Cartoon from Calvin & Hobbes by Bill Watterson
Welcome to 2013! Have you made any resolutions this year? Other than “going to gym”, it seems like the second most common response to that question is “save more money”. Since we can talk about the latter without working up a sweat, let’s start by looking at your paycheck and where it’s going.
I encourage you make January a time to review your paystub. Without anything to prompt you to review these and other deductions, these numbers can remain constant while your life changes.
Often you enroll in your 401k, determine what you can afford, then set it and forget it. Are you currently contributing as much to your 401k as you can be? If your salary or other factors have changed, it could be time to increase that percentage you set years and years ago. Your personal Financial Advisor or the Advisor of your 401k plan at work can help you work on this and how it fits into your retirement goals.
On your first day on the job, you fill out your Federal and State tax forms inside a big stack of paperwork. Do you remember what those numbers are? When you file your taxes, you may find that your withholdings are no longer in tune with your life. If you started at your job right out of school as a single person, and now 10 years later your paycheck has the same exemptions only you are married with three children, it’s probably time to make an update. I am certainly not a tax advisor, but I encourage you to review this with one.
Another easy way to start saving money is to set up an additional direct deposit from your paycheck. Instead of telling yourself you’ll spend less or manually moving money into a savings account, set up a direct deposit into your savings account. If that money doesn’t ever get into your primary bank account, you may be less likely to spend it until you really need it.
Still with me? Great, you are serious about this resolution! Reviewing these items should give you a head start on the way to meeting your goal. I’d love to hear any tips you have as well.