s Law wouldn’t apply.

While the method for detecting financial fraud is not black and white, the need for more forensic accountants will not slow down any time soon.

Sources

https://www.acfeinsights.com/acfe-insights/2023/3/28/benfords-law-how-to-use-it-to-spot-fraudnbsp?rq=Benford

https://www.acfeinsights.com/acfe-insights/2023/3/21/benfords-law-applicationsnbsp?rq=Benford

https://www.acfeinsights.com/acfe-insights/what-is-benfords-law?rq=Benford

https://insights.sei.cmu.edu/blog/benfords-law-potential-applications-insider-threat-detection/

https://www.journalofaccountancy.com/issues/2017/apr/excel-and-benfords-law-to-detect-fraud.html

https://www.alliedmarketresearch.com/forensic-accounting-market-A17182

Jun 01
Love0

How To Recession-Proof Your Portfolio (Just in Case)

By Blog, Financial Planning

How To Recession-Proof Your PortfolioSome economists and market analysts have been predicting a U.S. recession ever since last fall. They’ve been wrong before – but they’ve also been right. Rather than try to predict how the stock market will react during the next recession, investors are better off planning for a range of potential outcomes. This will help reduce the risk of losses regardless of whether or not the United States experiences a recession in 2023.

Bear in mind that stock and bond markets are forward-looking and typically priced to take into account economic conditions such as higher interest rates, inflation, and commodity prices. In response to whatever factors are in hand, the market adjusts in ways to try to keep returns on par with historical norms and practices.

In its market perspective for 2023, Merrill Lynch suggested that the economic cycle would bottom out, market returns would begin turning a corner, and investors who hold diversified portfolios would see less volatility and be positioned to fully participate in a renewed bull market.

There are several strategies you can implement to help mitigate the impact of an impending recession. Be aware, too, that these strategies are sound all-weather moves designed to help reduce your risk and maximize returns over the long term, regardless of economic and market conditions.

Diversify Your Portfolio

The recent failure of established regional banks is a reminder that there are no “safe” stocks – all stock market investing is subject to a wide range of risks. However, investors should be most wary of owning a high concentration in any single stock. After all, while it is unlikely the stock market will ever be reduced to zero, it is entirely possible for an individual stock to lose total value. This can happen due to a fall in demand, bankruptcy, corruption/embezzlement, a natural disaster, or a public relations scandal. There are many situations that are unforeseen and out of an investor’s control that can lead to substantial losses.

By diversifying your portfolio across a large number of stocks, even those within the same industry (such as competing banks), you can mitigate exposure to a single stock that experiences a major decline in performance. For 2023, Merrill Lynch recommended a broad global stock portfolio with a slight overweight in U.S. equities, including large-cap value stocks and a mixture of small-cap growth and value stocks. It contends that the Energy, Financials, Healthcare, Utilities, and Real Estate sectors offer stable returns via strong cash flow and attractive valuations.

Well-established dividend stocks pay out a steady income as well as offer growth opportunities, which is a good hedge for a strong long-term total return regardless of economic conditions.

Merrill Lynch also favors global fixed-income securities, including investment-grade corporates, 10-year Treasury bonds, and longer-maturity municipal bonds.

Fund Investing

An easy way to diversify across a wide range of stocks and/or bonds is to invest in asset category-specific mutual funds or exchange-traded funds. The immense universe of funds offers a broad range of stocks (e.g., growth, value, large-, medium- and small-cap) and bond (high yield, high quality, government, corporate) fund options. A balanced fund offers a combination of both stock and bond securities to help capture growth as well as capital preservation.

If you invest regularly through a 401(k) plan at work or defer income to an IRA, note that your money will purchase more shares when prices drop, which is often the case during a recession. As long as you have vetted and have faith in your investment choices, this discounted buying opportunity can set up your portfolio for stronger gains once the market recovers.

Cash Allocation

It is always a good idea – even more so during a recession – to hold an allocation in cash or cash-equivalent vehicles such as CDs and money market funds. However, it is not a good idea to sell stocks that have lost ground just to beef up your cash allocation. It may be better to sell a stock with significant appreciation instead, especially if it is in an industry that does not tend to perform well during a recession (e.g., Construction, Manufacturing, Retail, Leisure, and Hospitality).

Jun 01
Love0

7 Tips to Save Money This Summer

By Blog, Tip of the Month

7 Tips to Save Money This SummerSummer is here, and so are all the activities. But as we know, these activities cost money. Here are a few ways you can still have fun and, while doing so, save some cash.

Look at Your Calendar

Summer months are filled with holidays, birthdays, cookouts, weddings – the list goes on. Take a look and make an estimate of how much you want to spend on each event. When you can plan ahead and figure out your budget, you won’t be faced with surprise expenditures at the last minute. Nobody likes that.

Go on a Spending Cleanse

We’re not talking for months on end – just a few weeks. During this time, make a point to spend only on necessities. It will force you to take a look at what you want versus what you need. The money that you might have otherwise spent on wants can go into a slush fund for future summer events.

Check Out Money-Saving Sites

If you want to go to an amusement park or, say, the movies, you know how quickly this can add up. Go to Groupon or LivingSocial for some serious price-slashing coupons. Other resources to check out are AAA or AARP. For instance, AAA members get up to 30 percent off tickets to Six Flags.

Take Advantage of Free Entertainment

Inquire at your public library for free events and activities. Check out your local zoo and botanical gardens for free admission days. Go online to your local parks and recreation centers – many plan free, outdoor things to do. All you have to do is dig around a little!

