Create Your Post-College Budget In 6 Easy Steps

Establish A Post-College Budget In Just 6 Steps

Congratulations on having earned your diploma and on having received a job offer. This time of life is guaranteed to be exciting.

As you begin planning your next moves, it is vital to have a budget. How do you create a post-college budget? Following are several things that I discovered after having graduated and started my first adult job.

Consider Your Monthly Income

Investment
Investment (Photo credit: LendingMemo)

You might have an awesome starting salary, but you should not use this figure to write out your budget. Determine how much you’re going to be bringing in after taxes every month instead. Remember that federal taxes, social security and Medicare are all going to be deducted from your check.

Employees are going to have to pay 6.2% of their wage earnings, up to minimum wage. A tax rate of 1.45% is paid for Medicare. If you are self-employed, however, these rates are going to be double.

Next, figure your federal income tax rate according to your projected earnings. You will be surprised by how much is going to be deducted from your check.

Think About Retirement
Decide how much you are going to invest in your 401k. Will your employer be matching your 401k? Use this match to your benefit as it is included in your compensation. Invest the minimum in order to receive this match.

If you are able to, make an immediate effort to max out your 401k. Should you invest with pre-tax money, this is going to lower the rate for your federal income tax at the year’s end. Always use low-cost funds to invest.
H&R Block gives amazing tips for investing.

Take Advantage of Pre-Tax Dollars

Use a Health Savings Account or a Flexible Savings Account to save pre-tax dollars. Do you have forthcoming medical expenses that you can cover with pre-tax money? Braces, contacts, glasses, doctor visits and prescriptions are things that you can use this money for. These savings are automatic.

Wisely Choose Your Housing
It is very easy to move into a luxury apartment after graduating. This is what I did. In retrospect, I wish I chose an apartment that was more affordable.

Housing advice varies. Some people say that you should spend no more than 30% of your earnings for a rental or 28% for your mortgage.

List Your Monthly Expenses
List all of the bills that you need to pay each month including sewage, water, rent, Internet, electricity, groceries, cable, car insurance, gym fees, debt payments, renter’s insurance, cell phone services, etc. You will have to allocate you monthly earnings for these expenses. Budgets are used to track and manage this spending.

Save Money!
Put aside monies to create an emergency fund. You never know when car maintenance issues and other expenses will arise.

You can also invest in a traditional IRA or ROTH to take your savings plan a bit further.

Creating a solid financial house early in life will assure you of a comfortable financial future.

Ways to make the Most out of a Charitable Donation

Any way you slice it, charitable donations are a plus for everyone involved. When you decide that it’s finally time to give back, there are countless ways to do so. But how do you make the most out of your decision to help out? There certainly isn’t anything wrong with maximizing your return on your donation, and helping out is easy. Here are a few things you may want to consider.

Volunteer

This is the simplest way to give back to your local community, and potentially the most rewarding. Anyone can donate money, but to give up your free time in the support of the less fortunate is truly the definition of charitable. Every community is loaded with opportunities to do so. From food banks to home repair to hospitals and retirement communities, the possibilities are as endless as they are rewarding.

Make a donation

If volunteering is not in the cards for you for whatever reason, consider making a donation. Again, there are tons of options here. Although passing cash out of your car window may not be ideal, donation money to a charity is nearly as simple. Food banks take canned and dry goods, many places will take a bag of clothes off your own front step, and there are plenty of places to drive in and drop off. Consider that every time you drop off a bag of clothes, you are also lightening your own, certainly overstuffed closet. many people have clothes that are perfectly fine, and have not been worn in years, sometimes decades. Release yourself from this burden of too much stuff while helping people clothe themselves. This is especially true during the winter, when people are trying to stay warm.

Make a gift out of it

Everyone has an aunt or uncle who during the holidays donates money toward a well in Africa or an animal in India. Although it’s true that these gifts can sometimes be a bore to open, they do immense good across the world. Giving the gift of clean water or life giving goat to people you will never meet is still a worthwhile endeavor and makes everyone feel better about themselves. There are many online sources for this type of donation, so finding one is a snap. Plus, you get the added benefit of:

Writing it off

Nearly all of your charitable donations can be used as a tax write off. Donations of food, clothes, furniture, cars, and computers just to name a few will certainly come with a receipt that can be plugged into your taxes to lighten your own burden come that time of year. While this shouldn’t be your driving force for helping out(after all, how much write off can one person possibly have), it is a bonus for you for helping others. So, with no negatives involved at all, why not help out with a donation of your time, money, food, or old clothes and household items? It truly is a win-win for all parties involved.

George Gallagher is a persona finance writer and blogging enthusiast.  He has also been working with students to fund their education with the best private student loans.

Do I Really Need to Hire a Tax Consultant?

If you ever start your own part time business, keeping track of your finances is one of the needed keys to a successful business. In addition, learning how to read the tax laws is important as it allows you to keep your hard earned money. However, since the tax laws change frequently, it’s a good idea to hire your own professional tax consultant. It saves you on hassle and if you find a good one, they will do their job better than you ever could. So if you want your business to run smoothly, learn how to find a tax consultant.

