5 Money Saving Tips for After the Tax Season
By Roxy Caines
Now that you’ve filed your taxes and claimed the tax credits you are eligible for, what else can you do to boost your savings and maximize your money? Planning before spending can benefit your financial health.
Here are five steps to help you plan and prioritize for the rest of the year.
1. Build a better budget before you do any spending.
A better budget goes beyond necessities like food, rent, bills, and transportation and incorporates saving. Short- and long-term savings goals like an emergency fund, summer camp, repairs, gifts, a computer, or a home can be built into your budget. If you have multiple savings goals and limited cash, rotate your contributions to your goals so everything gets funded over time.
For example, you may have $75 to save after your expenses each month. You could save it the following way for six months:
|Month 1||Month 2||Month 3||Month 4||Month 5||Month 6||Total|
2. Step up your savings.
Having an emergency fund to fall back on can help when unexpected events come up like medical expenses or job loss. The first step to saving is to open a savings account at a bank or credit union if you don’t have one. Many financial institutions offer bonuses for opening new accounts, so research your options. Look for an account that has low (or no) fees, high interest rates, and is FDIC insured. Often, local credit unions (which are member-owned and not-for-profit) are good options.
If you already have a designated account to save (not one that is shared with a checking account), try automating your savings. Have money taken out of your paycheck and directly deposited into your savings account monthly or every pay period. Skip this if you aren’t paid consistently. Instead, consider setting a minimum amount to save each month and save extra the times you earn more.
3. Check your credit report.
Credit reports include your bill payment history and are frequently reviewed in applications for credit, housing, insurance, or employment. Monitor your credit report to make sure the information is accurate and to prevent ID theft.
You can get a free credit report from each of the three national credit reporting bureaus at Annual Credit Report once a year. Beware of websites that charge a fee. You can decide to get three reports at once or get one from each company throughout the year. Place reminders on your calendar to know when to review your credit report
4. Review your personal withholdings.
When you start a new job, employers have you complete IRS Form W-4, which tells them how much money to pay toward your federal and state taxes. This is your withholdings. The 2017 Tax Reform bill includes changes that might affect how much you want to put in withholdings.
While reviewing your withholdings won’t save you additional money, it can save you shock at tax time if your refund is less than expected because you’ve received your money throughout the year. (This isn’t bad and can help with budgeting. See # 1.) If you have more than one job, be mindful that you withhold the right amount with each employer. Form W-4 includes worksheets to assist with this.
5. Get a financial coach.
Need help making decisions about these financial steps? Coaches can provide guidance and accountability as you learn to make new financial choices, pay off debt, and develop lasting habits. Many organizations offer free financial coaching programs or financial education classes. Check your local United Way, NeighborWorks, Cooperative Extension, church, or credit union. Some VITA sites offer financial coaching or can refer you to a program.
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