Now that the new 2018 tax plan is in full force, whether you have started receiving larger paychecks or not, it’s always a good idea to go through the W-4 form, not to mention compare on your 2017 taxes that you probably have filed by now, whether you owed or had a return, to ensure accuracy. Going through now with more paychecks remaining since it’s March, more to spread out any additional tax payments you need to make, especially if you’re a two-income earning household. After you figure out the tax situation you can see what funds you have available before you can say what does ira stand for.
I know it’s easier said than done, especially if money is tight, but if you are able to maximize your 401(k) accounts, you will be as prepared as you can for the future. This year, there is an $18,500 limit, up from last year, so you can put more of your hard-earned money toward retirement. Those over 50, you can put another $6,000 in order to catch up. You never know where life will take you, so it’s a good idea to contribute the most you can while you’re making money.
Don’t Miss Out on Free Money
Speaking of money, there is nothing better than free money, so it’s a good idea to ensure that you’re taking full advantage. While using a rewards credit card is a good way to earn points or dollars on the purchases you would be making anyways, at work, you can capitalize on employer-matching contributions to have that free money grow over time. If, say, they will contribute up to 6% and you’re contributing any less, you will be missing out on free money that could be growing in your account over time.
What Should You Strive to Save?
Between employer-matching and what you are contributing, experts have suggested that 15% is a good ratio to be saving for retirement. For those that are under, if you can increase a percent or two every year until you get to 15%, you will feel less of a burden from your paycheck over time instead of all at once, not to mention building up at the same time. The earlier you can get to that 15%, or saving in general, the better, and the longer you have to build up over time. Retirement may still be decades away, but that doesn’t mean you should put off saving.
How You Can Free Up Extra Money
You may be thinking, how am I going to put 15% into my retirement account when I’m barely getting by, living paycheck to paycheck? Well reducing expenses and increasing your income is the best way to come up with extra money. Areas such as avoiding going out to eat and opting to go grocery shopping and prepare meals at home could save you hundreds per month. Other tough calls may be cancelling cable and going with a streaming service for a fraction of the cost, freeing up another hundred or two every month.