First, ask your friends and family if they know someone suited for the job. A tax adviser that someone else knows is more likely to be trustworthy. If not, then it’s time to pick up the phone book and start interviewing everyone. Keep in mind that some people only want your money and aren’t necessary good for your business. Avoid these scammers. If you are interviewing a potential adviser and they demand to be paid for being interviewed, they are a bad fit, drop them fast. Be sure to interview several people before deciding on who to go with. Also, even if you hire someone that sounds good, there is a small chance that it may not work out. If it doesn’t, simply fire them and try again.

You may not need to hire a tax consultant if you are determined to do your own taxes. However, unless you plan to study up on all of the laws, you may make a mistake somewhere. Some people don’t want to get a tax consultant because it costs money, but the resources they save you are worth more than you are paying them. A good tax consultant will be able to save your business money in places that you may not have figured out yourself. Of course, a bad consultant can do the same thing, but they won’t follow the tax laws correctly, leading to trouble down the line. Before you choose a tax specialist, weigh the pros and cons first.

3 Ways in which you can accelerate debt reduction

If you are under severe debts and do not know what to do, then you should understand that debt reduction should be your primary focus. This is because debt reduction can help you reduce stress and levels and leaves you with more cash that you can save or utilize in investments to make money.

Some of the ways in which you can reduce your debts and also make sure that you save are as follows.

1. Plan a budget to manage finances: It is most essential for you to formulate a budget that you can use by which you can assess your financial condition. The budget that you formulate should list all your expenses and also your monthly income. It should have categories to tell you how much you spend and where you spend it. This helps you in getting a clear picture of your finances and also makes you aware about where you are spending and how much you are spending. You must also make provisions in your budget so that you can save a certain amount every month. You must subtract the total expenses from the total income and the amount that you get is to be used to pay off your debts. If you feel that this amount is not sufficient, then you must try to reduce your expenses or increase your income. The budget keeps you motivated and helps in debt reduction as well as savings.

2. Do not spend on what you do not need: It is important for you to know that when you are paying off your debts you are to try and spend as less as possible. This is to be done so that you can save enough to pay off your debts. Every month make a list of the things that you really need and buy only those things. Things that you desire but do not need must be avoided. The best way to refrain yourself form making such purchases is to wait. If you want to buy something that is very expensive wait for a few days to make the purchase. You will gradually realize that the desire to possess it has left you. This will save you a lot of money and you will be able to pay off your debts with ease. After you have finished paying your debts, if you still practice this, you will have enough left for investing and making money.

3. Do not add up more debt: You should try not to add more debt to your existing debt. This is because when you are already paying off debts then it is best that you do not take on new debts. If you take on new debts, then you will have to pay a certain amount of money towards it. This will lead to a shortfall in the amount that you have to pay off towards your current debts. In order to avoid that and accelerate debt reduction you must not take on further debt. This will also help you save and make more money in future.

These are a few ways in which you can tread the path of debt reduction and opt for a new way life where you have enough to save and enough to invest.

How To Do Your Own Taxes

Filing your taxes each year is like running a race with hurdles and hoops to jump over and through with no clear idea of what prize will await at the end of the race. Sure it may be fun for some, but if you are like most people, it is a dreaded affair. At least there is the hope of a positive lump sum of money when you are done.

Doing your own taxes is much cheaper than going to a CPA and is probably worth the effort on your part should you not have a very complex return. When should you fork out the money and get help from a CPA?

1.      You have inherited a large sum of money. There is a complex set of rules that your CPA will know about when you receive a large gift or amount of money. It’s best to trust their advice in this situation.

2.      You are starting a small business. This is highly recommended when you start; then, if you feel comfortable, you can do your own taxes in the years to come. You want to get as much money as possible and flying solo when starting out is risky.

While getting your taxes done by a professional has gotten cheaper over the years, it still is not fun paying someone before the possibility of paying more back to the state and federal governments. You will find that it may include a little painful stretching as you venture to do your own taxes this year, but it will be cheaper, and you will feel satisfied with the new skills you have learned.

The most common concern with doing your own taxes is that you will not get as much back from Uncle Sam than if you went through someone like H&R Block. TurboTax guarantees you will get the maximum amount by using their software. And they have boiled down the complex federal tax system to simple, easy steps. Pricing on TurboTax software packages range from the simple filer for free to someone that owns a corporation. Even so, it will be cheaper than having a professional do it for you. The good thing about TurboTax is that it makes it simple enough for the amateur.

Even though the price is cheap and the process is simple, there are a couple things outside of TurboTax to remember.

1.      Keep track of all of your employers, investments, retirement accounts, charitable donations, and other income before you start. This will help you not miss out on potential returns and will help you miss out on penalties.

2.      Organize. The better you keep things together, the easier the process will be.  After you have written down a list of all accounts and income, follow up with employers or fund managers that you have not received anything from. Once things are put together it involves following easy steps that TurboTax provides.

About the author: Gunter Jameson writes about minimalism, pell grants, and anything else that interests him.