Freeze Your Gym Membership

Chances are you’ll be spending a lot more time outside this summer, some of which might be working out. So why pay for a gym membership if you’re not using it? Instead of paying a hefty cancellation fee or initiation fee to rejoin, ask if you can freeze your membership for the summer. You might be charged a small fee, but in comparison to your monthly or yearly dues, you could save a lot. Plus, exercising outside is good for you.

Turn Down Your Air Conditioner When Away

After you’ve been out in the heat, coming home to an icy home undoubtedly feels great. But what doesn’t feel so great is looking at your A/C bill every month. You could turn down your A/C to a tolerable temp when you leave, then, of course, turn it up when you return. Or, you can get a programmable thermostat that will automatically adjust while you’re away. According to the U.S. Department of Energy, one of these devices can save you as much as 10 percent on heating and cooling costs.

Unplug Electronics When You Leave for Vacation

Before you head out for your summer adventure, make sure to unplug everything from your entertainment system – cable box, TV and speakers – to your small kitchen appliances like your toaster and coffee maker. These devices still consume energy when they’re plugged in. If you want to expedite this, get a power strip. With just one or two flips, you can save up to 5 percent on your energy bill.

These are just a few little things you can do to shave costs, but over time, they can add up to substantial savings. They’ll also help remove the stress that lack of money can cause. You deserve to have a relaxing, worry-free summer!

Sources

Summer Is Expensive: Here’s How To Budget Accordingly

https://www.gobankingrates.com/saving-money/budgeting/money-mistakes-probably-making-summer/

https://www.consumerreports.org/appliances/thermostats/best-programmable-thermostats-of-the-year-a1031454339/

Jun 01
Love0

Upholding Human Agency in an Era of Evolving Digital Systems

By Blog, What's New in Technology

AI and Human AgencyTechnology has greatly contributed to improving and streamlining everyday life. However, as technology advances, there is an increased reliance on digital tools powered by artificial intelligence and machine learning. Unfortunately, these technologies are also challenging the fundamental notion of human agency. As a result, there are rising concerns about humans losing the ability to make independent decisions.

What is Human Agency?

Human agency refers to the capacity of individuals to act intentionally and make choices that shape their lives. Although the human agency is influenced by various factors, including social, cultural, and environmental contexts, individuals should maintain the ability to exert some degree of control and influence over their lives. As far as technology is concerned, individuals must retain control and decision-making power. This calls for technologies that support humans in making informed decisions rather than controlling the decisions made.

Concerns Over the Effects of Digital Systems on Human Agency

The Pew Research Center and Elon University’s Imagining the Internet Center conducted a nonscientific canvassing to gather expert views about the future of the human agency.

The experts were specifically asked, “By 2035, will smart machines, bots, and systems powered by artificial intelligence be designed to allow humans to easily be in control of most tech-aided decision-making that is relevant to their lives?”

Of the 540 experts from different fields, 56 percent disagreed with the statement, while 44 percent agreed. Some of the main themes raised by the experts who disagreed with the statement include:

  • The agendas of commercial interests and governments will determine the future.
  • The convenience that comes with automation makes users less vigilant over technology.
  • AI technology’s complexity and rapid evolution can be overwhelming, making it difficult for users to assert their agency.

Common themes raised by participants that agreed with the statement include:

  • Humans also will evolve with technology, and there is the expectation that AI and tech companies will be regulated.
  • Expectations that businesses will protect the human agency to retain public trust and to keep ahead of the competition.
  • Technology will allow varying degrees of human agency.

Key Considerations for Upholding Human Agency

Seeing that technology will keep advancing and more automated systems will be witnessed, it’s crucial to implement ways to help uphold human agency. Some considerations include the following:

  1. Implement mechanisms that contest AI systems. An AI system is as good as the information fed to it. Therefore, it can be faulty or deliberately flawed, and there should be ways to request redress. This can be through AI policies that allow users to contest or rectify a decision made by AI systems.
  2. Empower users through systems that include meaningful choices and controls, enabling users to decide how to interact with them. For example, a system should allow users to adjust preferences, customize settings and choose the features they want. This promotes a sense of ownership and autonomy over digital experiences.
  3. Promote digital literacy and education to teach about technology capabilities and limitations. Technology users must develop critical thinking skills to exercise human agency and make informed decisions.
  4. Integrate ethical principles into technology design and deployment. This can be done by creating guiding ethical frameworks that consider the likely societal impacts and consequences of digital systems.
  5. Guarantee transparency and explainability in technologies and algorithms, providing users with accessible explanations of how decisions are made and what data is utilized. This transparency fosters trust in the technology and empowers individuals to make informed choices.
  6. Establish accountability for the design, development, and implementation of digital systems. Holding individuals and organizations accountable for the impact of their technology helps maintain human agency and promotes ethical behavior.
  7. Implement robust measures to safeguard individuals’ privacy and protect their data. This includes incorporating strong data protection mechanisms, giving users control over their personal information, and establishing clear consent mechanisms for data collection and usage, accompanied by transparent policies. Respecting privacy rights is paramount for preserving human agency in the digital realm.

Conclusion

The essence of being human lies in exercising control over the nature and quality of an individual’s life. However, technological advances such as artificial intelligence are raising concerns about this human ability. Humans are responsible for actively embracing and comprehending the possibilities and implications of living in a world where digital systems take over various tasks and processes. Instead of surrendering their agency, humans should view partnering with these digital systems as a means to supplement and strengthen their intelligence rather than surrendering it.

Close Menu