Did you spend time gathering your financial documents to file your tax return? If you’re like most people, April 15th (or in this year’s case due to Emancipation Day, April 18th) is a dreaded deadline. And if you hired a tax advisor to file your tax return, then your deadline was earlier. While you’re in the financial mode, take a bit more time to do the following quick clean-up with your finances.
1- Check your withholdings from your W-2. If you had too much money withheld in 2015, you may consider changing your withholdings for this year. This change will put more money in your bank account instead of having the IRS hold it. Discuss this option with your CPA or Enrolled Agent (EA).
2- Consolidate bank accounts. How many bank statements did you have to gather for your tax return? Wouldn’t life be easier if you had only a few statements to review? The Federal Deposit Insurance Corporation (FDIC) covers deposit accounts at insured banks and financial institutions for up to $250,000. Click here to learn more about this coverage. If you have less than that amount, then simplify by using one bank for your financial needs.
3- Consolidate credit card accounts. How many credit card statements did you have to review to find information for your tax return? Wouldn’t life be easier if you had less statements to review? Wouldn’t it make tracking spending easier? Simplify by consolidating to one credit card. Pick the credit card which has no annual fee and a generous reward program.
4- Review credit card statements and PayPal account for recurring charges. Some products and services you receive are on an automatic payment. These recurring charges can be a waste of money if you are not using those products or services. When reviewing these subscription offers, be honest with yourself if you truly need these products or services. You may decide you would be better off using that money to build your savings.
5- Check your emergency reserve. It should cover your expenses for at least 9 months if you’re a dual income family or 12 months if you’re a single income family. Historically, it’s been recommended for an emergency reserve to cover at least 3- to 6-months of expenses – but realistically, how long would it take you to find another job if you were let go from your current employer? With our difficult economy, it is better to be conservative and save to cover your expenses if that situation or another unexpected situation arises. Click here to read more about building your emergency reserve.
If you’re like most people, you dread dealing with your finances. But every year, you are forced to deal with your finances as you prepare for your tax return. Take advantage of this time and do a quick clean-up on other financial matters. For more tips about money and life, click here to receive our monthly email.
ABOUT THE AUTHOR:
Niv Persaud, CFP®, CDFA™, CRPC®, is the Founder of Transition Planning & Guidance, LLC. Life is more than money. It’s about living the lifestyle you want and can afford. For that reason, Niv consults with clients on money, life and work. Her approach capitalizes on techniques she learned throughout her career, including as a management consultant, executive recruiter and financial advisor. Her services include spending plan, financial plan, divorce financial review, life strategy and professional progression. Niv actively gives back to her community through her volunteer efforts. She believes in living life to the fullest by cherishing friendships, enjoying the beauty of nature and laughing often — even at herself. Her favorite quote is by Erma Bombeck, “When I stand before God at the end of my life, I would hope that I would not have a single bit of talent left and could say ‘I used everything you gave me’.”