Time to Spring Clean Your Budget

T I M E T O S P R I N G C L E A N Y O U R B U D G E T

Tara Opie-C O N T R I B U T I N G W R I T E R

Congratulations to Pretty Smart Chics Ezine for turning 1 this year!! It’s now time to freshen up your budget and learn how to clean, maintain, and grow your budget. Let’s talk about it.

Know How Much You Owe Do you know your numbers? Yes, we survived Christmas and Spring Break. We need to start thinking about how to make what we have grow. The first thing to do is look and see how much we currently owe overall. I found myself frustrated and in denial about what it would take to get my own finances together, so I’m sharing the first steps I took to take control of it.

Look at all payments that are owed and list them from the largest amount to the smallest. I recommend paying off the lowest balance first and using that money to pay down the next smallest bill. That process is coined the “snowball effect.” Take some time to think about what fees are attached to past due payments? How many extra payments were paid throughout the year? Think about and list what could have been done with that money instead.

Know Your Tax Bracket For the past several years, I have been a tax preparer for companies as well as independently. This past year, I have had clients who assumed that when the taxes are taken out this would cover all the taxes owed throughout the year. They were sorely surprised to learn that they owed the IRS even more. The worst part is that a penalty could be attached and even more would be owed. Let us look at what type of tax withholdings you will need to keep as much money in your pocket as possible.

IRS.gov shows the tax bracket and how it changes drastically between income levels. Here is a quick example:

If you make more than $9,950 or less after all the deductions, ($19,900 for married couples filing jointly), you would be paying 10% in your taxes each year, so most can expect a refund. Income above $9,951, your taxes owed raises to 22%. I have a tip to help keep the most in your wallet.

The HR department issues a W4 during the hiring process and you have the option to choose how much you would like to withhold each pay period. Here’s a link to a downloadable page. If you choose to use a number above zero in your state and federal withholdings, try to change it to 0 (zero) for federal and 0 (zero) for state; this will reduce your take-home pay throughout the tax year but reduce what you owe in January.

Choose Wise Investments The most common investments mentioned in the workplace are IRAs and 401(k)s. Yes, they are good for saving for retirement, but how much are you really getting out of it? 401(k) plans are employer based with options for the company to match contributions. An IRA, Individual Retirement Account, is made and funded by the person. Both have interest rates where the money grows over time.

Larger corporations have stock options where portions of their stock can be purchased instead, only offering whole shares. This makes investing much more accessible to everyone. Take some time to learn about what you like to purchase . Consider stores and products your family uses. You can round up your change and invest it in the gaming company your nephew is always on. I purchased stock in my local grocery store using Robinhood, E*Trade, and CashApp; and each quarter I receive and reinvest my dividend payment. This simple method will start to create a rainy-day fund.

For more smart money moves, follow me on social media @tkspecializes on Instagram and Facebook or visit my website: taraspecializes.com

Credits: irs.gov. 2022 Form W-4. 1 January 2022. Document. 17 April 2022. —. IRS provides tax inflation adjustments for tax year 2021. 26 October 2020.

<irs.gov/newsroom/irs-provides-tax-inflation-adgustments-for-tax-year-2021>.

Tara K. is a mother of three, a graduate from Independence University with a degree in Accounting with an emphasis of Forensic Accounting, and a minority business owner. Before then, she managed a small business for several years learning the needs and wants of small business owners. She has been practicing accounting and bookkeeping since 2016 with clients all over the world. She started Tara K. Specializes, LLC in 2019 with the goal of helping small business owners achieve financial health. She has published two books entitled How to Monetize Your Niche in

90 Days and Simple Credit Repair. Both are available at taraspecializes.com/products.

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