Smart Money Moves to Make Today
- Author: Randolph Hane
- Posted: 2024-08-14
Max Retirement Accounts
Investing the maximum amount into a retirement account is crucial to your financial success. There are numerous tax benefits in using a retirement account. Not only do these accounts help you invest for the future, but they also help you reduce your taxable income. This is a huge advantage over a long period of time.
If you have a 401(k) option through work, make sure to contribute at least up to any match that your employer gives you. Some people are losing out on free money by not contributing up to this amount. If you have additional room in your budget, use it for contributing to retirement accounts.
Plan Your Taxes
Some people make the mistake of waiting until tax time to start thinking about their taxes. However, before the end of the year, you should already be thinking about filing your taxes in a couple of months.
If you own your own business, you have to pay quarterly estimates to the IRS. Some people wrongly assume that this is not required. If you do not pay quarterly estimates, you could face fines from the IRS. Make sure to look at your expected income for the year versus how much you have paid in taxes. If there is a variance, you need to go ahead and make up the difference before the end of the year.
Working with a tax accountant is the best way to maximize your tax savings. Although using tax software is convenient, it does not always catch all of the ways to save money. You need to have an annual plan for your taxes, and working with a professional is the best way to do so.
Pay Down Debt
Numerous people struggle with high levels of debt in their personal finances. It is hard to save or invest with high debt levels. Not only is it stressful, but it also restricts your cash flow every month.
Before the end of the year, make a plan for how you are going to reduce any consumer debt in the years ahead. Some people work an extra job in order to get some traction in paying down their debt. When looking at your budget, you should determine how much extra money you can apply towards the debt.
Once you start paying down your debt, you will notice an increase in available income every month. This can be used to invest and build wealth over time.
Make a Budget
Having a budget is one of the most important aspects of personal financial planning. If you cannot make and follow a budget every month, you are going to have trouble saving and investing.
Every month, you should sit down and estimate your expenses in various areas of your life. This will help you plan and organize your finances based on your goals.
There are various online options for budgeting if you are having trouble keeping track of your expenses. Although each month is different, you should still plan based on what you expect to happen.
Build an Emergency Fund
The vast majority of people today cannot financially survive an emergency. As a general rule, you need to have several months of expenses in the bank. If you do not have this money saved up, you are going to have a hard time dealing with an emergency when it comes.
For example, if you get injured and have to miss work for several weeks, this emergency fund will prevent you from going into debt. Although it takes a long time to build, a solid emergency fund can greatly reduce your stress around your finances.
Having financial success is not as hard as it seems. You simply need to have a plan and the discipline to follow it. Reducing your debt and investing for the future are critical components of financial success. Start planning today to have a great year in 2018.
