How to keep your finances under control
This article first appeared at Financial Post.
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By the end of this article you’ll have built a strong portfolio that will be better able to withstand the inevitable shocks of the market.1.
Know your taxesIf you’re in the market for a new home, your taxes should be your first priority.
Tax software is becoming more sophisticated, and it’s increasingly easy to file your returns online.
You can also get a personalized tax bill that is tailored to your situation and your financial needs.
If you haven’t done so already, pay close attention to your tax situation.
It could be that you owe less than $5,000 in federal taxes and you’re eligible for a tax credit, or it could be you owe more than $50,000 and you owe the IRS a massive tax bill.
You might want to look into these scenarios to determine if you’ll need to file a return online or if it’s still worthwhile to file in person.2.
Pay attention to the size of your mortgageIf you need to refinance your mortgage to get into a better financial position, consider how much you’re willing to pay to refinances.
Some lenders are offering a 20% down payment reduction if you’re able to make a down payment that is more than 10% of the home’s value.
The lower the down payment, the better.3.
Use your 401(k) if you canIf you have access to a 401(b) plan, you might want a new one.
Some plans offer a matching match for employer contributions and contribute up to a maximum of $18,000 a year to a Roth 401(q).
Many plans also have an employer match for contributions made after age 59½.4.
Understand your insurance optionsIf you don’t have any health insurance, you’ll likely be covered under the federal government’s new health insurance exchange, HealthCare.gov.
This is a great opportunity to shop for an affordable plan that is available in your area.
Other companies offer private health insurance that covers most or all of your medical expenses.
If you do not have health insurance through an employer, you can always find a plan through a state-based exchange.5.
Invest in your 401kIf you already have a retirement account, you should start investing in it right away.
Most employers offer an employer matching match if you contribute more than a certain amount of money to your retirement account.
This match is based on your age and can be used for your employer’s tax benefits.
The bigger the contribution, the higher the match.
The match also depends on your total assets.6.
Make sure you’re protected against catastrophic eventsIf you’ve already been affected by a catastrophic event, like a hurricane, flood, or tornado, it may be worth considering investing in a qualified personal injury insurance policy that will protect you and your family from loss.7.
Understand the risk of a catastrophic lossIf you know the risk associated with a catastrophic death, you may be able to figure out what you should do with your money.
Consider investing in qualified life insurance to protect your family.8.
Keep track of your retirement savingsIf you plan to invest in a Roth IRA, you must keep track of the amount you’ve put in and the types of investments you’re taking out.
You should keep a record of any withdrawals, investments, and withdrawals as well as any income from those investments.
The IRS has a guide to tracking retirement savings.9.
Know what your taxes will beIf you aren’t certain what your tax bill will be, look into a personal finance tax preparer to determine what your federal tax bill might be.
The personal finance preparer might also have some advice on how to file and pay your taxes.